Did you know that unfair terms are not legally binding on consumers? Having clear and fair terms in your contracts will:

  • Save you time
  • Help prevent disputes and reputational damage
  • Protect your business if something goes wrong

The Competition and Markets Authority (CMA) has published a series of ‘at a glance’ guides to help businesses understand what terms are likely to be considered “fair” and “unfair” when used in a consumer contract. The guides are aimed at small businesses and provide an overview of some of the main mistakes that a business should avoid when writing its terms.  Here are some of the key things suggested by the CMA for businesses to consider when writing their terms.

  • Respect your customer’s interests, don’t use terms you would not like to sign up to yourself.
  • Avoid ambiguity – ensure that your terms are not open to a number of different interpretations.
  • Be open and fair – don’t hide important wording or use small print that might surprise or mislead your customer.  Wording that has a significant impact for customers should be particularly drawn to their attention.
  • Use ordinary words and avoid legal jargon or technical language.  Put yourself in your customers’ shoes to make sure the effect of the term is likely to be understood by them.
  • Consider whether your written contact is reader-friendly (for example, are terms legible?  Are short sentences and subheadings used?).
  • Consider whether terms describing the contract’s main subject matter and those setting the price (i.e. the essential obligations of the contact) are specifically brought to the customer’s attention as well as easy to understand.
  • Take particular care with terms that could potentially work against your customer, for example:
    • Terms that limit your liability if things go wrong
    • Terms that transfer risks to your customer that they can’t control
    • Terms that allow you to make changes to the contract
    • Terms that allow you to keep deposits and advance payments
    • Terms that impose financial sanctions on your customer (e.g. cancellation fees)
    • Terms that automatically renew your customer’s contract.

Considering these things will help you communicate with your customers clearly and avoid unnecessary disputes. When dealing with consumers remember – contracts will only protect your business if the terms are fair

Click here for the CMA’s practical guides on the types of terms that may be unfair

For more information, email blogs@gateleyplc.com.

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.