Consumer Rights Act
The Unfair Terms in Consumer Contracts Regulations 1999 (the "Regulations") were replaced by the Consumer Rights Act on 1 October 2015.
For guidance in relation to contracts entered into on or after 1 October 2015, please see our page on the Consumer Rights Act.
This page provides guidance in respect of historic contracts which were entered into on or before 30 September 2015, which will still be governed by the Regulations.
When is a contract term unfair?
A term of a contract entered into prior to October 2015 can be deemed unfair if it creates a 'significant imbalance' in the trader and consumer’s positions, to the detriment of the consumer.
For example, a term that allows the trader to fundamentally change the goods or services to be supplied under the contract, and at the same time gives the consumer no way out of the contract if they're not happy with the changes, would be considered unfair under the Regulations.
The Regulations also required contract terms to be in plain and intelligible language. If a court is assessing a contract entered into on or before 30 September 2015, and the terms are not plain and intelligible, the court will interpret them in a way which is most favourable to the consumer.
Consumers have the right to complain about unfair contract terms.
Examples of unfair contact terms
The list of terms that are likely to be unfair includes the following examples:
- terms that allow the trader to unilaterally change the characteristics of the goods or services without good reason
- terms that allow the trader to keep an unreasonable amount of money as compensation if the consumer doesn’t keep to their side of the bargain
- terms that aim to take away the consumer’s legal rights
What is the effect of a term being unfair?
If a contract entered into prior to October 2015 contains an unfair term, that term will not be binding on the consumer. The overall contract will continue to be valid (as long as it continues to make sense), but the unfair term will be struck out.
Which terms can’t be challenged?
Some contact terms can’t be challenged under the Regulations, in particular terms that set out what you are buying and how much it will cost.
So if you entered into a contract prior to October 2015, you can’t argue a term setting out how much you will pay for goods or services is unfair just because you could have got the same thing cheaper elsewhere.
If you want to challenge unfair contract terms, this letter template can help.