Where a contractual provision is inserted into the text without being discussed with the consumer and upsets the balance between the parties’ positions to the consumer’s detriment, an unfair term is present. The fact that consumers, as the weaker party to the contract, were persistently harmed in practice by provisions of this kind made it necessary to issue the Regulation on Unfair Terms in Consumer Contracts. The Regulation assigns to the Ministry of Trade of the Republic of Türkiye the task of taking the measures required to have provisions of this nature removed from contract texts or not used at all. Every provision characterised as an unfair term is deemed null and void; that invalidity does not, however, extend to the contract as a whole, and the remaining provisions continue to stand.
Under the framework drawn by the Regulation, provisions that create an imbalance to the consumer’s detriment in a manner incompatible with the rule of good faith, and that are inserted into the contract without negotiation, are treated as “unfair terms”.
Provisions of this kind do indeed appear in a great many forms in everyday life. Sometimes by a wet signature placed on paper, and sometimes by ticking the box on a screen reading “I approve the (…) agreement”, individuals become parties to these contracts. Yet under our legislation, for a contract to be regarded as valid the parties must discuss its provisions, reach common ground and align their intentions accordingly. In practice, however, one frequently encounters contracts drawn up without regard to these conditions, largely in standard form and containing provisions adverse to the consumer.
The Concept of the Unfair Term
In consumer contracts, an unfair term is a provision included in the text without being negotiated with the consumer and giving rise to an imbalance to the consumer’s detriment in terms of the rights and obligations arising from the contract. The definition itself reveals the purpose of the concept: to protect the consumer, who is in a relatively weak position, within the contractual relationship.
The procedures and principles governing how such provisions are to be identified and reviewed are set out in the Regulation on Unfair Terms in Consumer Contracts. The aim of this instrument, which entered into force upon publication in the Official Gazette of 17.06.2014, is to prevent outcomes contrary to law and equity that may arise to the consumer’s detriment through unfair terms.
Conditions for an Unfair Term
As explained in detail in the legislation, two conditions must be satisfied together before an unfair term can be said to exist in a consumer contract:
- The provision must have been placed in the contract without being negotiated with the consumer.
- The provision must create an imbalance to the consumer’s detriment, in a manner incompatible with the rule of good faith, in terms of the reciprocal rights and obligations arising from the contract.
The point to be underlined here is that these two elements are cumulative. They must be present at the same time; as a rule, the fulfilment of only one of the conditions is not sufficient for the provision in question to be regarded as an unfair term.
Let us consider concrete examples. Provisions stipulating that the consumer will pay disproportionately high compensation should they fail to perform their obligation are in the nature of unfair terms. Similarly, clauses stating that the consumer accepts in advance and unconditionally provisions of whose content they could not have been aware before the contract was concluded are likewise regarded as unfair terms and are null and void.
How the Negotiation Test Is Applied
In contracts in fields such as banking, insurance and transport, it is all but impossible for the consumer to influence the content of the text. These contracts are for the most part submitted for signature alone, as pre-printed ready-made texts. The answer to the question of which clauses were genuinely discussed is therefore decisive in determining the legal regime to be applied.
On this point the Regulation lays down a clear test: if the term in the contract has been drawn up in advance and the consumer has no opportunity to intervene in its content, the negotiation requirement is deemed not to have been met.
The example of a housing or consumer loan gives concrete form to this test. It is plain that a person taking out a loan does not sit down with bank officials and discuss each clause of the contract one by one. For this reason, items such as file charges and transaction charges inserted into loan agreements are clearly assessed as unfair terms. It is possible to pursue legal remedies against the bank in order to reclaim the sums collected from the consumer in reliance on such clauses.
For details on the subject, our note entitled “Recovery of Bank Loan File Charges” may be consulted.
Who Bears the Burden of Proof?
As stated above, one of the statutory requirements for a provision to be regarded as an unfair term is that it was not negotiated between the parties.
At this point, the question of who is to prove whether negotiation took place comes to the fore. Article 5(2) of the Regulation, entitled “Unfair Term”, has clarified this matter:
Regulation on Unfair Terms in Consumer Contracts, Art. 5(2)
“Where the consumer has been unable to influence the content of the contract because a contractual term was drawn up in advance and is contained in a standard contract, that contractual term shall be deemed not to have been negotiated with the consumer. Where the party drafting the contract claims that a standard term was individually negotiated, that party bears the burden of proving it.”
Accordingly, the party asserting that a provision is not an unfair term and was agreed following mutual discussion is the party drafting the contract, and the obligation to prove that assertion rests with that party as well.
