Unfair Contracts
You’re legally responsible for certain situations that happen when people buy your product or service. Your standard sales contracts must be ‘fair’ in the eyes of the law or you won’t be able to enforce them.
Unfair consumer contracts
Your standard contract would be unfair if you try to not take responsibility for:
- death
- injury
- faulty goods
- goods that aren’t as described
- selling goods that aren’t yours to sell
Your contract might be unfair if you try to not take responsibility in other ways, for example:
- delays
- unsatisfactory services
- not doing what was agreed
Unfair business contracts
Your standard contract would be unfair if you try to not take responsibility for:
- death or injury - under any circumstances
- losses caused by negligence – unless to do so is ‘reasonable’
- defective or poor quality goods – unless to do so is ‘reasonable’
What is reasonable?
Courts will take into account:
- the information available to both parties when the contract was drawn up
- if the contract was negotiated or in standard form
- if the buyer had the bargaining power to negotiate better terms
Unfair terms in standard consumer contracts
The Unfair Terms in Consumer Contracts Regulations provide additional protection for consumers only. ‘Unfair terms’ in consumer contracts can’t be enforced and may be illegal to use. This doesn’t apply to contracts with other businesses.
An unfair term is one that weighs the contract in your favour, for example:
- excessive cancellation charges and loss of upfront payments
- unbalanced rights – for example, being able to change a contract within 24 hours’ notice, but demanding the customer gives 6 months’ notice
- being able to change the price at a later date from the one agreed
If a consumer believes your contract contains an unfair term they can complain to the Office of Fair Trading (OFT) or to one of several consumer-related organisations that can act against unfair consumer contracts. Such a complaint may lead to court action.
Source: www.gov.uk