Contract review for UK businesses

The first question is who the parties are

Most contract advice you will find online cites the Consumer Rights Act 2015 at businesses. It does not apply. Section 1 says Part 1 applies where there is an agreement between a trader and a consumer — so in a contract between two companies, the unfair-terms provisions at s.62 and s.64 are simply the wrong statute, and quoting them is a reliable sign that whoever wrote the advice did not check.

The business-to-business regime is the Unfair Contract Terms Act 1977, and s.2(4) says so directly: the section does not apply to a term in a consumer contract. Two regimes, and the review establishes which one you are in before it says anything about whether a term is enforceable.

What cannot be excluded at all

Under s.2(1) UCTA, a person cannot exclude or restrict liability for death or personal injury resulting from negligence — by contract term or by notice. There is no reasonableness test on that one; it is absolute. For other loss or damage, s.2(2) allows exclusion only so far as the term satisfies the requirement of reasonableness. So a sweeping “we exclude all liability howsoever arising” clause is partly void before anyone argues about it, and the interesting question is what survives.

The penalty clause line almost everyone still quotes is out of date

You will still read that a clause is a penalty unless it is a “genuine pre-estimate of loss”. That is a nineteenth-century formulation. The Supreme Court restated the rule in Cavendish Square Holding BV v Makdessi and ParkingEye v Beavis [2015] UKSC 67, and the test at paragraph 32 is:

“The true test is whether the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation.”

Two things follow, and both matter commercially. The rule only reaches a secondary obligation — one triggered by breach. An ordinary primary allocation of risk or price, however one-sided it looks, is not a penalty, so “that clause is a penalty” is usually the wrong objection and wastes the one letter you were going to send. And the innocent party’s legitimate interest can extend beyond simple compensation, which is exactly why ParkingEye won on an £85 charge that cost it nothing.

The auto-renewal advice that traps you

This one is worth the whole review on its own. When a contract auto-renews unless you give notice, the notice period is a lock-in, not a protection. A shorter notice period is better for you: less advance commitment, an easier exit. A longer one — ninety days is a common supplier draft — forces you to decide three months early and makes the window easier to miss.

Generic review tools get this backwards and recommend “extending the notice period”, as though more notice were more safety. It is the direction that traps you harder. This tool is explicitly barred from recommending it, and will suggest a diarised renewal reminder instead, which is the thing that actually helps.

Two modes, because they are different jobs

Reviewing a contract you have been handed is defensive: what is unusual, what is missing, what would you regret in eighteen months. Reviewing one you drafted is the opposite — whether it does what you meant, whether it is enforceable, and whether anything in it is so one-sided that it invites a fight you would rather not have. Same document, different questions, so the tool asks which you are doing first.

Almost Legal is AI drafting software grounded in UK law, not a law firm — you review and decide on everything it produces. General information on this page is not legal advice for your situation, and for anything material you should have a solicitor review it.