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OFT overturns Foxton’s appeal over unlawful lettings contracts

The Office of Fair Trading has overturned an appeal from Foxtons and will go ahead with proceedings against what it deems are unfair clauses in its contracts.

The OFT commenced High Court proceedings against Foxtons in February 2008 seeking an injunction under the Unfair Terms in Consumer Contract Regulation which would prevent the estate agency using terms, considered by the OFT to be unfair, in its lettings agreements with landlords.

The OFT says Foxtons’ terms can potentially require landlords to pay Foxtons substantial sums in commission, where a tenant continues to occupy the landlord’s property after the initial fixed period of the tenancy has expired when Foxtons plays no part in persuading the tenant to stay, and no longer collects the rent or manages the property.

The OFT has also objected to Foxtons’ terms that require a landlord to pay these sums after they have sold the property. Foxtons contends that such terms with landlords are not unfair.

During the preliminary stages of these proceedings Foxtons argued that any injunction on unfair terms could only apply to future contracts, rather than preventing the use or enforcement of unfair terms in existing ones. The Judge ruled in favour of this.

But the Court of Appeal today overturned this ruling. The court stated that the UTCCRs aim to protect consumers, and was of the view that traders should not have the freedom to pursue existing customers without restriction, in correspondence or by litigation, in order to enforce contractual terms that have been found to be unfair.

The case will go before the High Court during the week commencing April 27.

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