Avoid unfair terms in sales contracts

Business: Sale Goods Services Data

    Your standard sales contracts must be ‘fair’ in the eyes of the law or you won’’t be able to enforce them.

    You’re legally responsible for certain situations that happen when people buy your product or service. You must not try and claim you’re not responsible for them.

    You have more responsibilities towards consumers than other businesses.

    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, eg:

    • 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

    ‘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, eg:

    • 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

    Contracts must be written in plain language to avoid being misleading and unfair.

    The Office of Fair Trading has more guidance on unfair contracts:

    Implied rights on goods and services

    Unless the contract legally states otherwise, your customers have implied rights when buying your products or services.

    These rights mean a product must be:

    • as described
    • of satisfactory quality (eg safe, in working order, free of defects)
    • fit for purpose– capable of doing what it’s supposed to

    It also means services must be carried out:

    • with reasonable care and skill
    • within a reasonable time
    • for a reasonable charge (if this is estimated, rather than agreeing on an exact price)

    Contracts for hiring, hire purchase and part exchange also have these implied rights – unless the contract states otherwise.

    Consumers always have implied rights when buying goods – the contract can’t legally state otherwise. They also have the implied rights when using services, even if the contract states otherwise.

    Unfair exemptions

    The price you agree with any customer or any terms you negotiate between you aren’t affected by the regulations. However, you can’t force a customer to accept unfair terms by negotiating in a ‘take it or leave it’ way.

    Changing ‘unfair’ contracts

    You can be forced to change the wording of an unfair standard contract by the Office of Fair Trading or local trading standards office, if a consumer or business complains.

    It is up to the courts, however, to decide if a contract is ‘unfair’.

    Rules on consumer and business sales contracts under the Unfair Contract Terms Act and Unfair Terms in Consumer Contracts Regulations