This guidance is for England, Scotland and Wales
The Consumer Rights Act 2015 gives you important rights when you make a contract with a trader for the supply of goods, services and digital content.
The law also sets out rules to protect you if a trader tries to take away your rights or use terms in a consumer contract or notice that are unfair.
This guide gives a broad overview of what unfairness means; however, it is for a court to consider the fairness of a term and for regulators to enforce the law on unfair contract terms.
WHAT IS A CONTRACT?
The Consumer Rights Act 2015 refers to contracts between a trader and a consumer for the trader to supply goods, services or digital content; it is an important first step to understand what a contract is and how it is formed.
A contract is a legally binding agreement between you and the trader and is made when certain elements come together:
There must be an 'offer' - for example:
- you remove goods from the shelf and take them to a checkout
- you click 'add to basket' on a trader's website
- you contact a trader to place an order from a brochure
- a trader gives you a quote for a service
Then there must be 'acceptance' of the offer - for example:
- a trader puts the goods through the till
- you receive a confirmation email from a trader after you placed an order and payment was received through a website
- you accept a quote for a service
There must be a transfer of 'consideration'. This is the payment you make for the goods, services or digital content. It is usually money but can include other things of value, such as a part exchange or transfer of goods.
There must be an 'intention to make a contract'. You and the trader must intend to be legally bound by the contract and you must both understand what the contract actually means.
You must have 'legal capacity'. This means you must be legally capable of making a contract. Examples of when a person, depending on the situation, may not have legal capacity are if they:
- are too young
- have mental health capacity issues
- are under the influence of drugs or alcohol
The rules of the contract are called 'terms' that are agreed between you and the trader, such as the price of the goods or delivery arrangements and those required by law, known as your 'statutory rights'. Contracts can be written, spoken and even implied by conduct - for example, you may select goods in a supermarket and pay for them at a self-service checkout, no words are spoken and nothing is written down but it is a contract all the same. Some contracts, such as credit agreements, must be in writing.
When a trader displays goods, services or digital content in a store window display, in the store itself, online or in a brochure, for example, they are inviting you to make an offer to buy. This is known as an 'invitation to treat'. What this means is that you cannot insist a trader sells the goods, services or digital content on offer; the trader is legally entitled to decline your offer to buy.
WHICH CONTRACTS AND NOTICES DOES THE LAW ON UNFAIR TERMS APPLY TO?
The law on unfair terms applies to all consumer contracts (contracts between a trader and a consumer) whether they are in writing or not.
It also covers notices if they are 'consumer notices', which means they set out rights or obligations between a consumer and a trader or try to deny or restrict a trader's responsibility to a consumer. The meaning of 'consumer notices' is wide and applies to announcements and any other communications, whether in writing or not, that are intended to be seen or heard by a consumer. These types of notices are often found in car parks, shops, recreational facilities such as swimming pools and cinemas, and on websites.
Take note that the law does not apply to contracts of employment or apprenticeship, or notices setting out rights and responsibilities between an employer and employee.
WHAT IS AN UNFAIR TERM?
The Consumer Rights Act 2015 states that a "notice is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer".
What does this mean? Basically it means that traders must draft and present their contracts and notices to you in a way that is fair and open and that respects your lawful interests. Terms and notices should be clear; the wording used should be plain (no legal jargon) and capable of being understood. They should not be designed to trick or trap you and any terms that are important (because they may put you at a disadvantage) must stand out. 'Significant imbalance' means that the rights or obligations contained within the term or notice are significantly weighted in favour of the trader; therefore, they place a greater burden on you.
Terms that are 'standard' (which means that they are used in all the trader's contracts) and terms that are individually negotiated with you as part of your own contract can all be assessed for fairness. However, terms that deal with the main subject matter of the contract and those that set the price are exempt from the assessment of fairness only if they are transparent and prominent.
You are not entitled to challenge the wording of a term or notice if it is wording that is required or permitted in law.
WHICH TYPES OF TERM ARE UNFAIR?
There are certain terms, if they are included in a contract or notice, that are automatically unfair in all circumstances; a trader cannot rely on them and cannot enforce them against you. The Competition and Markets Authority refers to these terms as 'blacklisted'. They are:
- terms that exclude or restrict responsibility for death or personal injury resulting from negligence. A person is not considered to have voluntarily accepted any risk simply because they knew about or agreed to the term or notice
- terms designed to prevent or make it difficult for you to claim your statutory rights and remedies when obtaining goods, services or digital content or by putting you at a disadvantage after doing so
The 'Sale and supply of goods: your consumer rights', 'Supply of services: your consumer rights' and 'Supply of digital content: your consumer rights' guidance explains what your statutory rights and remedies are.
The law introduces a list of example terms, which are not automatically unfair but may be considered unfair depending on how they are used. They are a guide for courts to use when deciding if a term passes a 'fairness test'. The Competition and Markets Authority refers to these terms as the 'grey list'. Some of the terms are listed below:
- terms that require you to pay a unreasonably high payment in compensation if you do not go ahead with a contract
- terms that allow a trader to get out of the contract at their discretion but do not allow you to do the same
- terms that allow a trader to cancel an open-ended contract without reasonable notice unless they have serious grounds for doing so
- terms that allow a trader to alter, without valid reason, the characteristics of goods, services or digital content to be provided
- terms that bind you to a contract for the provision of a service, but allow a trader a choice, beyond what would be reasonable, as to when and how the service is to be performed
- terms that permit a trader to keep a payment for services not yet supplied when it is the trader who has cancelled the contract
- a term that binds you to terms that you have not become familiar with before the contract is finalised
- terms that have the object or effect of enabling a trader to alter the terms of the contract without a valid reason that is specified in the contract
- terms that permit a trader to increase the price of goods, services or digital content without giving you the right to cancel if the final price is far higher when compared to the agreed contract price
ARE UNFAIR TERMS LEGALLY BINDING?
No, you are not legally bound by an unfair contract term or consumer notice and you have the right to challenge it, in court if necessary. However, there is nothing to prevent you from relying on a term or notice if you choose to do so.
Even if a term is found to be unfair, the rest of the contract continues if it is practical to do so.
WHAT IF THE TERM HAS DIFFERENT MEANINGS?
In this case, the meaning that is most favourable to you applies.
WHERE TO FIND MORE INFORMATION ON UNFAIR TERMS
Detailed guidance on unfair terms is provided by the Competitions and Markets Authority (CMA).
The CMA has also produced guidance on how to write fair contracts. Whilst it is aimed at traders, it will give you a different viewpoint on both fair and unfair contract terms.
A TERM IS UNFAIR: WHAT CAN I DO?
You can take legal action against the trader in the court. The court can consider, as part of your case, whether the term in question is fair. The 'Thinking of suing in court?' guide gives further details on taking a case to court.
Report your complaint to Citizens Advice consumer service for advice on the steps you can take to seek redress and where appropriate, refer the matter to the relevant regulator. Trading standards, the Competition and Markets Authority and other regulators have powers to enforce the law on unfair terms to prevent a trader from using them.
IN THIS UPDATE
No major changes.
Last reviewed / updated: January 2024
Key legislation
Please note
This information is intended for guidance; only the courts can give an authoritative interpretation of the law.
The guide's 'Key legislation' links may only show the original version of the legislation, although some amending legislation is linked to separately where it is directly related to the content of a guide. Information on amendments to legislation can be found on each link's 'More Resources' tab.
For further information in England and Wales contact the Citizens Advice consumer service on 0808 2231133. In Scotland contact Advice Direct Scotland on 0808 164 6000. Both provide free, confidential and impartial advice on consumer issues.
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