Ticking the Box

Terms and Conditions: Unfair Terms

Solicitor David Leuchars takes a look at whether we are all signing our lives away!

David Leuchars

“Please tick this box to confirm you have read the Terms and Conditions.”

We’ve all done it. Signing up to an online subscription, purchasing an app for your phone, installing a new programme on your computer; several times a week you can be faced with a huge document, written in a tiny font. Rather than spend 30 minutes reading the entirety of the terms and conditions, you tick the box to say that “Yes, I’ve definitely read all of those terms and agree to them.”

But what have you actually agreed to? The terms and conditions are a contract, and you are legally bound by them once you agreed to them. Sometimes, these terms are much more far reaching than people realise. As an extreme example, the standard terms and conditions used by Apple state that you won’t use their products in the design and production of nuclear weapons. Presumably, this is why nuclear missiles aren’t manufactured with Apple Music installed!

Recently, Disney were subject to a lawsuit in the USA for wrongful death after a visitor to a Disney resort suffered a fatal allergic reaction to a meal they ate at one of the resort’s restaurants, despite the visitor and his wife having made the restaurant aware of his severe allergy and having been assured by the restaurant the food was allergen free. Disney tried to prevent the claim going to Court, instead forcing the claim to be heard via arbitration, because the deceased’s widow, who was bringing the claim against Disney, had previously signed up to the Disney Plus streaming service, the terms of which contained the following clause: “any dispute between you and us, except for small claims, is subject to a class-action waiver and must be resolved by individual binding arbitration.” Unsurprisingly, the lawyers acting for the widow said this was massively unfair and grossly unreasonable. Following a huge amount of negative press and backlash, Disney graciously stated that they had waived their right to arbitration, and the claim will now proceed to Court.

Protection for Businesses as well as Customers

Disney’s robust use of their Terms and Conditions is not unusual for large tech companies, although it is an extreme example. This does serve to highlight though the important job well drafted terms and conditions can do, and the importance of avoiding unfair terms. Clearly written, easy to understand clauses ensure that all parties have clarity on key aspects of the contract. If the terms and conditions make clear aspects of the contract such as payment terms, delivery, and any limitation of liability, it minimises disruptive and costly disputes and should make it clear if a breach of contract has been committed by either party. The additional level of certainty offered by clear terms is in the interests of both parties to the contract and prevents disputes and disagreements resulting from ambiguous terms.

Protection from Unfair Terms

It is vital to remember that ignorance is not an excuse when agreeing to terms and conditions; “I didn’t read that,” or “I didn’t know that term was in there” will not be an adequate defence if any dispute results in legal action.

For business-to-business agreements, the Unfair Contract Terms Act (UTCA) 1977 states that clauses are deemed to be unfair if they are unreasonable. A number of factors determine when a clause may be deemed unreasonable, including the bargaining position of the parties (in particular, whether one party is significantly larger and better resourced), and whether a clause deviates dramatically from the industry standard.

For agreements between a consumer and a business, a consumer is offered some protection by the Consumer Rights Act 2015 (the CRA). A term of a consumer contract could be regarded as unfair if it causes a significant imbalance in the parties’ rights and obligations under the contract, to the consumer’s detriment. It must also be contrary to the requirement of good faith, and should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps.

The CRA helpfully sets out a number of examples for what may be considered an unfair term. Such examples include disproportionately high sums to exit a contract, or automatically extending a contract of fixed duration where the consumer does not indicate otherwise.

It is therefore important before the other party signs your terms or conditions - or even just ticks the box to state they’ve read them - to ensure the terms they contain are fair. If a term is considered unfair by the Court, that term will no longer be considered binding on the other party, and the entire contract may therefore be deemed unenforceable.