The Student Contract: “CMA” Implications of Variation

• United Kingdom

• Education - Briefings

13-06-2017

Welcome to the seventh in our series of fortnightly Student Contract: ''CMA'' Implications ebriefs for universities, colleges and private providers. These ebriefs highlight aspects of the application of consumer law to the student contract which pose challenges for the tertiary education sector.

This time we focus on the implications of an institution seeking to vary the contractual promises it has made to students.

Terms which allow an institution to vary something, such as programme content or location or fees, may be considered unfair when assessed by reference to the “fairness” test set out in the Consumer Rights Act 2015 (CRA).

A term will be unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the rights and obligations of the institution and student to the detriment of the student. An unfair term will be legally unenforceable against a student.

The more discretion the institution has to vary the terms of the student contract, the greater the risk of that term being deemed to be “unfair”.

Getting a variation clause “right” can be a challenge. In its publication of the findings of its sector review on 22 July 2016, the Competition and Markets Authority made some specific comments about how institutions should look to present variation provisions (you can view the findings by following this link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/540253/higher-education-compliance-review-open-letter-to-providers.pdf).

A variation clause is more likely to be enforceable if:

• it is narrow in its scope and effect;

• it sets out valid reasons for why changes might be necessary, and students are able to foresee when and what changes might be made;

• it sets out how the institution will deal with any changes that become necessary (for example, it will provide adequate notice of proposed changes to students and take all reasonable steps to minimise disruption to students);

• the term is set out in plain and intelligible language so students can understand and foresee its potential impact on them, and it is actively drawn to the student’s attention up front (i.e. prior to the student entering into the contract);

• the institution informs students about any proposed changes in good time before they become effective (although providing notice of changes will not alleviate the unfairness of a term that is not substantively fair); and

• the student is able to terminate their obligations where they are adversely affected by the change (although this may not be a perfect solution, particularly where the student may find themselves facing the prospect of finding an alternative institution having already undertaken a significant part of the original programme of study)

It is helpful to consider rights of variation in the context of two main “buckets” - minor changes and major changes - and to align these to a clear set of “reasons” for looking to make these changes. It is important also to consider the different aspects of the contract that may change. For example, would the institution anticipate service changes also capturing changes to pastoral and support services?

In essence, it is important that students are given clear information at the outset as to how their studies and support services may change over the term of the course and how the institution will deal with any changes, as this will form an important part of the students’ decision in choosing their preferred provider.

Next time - The Student Contract: “CMA” Implications of Withdrawal or Cancellation of Programmes

Eversheds Sutherland has a wealth of experience advising on student contract / “CMA”-related issues in the HE and FE sectors. If you would like to discuss how Eversheds Sutherland may assist you in managing any of the issues addressed above (or any other student contract/consumer related issues) please contact Siân Jones-Davies or Eve England.