October 19, 2011

Does Law protect fools ?

'La loi ne protège pas les imbéciles'1, a well known adage among the french legal community, does not seem to find an application in the decision of the Ofcom2 to ban the automatically renewable contracts in communications market. This type of contract includes a clause so that at the end of a minimum contract period, without proactive information from the consumer saying that he does not want this happen, another minimum contract period is automatically renewed.

In the case the contract is tacitly renewed, the consumer who forgot to inform his communication provider often has to pay a termination fee. Seen as a restriction for the consumer to switch his provider, these contracts will be forbidden on 31st December 2011. This decision of Ofcom is partly based on a directive of the EU3,which aims to modify the comsuption legislation within the member states, and especially on the 30th (6)article which declares :

"Without prejudice to any minimum contractual period, Member States shall ensure that conditions and procedures for contract termination do not act as a disincentive against changing service provider."

As we can see, the members states are given all liberties to regulate contract termination in the matter of electronic communications, so that the consumer would not find himself prisoner of a service provider through the contract. We can ask ourselves if it is really necessary to go as far as banning a so-called 'rollover contract' to protect the consumer. Within the EU, the communications providers are already forced to inform the client before the end of the minimum contract period to leave hime the time to cancel the contract. For instance, in France a provider cannot inform its consumer later than a month before the end of the period, and if he does, or does not even inform him, the consumer is allowed to denounce the contract without any penalty.

This obligation to inform is already a big restriction for the communication providers. The ban decided by Ofcom seems on one hand a step forward in favour of competition but on the other hand a protection of one's negligence.

In my opinion, consumption law in the EU and its member states is a really big issue, but which tends to expand itself as overprotective for the consumer, as far as protecting him against his own foolness, and to limit excessively a 'former' well-established legal principle in Europe, the freedom of contract. The decision of Ofcom constitutes one example of this tendency.

1 "Law does not protect fools"
2 Office of Communications ( United-Kingdom )
3 Directive 2009/136/EC of the European Parliament and of the Council amending Directive 2002/22/EC on universal service and users' rights relating to electronic communications networks and services

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