Right of withdrawal

position and reduce the disparity in the rational decision between him and the professional regarding the conclusion of the contract. This could be achieved through the implementation of the right of withdrawal which will be the subject of discussion in the next section.

2.3.4.2 Right of withdrawal  

The right of withdrawal²⁴² (also known as cooling-off period) is a procedural solution awarded to the consumer to allow him unilaterally to terminate the contract within a specified period without having to provide any reason or incurring any liability.²⁴³ It is a mechanism whose objective is to compensate for the disadvantageous position of the consumer by granting him additional time before being irrevocably bound by the contract,²⁴⁴ as well as protecting his consent to ensure it came into existence as a result of careful consideration.²⁴⁵

There is a direct link between the professional’s duty to inform and the consumer’s right of withdrawal. The professional has an obligation to provide sufficient information to the consumer regarding the terms of the agreement and the essential characteristics of the supplied goods or services. If the former fails to fulfil this obligation or supplies goods or services with disappointing quality, then his conduct should be

242 Under EU law, the right of withdrawal was initially introduced to curb abuses of doorstep selling. It   appeared for the first time in the Door Step Directive 85/577/EEC and since then it has been implemented in other Directives such as Distance Selling Directive 97/7/EC and Consumer Credit Directive 2008/48/EC, Evelyne Terryn, ‘The Right of Withdrawal, the Acquis Principles and the Draft Common Frame of Reference’ in Reiner Schulze (ed), Common Frame of Reference and Existing EC Contract Law (Sellier 2008), pp. 145–148.

243 Ibrahim Abu Allail, p. 274; Omar Abdulbaqi, p. 768; Christian Twigg-Flesner and Reiner Schulze,

‘Protecting Rational Choice: Information and the Right of Withdrawal’ in Geraint Howells, Iain Ramsay and Thomas Wilhelmsson (eds), Handbook of Research on International Consumer Law (Edward Elgar 2010), pp. 130 and 131.

244 Christian Twigg-Flesner and Reiner Schulze, p. 145.

245 Ibrahim Abu Allail, p. 276. Abu Allail argues that although the right of withdrawal is connected to consent, it is not related to the theory of defects of consent because the purpose of this theory is to protect the consent by ensuring its freedom from defects, whereas the role of the right of withdrawal is to ensure that the declaration of the party consent was a result of due deliberation and reflection.

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indirectly sanctioned by granting the consumer the right to withdraw from the contract.²⁴⁶ However, the right of withdrawal is not only based on the information model.²⁴⁷ It exists independently of whether or not the information is provided and its main objective is to compensate for the disadvantaged weak position of the consumer.²⁴⁸ This is why it should be introduced in the context of adhesion contracts in the KCC to give the adhering party an opportunity to reconsider his contractual commitment to ensure that his consent is informed.

However, this right has an extensive influence on the contract by restricting its binding force. It strongly undermines the principle of pacta sunt servanda²⁴⁹ because it allows unilateral amendment of an already effective contract to the benefit of one party, consequently opening the door to a threatening to the stability of transactions. Therefore, how can one justify the award of the right of withdrawal in adhesion contracts when it seemingly contradicts the classical principles of contract law?

It should be borne in mind that the principle of pacta sunt servanda is not an absolute principle within the KCC. The code states in Art. 196 that "contracts are the law between the parties. Neither is allowed to cancel or amend its rules unless permissible by agreement or law". This provision establishes a general rule that contracts must be observed by both parties and, at the same time, implies that the contract parties can include whatever lawful terms they desire, including terms that place limitations on the biding force of the agreement. The code even embodies this principle in the contract of sale and recognizes the buyer’s right to withdraw by mutual agreement if explicitly mentioned in the contract, such as in the sale upon trial or testing or sale by way of down payment.²⁵⁰ Additionally, exceptions to the binding force of the contract may be prescribed by legislation. Law No. 64/1999 concerning intellectual property rights grants the author of

246 Clarisse Girot, p. 71.  

247 Christian Twigg-Flesner and Reiner Schulze, p. 145.

248 Ibid., p. 146.

249 Marco Loos, p. 241; Omar Abdulbaqi, p. 764.

250 Art. 458 and Art. 74 KCC respectively.

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of adhesion contracts

laterally to redress the contractual imbalance and maximize the fairness of the contr

s duties and takes all necessary steps to render the consumer’s consent informed.²⁵²

.3.4.3 The principle of transparency

literary works, subject to court approval, the right to withdraw his work from circulation.²⁵¹ Therefore, in principle, the right of withdrawal is not alien to the Kuwaiti contract law and its implementation can be easily justified in the context

.