Scope of the Negotiation Requirement
Whether a contractual provision is unfair is assessed by reference to the moment the contract was signed. That assessment takes into account the nature of the goods or services forming the subject matter of the contract together with the circumstances and conditions prevailing at the moment of signature. The characteristics of the contract taken as a whole and other relevant matters also play a decisive role in this examination.
The scope of the requirement of having been negotiated is determined not on a clause-by-clause basis but by considering the contract as a whole and all of its provisions.
Criteria Applied in the Assessment
The temporal criterion. As noted above, the examination of an unfair term is first of all limited in time, and the conditions are assessed within that identified moment. The moment to be taken as the basis is the moment the contract was concluded.
Accordingly, the conclusion is reached by considering together the nature of the goods or services forming the subject matter of the contract, the conditions existing at the time of conclusion and the other provisions of the contract.
The language criterion. Where the contractual terms are drawn up in writing, they must be worded in plain and intelligible language that the consumer is able to grasp. Where a provision is not intelligible or is capable of bearing more than one meaning, it is interpreted in the consumer’s favour.
The Supervisory Mechanism and the Role of the Administration
Encountering uniform, standard contracts is an ordinary matter for consumers today. Very often, even a person who notices that the text contains provisions adverse to them has no choice but to sign the contract. Once the drawbacks created by this picture were recognised by the legislator, detailed rules were laid down on the subject. Those rules did not merely establish the tests for identifying an unfair term; they also conferred certain powers on the administration so that shortcomings in practice could be remedied.
Within this framework, the power and the obligation to take the measures necessary for unfair terms to be removed from contract texts, or for their use to be prevented, have been conferred on the Ministry of Trade of the Republic of Türkiye.
The Ministry may also grant a period of time for the removal of such provisions from the text where unfair terms are found in consumer contracts prepared for general use. The period granted may be set at thirty days and may, in certain cases, be extended to as much as ninety days.
Where a provision is identified by the Ministry as an unfair term and it is decided that it is null and void as against consumers, this is announced to the consumer by the party drafting the contract. The notification may be made in writing or transmitted by electronic means. In this way, such provisions are deemed to have been removed from contract texts concluded with consumers before the date of the finding and still in force.
A period of time may be granted to the party drafting the contract for the removal from the text of the unfair terms identified by the Ministry. Where the period granted has expired and the provisions have not been removed from the contract, an administrative fine is imposed in respect of each contract in which the breach has been established.
The Effect of Invalidity on the Contract
Where it is decided that certain clauses in a contract are unfair terms to the consumer’s detriment, how that outcome affects the contract as a whole is of importance. Although unfair terms are null and void, they do not render the entire contract invalid. In other words, the provisions other than the unfair term remain valid.
One matter calls for particular emphasis: the party drafting the contract may not argue that “it would not have entered into the contract on the remaining provisions had the terms deemed null and void not been present”.
The List of Unfair Terms Annexed to the Regulation
Article 5(4) of the Regulation on Unfair Terms in Consumer Contracts, entitled “Unfair Term”, provides that the terms listed in the annex to the Regulation are accepted as unfair terms.
That said, the list in question is not an exhaustive enumeration; it is entirely illustrative. Even if they do not appear in the list, other contractual provisions bearing the characteristics explained throughout this note may likewise be regarded as unfair terms and deemed null and void. The list may be accessed in the section of the Regulation entitled “ANNEX-1 Unfair Contract Terms”.
Independent Legal Assessment
Review for unfair terms is one of the most functional instruments of consumer law, because it disapplies only the provision that upsets the balance, without unsettling the contract as a whole. In practice, the point on which the dispute turns is generally not the content of the provision but whether it was negotiated. The fact that the burden of proof has been left with the party drafting the contract creates a significant procedural advantage in the consumer’s favour.
Nor should it be overlooked that the administrative supervisory route operates in a manner complementary to the individual action. An application to the Ministry may secure the correction of the same text for other consumers as well. In a given file, it would be appropriate to address the following matters first:
- Documenting whether the contested provision derives from a standard text, that is to say whether any opportunity to intervene existed
- Establishing the imbalance contrary to the rule of good faith by reference to concrete financial or legal consequences
- Bearing in mind that the assessment is to be made by reference to the moment the contract was concluded
- Invoking the rule of interpretation in the consumer’s favour in respect of unclear or ambiguous wording
- Formulating separately a claim for restitution where sums have been collected in reliance on an unfair term
- Recalling that the list annexed to the Regulation is illustrative and that provisions not appearing in the list may also be reviewed
Independent Legal advises on the review of consumer contracts for unfair terms, the preparation of administrative applications, and the pursuit before the courts of restitution claims founded on unfair terms.