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Student contracts and Covid: recent CMA and OfS guidance

Posted: 12/01/2022

The Competition and Markets Authority (CMA) has reiterated that contractual terms allowing a higher education (HE) provider to cancel or withdraw an offer, or change entry requirements, will likely be ‘unfair’ under consumer protection law. 

The pandemic years of 2020 and 2021 have been riven with uncertainties for all of us. So many plans have had to be redrawn, delayed, or cancelled. It has been particularly hard, of course, for school leavers planning the next phase of their education without knowing whether exams would go ahead, and what this might mean for university admissions. During these anxious times, certainty over the results needed to secure a place has been all the more important.

It has also been a particularly difficult time for HE providers that have been faced with the problem of the number of students meeting the requirements of their offers far exceeding the number of available places. In any year there is a certain amount of risk for universities in calibrating offer requirements in view of available places, but the pandemic has thrown the usual assumptions into disarray. In light of this, some institutions have been tempted to introduce clauses into the terms of their offers, allowing withdrawal of an offer should too many students meet entry requirements for the available places. Thus, prospective undergraduates might fail to gain entry to the university of their choice despite having delivered on the required grades.

Set against this background, the Department for Education, via Michelle Donelan, Minister of State for Higher and Further Education, issued a letter to vice-chancellors in England on 24 November about admissions policies and contract terms. She expressed disappointment  in those institutions that sought to address the problem of oversubscription by incorporating conditions allowing for cancellation, delay or withdrawal into the terms of their offer.

In parallel, the CMA has published a restatement of its guidance for the sector (first issued in 2015) on the application of consumer law to the student contract. Once an HE provider makes an offer of a place and that offer is accepted, the usual contract law principles of ‘offer and acceptance’ apply, and a binding contract will have been formed. Since students are consumers under consumer protection legislation, it is incumbent on universities to ensure that contract terms with students are ‘fair’ to them. The CMA has restated its view that “a term may be open to challenge if it could be used to cause consumer detriment even if it is not at present being used so as to produce that outcome in practice.” Unfair terms will be unenforceable against students. It follows that terms that give an HE provider wide discretion to cancel or withdraw an accepted offer are likely to be unfair and unenforceable. 

Similarly, the CMA has restated its view that terms that seek to limit or exclude an HE provider’s liability if it cannot provide an agreed place are likely to be unfair under consumer protection legislation. It highlighted that the impact upon students of cancellation or withdrawal of an accepted offer could be far-reaching, leaving the students with an uncertain future. The risk of oversupply of students is one that universities will need to manage as far as possible, but not by reference to the terms of the student contract.

The Office for Students (OfS) has added its voice to the clamour by issuing a statement that use of oversubscription cancellation clauses in student contracts may constitute a breach of the condition of registration C1, that requires HE providers to have regard for consumer protection law. The OfS may investigate if a university is found to have overstepped the mark in its contract terms.

The CMA’s recent restatement of views is not its first. In 2020, the CMA restated its belief in the need for HE providers to ensure that pre-contract information, as defined in the consumer protection legislation, is provided to students before they accept an offer. This pre-contract information is then binding on the HE provider if the offer is accepted. Unilaterally moving the goal posts and materially changing the terms of the contract after the student has accepted an offer would likely be unfair. The guidance provides for some exceptions to this; for instance, where the HE provider has clearly specified in plain intelligible language what (narrow) changes are anticipated, the justification for those changes, and where students are entitled to terminate without penalty if they are adversely affected by the change.

It is tempting for HE providers to include standard commercial protections in student contract terms, such as ‘force majeure’ and limitation of liability clauses, but universities must be mindful of the protections granted to students as consumers. These types of terms are unlikely to stand up in the context of student contracts.

If you would like to discuss your student terms & conditions, please get in touch with your usual Penningtons Manches Cooper contact or Susie Hilton Knox or Anna Frankum. We are on hand to provide specialist advice to the education sector.

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