I now find myself writing my first post which is linked to two topic areas on this website (Student Tips and Simply Law). This is important because it highlights how vast this issue this; it may well be effecting parents and guardians, students who were, or are, due to start courses soon, and perhaps even students researching courses to start next year. In summary of the issue being spoke about today, the are numerous universities in the U.K. which have added 'oversubscription clauses' into their contracts with prospective students. This means that even after accpeting a place and expecting to start at said university, they are able to withdraw that offer, sometimes only a few weeks before the course is due to start. These clauses have been added as a response to the recent increases in A-level students achieving their predicted grades, resulting in universities having offered more positions to students than the courses can accommodate. However, this has recently made its way to featuring heavily in the news, with many questioning the legality of such clauses.
Indeed, the Compeition And Markets Authority (CMA), the Office for Students (OfS), and Michelle Donelan, the Universities Minister, have all condemned the move, calling it 'disappointing' and 'concerning'. The OfS have even gone as far as to say the following:
"......Providers should not use such clauses, as doing so would probably contravene consumer law......A potential breach in consumer law may prompt the OfS to investigate and, if appropriate, carry out enforcement action". They added that cancelling already accepted offers is "inappropriate [and] likely to be unfair under ‘unfair terms’ legislation"
Despite what seems like a pretty open-and-shut case on the face of it, I felt it important to explain exactly what this means and precisely which pieces of legislation are being spoken about here. Much of the legislation being cited is within the Consumer Rights Act 2015 (which shall be referred to as the CRA from here on), with small sections of the Unfair Contract Terms Act 1977 (which, similarly, shall be called the UCTA) also being used. It is worth searching for a simple overview or summary of these Acts, as they are vitally important for protecting yourself day-to-day, with the law and your rights regarding sales, purchases, returns and warranties, liabilities and much more being outlined. I first turn to Part 2 of the CRA, where we find a whole section dedicated to 'Unfair Terms'. Here, a few sections stand out in respect to these oversubscription clauses. They are, namely;
A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer;
The court must consider whether the term is fair even if none of the parties to the proceedings has raised that issue or indicated that it intends to raise it.
The term is subject to the provisions of this Part that would apply to the term if it were in the main contract.
These key subsections tell us a few important details. Firstly, that a term is deemed unfair if it puts one party in a position of having a far superior catalog of rights available to them, which subsequently puts the other in a weak position with many obligations but limited rights. Secondly, that even in the event of neither party raising the issue, for whichever reason that may be, it is still the courts responsibility to exam the fairness of the term. Thirdly, that in the event of an unfair term appearing in a 'secondary contract' (this being a contract which outlines services being offered, but seperate to the main contract, for example the main contract agreeing that the student will be liable to pay for tuition and the university is lisble to teach the student, followed by a secondary contract which outlines exactly what is being taught and precisely what the student is agreeing to regarding the tuition, securing their place on the course etc.), the unfair term must be considered in the same way as if it were in the original contract - i.e. it is subject to the same scrutiny, rights, responsiblities as if it were a primary contract. I have selected these three points for a few reasons. The first is that students and parents often do not realise that the contract that the student/their child is making with the university is a two-way street, it is not something with which you are signing away your rights and agreeing to be held ransom in exchange for tuition and a degree certificate. Furthermore, often students in particular do not raise issues they find in contracts, either because they feel powerless or because they do not want the additional hassle during their studies. In cases like this, it is reassuring therefore to know that the court will take these clauses into a period of severe scrutiny. Moreover, in the event of not noticing these clauses exist, perhaps because they do not appear until you're signing subsequent contracts, you will still have the same rights, and the clauses the same tests to pass, as if it was the original contract you were signing.
There's more, happily, as this same section very kindly points us to a 'Schedule' which outlines unfair terms, but with a more specific context. I shall now list just a few of the applicable examples outlined in the legislation. It is important to note, however, that in the legislation the word 'Trader' means someone acting on behalf of the business, profession etc. or through someone else for that business, profession etc. It does NOT necessarily or exclusively mean someone who is a 'sole' trader, or someone who is otherwise working for themselves.
