(grossly unfair) contractual terms

What are void (grossly unfair) contractual terms?

Void (grossly unfair) contractual terms undermine the purpose of the late payment legislation. For example, they might seek to deny the supplier their right to reasonable compensation for debt recovery costs and/or remove or minimise the supplier's right to statutory interest for late payment. For example, the customer might try to impose unilaterally a reduction in the rate of interest to be charged for late payment and/or increase the length of the credit period.

What can you do?

Any business or the public sector is entitled to go to court and challenge such terms and conditions.

Representative bodies officially recognised as, or having a legitimate interest in representing SMEs may go to court on behalf of the SME(s) and challenge as grossly unfair contractual terms which purchasers wish to rely upon. If the party that makes the challenge is successful, the Court will strike down as void the offending term(s) and the provisions of the late payment legislation will apply instead.

Representation in court
Small and medium-sized enterprises (SMEs) can ask a representative body to go to court on their behalf. Such a body might represent SMEs as a whole or cover a particular sector or geographical area.

There is no specific funding available to support challenges in court against grossly unfair contractual terms. Any representative bodies going to court are subject to normal costs rules and litigation liabilities.

Can an independent representative body challenge void (grossly unfair) commercial contract terms and conditions without having been requested to by at least 1 SME?

Yes. As long as the representative body has a demonstrable, relevant link with the SME(s), and has been set up specifically to act in the interests of SMEs as a whole or for a particular sector or geographical area.