Not every term in a contract is enforceable. UK law steps in to control terms that are unfair, especially against consumers and in relation to excluding liability. Knowing how this works helps you spot terms that may not bite, and avoid drafting ones that won't hold up. Here is a plain-English guide for England and Wales.
Two regimes: consumers and businesses
The law tackles unfair terms through two main statutes, depending on who the contract is with:
- Consumer contracts (trader-to-consumer): the Consumer Rights Act 2015 (CRA).
- Business-to-business contracts (and exclusion of negligence generally): the Unfair Contract Terms Act 1977 (UCTA).
Consumer contracts: the Consumer Rights Act 2015
The CRA says a term in a consumer contract is unfair (and not binding on the consumer) if, contrary to good faith, it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer.
Key features:
- Core terms exemption: a term setting the main subject matter or the price is not assessed for fairness provided it is transparent and prominent (so hidden or unclear pricing terms can be challenged).
- Transparency: terms must be in plain, intelligible language; ambiguities are read in the consumer's favour.
- The "grey list": Schedule 2 to the CRA lists examples of terms likely to be unfair, such as terms letting the trader change the contract at will, impose disproportionate cancellation charges, or limit the consumer's legal remedies.
- Non-excludable rights: a trader can never exclude the consumer's core statutory rights (e.g. satisfactory quality of goods, reasonable care and skill in services) or liability for death/personal injury from negligence.
The Competition and Markets Authority (CMA) and other regulators can enforce against unfair terms, and recent reforms have strengthened the CMA's powers to act directly against breaches of consumer law.
Business contracts: the Unfair Contract Terms Act 1977
UCTA mainly controls exclusion and limitation clauses:
- You can never exclude liability for death or personal injury caused by negligence (s 2(1)).
- Other attempts to exclude negligence, or to exclude/limit liability for breach of your written standard terms, are valid only if reasonable, judged by the reasonableness test (s 11 and Schedule 2), looking at factors like the parties' bargaining strength, any inducement, and whether the customer could have contracted elsewhere.
How to tell if a term is unfair (and what happens)
Ask:
- Is it a consumer or business contract? (different test).
- What is the term trying to do? (exclude liability, change the deal, impose a charge?).
- Is it transparent and reasonable/fair?
If a term is unfair (CRA) or fails the reasonableness test (UCTA), it is generally not enforceable (wholly or in part) while the rest of the contract usually continues.
Practical tips
- Drafting: keep terms clear, prominent and proportionate; avoid one-sided clauses; never exclude death/PI from negligence.
- Facing a term: check whether it is transparent, on the grey list, or fails the reasonableness test, many onerous terms are unenforceable.
Key takeaways
- Unfair terms are controlled by the Consumer Rights Act 2015 (consumers) and the Unfair Contract Terms Act 1977 (business/negligence).
- A consumer term is unfair (and not binding) if it causes a significant imbalance against the consumer contrary to good faith; the Schedule 2 "grey list" flags likely-unfair terms.
- You can never exclude liability for death/personal injury from negligence, or consumers' core statutory rights.
- In B2B, exclusion/limitation clauses must pass the reasonableness test, and the CMA enforces consumer-protection rules.
Sources
- Consumer Rights Act 2015, Part 2 (fairness test; transparency; Schedule 2 grey list; non-excludable rights)
- Unfair Contract Terms Act 1977 (ss 2, 3, 11 and Schedule 2, reasonableness test; negligence)
- CMA consumer-protection enforcement powers (including reforms under the Digital Markets, Competition and Consumers Act 2024)
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor.