Control of Unfair Terms Under Cypriot Contract Law

Abstract

The introduction of the EU Unfair Terms in Consumer Contracts Directive in the legal system of Cyprus was the first instrument specifically dealing with the problems that arise with standard form contracts and the issue of consent. However, the Directive only generated caselaw approximately twenty years after its adoption, whereas the principle-based approach of the test for unfairness (significant imbalance test and good faith requirement) was interpreted in the common law notion of absence of dishonesty. Hence, Cypriot courts interpreted good faith as “honesty in fact”. Under this interpretation, it seems that both procedural and substantive unfairness are not captured under the test. It is understood that whereas the statute codifying the contract law of Cyprus has incorporated the [civil law] will theory of contracts, no tools for the invalidation and scrutiny of terms that may be deemed unfair were provided. The statute placed considerable emphasis on procedural fairness, however, Cypriot courts seemed unwilling to adapt their approach and deal with the problems that standard form contracting poses, failing also to follow the developments in the UK. Thus, even after the adoption of EU consumer law directives, Cypriot courts show an unwillingness to scrutinize the parties’ initial allocation of risk, even though such allocation was done in a standardized manner by one party. Despite the mixed character of the legal system, consumer law directives and the introduction of content control can be seen as legal irritants.