How to Protect Your Business from Unfair Contract Terms in the UK

By Natalie Popova, Legal Consultant | Express Law Solutions

Disclaimer: This article is for general information only and does not constitute legal advice. For specific guidance, contact Express Law Solutions.

Introduction: Understanding Unfair Contract Terms in the UK

Running a business in the UK means regularly signing agreements with clients, suppliers, landlords, service providers, or freelancers. However, not all contracts are fair. Some contain unfair contract terms that are one-sided, unclear, or legally unenforceable under UK contract law.

Knowing how to spot unfair clauses and understanding your rights under the Unfair Contract Terms Act 1977 (UCTA) and the Consumer Rights Act 2015 can protect your small business from financial loss and legal disputes.

What Is an Unfair Contract Term?

An unfair contract term is any clause in a B2B or B2C contract that:

Creates a significant imbalance between the rights of the parties;
Is not transparent or is hidden in small print;
Favors the stronger party, leaving the weaker with limited legal remedies.

Examples of Unfair Terms in the UK

Excessive cancellation fees;
One-sided liability clauses (e.g., trader not liable for losses, but you are);
Automatic renewal clauses without notice;
Unilateral right to change prices or terms;
Clauses that remove your right to seek legal redress.

UK Legislation Governing Unfair Contract Terms

Unfair Contract Terms Act 1977 (UCTA)

Restricts the ability to limit or exclude liability in business-to-business contracts. For example, excluding liability for death or personal injury caused by negligence is automatically void.

Consumer Rights Act 2015

Covers B2C contracts and protects individuals and small businesses when dealing with larger entities. Unfair terms in consumer contracts are unenforceable, and authorities like the Competition and Markets Authority (CMA) and Trading Standards can take enforcement action.

How to Spot an Unfair Clause Before Signing

Check for terms that:

Are buried in small print;
Give the other party excessive rights to cancel or change the contract;
Shift all financial or legal risk to your business;
Limit your right to compensation or legal action.

Always review carefully:

Termination clauses;
Payment and late fee terms;
Renewal and automatic extension clauses;
Limitation of liability clauses.

What to Do If You’ve Signed an Unfair Contract

Even after signing, you may be able to challenge unfair contract terms under UK law. The courts can:

Strike down or ignore the clause;
Allow you to exit the agreement early;
Award damages or compensation.

Drafting Fair Contracts as a UK Business Owner

If you’re offering contracts to clients or other businesses:

Use plain English avoid complex legal jargon;
Be transparent about charges, renewal terms, and cancellation policies;
Follow UCTA 1977 and Consumer Rights Act 2015 guidelines;
Avoid hidden clauses or small print traps;
Ensure terms are clear, fair, and prominent.

Fair contracts build trust and reduce disputes.

Real-World Example: Automatic Renewal Clause

Anna, a freelance designer, signed a contract allowing a marketing agency to delay payment indefinitely until their own client paid. This unfair payment clause breached UK law, and the court ruled in her favour awarding her payment plus interest.

Final Thoughts: Protecting Your Business

Understanding and avoiding unfair contract terms UK is essential for legal compliance and reputation management.
Whether you’re a freelancer, startup, or small business, regularly review your contracts to ensure they meet UK contract law requirements and protect your rights.

Need help? At Express Law Solutions, we review, draft, and negotiate contracts to ensure they’re fair, clear, and enforceable.