Are your consumer terms actually enforceable?

A term the customer agreed to is not the same as a term that binds them. Which clauses in an ordinary set of consumer terms fail the fairness test, and why the ones you were most confident about are usually the first to go.

Problems, in order · Part of Outsourced General Counsel

Most consumer terms are written once, copied from a business contract, and never read again until somebody refuses to pay. At that point the question is not whether the customer clicked a box. It is whether the term is fair, and whether it was put in front of them plainly enough that they could have understood what they were agreeing to. A term that fails either test is not weakened. It is simply not there.

Are unfair consumer terms enforceable?

The rule sits in the Consumer Rights Act 2015, and the operative words are worth reading rather than a summary of them.

Three things follow. The test is about the balance of the bargain, not about whether the customer was careless. It is applied to the term as drafted, not to how reasonably you have behaved in practice. And section 62(1) makes the consequence binary: the term is not binding at all, rather than being read down to something acceptable.

Which clauses usually fail?

Liability limits borrowed from the business contract. A cap at twelve months' fees, an exclusion of indirect loss, a clause capping liability at the price paid: all of these are ordinary between two businesses. Against a consumer they are the clearest example of significant imbalance there is, and they are usually the first thing a court strikes out. Where the contract is for goods or digital content, the position is harder still, because the statutory rights around quality and description cannot be excluded or restricted at all.

Auto-renewal with a cancellation window nobody can hit. A subscription that renews for twelve months unless cancelled thirty days before the anniversary is not automatically unfair, but it is squarely on the territory Parliament flagged. Schedule 2 to the Act sets out an indicative list of terms that may be regarded as unfair, and it includes a term automatically extending a fixed-term contract where the consumer has to give notice at an unreasonably early date. If your renewal notice goes out inside the cancellation window, or not at all, the clause is doing exactly what the grey list describes.

Fees that are really penalties. A charge for late payment, a cancellation fee set at the full contract value, an "administration fee" of a round number that bears no relation to any cost: each is assessed on whether it is a genuine pre-estimate of what the breach actually costs you. Most businesses have never worked that figure out, which is the problem. A fee you can evidence is defensible. A fee you cannot is a penalty with a different name on it.

Terms first shown after checkout. This is the one that catches otherwise careful businesses. A term that appears in an order confirmation email, in a pack sent with the goods, or behind a link the customer was never required to open, was not part of the bargain. It does not become part of it because it is well drafted.

Does clear drafting make a term fair?

The Act treats plain language as a legal requirement rather than a matter of style.

This matters commercially in a way that is easy to miss. Terms about the main subject matter of the contract and about the price are exempt from the fairness assessment, but only if they are transparent and prominent. Bury your price escalation clause in paragraph 14 of terms reached by a footer link, and you lose the exemption that would otherwise have protected it. The clause you were most confident about becomes the one available to be judged.

The Competition and Markets Authority's guidance on unfair contract terms is the practical companion to the statute, and it is written for businesses rather than lawyers. It is the document a regulator will hold your terms against.

What this looks like in practice

The businesses that get caught are rarely the ones behaving badly. They are the ones whose terms grew by accretion: a set drafted for trade customers, adapted for consumers by deleting two paragraphs, then extended over four years by whoever was closest to the problem. Nobody has ever read the result start to finish against the statute.

The work is not complicated, but it is specific. It means identifying which of your contracts are with consumers at all, which is less obvious than it sounds where sole traders and small landlords are involved. It means reading the liability, renewal, cancellation and fee clauses against the grey list. It means checking the point in the purchase journey at which each term is actually shown. And it means keeping a note of why each fee is set where it is, because that note is the evidence if the fee is ever challenged.

This is the kind of work Dinmore Bell holds as a standing function rather than a project. As an outsourced General Counsel we own the contract estate: the terms you issue, when they were last reviewed, and what changes when the law or the product moves. On the consumer side that usually runs alongside the wider corporate and commercial work, because the same trading terms sit behind both the consumer and the trade channel and they are rarely reconciled with each other.

Where a specialist is needed

Dinmore Bell will rewrite the terms, work out the evidence behind each fee, and deal with a customer complaint or a trading standards enquiry in correspondence. Where a claim is issued and proceedings have to be conducted, or where a regulator opens a formal investigation, that is litigation and we bring in a regulated firm to conduct it, staying in the seat as the client's side of the conversation. The tax treatment of any refund or credit programme is for your accountant.