The English and Scottish Law Commissions have recommended simplification of the laws governing unfair contract terms.
At present two regimes operate-the Unfair Contract Terms Act 1977 (UCTA) and the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR).
The former gives protection to both businesses and consumers. Broadly it is easier for businesses to exclude or limit their liability when dealing with other businesses as opposed to dealing with private consumers though confusingly businesses too can buy as consumers when not “dealing in the ordinary course of dealings”. The distinction can be a fine one and can make a difference as to whether a clause in fair and enforceable or unfair and void at law. Further some liability clauses can fail the “reasonableness” test and likewise be deemed unenforceable.
The latter deals with consumers and deals with non-negotiated terms under the test of “fairness”. Certain bodies can take action action to prevent the use of unfair terms-e.g the OFT which forced changes on the high street banks and their own “excessive” rates of charges.
It is possible going forward that the two regimes will be simplified to produce a unified and simpler system based on a single test-what is “fair and reasonable”. This will cover both consumer and business contracts and will end the practise of having to consult jointly to determine the law.
