All private individuals of age may enter into a series of consumer contracts, from small, daily purchases to such major lifetime transactions as home purchase, taking up a mortgage, house construction, and the signing of contracts for insurance, pensions and investments.
Consumer contracts are usually standard contracts drafted by commercial interests. There is often a considerable imbalance between the parties with respect to their resources and insights into the area in question.
Dalan’s team consists of leading consumer law specialists.
Consumer law can be complex. Whereas in a dispute between two equal parties one can refer to the contract, in a consumer case one has additionally to consider whether the contract is in accordance with statutory legislation, and whether consumer protection considerations would require another resolution than a contractual relationship between two equal parties.
Dalan’s team consists of leading consumer law specialists. We provide commercial and private clients with support in disputes concerning contractual matters across the entire spectrum of consumer contracts. We also assist commercial actors in drafting standard terms and conditions that meet the requirements of Norwegian law.
In order to mitigate against an imbalance between the parties leading to unreasonable results, legislators have, since about 1980, restricted contractual freedom by passing a number of mandatory acts that regulate the obligations of the parties. Legislation covering financial and insurance contracts, artisan services, residential property construction, package holidays, securities trading as well as general purchases etc., safeguard the rights of consumers regardless of what is stated in a company’s standard terms. If a term in a standard contract places the consumer in a worse position than that stipulate by law, then the term is rendered invalid and ineffective.
Many of the legislative changes are the consequence of EU directives which are binding on Norway. One example is Council Directive 93/13/EØF relating to unreasonable conditions in consumer contracts (consumer contract directive). This directive states that written standard terms shall “always be formulated clearly and understandably” and if there is doubt concerning the interpretation of a term, “the interpretation that is most advantageous for the consumer shall apply”. The directive has been partially established legally through Sections 36 and 37 of the Contract Act.
In legal practice, greater importance has been attached to the interests of the consumer. The Supreme Court has increasingly taken consumer interests into consideration and thus provided guidance for deciding new cases.
The Supreme Court in Røeggen (Rt-2013-388) based its decision on the consumer contract directive and the need for consumer protection:
“I would however add that the directive has to be seen as an expression of a general view that consumers in their dealings with professional bodies are entitled to special protection. The considerable weight attached to the consumer’s point of view, must be reflected in a specific assessment of reasonability”. The court thought that the imbalance between the parties “should influence the information that the bank is obliged to provide about the products”. Thereafter the court formulated a requirement that the bank “ensures that the client understands the nature of the business he is transacting, and does not provide misleading or erroneous information about important matters that have a bearing on the investment decision”.
Because these requirements were not met by the bank, the contract was declared void and the client was compensated for his loss.
In a decision from 2020 (HR-2012-312-A), the Supreme Court again attached weight to the interests of the consumer. The court concluded that an architectural firm, which had applied for permission to erect four houses, was directly liable for damages vis-à-vis the buyers because of serious faults, despite the fact that there was no contractual relationship between them. The court deemed it important that one of the reasons for the control regime stipulated by the liability provisions of the Planning and Building Act, was that the Act is meant to protect private interests as well as consumer interests.
An important aspect of consumer contract law are the rules governing the requirements that must be met in order to establish a legally binding contract (Contract Law). This includes the question of whether the consumer has entered into a contract or not (Question of Acceptance).
A series of laws and EU directives impose on the commercial party a duty to provide the consumer with certain information before a contract can be signed. If this is not done, the contract may be declared wholly or partially void.
The Consumer Purchases Cancellation Act entitles the consumer, on certain terms, to rescind the contract without there being a fault with the product or service he/she has ordered. The Act is also valid for distance sales, including internet shopping, as well as for sales transacted outside the usual fixed sales location.
The E-Commerce Act sets out rules for entering into contracts, including a requirement whereby key input errors can easily be discovered and rectified before the contract is signed, and the contract terms saved and stored.
The question frequently arises as to whether a contract must be deemed void because it is unreasonable, or because of disloyalty, frustration or irregular developments. Section 36 of the Contract Act permits whole or partial rescission following an overall assessment as to whether it is unreasonable to declare a contract valid. The balance between the parties is one of the factors to which weight is attached here.
Another main section of the Act deals with the rules governing the content of the contract and the legal remedies in the event of a breach of contract. The issues addressed here include whether the contract has been breached by one or both parties, and if so, whether this gives the other party the right to a price discount, to rescind the contract, or to claim damages etc.