All business-to-business standard terms may be subject to unfair contract terms test

The Law Commission has just published a consultation paper proposing reform of the law on unfair contract terms. The Commission is proposing an overhaul and streamlining of the legislation in this area and asking for views on other potential amendments which would have significant implications for many businesses in relation to the standard terms on which they do business with other businesses and in relation to their dealings with consumers. In particular, one suggestion is that all standard terms, ie those that are not individually negotiated, in business-to-business contracts should be subject to a “fair and reasonable test, and not just the clauses that exclude or limit liability.

In the consultation paper, the Commission provisionally propose:

• Replacing the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 with a single piece of legislation, which will provide the protection required by European legislation and the additional protection given to consumers by the 1997 Act;
• Rationalising the controls over non-negotiated terms in business-to-business contracts, so that these apply not only to clauses that exclude or limit liability but also to other unfair terms that have not been negotiated between the parties; and
• Re-writing the legislation in a way that is clearer and more accessible to consumer and business advisers.

The Commission is asking for comments on its proposals and opinions on various issues by 8 November 2002.

For further details please contact Christopher Hodges, at [email protected], or on +44 (0) 20 7367 2738 or contact Natalie Wood at [email protected] or on +44(0) 20 7367 2523.