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Consumer contracts

Start date: 4 February 2010 

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Summary of work

The study examined when, how and why contracts may cause difficulties for consumers. The report draws together:

  • past empirical and academic evidence about how consumers understand and act in contracts, and learn from their experiences, including insights from behavioural economics
  • new evidence about how consumers use and assess contracts, from a consumer survey, in-depth interviews and focus groups
  • an assessment framework that the OFT will use to screen potentially problematic contract terms, and prioritise its work on cases where consumers suffer the most harm
  • discussion of how consumer harm that we detect using the economic approach of the assessment framework can be tackled through the legal tools we have available.

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Findings and outcomes

The evidence shows that consumers, with good reason, rarely read contracts in full before they enter them, so they will be unaware of some of the terms they are agreeing to. Consumers can also make mistakes in interpreting terms and conditions that they are aware of, even when they are taking reasonable care. This study has helped the OFT to determine the kinds of contract terms that are most likely to harm consumers, and which it should tackle through the Unfair Terms in Consumer Contracts Regulations 1999, Consumer Protection from Unfair Trading Regulations 2008, or other legal or practical tools.

In future, our assessment of whether a contract term is harmful will ask the following questions, and wherever possible use empirical evidence to answer them:

  • Are there any significant surprises in the small print? Small print terms should not undermine the upfront deal that consumers understand they are entering.
  • Do consumers properly assess the deal and act on the implications? Upfront terms and the sales environment should not unduly manipulate consumers' decisions.
  • Can consumers avoid the term? We will be less likely to intervene if consumers can learn from their mistakes and avoid them in future by choosing a different business model or avoiding problems once they have entered the contract.
  • Are there benefits that outweigh the detriment? We recognise that some complex or surprising terms may be necessary in order to deliver benefits to consumers, but will need clear evidence that these benefits are sufficient to justify the harm, and cannot be achieved less harmfully.
  • Is there a wider impact on the market? Our assessment will take account of how competition might solve or worsen problems over time, and of whether the contract term impedes competition

We recognise that most businesses do not want to harm or mislead their customers and intend to comply with the law. We hope that this framework will help businesses to understand the OFT's priorities, and how they can avoid harming their consumers - by delivering clear upfront deals, backed up by small print that contains no hidden surprises.

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Market study details and report

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On the 2 August 2010, the Office of Fair Trading (OFT) hosted a roundtable discussion on the Consumer Contracts Market Study launched in February 2010. The purpose of the roundtable was to discuss the issues being considered in the market study.

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Related documents 

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Consumer contracts top tips

  • Read Consumer contracts Top Tips (pdf 73kb) for a summary of the key contract terms identified within the market study that are most likely to cause consumer harm. These top tips have been designed to help businesses establish clear and fair contract terms.

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Team leaders:  Laura Phaff  (020 7211 8701, and Simon Perrett (0207 211 8288,

Project director: Mary Starks  (020 7211 8307,

Senior responsible officer: Cavendish Elithorn  (020 7211 8170,

Media enquiries: Any media enquiries should be directed to a member of our Press Office.

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