The right of withdrawal can also be justified, in my opinion, on the basis of the principle of freedom of contract. This principle implies that contractual obligations rely on the consent of the parties and that the agreement should be the result of mutual understanding and meets the expectations of each party. Thus, if the professional abuses his right to contract to obtain an excessive advantage over the consumer which results in gross imbalance between the two parties, then such behaviour should be sanctioned by reversing the positions of the parties and granting the weak party the right to cancel the agreement uni

act.

However, preconditions and restrictions on the exercise of this right should be introduced alongside its recognition. A balance should be struck between the interests of the consumer and the professional to prevent its abuse by consumers, especially when the professional does not breach hi

2  

A further deficiency in the theory of adhesion contracts under the KCC is that it does not aim to control the form of the contract. The code lacks explicit rules about contract drafting and leaves it up to the professional to determine the content and form of the contract document. Not only can the professional obscure the meaning of the terms in his favour by

251 Art. 35.  

252 Abuse can be prevented by placing limitations on this right, such as restrict the exercise of the right to withdraw to a specific timeframe and allow exceptions for particular goods.

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drawal to protect the consent of the adhering

duty in t

terms. If the agreement contains clauses that diminish the rights or increase the obligations        

using sophisticated language, but he can also shrink the print size of the terms to discourage consumers from reading the document. The protection measures provided in the code in this regard are futile because they do not address the formal aspect of the contract document. What is needed is to strengthen the position of the consumer prior to the conclusion of the contract by obliging the professional to make the terms more accessible to the adhering party. Therefore, another preventative measure should be introduced to reinforce the duty of information and the right of with

party prior to the conclusion of the contract.

This can be attained through the adoption of the principle of transparency.²⁵³ It simply means that contracts should be drafted and communicated in plain and intelligible language. The objective of this requirement is to allow the ordinary member of the public to determine the legal and economic significance of the term, and enable him to assess their implications without legal advice. On the other hand, it seeks to deter abuse of language and style of the contract by the professional, and oblige him to give the adhering party the opportunity to examine the terms. There is a pressing need to establish such a he Kuwaiti contract law and deem its violation as an illegitimate business practice.

The requirement of transparency prescribes that the professional observes two duties that complement each other. First, the terms must be "plainly" drafted in a comprehensible format to avoid any ambiguity or complexity as to their meaning. That is to say that the professional should avoid the use of technical legal terminology and make the significance of the terms precise, complete and straightforward. Second, the layout of the contract in terms of presentation and structure should make the text "intelligible" so that the consumer can easily follow it. The size of the print in the document, and the quality and colour of the paper should contribute towards facilitating the legibility of the

253 The principle of transparency is an important measure to control unfair terms. It is embodied in Art. 5 of   the Directive, well as Regulation 7(1) of the UTCCR.

85        

of the consumer, then these clauses must be brought to his attention and printed in a distinct colour to highlight their significance.

The imposition of the requirement of transparency would not be fruitful unless its breach is tied to a sanction. Although the code adopts the contra proferentem rule in Art.

82 and mandates that doubt as to the meaning of the terms should be construed in favour of the adhering party, it remains a weak weapon and does not suffice to discourage the abuse of language and style in contract formation. Many terms may have one possible meaning yet are drafted in neither plain nor intelligible language for ordinary individuals. Therefore, the breach of this requirement should be explicitly prohibited and sanctioned.

