Ireland’s Competition and Consumer Protection Commission (CCPC) published guidelines for contracts of care in nursing homes (Guidelines) in 2019. The Guidelines help nursing home operators in their compliance with the EC (Unfair Terms in Consumer Contracts) Regulations 1995 (Unfair Terms Regulations). The CCPC has recently refreshed their Guidelines, indicating that this is an area they are looking at. We consider some of the key issues from the Guidelines which nursing home providers should be mindful of when putting in place or updating contracts of care.
In addition to the Guidelines, nursing home operators should also be aware of other legislation which applies to contracts of care, like data protection law.
Plain intelligible language
The Guidelines advise that contracts of care should be drafted in plain and intelligible language to enable consumers to make an informed choice to enter into them. Legal jargon and ambiguity should be avoided, and sufficient information should be provided so that the consumer understands the meaning of the terms and the consequences of onerous terms.
Where a contract of care requires a guarantor, the guarantor will need to be fully informed of the extent of their obligations under the contract. In particular, the events which will result in the guarantor becoming financially responsible and the way by which any fees will be calculated must be clearly disclosed to the guarantor in the contract.
Exclusion/Limitation of liability
Care should be taken to ensure that any exclusions or limitations of the nursing home’s liability are not unfair. For example, the CCPC has advised that a nursing home operator cannot totally exclude liability for loss or damage to a resident’s possessions.
Sanctions for breach of contract
The Guidelines provide that residents should not be financially penalised for breaches of contract. The nursing home should only recover fees properly due and owing, and any financial sanction should be reflective of the loss incurred by the nursing home. This means that fixed penalty fees should be avoided. Interest on overdue fees should also be directly linked to the nursing home’s loss and should not be excessive or penal.
Unilateral termination rights without cause for the nursing home may be considered unfair. The reasons for termination should be specified in the contract. This could include, for example, when the nursing home is closing permanently or, due to a resident’s changing needs, the nursing home is no longer able to continue to provide care. Termination rights without a reasonable notice period also run the risk of being deemed unfair.
The CCPC considers that “entire agreement” clauses, which limit the obligations of the nursing home operator to those specified in the contract, are potentially unfair. The CCPC considers that promises or verbal statements made by the nursing home should form part of the contract. Care should be taken by nursing home operators to ensure that marketing brochures, and statements made by employees, do not go beyond what it will provide to the resident as part of the service.
We often come across contracts of care containing problematic clauses on termination, guarantors, entire agreement, and unilateral amendment rights. Given the CCPC’s recent refresher of the Guidelines, it is advisable for nursing home providers to review their standard terms to ensure their compliance with the Guidelines and consumer law more generally. Failure to do so may result in the relevant terms of your contract of care being unenforceable, as well as reputational risk.
The content of this article is provided for information purposes only and does not constitute legal or other advice.