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Ministry of Industries and Innovation

Merchants and Trade - Act No 14/1995 on the Amentment of Act No 7/1936 on Making of Contracts, Agency and Void Undertakings, with Later Amendments.

Act on the Amentment of Act No 7/1936 on Making of Contracts, Agency and Void Undertakings with Later Amendments, No 14/1995.
 
 
Article 1

Behind the words "to stick to it," at the end of subparagraph 1 of paragraph 1 of Art. 36 of the Act, shall be added: cf. though Art. 36 c.

Article 2

Following Art. 36 of the Act, there shall be four new Articles, first Art. 36 a which louds as follows:
Subject to Art. 36 d the provisions of Arts 36 a-d applied to contracts, including contractual terms, which have not been individually negotiated provided that the contracts are part of the activities of one party, the employer, but in the main not part of the activities of the other party, the consumer. The provisions apply also to contracts between consumers where an employer acts on behalf of one of the parties.
The employer has burden of proof that a contract has been individually negotiated and does not fall under paragraph 1.

Article 3

Art. 36 b of the Act louds as follows:
A written contract offered by the employer to the consumer must be in plain, intelligible language. Where there is doubt about the meaning of a contract, referred to in paragraph 1 of Art. 36 a, an interpretation favourable to the consumer shall prevail.

Article 4

Art. 36 c louds as follows:
Subject to the amendments in paragraphs 2 and 3 the provisions of Art. 36 shall apply to contracts under paragraph 1 of Art. 36 a.
When assessing wether a contract under paragraph 1 is unfair regard shall be had to factors and events referred to in paragraph 2 of Art. 36, including terms in another contract to which it is related. However, events which arise later shall not be taken into account to the detriment of the consumer.
A contract shall be regarded as unfair if, contrary to the requirement of good faith, it causes significant imbalance in the contracting parties' rights and obligations. If such a term is set aside wholly or partly, or changed, the contract shall, upon the consumers demand, continue to be binding in other respects without amendments if it is capable of continuing in existence without the term.

Article 5

Art. 36 d of the Act louds as follows:
If a contractual provision has a close connection with the territory of the States Parties to the Agreement of the European Economic Area, in such a way that the contract is for instance concluded there or some of the parties to the contract live there, and the contractual provision provides that the law of a country outside the European Economic Area shall apply to the contract such a provision shall not apply to unfair contractual terms if the consumer thereby gets less protection against such terms than under the appropriate law of a country in the Economic Area.

Article 6

The present Act, enacted on the basis on the Directive 93/13/ECE, enters into force forthwith.
The provisions of Art. 36 b of the Act shall not apply to contracts which are concluded before the entry into force of the Act.

Done in Reykjavík on March 6, 1995.

Vigdís Finnbogadóttir.
Sighvatur Björgvinsson

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