If you own or manage a business that uses commercial contracts as part of its operations, then we hope that before implementing those contracts you sought the advice of commercial lawyers. If you did not, then there is the possibility that because the contracts were not checked by a legal expert that they could include unfair terms.
Unfair contract terms are those terms and clauses within a contract that could be deemed to be unfair at best, potentially void, and almost undoubtedly unenforceable if you were to refer to or rely on them should any legal dispute arises between your business and a customer or client. Note that it is a two-way street, which means you could enter a contract in which the other party has included unfair contract terms.
Unfair Contract Terms Explained
Whilst most people will understand what ‘unfair’ means in a general sense, when it comes to how it is used within commercial law and specifically in relation to commercial contracts, the definitions are far narrower. Commercial legislation states that a contract term is regarded as unfair when it would create any of the following scenarios:
- A Significant Disparity In The Rights And Obligations Of The Respective Parties As To Create An Imbalance
In effect, this means that any terms which remove or significantly reduce one party’s rights while at the same time minimising the obligations of the other party, would be deemed unfair. An example is a company that supplies and installs heating systems removing any obligation it had concerning a warranty and placing all obligations for fixing it on its customers.
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