CMA refreshes its unfair contract terms guidance: what it means for your consumer terms

On 22 July 2026 the Competition and Markets Authority published a rewritten CMA37, its guidance on the unfair contract terms provisions in Part 2 of the Consumer Rights Act 2015. It arrives with a separate technical note aimed at legal advisers (like me) and enforcers, and the CMA has refreshed its shorter “how to write fair contracts” guides at the same time. The version it replaces had been in place since 31 July 2015, so this is the first substantive refresh in a decade.

If any part of your customer base is made up of consumers, this is the document a regulator will have open in front of it when it looks at your terms. No business owner I know will have read it mind, that’s why they pay me to write nice plain english contracts.

The law has not changed, but the guidance has

This is the first thing to say to any client who reads a headline and panics. The CMA was explicit at the consultation stage that, because the substantive law had not moved since 2015, it had generally not revised its interpretation of it. The exercise was about simplification, presentation and readability, together with an update to reflect post-Brexit case law and the Digital Markets, Competition and Consumers Act 2024.

The practical result is a much more usable document. The old package ran to roughly 245 pages across three documents. The new main guidance is 134 pages, with the legislative background hived off into the technical note. There are summary-at-a-glance boxes at the head of each detailed chapter, two flowcharts (one for how Part 2 works overall, one for the core exemption), and the content on potentially unfair terms has been reorganised thematically rather than clause by clause through the Grey List. Given how much the Grey List items overlap in practice, that is a sensible call.

So no, you may not need to rewrite your terms because the guidance changed. But if they’ve not been reviewed for more than 5 years, I’d probably get them looked at by a contract lawyer.

What has actually changed is the enforcement picture

In 2015 the realistic downside of an unfair term was that a court would not enforce it, and that in a bad case the CMA or Trading Standards would seek an injunction or an undertaking. That is still available under Schedule 3 to the Consumer Rights Act. What sits alongside it now is the DMCCA regime, and the new guidance is threaded through with references to it.

Two routes exist. Under the court-based regime in Chapter 3 of Part 3 of the DMCCA, the CMA, Trading Standards and sector regulators can seek orders requiring a trader to stop and rectify its conduct, including compensating consumers, or to pay a penalty of up to £300,000 or, if higher, 10% of global turnover. Under the direct enforcement regime in Chapter 4 of Part 3, the CMA alone can investigate, decide and impose penalties without going to court at all.

There is a second sting. The guidance states that using, recommending or enforcing a contract term that is unfair under the Consumer Rights Act is also inherently likely to be treated as an unfair commercial practice under Chapter 1 of Part 4 of the DMCCA. One badly drafted clause is therefore capable of generating exposure under two regimes at once.

The reach is not limited to UK businesses either. Unfair terms law can be enforced under Part 3 of the DMCCA against traders outside the UK where the trader has a place of business here, carries on business here, or directs activities at UK consumers.

Digital contracts: the transparency chapter now has teeth

The most practically significant expansion between the draft and the final guidance is at paragraph 4.42, which deals with transparency in a digital environment. The CMA sets out, non-exhaustively, what it expects: contracts or notices offered in more than one format, such as HTML text as well as PDF; digital contracts that are accessible and readable whatever device is used; and terms that are readily available at all times on the website or app.

The important qualification is the one many businesses might miss. Making terms accessible in a single click from the home page is, in the CMA’s words, unlikely on its own to be sufficient for surprising or onerous terms. Those need to be surfaced during the consumer journey, as part of the decision, and flagged prominently. The CMA is receptive to information being fed in smaller pieces through the journey using pop-ups or hover-over text, and to key terms being explained in an FAQ format, provided the full terms remain available in one place and the FAQs do not contradict them or substitute for them.

Paragraph 4.43 goes further and, frankly, reads as a criticism of how most commercial terms are drafted. Text that is densely written, heavily cross-referenced, or cluttered with statutory references and elaborate definitions is more likely to confuse the average consumer and therefore more likely to fail the transparency test. Nor is the answer to make everything prominent, which the CMA says risks overwhelming consumers and undermining the point of the exercise. Emphasis has to be selective and targeted at the terms that hurt: early termination fees, automatic renewals, complex pricing.

Paragraph 4.48 adds that traders should not use false time pressure, such as countdown timers or automatic removal of items from a basket, where that would discourage proper review of the terms.

The reason this is important is something the guidance makes a point of saying twice, citing Parker-Grennan v Camelot UK Lotteries Ltd [2024] EWCA Civ 185: the transparency requirement goes further than the common law test for incorporation and applies even where terms have been properly incorporated. A tick box does not fix the problem. 

Jurisdiction and governing law clauses

Paragraph 2.16 has been expanded on what counts as a close connection with the UK. Under section 74 of the Consumer Rights Act, Part 2 applies to a contract with a close connection to the UK even where the parties have chosen a foreign governing law. The CMA says a close connection is likely where the contract resulted from the trader directing commercial activities at UK consumers, where it is otherwise concluded or performed here, or where the impact of enforcement will be felt substantially here. The consumer’s place of residence is relevant but not determinative. The authorities cited are Soleymani v Nifty Gateway LLC (CMA intervening) [2022] EWCA Civ 1297, Payward, Inc v Chechetkin [2023] EWHC 1780 (Comm), and Eternity Sky Investments Ltd v Zhang (CMA intervening) [2024] EWCA Civ 630.