A term which has the object or effect of inappropriately excluding or limiting the legal rights of the consumer in relation to the trader or another party in the event of total or partial non-performance or inadequate performance by the trader of any of the contractual obligation
A term which has the object or effect of making an agreement binding on the consumer in a case where the provision of services by the trader is subject to a condition whose realisation depends on the trader’s will alone.
A term which has the object or effect of obliging the consumer to fulfil all of the consumer’s obligations where the trader does not perform the trader’s obligations.
A term which has the object or effect of excluding or hindering the consumer’s right to take legal action or exercise any other legal remedy
Very simply then, we can see that the OfS seems to be correct in saying that withdrawing offers already accepted by students looks to be illegal. For example, here we can see that it is an unfair term if the student is left with limited legal rights after the university doesn't perform it's agreed obligation to provide the course tuition, or if the university decides that it can't possibly allow the student on the course as it would require more resources than they were expecting to have to use, or if the result of the clause is that the student completes their obligations to pay the first fee's, sign the contracts and agree to be bound by them, to then find that the university hasn't performed their obligations and is saying they don't have to because of the clause allowing them to rescind their responsibility to that student.
To seal the deal, so to speak, we now turn to the UCTA 1977, which allows us to provide concrete proof of these clauses constituting unreasonable exemptions to the universities responsibilities [NOTE: Even though there's a fair chunk of text coming, please do read on as I shall simplify it afterwards].
"If a contract contains a term which would exclude or restrict—
(a)any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or
(b)any remedy available to another party to the contract by reason of such a misrepresentation,
that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977; and it is for those claiming that the term satisfies that requirement to show that it does.”."
"A person is not bound by any contract term prejudicing or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another’s liability which this Part of this Act prevents that other from excluding or restricting."
"To the extent that this Part of this Act prevents the exclusion or restriction of any liability it also prevents—
(a)making the liability or its enforcement subject to restrictive or onerous conditions;
(b)excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy;
(c)excluding or restricting rules of evidence or procedure;
and (to that extent) sections 2, 6 and 7 also prevent excluding or restricting liability by reference to terms and notices which exclude or restrict the relevant obligation or duty."
What this all means for students facing the possibility of having their agreed offers rescinded by the universities is rather simple, as I shall now bullet-point below.
If a term is said to be a misrepresentation (meaning that you were made to think you were getting a certain thing form the university, but in fact ended up getting something very different, or even non-existant in this case), then it must pass what is known as the reasonableness test AND it is up to the university to prove it is a reasonable clause
In the event that the clause appears in a secondary contract, if the clause takes away your rights to a remedy resulting from the non-performance by the university, you are not legally nound by it and can, in fact, pursue a remedy
If a university tries to make their peformance of the contract subject to unreasonable conditions, or attempts to prejudice/discriminate/victimise you because of your pursual of a remedy, this is unlawful and an unfair term of the contract
You may have noticed by now that I have referred on numerous occasions to 'the reasonableness test'. You are also probably wondering what this is. To succinctly explain it in a bite-sized morsel, there are a few steps to the test.
The term must have given regard to the knowledge and expectations which the parties had, or ought reasonably to have had, at the time the contract was formed
Thought must be given to the bargaining position of ech party when entering into the contract, taking into account factors such as how else the consumers/customers requirements could have been met
Did the consumer/student receive an inducement to enter into the contract and could they have entered into a contract with a different provider without the oversubscription clause?
Did the student know, or ought they have known, about the existence and scope of the clause in the contract?
if the term excludes or restricts liability in the event of non-compliance with a condition of the contract, was it reasonable at the time of the contracts formation to expect that compliance with said term would be practicable and reasonable?
As part of this test, it is for the trader/business (or university in this case) to prove each step in their favour, so that reasonableness can be established. If they are unable to, then the term is declared unreasonable by default, so to speak.
In my opening for this article, I explained that this issue is very important as it effects not only students, but their parents and guardians. I also highlighted the position taken by many organisations tasked with the regulation of universities, who thought that these clauses represent an inappropriate and unreasonable move by the universities, breaching numerous pieces of legislation along the way. Now that I have showed you what the law says on the matter, I would like to put the question to you. Do you think these clauses are unreasonable and a breach of law? Is there another way to ensure that courses are not overcrowded without rescinding agreements with students?