Avoid!

The above photograph conveys everything that is pleasant about staying in a nice hotel or boutique guesthouse.

Sadly, this was not the case for one couple, Mr and Mrs Jenkinson, who had booked into accommodation (the Broadway Hotel) in the English seaside resort of Blackpool in 2014. The couple were so disappointed by the lack of basic hygiene standards and facilities that they were motivated to leave a review on Tripadvisor – a very bad review, in fact, which did the establishment absolutely no favours.

How did the hotel respond?

Not in the way that you would think the management should have responded i.e. by issuing the couple with a grovelling apology and, possibly, a refund?

No, the couple were checking their credit card statement some days after their review had been posted and noticed that £100 had been charged to their account by the Broadway Hotel. Surely, this must have been some oversight or mistake? Following further enquiries by the couple, they discovered that the hotel had levied the charge because they had the nerve to leave a bad review on Tripadvisor about the very poor standards they had experienced while staying there.

When the couple objected to this, the establishment told them to check the small print in its booking documents – which Mrs Jenkinson had admittedly signed. True enough, buried somewhere in the small print was a statement to the effect:

“Despite the fact that repeat customers and couples love our hotel, your friends and family may not. … For every bad review left on any website, the group organiser will be charged a maximum £100 per review.“

Now, the Broadway Hotel was by no means luxury accommodation (the Jenkinsons had paid £36 for an overnight stay), but even budget hotels must meet basic standards such as adequate hygiene. The hotel failed miserably to meet these standards. More and more often, we do rely on the experiences of other people to guide us in our choices as consumers and the Jenkinsons were posting a fair comment review on Tripadvisor. The ability of businesses and traders to prevent consumers doing this would clearly be a retrograde development.

At the time, the story went viral and Mr and Mrs Jenkinson were invited on to the BBC Television’s Breakfast show to talk about their experiences. Needless to say, the hotel got more than it bargained for with the adverse media publicity and Blackpool Council’s Trading Standards Department taking a keen interest in its business practices.

A link to the story on the BBC website about the Jenkinsons’ experiences at the Broadway Hotel, Blackpool in 2014 can be found below:

https://www.bbc.co.uk/news/technology-30100973

Was this clause enforceable?

At the time of the story breaking, I fortuitously happened to be teaching Unfair Terms in Contract Law to two of my classes. I had never seen a clause like this before and informed my students that it was very unlikely to be capable of enforcement by the hotel given its blatant unfairness – let alone the implications for freedom of speech in the UK.

I’ve long wanted to write about the Jenkinsons’ experience and I was reminded of their story some weeks ago when teaching a group of students about unfair terms in contracts.

Normally, when I discuss this area of the law, I make students aware that businesses used to be extremely trigger happy when using all sorts of unfair terms in contracts in order to avoid their responsibilities to customers.

Prior to the introduction of the Unfair Contract Terms Act 1977 (about more later), businesses and other organisations could exclude or limit their liability for causing death and personal injury so long as adequate notice of the existence of the term was brought to the attention of the other party to the contract.

So, for example, if a garage owner wished to exclude his liability to a customer who put a vehicle in for repairs or a service, he could simply alert the customer to the existence of an exclusion or limitation clause in the contract. The customer leaves the car to have the brakes fixed; picks the car up later; the mechanic has been negligent and not carried out the work properly; the customer later suffers a terrible accident because the brakes haven’t been fixed. Hey presto, no need to worry because the garage owner could point to his standard terms of business which contained an exclusion clause. In effect, the exclusion clause was a get out of jail card.

Another tactic often deployed was where the business could argue that the customer had constructive notice of the existence of the unfair term e.g. the customer should have read the documents presented to him or her. Mrs Jenkinson had signed the booking documents presented to her by the Broadway Hotel. She later admitted that she did not read the terms because she did not have her spectacles with her.

On occasion, the courts might intervene and side with a party objecting to the enforcement of an unfair term under a number of judicial doctrines:

• the repugnancy rule
• fundamental breach
• the contra proferentum rule

Despite judicial intervention, the odds were still stacked against parties who wished to challenge the inherent unfairness and abusive nature of attempts by traders and businesses to exclude or limit their liability.

Sensibly, the UK Parliament decided to tackle what was becoming the Wild West of contractual terms and passed the Unfair Contract Terms Act 1977 which made such attempts to evade liability automatically void.

Generally speaking, the Act made it much harder (but not impossible) for businesses to impose other unfair terms on consumers. Businesses, on the other hand, were still, advised to read the small print of any agreements that they were contemplating entering, although courts would be more sympathetic if a larger business tried to use its unequal bargaining power to impose unfair terms on a smaller business.

The European Union also passed legislation (European Council Directive 93/13 on Unfair Terms in Consumer Contracts and, for a while, the Unfair Terms in Consumer Contracts Regulations of 1994 and 1999 respectively were in force. These were later repealed and replaced by the Consumer Rights Act 2015, although the terms of the Directive live on in this legislation (remember: EU Law is hardwired into UK national laws).

Along the way, the Enterprise Act 2002 and the Consumer Protection from Unfair Trading Regulations 2008 severely restricted the ability of businesses and traders to impose very unfavourable terms on consumers.

The net effect of all of this legislation was that consumers were really protected against the imposition of unfair terms by traders and businesses. Consumers were often deemed to be the weaker party in a relationship with traders and businesses and, therefore, needed to be protected.

Returning to the Jenkinsons’ experience at the a Broadway Hotel, it is worth emphasising that the couple were being provided with accommodation services as consumers and, therefore, would have been entitled to the benefit of existing UK consumer protection laws on the statute books in 2014.

Had this incident occurred in 2020, the Jenkinsons would, of course, have been able to challenge the legality of the penalty clause primarily in terms of the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer Rights Act 2015.

Conclusion

Happily, we have come a long way in consumer law where businesses could previously impose all sorts of unfair, not to say downright abusive, terms on customers.

We are now in a position, where UK consumers will be protected by legislative safeguards which should ensure that these types of terms will not be permitted to stand i.e. they will be automatically void or simply unenforceable. The penalty clause which the Jenkinsons experienced would doubtless have fallen foul of consumer protection legislation had the issue got anywhere near a court room. Nonetheless, it was an interesting example of the inventiveness of businesses regarding the creation of new types of unfair terms in contracts.

It remains the case, however, that in business to business contracts (or in private transactions), it will be highly advisable for parties to remain wary about the potential unfairness of contractual terms. Only the most outrageous and downright abusive terms (such as excluding or limiting liability for death or personal injury) will be automatically void – no matter how much notice of their existence has been given by the party seeking to rely on them. If a business is seeking to have a clause declared void or unenforceable, the debate to be had in terms of the Unfair Contract Terms Act 1977 will often centre around the perceived reasonableness (or otherwise) of the clause.

Copyright Seán J Crossan, 1 March 2020