A look at comparative law provides a learning experience that could be beneficial in presenting recommendations for reform of the Kuwaiti law. In Germany the courts have developed a tendency to declare contractual terms ineffective on the mere grounds that they lack transparency.²⁵⁴ In one of the cases the Bundesgerichtshof (hereinafter BGH) (the Federal Supreme Court) held that terms can be unfair because of their lack of transparency, regardless of whether or not they were unfair in substance.²⁵⁵ In the UK, under the Unfair Contract Terms Act, 1977 (hereinafter UCTA), one of the factors the court can take into account when assessing whether a term is reasonable is the intelligibility of the text. Thus, terms could fail to satisfy the test of reasonableness and be regarded as unfair if unintelligible.²⁵⁶ This view has been reinforced by case law.²⁵⁷ In addition to UCTA and case law, Regulation 6(2) of the UTCCR provides that the core

254 Christian Armbrüster, ‘Standard Contract Terms and Information Rules’ in Hugh Collins (ed), Standard   Contract Terms in Europe: A Basis for and a Challenge to European Contract Law (Kluwer Law International 2008), p. 167.

255 BGH 17 January 1989, NJW 1989, 582. See also Paolisa Nebbia, pp. 138–139.

256 Schedule 2 of the UCTA supplies the court with a number of guidelines that the court can take into consideration. Guideline (c) provides: "whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties".

257 See, for instance, Stag Line Ltd v Tyne Ship Repair Group Ltd [1984] 2 Lloyd’s Rep 211; George Mitchell Ltd v Finney Lock Seeds Ltd [1983] QB 284, 314. In Stag Staughton J commented: "I would have been tempted to hold that all the conditions are unfair and unreasonable for two reasons: first, they are in such small print that one can barely read them; secondly, the draughtsmanship is so convoluted and prolix that one almost needs an LLB to understand them. However, neither of those arguments was advanced before me, so I say no more about them".

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which the term is transpare

t. The most appropriate sanction would be declaring

terms (i.e., the definition of the subject matter of the contract, or to the adequacy of the price or remuneration, as against the goods or services supplied) would lose their exemption and be subjected to judicial review for fairness if they are not in plain and intelligible language.²⁵⁸ In recent years the Law Commission recommended in its report that it should be possible for a contract term to be found to be unfair principally or solely because it is not transparent.²⁵⁹ The commission produced a Draft Unfair Contract Terms Bill, which was published in its report, and proposed that in determining whether a term is

"fair and reasonable" it should be assessed according to the extent to nt.²⁶⁰

Kuwaiti law should take these legislative solutions into consideration and expressly prohibit the use of complex language in consumer contracts by introducing a general duty of transparency and attach specific sanction to its breach to deter professionals from abusing their right to contrac

non-transparent terms ineffective.²⁶¹

In conclusion, the existing regime for the control of unfair terms as outlined in the KCC will remain inefficient and deficient as long as it seeks to remedy the adhering party’s economic weakness and continue to disregard his knowledge weakness. The absence of ex ante protection measures contributed to the failure of the present control regime as it merely seeks to regulate substantive unfairness. Any future reform of the

258 The House of Lords in Director General of Fair Trading v First National Bank [2002] 1 All ER 97 in the   context of its discussion of the regulations and the principle of good faith highlighted the importance of the proper use of language and style in contract drafting. Lord Bingham said at para 17: "Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps.

Appropriate prominence should be given to terms which might operate disadvantageously to the customer".

259 Law Commission and Scottish Law Commission, Unfair Terms in Contracts (Law Com No 292 Cm 6464, Scot Law Com No 199), 2005 , para 3:102.

260 Ibid. at Annex A, Clause 14(1).

261 Administrative bodies can direct professionals to use or avoid certain terminology to make agreements more accessible to ordinary consumers. The Office of Fair Trading in the UK, for instance, issued guidance on unfair terms in consumer contracts and warned that reference to technical vocabulary, such as indemnity and statutory rights, should always be avoided because they would have onerous implications of which consumers are likely to be unaware. See section IV of the Unfair Terms Guidance: Guidance for the Unfair Terms in Consumer Contracts Regulations 1999, OFT 311, OFT, September 2008.

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ontrol system of unfair terms in Kuwait should combine both procedural and substantive

.4 Adhesion contracts as interpreted by the courts: A conceptual problem

ing party to

ulated in the above articles

        c

elements in order to restore contract equilibrium.

