Both EU and English law require plain intelligible language in consumer contracts.
The European Court of Justice has just given the French court some hints on what this might mean, in the context of payment protection insurance sold with a loan.
The court said (in the English version):
“Of fundamental importance to the consumer, therefore, for the purpose of complying with the requirement of transparency, is not only
- the information given prior to the conclusion of the contract concerning the conditions as to liability, but also
- the information given concerning the specific features of the arrangements for covering the loan repayments payable to the lender in the event of the borrower’s total incapacity for work and the relationship between those arrangements and the arrangements laid down in respect of other contractual terms, so that that consumer is in a position to evaluate, on the basis of plain, intelligible criteria, the economic consequences for him which derive from it.”
Compared to this, the allegedly unfair clause was a model of clarity. It said that the trigger for payment was “total incapacity for work … paid or otherwise”. So the insurers refused to pay a debtor who had 75% incapacity for paid work. Though not 100% incapacitated for unpaid work, he had lost his job and could not afford to repay the loan.
The European Court seems to be suggesting that a clause may not be plain and intelligible if it says, in correct grammar and language (and shorter sentences than the court’s), something contrary to what the consumer expects. But other information given in the transaction might correct the consumer’s expectations and make the clause plain.
Van Hove v CNP Assurances SA, Case C‑96/14, 23 April 2015
