Home Business NewsBusiness Over half of businesses don’t know unfair contract rules well

Over half of businesses don’t know unfair contract rules well

by LLB Reporter
24th Oct 16 11:13 am

New research shows

More than half of UK businesses (54 per cent) don’t fully understand the rules on unfair terms which directly impacts how they treat their customers, according to research by the Competition and Markets Authority (CMA),

The research also revealed that some businesses think a signed contract is final, not realising that they can’t enforce a term against a consumer if it’s unfair. Others may copy terms from larger businesses or competitors, assuming incorrectly that these will be automatically fair and legally binding.

Unfair terms are those that give businesses an unfair advantage over consumers, often by reducing their rights or ability to complain if things go wrong. For example, they can include:

  • keeping all of a customer’s deposit if they cancel, regardless of the amount the business is actually losing as a result
  • using excessively long notice periods that end up tying customers into a contract for longer than they want
  • excluding the business’ liability for things that are its fault (ie delays, or faulty goods or services)

The research showed that less than half (45 per cent ) of those surveyed claimed to know the rules on unfair terms well, whereas 36 per cent owned up to not having a strong grasp, and 18 per cent admitted they had never heard of them.

It also found that 67 per cent of UK businesses sell to consumers, with most of these using some form of terms and conditions. The rules on using unfair terms are set down in the Consumer Rights Act (CRA) 2015. However, only 15per cent said they were familiar with the Act when asked.

Paul Latham, Director of Communications at the CMA, said:

“Consumers have a right to be treated fairly – and businesses need to know that they can’t rely on their terms and conditions if they’re not fair.

“We know that the majority of businesses want to do the right thing by their customers, but it’s worrying that many businesses are not familiar with the law.

“That’s why we have launched this campaign to help businesses protect themselves against breaking the law, and against using contracts that they can’t enforce.”

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