A Standard Form Contract is an agreement that contains standardized, non-negotiated provisions for the supply or sale of goods and/or services. These are usually in preprinted forms i.e. sales receipts, contract of services and facility letters, to mention but a few. One of the main reasons to introduce standard business terms in consumer contracts is that they reduce transaction costs by eliminating the need to negotiate the various terms and conditions of a contract for each instance a product is sold or a service is rendered. Essentially, the objective of having these Standard Form Consumer Contracts registered by the Fair Competition Commission (the FCC) is to prevent unfair contractual terms and frequent consumer injuries and losses.
Part II of the Standard Form (Consumer Contracts) Regulations, 2014 of the laws of Tanzania published under Government Notice Number 305 of 2014 (the Regulations) defines all the technical aspects of contractual obligations. One amongst them includes the standardized contractual terms whereas a producer or trade association, for the purpose of establishing a sound order of trade and prevent unfair contractual terms from circulating, may prepare a set of standard contractual terms to be used in a particular field of trade.
What are the Specific Requirements of Standard Form Consumer Contracts?
The requirements for standard form consumer contracts include:
One amongst the specific requirements of the Standard Form Consumer Contracts is that producers are obliged to state on their goods and services information regarding the nature of the goods and service, way of advertising, way of offering it and signing it. Lastly, they are also required to provide consumers with their rights, duties and obligations. A detailed specific Standard Form Consumer Contracts requirements are provided under Part III of the Regulations.
Registration of Standard Form Consumer Contracts.
Any person or body corporate that uses standard business terms and conditions (manufacturers, suppliers, sellers, service providers and operators) in a contract is required to register the contract (with the FCC) by filling SFC Form No 1. The FCC is vested with the authority to review and endorse the Standard Form Consumer Contracts. The procedures laid down for registration of Standard Form Consumer Contracts include filing SFC Form No.1 with the FCC within twenty-one days before the conclusion of a contract and afterwards, the said form shall be reviewed within fourteen days by the FCC as per Regulation 19 (1) of the Regulations. Thereafter, the FCC may approve or disapprove the standard business terms as provided under Regulation 21( 1) of the Regulations.
What amounts to unfair terms in Standard Form Consumer Contract?
Unfair terms include contractual terms that cause a significant bargaining imbalance between a seller and a buyer and do not legitimately protect the interest of the seller and cause financial or non-financial harm to consumers. The unfairness of the contractual terms shall be assessed by taking into consideration the nature of the goods or services for which the contract was concluded. For instance, in order to determine fairness one ought to ask themselves these questions:-
Further, the Regulations insist on the use of plain language so that the terms can be reasonably and clearly expressed and eventually for the terms to be understood. Part V of the Regulations points out all technical aspects on unfair terms, assessment of unfair terms, language, and effect of unfair terms.
Who can lodge a Complaint to The FCC?
Any person or body corporate can lodge a complaint to the FCC by filling form SFC No. 2 alleging contravention of the provisions of the Fair Competition Act No. 8, 2003 and the Regulations. Although, one should bear in mind that the FCC shall not entertain a complaint if a similar complaint or part of it is pending before any competent authority or was previously determined by any competent authority.
The Procedures laid out by the Regulations.
Upon receipt of the complaint, the FCC shall notify the producer in a manner set out in form SFC 3 of the First Schedule to the Regulations. The producer will be given seven days to reply in a manner set out in form SFC 4 of the First Schedule of the Regulations. The FCC shall proceed to hear the complaint within twenty-one days from the date of receipt of the reply from the producer. Any person aggrieved by the decision of the FCC may, within twenty-eight days from the decision, appeal to the Fair Competition Tribunal.
What are Unfair terms?
The Regulations provide an exhaustive indicative list of unfair terms used in Standard Form Consumer Contract. Examples of such unfair terms include (a) contract terms that allow a provider of goods or services to alter the contracts without consumer consent i.e. “we may change subscription fees, terms and conditions at any time without prior notice”; (b) contract terms that confuse the agency arrangements that apply and seek to unfairly release the agency from liability for any failure to perform the contract i.e. “agency’s errors and omission are exempted”. Some of the unfair terms provided by the Regulations include a provision by which the producer is relieved of the statutory requirements to give notice to the other party to perform or to fix a period of performance, limitation of liability for other losses caused by the negligence of the producer, the producer’s obligation to bear the expenditure necessary for supplementary performance in particular costs of carriage, a provision by which a producer is entitled to receive payment of a penalty in the event of non-performance or late acceptance of performance.
Overall, the Regulations intend to enable suppliers and consumers to understand and equip them with the aptitude on how best they can learn and use the knowledge to mitigate unfair trade practices in the market.
By Said Nassor – Advocate
Note: This is not a legal opinion and the contents hereof are not meant to be relied upon by any recipient unless our written consent is sought and explicitly obtained in writing.
