{"id":176070,"date":"2022-09-26T18:30:57","date_gmt":"2022-09-26T17:30:57","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=176070"},"modified":"2024-12-16T05:10:01","modified_gmt":"2024-12-16T05:10:01","slug":"unfair-contract-terms","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/commercial-contracts\/unfair-contract-terms\/","title":{"rendered":"What You Need to Know About Unfair Contract Terms in the UK"},"content":{"rendered":"\n

Running a business involves creating and entering into legally binding contracts with other companies. When doing so, you and the other party will negotiate which contractual terms to include within the written agreement and which to avoid. However, in contract law, there are some clauses you will not want to have in your contracts. These are unfair contract terms<\/a> which are labelled unfair by a court in UK law. Therefore, your contract might be declared void. Consequently, you may not have adequate protection for your business interests. To help, this article will explain what you need to know about unfair contract terms to ensure your business avoids them<\/a> when creating commercial contracts.<\/p>\n\n\n\n

What is an Unfair Contract Term?<\/span><\/h2>\n\n\n\n

An unfair contract term is an unfair exclusion clause. An exclusion clause tries to exclude one company from being liable to another in a specific situation. One example would include a clause trying to limit the compensation payable to your business from another company if they breach the written agreement.<\/span><\/p>\n\n\n\n

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Where an exclusion clause is unfair, it is automatically invalid. Clauses are automatically invalid where they contain extreme content, such as trying to limit liability for personal injury or death caused by the negligence of your business.<\/p>\n<\/div>\n\n\n\n

While businesses like yours <\/span>should be free to agree on whichever terms<\/span><\/a> they choose in a contract, they must be fair. The Unfair Contract Terms Act<\/em> is the primary legislation that defines and limits unfair contract terms. However, it does not cover consumer contracts or contracts of employment. When businesses agree to an unfair contract term, the law aims to step in to protect businesses from terms that are so severe or unfair and prevent the clause from having any legal enforceability. <\/span><\/p>\n\n\n\n

Less severe exclusion clauses, however, are subject to a reasonableness test.<\/span><\/p>\n\n\n\n

Clauses subject to a reasonableness test include those aiming to exclude liability for the consequences of:<\/span><\/p>\n\n\n\n