Contract clauses and consumer protection

Law no. 52 of 1996 introduced into the Italian legal system certain rules to protect consumers in their contractual relationships with professionals.

The “Consumer Code” contains a fundamental reworking of most of the regulations in force for the protection of consumers.

In Italy there have been numerous interventions for the readjustment of contracts made by both court rulings and the effect of the initiatives of consumer associations.

There are a number of clauses which raise suspicion of abuse, such as those that establish:

1. that in the event of a dispute, the court having exclusive jurisdiction is that of the bank’s location and not of the residence of the consumer;
2. that bank statements are always full proof against the borrower;
3. that the borrower does not have the right to request discharge of the mortgage after the loan has been repaid in full;
4. an absolute prohibition on passing on the debt arising from the loan;
5. significant limitations to the use of the property granted as security;
6. prohibition on sale of the property;
7. exceptions to the rules on commonly held property;
8. the right of the bank to terminate the contract for non-compliance with obligations that are too generic, or unimportant, or not worthy of protection;
9. transfer to the borrower of the bank’s direct tax charges.

Other apparently unfair clauses are those that purport to allow the bank, unilaterally and without just cause, to change the economic conditions of the contract, including the interest rate. The law expressly excludes the very legitimacy of a unilateral change in conditions where there is no justifiable reason and unless there has been prior notification in writing.

Loan terms, therefore, normally include a closing form of words making an exception for the mandatory provisions of the Consumer Code and therefore any clauses in the contract or its annexes which can be held to conflict with those provisions are null and void.