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Unfair Terms in Contracts

Unfair Terms in consumer contracts are regulated by the Unfair Contract Terms Act and The Unfair Contract Regulations.

The Unfair Contract Terms Act 1977 limits the use of exclusion clauses in contracts.

The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999 No 2083) provide that a term which has not been individually negotiated in a consumer contract is unfair (and hence non-binding on the consumer) if, contrary to the requirement of good faith, it causes a significant imbalance in the rights and obligations of the parties to the detriment of the consumer.

We have seperate pages for each of the above subjects. Please click on the links in the menu on the left.

In February 2005 the Law Commission and the Scottish Law Commission published a joint Report and draft bill on unfair terms in contracts. The Report recommended rewriting the existing law on unfair contract terms into a single, unified piece of legislation, which preserves the existing level of consumer protection. It also recommended improved protections for the smallest and most vulnerable of businesses (see link on the right to the Report on the Law Commission website).

The Government responded to the Chairmen of the English and Scottish Law Commissions on 24 July 2006. The letters to the Chairmen may be downloaded on the right.