Tag: Office of Fair Trading

Unfair contract terms in the Consumer Rights Act

In a recent post we outlined the changes that took effect in sales and services legislation with the passing of the Consumer Rights Act [2015]. We are going to examine unfair terms in this post and your rights.

When you enter into a contract; as a buyer, seller or for a service; both parties must follow the terms set out in that contract. Probably the best way to ensure you do not have unfair terms is to take the time to read and terms & conditions of a contract you are going to enter into, to avoid problems later. However there is statutory protection against unfair terms.

 What are your rights to challenge unfair terms

Generally companies are free to use whatever contractual terms and conditions they consider to be reasonable, provided they are not in themselves unfair or contradict statutory law and provisions.  As a result of this being a new item of legislation the existing rules operate alongside the rules for a time. In effect until all new contracts were entered into under the Consumer Rights Act [2015]. The rules in relation to which legislation covers your contract are as follows:

  • For contracts entered into after 1st October 2015, these are governed by the Consumer Rights Act [2015]
  • For contracts entered into before 1st October 2015, these are governed by the Unfair Terms in Consumer Contracts Regulations (1999).

While these are two different pieces of United Kingdom legislation in effect over the same or similar issues and where one supersedes the other. Both are premised by a clear legal view that you are not bound by a standard term in a contract, with a seller or supplier if that term is judged to be unfair.

As a consumer, if you think a standard contact term is unfair to local authority trading standards department or to the Competition and Markets Authority (CMA) which replaced the Office of Fair Trading (OFT) as the regulator in April 2014.The CMA is empowered to investigate and ultimately can force a company to change its terms.

As an individual or corporate entity you also have the right to challenge a contract term if you think it’s unfair. However in this instance only the courts can rule whether a term is fair or unfair.

 Terms you can challenge

The Consumer Rights Act [2015] allows you the statutory right to challenge hidden fees and charges as the basis of the legislation is that key terms of a contract, including price, may be assessed for fairness unless they are both prominent and transparent.

This is a significant departure from the previous Unfair Terms in Consumer Contracts Regulations [1999] were these type of terms were exempt from a fairness test if they were written in plain language. Of course what is plain language is in itself a leading and ambiguous terms

Terms may be ruled as unfair where:

  • They are contrary to the requirements of good faith, meaning they must be designed, negotiated and entered into with the consumer in a fair and open way
  • They cause a significant imbalance between the rights of the retailer and consumer to the detriment of the consumer

Terms you can’t challenge

All of the contract terms (including core terms) must be in intelligible and plain language or they are open to challenge as unfair. However you could not make a challenge to terms for the following reason under either the old Regulations or the new Act:

  • By finding the same product elsewhere at a cheaper price than you have agreed to pay
  • Claim that a contract for an extended warranty is unfair because it offers less cover than an extended warranty you could have bought for a similar price
  • Challenge terms that you have negotiated directly with the seller as these would have been agreed between the parties in good faith. In effect you can only challenge standard terms and conditions that you believe to be unfair

Terms deemed to be unfair

Some of the most common unfair terms that are sneaked into standard terms and conditions and that can be challenged are the following:

 Unbalanced rights

Contract terms that confer greater rights to the seller / trader than to you as the consumer enjoy, such as where in an on-going contract the trader can change a term and condition of your contract with one-week notice, but you must give six months’ notice to terminate a contract.

 Excessive cancellation fees

These are terms that allow the trader to take too much of your money if you end a contract before it has run to its term. If you choose to end a contract using a clause in the terms and conditions that allow you to do this, the trader can claim for administration and marketing costs and for any work they had started and loss of profit. They cannot charge for punitive damages, such as paying up what you would have expended until the end of the natural life of the contract.

 Changing goods or services

A trader cannot have a term that allows them to change significantly what you are buying without giving you the chance to withdraw from the contract. For example, if you order timber frame windows for your house and want matching doors, the trader cannot decide to give you PVC doors and timber frame windows, without giving you the chance to cancel your order and get a refund.

Changing the price

The seller’s terms and conditions may state your order is accepted only when it starts fulfilling the order from its shelves and you’ll be charged the price of the goods at that time. However, a contract term that states you must pay a higher price if prices rise after you’ve ordered could be considered unfair.


Of course companies will try new ways to circumnavigate the legislation and these are only ever struck down when challenged, so while these are current terms that are able to be challenged, there may be others and we may revisit this subject again.

However the basic rule of thing would be to view against the criteria detailed above, particularly against being balanced, because these are the easiest terms to try and marginally skewer to have that unfair advantage.