Unfair Terms in Contracts

Without adequate legal controls, there is a risk that the terms of contracts will be unfair to one of the parties.

This applies to both contracts between a business and a consumer and business-to-business contracts, and is particularly the case where the terms of the contract have been drawn up by one party in advance.

Although the other party may "agree" to the contract, he may not be aware of the term in question, or may not understand its implications.

Even if he does realise what the term means, he may find that the other party is unwilling to change its 'standard terms' just for him.

At present, this aspect of law is subject to two quite separate regulatory regimes: the Unfair Contract Terms Act 1977 (UCTA) deals with clauses which exclude or limit liability in consumer and business-to-business contracts; and the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR) deals with unfair terms of any type in consumer contracts.

These regimes differ in terms of scope of application, the use of concepts and terminology and their effects, resulting in complexity and inconsistency. This joint consultation document considers the feasibility of a single unified regime to replace the UCTA and the UTCCR; looks at extending the protection in the UTCCR to businesses, in particular small and medium sized businesses; and proposes some draft legislation which uses clearer language and has a more accessible structure.