Unfair Contracts

If you are an individual dealing with a company / business and you enter into a contract and that contract is unfair you may not have to keep to what you have agreed.

Often contracts have "standard terms", this means a company or business uses the same contract for all it's customers or clients. These standard terms must be fair.

You may sign a standard contract for example when you book a holiday or buy goods. Often the contract is printed on the receipt, booking or application form. Such contracts are often called "the small print".

The law says that the terms of the contract must be written in plain language that is easy to understand. However, there are some standard terms which you might not be able to challenge.

For example, standard terms explaining the contract, setting the price, or terms which by law have to be included in the contract.

In deciding if a contract is unfair the court has to look at whether it is unfairly weighted against you, whether there was unequal bargaining strength and whether the company / business behaved properly in getting you to agree to the terms of the contract.

If part of a contract is found to be unfair the court will not allow the company / business to enforce that part of the contract. The law also says that if a company or business tries to exclude liability or responsibility under the contract this may be unfair and in some cases could make the whole contract "null and void". This means the contract is treated as if it never existed. (Examples of this is an attempt to exclude liability for death or injury or limiting or excluding the legal rights of consumers.)

Under the Unfair Terms in Consumer Contracts Regulations a department of the Office of Fair Trading (OFT) known as the Unfair Contract Terms Unit deals with unfair terms in consumer contracts.

Members of the public can notify the OFT if they consider a contract term to be unfair. The OFT can try and negotiate changes to the contract if it is unfair. Or take out a court injunction to stop the contract term being used in the future.

Examples of the types of contract terms the OFT will consider to be unfair include:

1. Exclusion of liability for death or personal injury.

2. No liability by the company / business for breaches of contract.

3. Excluding liability for poor work or work & materials.

4. Restricting the level and type of liability.

5. Unreasonable time limits on notification of claims.

6. Binding you to the contract when the company / business is at fault.

7. Assignment clauses.

8. Restricting your rights and remedies.

9. Excluding your right to set off claims you have against the company / business against any claims they make against you.

10. Excluding liability for delay.

11. Contracts which allow the company / business not to perform obligations at all.

12. Binding you to the contract while allowing the company / business to offer no service at all.

13. Allowing retention of prepayments when you are not at fault.

14. Penalties.

15. Unequal cancellation rights.

16. Making termination subject to unreasonable conditions.

17. Allowing termination of the contract without notice.

18. Binding you to hidden terms or variation clauses.

19. Allowing changes in what is supplied, or price variation without notification to you.

20. Allowing the company / business to impose undue financial burdens.

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