Foxtons’ terms “unfair”

Estate agents Foxtons used “unfair” terms and conditions in its lettings agreements with landlords, the High Court has ruled.

In OFT v Foxtons [2009] EWHC 1681 (Ch) the Office of Fair Trading (OFT) brought proceedings against Foxtons under the Unfair Terms in Consumer Contracts Regulations 1999, and will now ask the court to grant injunctions preventing the continued use of the terms.

The court looked at letting contracts which typically applied an 11% renewal commission where a tenant stayed at the property beyond the initial (usually one year) period, even where Foxtons played no part in this, and a 2.5% commission payment in the event that a tenant, occupant or licensee of the property entered into an agreement with the owner to buy the property.
Ruling that all the terms the OFT brought before the court were unfair, Mr Justice Mann said that charging of repeat renewal commission by Foxtons represented a “trap” or “timebomb” for consumers. He said such important terms should be flagged up not hidden in small print. He found Foxtons had used language in its contract that was not “plain and intelligible”.

On the commission payable on the sale of a property to a tenant, Mann J said consumers would be “astonished” by the potentially large financial liability to Foxtons, given that Foxtons played no material part in it. The court considered certain old terms used by Foxtons, as well as new terms. Mann J found both were unfair.

OFT chief executive John Fingleton says the ruling sends out a clear message that businesses offering services need to ensure unexpected or surprising terms are not hidden away in small print. “Contracts need to be written in clear and straightforward language with important provisions, particularly those which may disadvantage consumers as in this case, given prominence and actively brought to people’s attention,” he says.

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