Unfair contract terms guidance 29
that is, to return what has been supplied for a full refund if it is
unsatisfactory (see paragraph 2.1.3). The right to reject can normally be
exercised only in contracts which are wholly or mainly for the supply of
goods. It does not apply in contracts for work alone, or where significant
work has to be done, for example, in installing goods.
2.5.5 Even where the consumer can reject goods, a term excluding the right of
set-off may be considered unacceptable. It restricts the consumer's
freedom to use other legitimate methods to exercise their statutory rights
to redress, contrary to law (see paragraph 2.1.1). Rejection is usually the
preferred recourse for consumers who receive unsatisfactory goods, but
not always. The consumer may have no time to start looking again for a
new car, or wait for delivery of a replacement computer. Where departures
from the promised specification are minor, accepting the product but paying
a reduced price for it may be a better option, and consumers should not
have their right to exercise that option removed or reduced.
2.5.6 Clauses subjecting set-off to penalty. Concerns are particularly likely,
whatever the subject matter of the contract, where consumers are subject
to an immediately effective penalty
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if they do not pay the whole contract
price when demanded – for example, where there is a loss of guarantee
rights, or of a right to a discount of the price.
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2.5.7 The above objections do not apply to terms designed only to deter
consumers from withholding amounts that are disproportionate to the fault
in the goods or services. Other relevant examples of terms considered
acceptable may be found at Annexe A under Group 2(e).
2.5.8 Full payment in advance. The OFT objects to terms which have the indirect
effect of excluding liability unfairly. For example, the right of set-off is
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The concern here relates to penalties that might take effect independently of any resolution of the
dispute in the consumer's favour, and without intervention of the court. That is not true of interest
rate penalties, since if the consumer is withholding part of the contract price, he is bound to
withhold the interest on it too. While he does that, it is the supplier, not the consumer, who is in
the position of having to take his claim to court.
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There is no serious objection to guarantee rights being suspended until due payment has been
made – again, a problem occurs where the penalty is effective regardless of subsequent resolution
of the dispute.