What are unreasonable terms in a contract?

Asked by: Prof. Deven Ondricka  |  Last update: February 1, 2026
Score: 4.2/5 (60 votes)

Unreasonable contract terms are clauses that create a significant imbalance, lack transparency, or exploit a weaker party, often by shifting disproportionate risk, limiting legal rights, imposing unfair penalties (like excessive fees for cancellation), allowing unilateral changes by one party (like price hikes), or forcing arbitration in inconvenient locations, generally making them unenforceable, especially in consumer contracts where terms must be fair and reasonable.

What are examples of unfair contract terms?

The law sets out examples of terms that may be unfair, including:

  • terms that allow one party (but not the other) to avoid or limit their responsibilities under the contract.
  • terms that allow one party (but not the other) to end the contract.

What two conditions must be present for a contract to be unconscionable?

A contract is most likely to be found unconscionable if both unfair bargaining and unfair substantive terms are shown. An absence of meaningful choice by the disadvantaged party is often used to prove unfair bargaining.

What are my rights regarding unfair contract terms?

In general, unfair contract terms for consumers are void and unenforceable. This means that if one party tries to enforce an unfair term, the other party can refuse to comply and may be able to recover damages.

What is the Unreasonable Unfair Contract terms Act?

The act renders terms excluding or limiting liability ineffective or subject to reasonableness, depending on the nature of the obligation purported to be excluded and whether the party is purporting to exclude or limit business liability, acting against a consumer.

Unfair Terms in Contract Law | Unfair Contract Terms

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What are the 4 types of contract breaches?

“Some contract breaches are more serious than others. The law distinguishes between material (or total) breaches and immaterial (trivial or minor) breaches of contract.” In this comprehensive guide, we'll explore all four main types of breach of contract: minor, material, fundamental, and anticipatory.

What are the penalties for unfair contract terms?

Under the updated UCT regime, companies using 'unfair contract terms' in any standard form contracts which are made, renewed or varied from 10 November 2023 onwards can now be fined up to the greater of: $50 million; three times the value of the “reasonably attributable” benefit obtained from the conduct; or.

Can you sue for an unfair contract?

Yes, you can absolutely sue for an unfair contract. You would need to file a contract dispute because of terms and conditions that are either illegal or unconscionable. This means you can file a lawsuit against the entity that sought your agreement to unjust conditions or illegal activity.

What are the 5 rules of contract law?

To understand that, you need to know about the 5 essential elements of a valid contract: offer, acceptance, consideration, mutual intent, capacity and legality. Understanding these 5 fundamental elements of a contract can help you protect your interests and avoid potential legal disputes.

What happens if there are conflicting terms in a contract?

Key Takeaways. Conflicting contract terms arise when provisions contradict each other, leading to potential legal disputes. Courts analyze conflicting clauses by considering intent, precedence, and external evidence. Drafting contracts with clarity, consistency, and precise language helps prevent inconsistencies.

What are 6 things that void a contract?

We'll cover these terms in more detail later.

  • Understanding Void Contracts. ...
  • Uncertainty or Ambiguity. ...
  • Lack of Legal Capacity. ...
  • Incomplete Terms. ...
  • Misrepresentation or Fraud. ...
  • Common Mistake. ...
  • Duress or Undue Influence. ...
  • Public Policy or Illegal Activity.

What are four types of mistakes that can invalidate a contract?

However, being aware of the four vices that can void a contract — duress, undue influence, misrepresentation, and mistake — is crucial for ensuring that your agreements are legally enforceable and that your rights are protected.

What are the grey list unfair contract terms?

The Grey List includes terms which could cause a number of problems such as: Customers not being given full redress if things go wrong. Customers being tied into a contract for longer than they would normally expect. The business not having to perform its obligations.

What is Section 42 of the consumer rights Act?

Section 42: Consumer's rights to enforce terms about digital content. 204. If the digital content is not of satisfactory quality, fit for purpose, or does not match the description, the digital content will not conform to the contract.

How to challenge an unfair contract?

If you think a particular term in your contract is unfair, write to the company explaining why, stating the amount of money you think you should get back. If the company is demanding money from you, state that you consider the term they are relying on to be unfair, and that it can't be enforced against you.

What are the 3 C's of a contract?

Today, we're diving into the core components that make up a legally binding contract, often referred to as the 3 C's: Capacity, Consent, and Consideration. Understanding these key elements can help you navigate legal agreements with confidence and clarity.

What is considered an unfair contract term?

Unfair contract terms can disadvantage one party significantly. Common examples include unreasonable clauses on negligence, fraud, and breach of contract. Courts can strike out unfair terms, especially those that create a significant imbalance in the agreement.

How hard is it to win a breach of contract lawsuit?

Long story short, it's hard to win a breach of contract lawsuit. There are things you can do before the fact that prevent breach of contract from even happening and then there are things beyond your control that need to go in your favor.

What are oppressive contract terms?

Generally, where a term in a contract is oppressive on one party or their rights, to the benefit of the other party, the term will be considered unfair. There are times that a business may seek to include or rely upon a term that operates in their favour to protect their best interests.

How to get out of an unfair contract?

Some Ways to Get Out Of A Contract

  1. Duress.
  2. Illegality (The contract in question is illegal. ...
  3. Undue Influence.
  4. Fraud.
  5. Mistake.
  6. Unconscionability (The contract is very one-sided and unfair.)
  7. Impossibility of performance.
  8. Frustration of purpose (A change in the conditions of the contract makes performance meaningless.)

What is section 57 of the consumer rights Act?

Section 57: Liability that cannot be excluded or restricted

This section addresses “contracting out” of the consumer's statutory rights as established under sections 49, 50, 51 and 52. It also makes clear that a trader cannot limit its liability for breach of these sections to less than the contract price.