Unfair Terms Under Contract

I Think There’s An Unfair Term Or Hidden Costs In My Contract. What Can I Do?

When you enter into a (negotiated or non-negotiated) contract with your builder who is in business, it is imperative that you read the terms and conditions before signing any contract.

Builders are free to use whatever contractual terms they consider reasonable. You will be expected to follow the terms which are fair in the contract provided and therefore binding upon you. If you think there are unfair terms in your contract. We are happy to guide you through the Consumer Rights Act 2015 which aims to protect you against unfair contract terms and notices.

What Are Unfair Terms?

Generally, contract terms and notices are unfair if they put the homeowner or consumer at an unfair disadvantage.

CRA 2015 applies a “fairness test” that any standard term is unfair if it causes a significant imbalance in the positions of the parties to the detriment of the consumer in a way which is contrary to the requirement of good faith.

Also the terms and notices must be “transparent and prominent” which means that the builder must use plain and intelligible language in its written terms so that the homeowner or consumer has the chance to read and understand all the terms before agreeing to the contract. Notices must be brought to your attention in such a way that the average consumer would be aware of them. It is important for the builder to be up front about important terms that could have a significant impact on you. So the price and any subject matter terms must not be hidden in any small print otherwise the price and the subject matter terms will be assessed for “fairness”.

Top Tip: House builders should review their contracts including any notices such as website terms for compliance with the unfair terms provisions. This is relevant where how the main terms describe the subject matter of the contract and the price is presented.
Top Tip: If the contract term is drafted so widely that it could be used in a way that harms the consumer and if the consumer is unlikely to understand the wording of a clause that it has potential for unfairness if it likely to mislead or be intelligible to consumers. 
You have right to challenge unfair terms

Under the CRA 2015, you are not bound by a term in a contract with a builder if that term is deemed to be unfair. You have the right to challenge the term if you think it is unfair. The fairness of a term can only be assessed in the context of all the circumstances surrounding the contract. Where a term in a consumer contract or consumer notice has different meanings, the one most favourable to the consumer will prevail. The courts are under a duty to consider the fairness of a term in a consumer contract whether or not a party has raised the issue. Only a Court can decide whether a term is fair.

You can report a contract term you think is unfair to your Local Trading Standards Department or the Competition and Markets Authority (CMA)which have enforcement powers to deal with breaches of the unfair terms rules.

Did you know that unfair terms are not enforceable against the consumer? Enforcers such as CMA can also take action to stop them using it.

What Types Of Terms You Can Challenge

You Can Challenge Unfair Terms Such As:

  • Charged excessive deposits or cancellation fees
  • If the price has been changed and the scope of work has not changed
  • Changing the terms of a contract
  • Responsibility if things go wrong
  • Charges have been hidden in the small print
  • Disproportionate default charges been made.

You Cannot Challenge Terms If You:

  1. a) Claim that a price you’ve agreed to pay is unfair because you found the same item cheaper somewhere else.
  2. b) Claim a contract for an extended warranty is unfair because it offers much less cover than another one you could have bought for a similar price.
  3. c) Challenge terms that you have negotiated with the seller. You can only challenge a contract’s standard terms and conditions.
Top Tip: When considering the contract terms. Check if it avoids ambiguity, is it open and fair (check small print), are ordinary words used, or any legal jargon or technical language used, is it reader friendly written contract with subheadings and terms legible? Have the terms describing the contract main subject matter and price brought to your attention and easy to understand.

Did you know? There is a useful guidance on unfair terms in the contract provided by the government. See link:https://www.gov.uk/guidance/unfair-terms-explained-for-businesses-full-guide 


Altion Law are specialists at advising and representing parties in a Contractual Dispute relating to a Construction Project.  If you would like to have a confidential discussion with a member of our team, please complete our Contact Us Form, and we will call you back at a time that is suitable for you or you can contact us directly on 01908 414990.