Paragraphs 6.89 to 6.92 then deal with exclusive jurisdiction and choice of law terms, and contain the point I would most expect an English drafter to trip over. Consumers must not be prevented from starting proceedings in their local courts, and the CMA gives as an example a term requiring disputes to go to the courts of England and Wales where the contract is being used in another part of the UK with its own court system. If you sell across Britain on a single set of terms with an England and Wales exclusive jurisdiction clause in it, that clause is squarely within the CMA’s example of what does not work.

The illustration given as unlikely to be fair is short enough to quote:

“Any dispute arising out of this agreement shall be subject to the jurisdiction of the courts where the company is located.”

Choice of law is treated more permissively. Specifying a law other than that of the consumer’s home is not unfair in all circumstances, but the assessment is fact specific and turns on matters such as whether the two legal systems differ in ways that could produce unforeseen outcomes, and whether adding a second body of law to the hearing would make the dispute difficult, complex and costly for the consumer.

The one set of terms for everyone problem

If I had to pick a single paragraph for owner-managed businesses to read, it would be 6.11. Among the circumstances in which exclusion and limitation terms are more likely to be unfair, the CMA lists terms that are included in contracts the trader uses with trade customers as well as consumers. The point is made bluntly: the fact that certain customers, even a majority, are not consumers does not justify exclusion or limitation terms that could affect consumers. And any provision that tries to sidestep this by having the customer self-certify that they are not a consumer would be prohibited.

A great many businesses I act for run one set of terms across their whole customer base because it is administratively simpler. Where any meaningful slice of that base is individuals contracting wholly or mainly outside their business, that approach is now an identified enforcement risk rather than a tidy shortcut. Remember too that under section 2(4) of the Act, if a trader says an individual was not acting as a consumer, it is for the trader to prove it.

The same paragraph disposes of the standard defensive drafting. Vague saving clauses such as “the customer’s statutory rights are not affected” or “liability is excluded so far as the law permits” do not rescue an otherwise unfair disclaimer. As the CMA puts it, an unfair disclaimer is not made acceptable by being partially contradicted by unexplained legal jargon whose practical effect only a lawyer would understand.

Automatic renewal, and what is coming next

The automatic renewal section at paragraphs 6.79 to 6.81 is worth reading in full if you run a subscription model. Terms are more likely to be unfair where the consumer has to give unreasonably early notice not to extend, where cancellation involves disproportionate cost or inconvenience, where the contract renews onto a fresh fixed term when a rolling contract would meet the consumer’s interest, where the term relies on consumer inertia or the absence of effective reminders, or where auto-renewal is switched back on without express consent after the consumer has turned it off.

Running the other way, renewal terms are more likely to be fair where the consumer gets an effective reminder in good time, gave express consent to auto-renewal in the first place, has a cooling-off period following renewal, renews onto a cancellable rolling contract, and can switch auto-renewal off easily at any point.

The DMCCA subscription contract provisions in Chapter 2 of Part 4, which include a right to two 14-day cooling-off periods under sections 264 to 266, were not in force when the guidance was published. When they commence they will sit on top of Part 2, and compliance with them may feed into the fairness assessment. Separately, the CMA is running a webinar on 24 September 2026 as a practical refresher on the framework and the new guidance.

One for the boilerplate: entire agreement clauses

This is worth a specific mention because it is the clause most often lifted straight from a business-to-business precedent. At paragraph 6.26 the CMA says entire agreement terms are more likely to be unfair where they let the trader disclaim liability for oral promises the consumer reasonably relied on, and it expressly includes in that category terms saying employees or agents have no authority to make binding statements, or that changes must be in writing or signed by a director. Part 1 of the Consumer Rights Act separately prohibits entire agreement terms in contracts for the supply of services. The example given as unlikely to be fair is “No verbal agreements will be honoured.”

What I would do about it

Nothing here calls for a wholesale rewrite, particularly if you have reasonably modern written terms. It calls for a targeted review, and I would sequence it like this.

• Establish honestly whether any of your customers are consumers on the wholly or mainly test, remembering the burden of proof sits with you.
• If they are, separate your consumer terms from your business terms rather than running one hybrid document.
• Review the high-risk clauses first: termination fees, price variation, automatic renewal, cancellation formalities and liability exclusions.
• Strip out the vague savings language and replace it with wording that actually explains the position.
• Check that any jurisdiction clause works across all the UK legal systems you sell into.
• Look at the buying journey, not just the document, and identify where onerous terms are surfaced.

A word of caution

CMA37 is guidance. It says so itself, at paragraph 1.4: it is not a substitute for, or a definitive interpretation of, the law, and only the courts can decide whether a particular term is unfair. It would be wrong to treat every line of it as though it were statute, and there are places where the CMA’s position is more expansive than the case law strictly requires.

That said, the CMA can now impose penalties without going to court. Its published view of what fairness requires therefore carries a great deal more practical weight than it did when the last version was published in 2015. Treating it as merely advisory would be a mistake.

If you would like your consumer-facing terms and conditions reviewed against the new guidance, get in touch.

Sources

CMA, Unfair contract terms (CMA37), 22 July 2026

CMA, Technical note: unfair contract terms, 22 July 2026

CMA, Unfair contract terms (CMA37) publication page

CMA, How to write fair contracts

Consumer Rights Act 2015 (legislation.gov.uk)

Digital Markets, Competition and Consumers Act 2024 (legislation.gov.uk)

CMA consultation, Refreshing our guidance on unfair contract terms (closed 19 March 2026)