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Question Title: Unfair term in my tenancy agreement?
| Question: 392 |
| The tenancy agreement that I currently use contains a clause which states that "provided that where the tenant failed to keep an appointment with workmen at the property then the tenant is required to pay costs, at a minimum of £50.00 plus VAT, of an additional appointment". I have just sent an account to a tenant based on this clause and he has sent it back with a letter saying that he has been advised that this is unfair and that I cannot do this. Is this correct? He agreed to this provision when he signed the tenancy agreement?
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| Answer: |
| This type of clause which provides for a "fixed price" penalty has not normally been enforceable. A penalty is a sum specified in a contact as payable on its breach but not constituting a genuine estimate of the likely loss. Penalties, even if agreed under a contract, are not generally enforceable under the law of contract. The terms 'penalty clause' and 'liquidated damages' are often used interchangeably. However, liquidated damages must be a genuine pre-estimate of loss, not a penalty inserted to 'punish' the other party for not carrying out his part of the contract. Since the introduction of the Office of Fair Trading's Guidance on Unfair Contract Terms in Tenancy Agreements in 2001 such a term is considered as "unfair" and therefore unenforceable in a court. Reference can be made to the tenant covering the reasonable call out charges of the workmen, but fixed price penalty amounts in tenancy agreements should be avoided.
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References:
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Pages:
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Hyperlinks:
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Letting Factsheet No 10 |
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factsheet-10
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Letting Factsheet No 10b |
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factsheet-10
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For more information, discuss on the Forum
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Pre-Tenancy