Do you understand your contracts and contractual rights?

The Competition and Markets Authority (CMA) has published research which reveals that 54% of UK businesses surveyed didn’t understand the rules on unfair terms, and how they can lawfully treat their customers.

A signed contract is not final – you can’t enforce a term against a consumer if it’s unfair.  Unfair terms are those that give businesses an unfair advantage over consumers, often by reducing their rights or ability to complain if things go wrong.  The rules on using unfair terms are set down in the Consumer Rights Act (CRA) 2015.

The CMA found that 67% of UK businesses sell to consumers, with most of these using some form of terms and conditions.  However, only 15% said they were familiar with the CRA when asked.  Others copied terms from larger businesses or competitors, assuming incorrectly that these will be fair and legally binding.  Only one in five had their contracts reviewed by qualified lawyers.  The CMA believe most businesses want to do the right thing by their customers, but said “it’s worrying that many businesses are not familiar with the law”.

In response the CMA has today launched a new campaign, consisting of simple videos and guides, to inform businesses about what makes a term ‘unfair’ and help them understand how to treat their consumers fairly.  These short guides complement the more detailed guidance on unfair terms that the CMA produced in 2015.  The guides show how fair terms can help save time, avoid disputes with customers and enhance a business’ reputation whilst still protecting them if things go wrong.

The guidance is available at Writing fair contracts: guidance for businesses.

Harris & Harris have advised many businesses on their Terms & Conditions, both for B2C and B2B relationships.  We recommend that these are reviewed regularly, and specifically when there is any change in the law.