2

2.4.1 The dichotomy between the rule of law and its application  

The regulatory framework for protection against unfair contract terms in the KCC is defined in the context of adhesion contracts in articles 80–82.²⁶² The adopted approach for the control system is rather simple and straightforward. The code requires the satisfaction of two conditions in a contract to be regarded as an adhesion contract and, hence, qualify for protection against unfair terms: (i) the contract must be pre-drafted by the offeror, and (ii) the adhering party is prevented from negotiating the terms. In order for the adher

be protected against unfair terms, he must expressly request judicial intervention, otherwise the court is proscribed from reviewing the unfair terms of its own accord.²⁶³

Although these articles can, to a limited extent, provide consumers with protection against unfair terms, the restrictive interpretation of the concept of adhesion contracts by the courts and jurists succeeded in narrowing their scope considerably to encompass a few contracts only. They prescribe additional features in order to consider a contract an adhesion contract, namely the offer must relate to goods or services of an essential need, the offeror is a monopoly whether in fact or law, the monopoly makes its offer on general terms. However, when the concept of adhesion contract as artic

262 Art. 80 KCC provides: "It does not preclude the existence of the contract if acceptance comes in the form   of adherence of one party to the will of another by the delivery to a pre-drafted and non-negotiable model agreement prepared by the offeror". Art. 81 KCC provides: "If the contract is concluded by way of adhesion and includes unfair terms, the court may, at the request of the adhering party and in accordance with the rules of equity, amend the terms to alleviate unfairness or relieve the adhering party from their application even if he is aware of their existence. Any agreement to the contrary of this provision shall be deemed null. Art. 82 KCC provides: "In adhesion contracts, doubt shall always be construed in favour of the adhering party".

263 It is noteworthy that even if the adhering party makes such a request, the court jurisdiction remains discretionary and, therefore, depending on its understanding, the court may refuse to amend the contract in favour of the adhering party; see Art. 81 KCC.

88

is contra

fair terms from the prevailing theory of adhes

ab jurisprudence that supports a more relaxed theory of adhesion contracts that accommodates consumer contracts and an explanation why the researcher is in favour

l-established fact in courts’ decisions and in the n sted with the judicial and jurisprudential theory of adhesion contracts, there is a noticeable division between the rule of law and its application.

The researcher believes that the judicial and the jurisprudential approach towards the concept of adhesion contract is not only incorrect and contrary to the spirit of the code, but also outdated, impractical and deprives weak parties from the protection they deserve.

If the present regime for the protection against unfair terms is to be corrected, then the first step should be to disassociate the protection against un

ion contracts and attempt to reconceptualize the theory to address the weakness of the adhering party regardless of the type of contract.

In the following pages an attempt is made to sketch out the judicial and jurisprudential theory of adhesion contracts (hereinafter ‘the traditional theory’) and to discuss why the researcher believes it is erroneous. This is followed by an outline of the new trend in Ar

of its adoption.

2.4.2 The traditional theory of adhesion contract  

The failure of the protection regime against unfair terms in the Kuwaiti law can largely be ascribed to the meaning the courts and jurists gave to adhesion contracts, which narrowed the application of the theory. It is a wel

writings of legal scholars²⁶⁴ that in order for a contract to be regarded as an adhesio contract, three characteristics must exist:

264 In scholastic writings, see Abd-Alrazzaq Al-Sanhuri, pp. 294–295; Solaiman Murkus, p. 183; Al-Sayed Omran, The Protection of the Consumer during the Formation of the Contract (Alexandria, Monshat Al-Maaref 1986) (in Arabic), p. 27; Abdulmonem Faraj Assada, p. 77; Said Abdussalam, Contractual Balance in Adhesion Contracts (Cairo, Dar Alnahdha Alarabia 1998) (in Arabic), p. 37, Abdulrasol Abudlredha and Jamal Al-Nakkas, p. 78; Ibrahim Abu Allail, p. 179. Examples of judicial cases are Com App No. 770/94,

264 In scholastic writings, see Abd-Alrazzaq Al-Sanhuri, pp. 294–295; Solaiman Murkus, p. 183; Al-Sayed Omran, The Protection of the Consumer during the Formation of the Contract (Alexandria, Monshat Al-Maaref 1986) (in Arabic), p. 27; Abdulmonem Faraj Assada, p. 77; Said Abdussalam, Contractual Balance in Adhesion Contracts (Cairo, Dar Alnahdha Alarabia 1998) (in Arabic), p. 37, Abdulrasol Abudlredha and Jamal Al-Nakkas, p. 78; Ibrahim Abu Allail, p. 179. Examples of judicial cases are Com App No. 770/94,