Last year, the High Court held that a Foxtons’ rental commission agreement was partly unenforceable because its terms were ‘unfair’. In particular, this applied to a provision in a letting agreement which said that if T subsequently bought the property from L, then Foxtons would be entitled to an estate agent’s commission. Such a provision would be ‘unfair’ if Foxtons’ customer was a ‘consumer’ (under the Unfair Terms and Consumer Contract Regs 1999). At the same time, other provisions might not be automatically unfair, but would fail if they were not clearly explained to the ‘consumer’ (eg an entitlement for Foxtons to charge a commission if T renewed the lease, even if Foxtons were not involved in those negotiations).

That High Court decision was important because many other estate agents and letting agents had adopted similar provisions to those used by Foxtons. However, the recent OFT case against the banks (over excessive bank charges) has raised a possible line of attack against the High Court decision in the Foxtons’ case. In the bank charges litigation, the Supreme Court upheld the disputed charges because they had to be seen as part of the so-called ‘core bargain’. In the Supreme Court’s view, the core bargain has to be seen from the point of view of both sides of the transaction, and a balanced view adopted of it. However, in the Foxtons’ case the judge focused on the fact that the unfair term would not have been seen as part of the core bargain by the customer (ie the judge focused on the viewpoint of only one party to the transaction, rather than looking at it from both sides’ point of view). Accordingly, the Foxtons decision may well be appealable on the basis that the disputed charges have to be seen as part of the overall ‘core bargain’ (and it is therefore wrong to pick on individual charges and regard them as unfair). Having said that, the Foxtons’ terms would still have to have been properly explained to the customer (by being in ‘plain and intelligible language’), but that is a separate issue. What really matters is that the ‘core bargain’ approach of the Supreme Court means that it will often be wrong to focus on individual terms without looking at the overall bargain struck between the two sides. Source: Painsmith (http://painsmith.wordpress.com).