When entering into any contract, a key concern for all parties should be the potential existence of ‘unfair contract terms’. Such terms are defined as those that exist within a standard form contract and which can create a power imbalance between the two parties. For instance, a lease between a Landlord and a Tenant often falls within the definition of a standard form contract and is a great example of an arrangement where one side has a greater degree of power over negotiations than the other.
What is a ‘Standard Form’ Contract?
Many different contracts fall within the definition of ‘standard form’, ranging from mortgages to phone contracts. While some parties may attempt to make certain changes to a contract so that it can avoid this classification, insubstantial amendments are often not enough to remove a contract’s status as standard form. Off-the-plan contracts may be the exception in some circumstances, yet even they require considerable changes to not be seen as standard form. As contracts are presumed to be standard form unless proven otherwise, you can generally proceed on this basis. If a contract’s status is challenged in court, various relevant factors will be considered to determine whether or not it is standard form.
Examples of Unfair Contract Terms
As mentioned above, a power imbalance is the key indication of what constitutes an unfair contract term. For example, there might be a termination clause present in a contract relating to the breach of an essential term, which applies a harsher penalty over one party than the other. Using a sale contract as a particular guide, there may be a term that applies a penalty over the Buyer when the Seller has not suffered any real loss. This would be categorised as an unfair contract term, as the Seller is clearly in a position of power and is benefiting from the Buyer’s disadvantage.
Dealing with Unfair Contract Terms
When receiving a contract, it is always best to have a lawyer review it first to identify any unfair contract terms that may limit your rights. This can obviously prolong negotiations and incur additional costs, but it will help you to avoid detrimental conditions. If you believe a term may be unfair after reviewing the contract yourself, it is always best to get in touch with a lawyer to raise any doubts that you may have. In negotiating terms, it is not sufficient for one side to simply reject a change or amendment without providing a satisfactory reason, so unfair contract terms can be swiftly identified and removed through correspondence between parties.
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Why Choose Ardor Legal?
At Ardor Legal, we combine deep legal expertise with a commercial mindset. We do more than review contracts. We help you understand what you are signing and how it could impact your business or personal interests. Whether you are negotiating a lease, a business sale, or any standard form agreement, our team takes a practical and clear approach to flag risks early and advocate for better outcomes. We are here to protect what matters most to you.
Alex Stewart, Solicitor at Ardor Legal
Alex is a solicitor at Ardor Legal with a strong focus on commercial and property transactions. He is known for his clear and practical legal advice, particularly in helping clients navigate complex contracts with confidence. Alex takes a commercially minded approach to resolving issues and ensuring clients are well-informed every step of the way.
