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Business contracts may be affected by Unfair Terms legislation

United Kingdom
13/01/2003
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A consultation paper issued by the Law Commission "Unfair Terms in Contracts" (Number 166), may have serious implications for the use of some standard forms used between business parties.

The proposals aim to unify and simplify UCTA and the Unfair Terms in Consumer Contracts Regulations 1999 and propose to extend their scope to unfair terms in most contracts to which bothor all parties are businesses.

It is proposed to extend the "fair and reasonable" test to most terms in contracts between businesses of whatever size which are standard or are not individually negotiated. Exempted will be contracts of insurance, contracts creating or transferring interests in land, or creating or transferring interests in securities and those relating to IP rights and the formation or dissolution of a company.

The types of terms likely to be caught include default rates of interest, automatic extension of contract terms, entire agreement, jurisdiction and termination clauses.

The consultation period has expired and the Law Commission expects to provide a final report to the Dti on reforms to the law in the autumn of 2003.

To view the full paper please click here or to view a summarised version please click here

For further information, please contact Ruth Pedley at [email protected] or on +44 (0)20 7367 2098

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