What are unfair terms in contracts?

What are unfair terms in contracts?

Occasionally, the law regards standard terms and conditions – that a trader applies to all customers – as unfair.

This guide will help you to identify an unfair contract term, since you are not legally bound by it.

What is an unfair contract term?

The law governing unfair contract terms is the Unfair Terms in Consumer Contracts Regulations 1999.

Typically, standard contract terms are unfair when they:

  • put a trader at an unfair advantage over you; or
  • detract from your legal rights altogether.

Here are a number of common examples of contract terms that may be considered unfair:

  1. a term that is very hard to understand, possibly because of the language used or the small print size
  2. a term that attempts to prevent you from exercising your legal rights, for instance, your right to a refund for faulty goods
  3. a term that seeks to prevent you from bringing legal action against a trader.

When is a contract term not unfair?

A contract term cannot be unfair if:

  • you individually negotiated it with the trader
  • the contract is between you and a private individual (rather than a trader)

there is a legal requirement to include it in a contract – for instance, European Union (EU) legislation might deem it necessary for a trader to provide information in your travel agreement about the right to compensation from an airline for lost property. In this instance, the trader must state the law clearly and accurately otherwise you would still be in a position to argue that it is unfair.

What is the legal effect of an unfair contract term?

An unfair contract term will not normally invalidate the rest of your contract unless it ceases to be functional without that term.

The trader cannot use an unfair term against you. For example, if a term states that a trader is not liable for faulty goods, the trader cannot assert this term as a defence if you bring a legal action against them for selling you defective goods.

What remedies are available if you think a contract term is unfair?

If you consider a contract term unfair, your first port of call should be to complain directly to the trader.

If the trader is not in agreement with you, you can seek independent legal advice from the Citizens Advice consumer helpline before breaking the terms of your contract. For information or advice, the telephone number to call is 03454 04 05 06.

In appropriate circumstances, Citizens Advice can report the trader to Trading Standards and other enforcement bodies.

As a matter of last resort, you can take legal action against the trader, leaving it to the court to determine whether or not a particular term is unfair.

If a court rules that a contract term is unfair, you have the choice of ignoring the term or cancelling your contract with no cancellation fee being payable.

If you enter into a contract with a trader operating in the EU, your rights in relation to unfair contract terms will be similar to those you have with a trader in the UK.

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