Courts will soon have more leeway to strike down contracts containing oppressive or excessively one-sided terms if Parliament passes the newly proposed law that could reshape business and consumer agreements across the country.
Parliament has received the Law of Contract (Amendment) Bill, 2025 which aims to give judges powers to intervene in agreements where one party is clearly at a disadvantage.
This will mark a departure from the current practice where several courts have ruled that it is not their business to rewrite contracts for individuals who commit to bad deals. For instance, any contract that absolves a party from liability for death caused by their negligence will be rejected. Likewise, sale agreements that seek to absolve the seller from responsibility if the goods prove defective will be struck out.
‘The principal object of this Bill is to amend the Law of Contract Act to protect parties to a contract against unfair and unconscionable terms,’ reads the memorandum of the Wajir East Constituency MP Aden Daudi Mohamed-sponsored bill.
‘The Law of Contract Act provides for the application of English common law principles in contract law which has resulted in the use of unfair and unconscionable terms. Therefore, the bill seeks to prevent parties from relying on such unfair and unconscionable terms.’
Passage of the bill into law could reshape how contracts are drafted, enforced and contested across sectors ranging from finance and real estate to retail and services.
Currently, the country’s contract law primarily follows the principles of English common law, which emphasises the doctrine of freedom of contract. Parties are generally bound by the terms they sign, and courts intervene only in exceptional circumstances such as duress, misrepresentation, undue influence or fraud.
Under the proposed law, judges would be able to invalidate or modify contract provisions that are deemed grossly unfair, thereby enhancing protections for consumers, small businesses and other vulnerable parties.
Parties to a contract will not be permitted to include terms that exclude or limit liability for death caused by negligence of the other party.
Similarly, any clause that seeks to exclude or restrict a party’s liability for loss or damage arising from their negligence will be invalid unless the term is reasonable.
The bill clarifies that where a term attempts to limit liability for loss or damage resulting from negligence, a person’s agreement to that term will not in itself amount to a voluntary acceptance of risk.
‘Where a contract term excludes or restricts liability for loss or damage resulting from negligence, an agreement to the term by a person shall not indicate the person’s voluntary acceptance of risk,’ reads the bill in part.
In contracts involving a consumer, the supplier will be barred from excluding or limiting liability for loss or damage caused by a breach of contract. The supplier will also not claim to be entitled to render a contractual performance that is ‘substantially different’ from which was ‘reasonably expected’ of them.
The bill also prohibits suppliers from drafting contracts that exclude them from liability in case they sell defective goods.
‘In the case of goods supplied for consumer use, liability for loss or damage shall not be excluded or restricted by reference to a contract term contained in or operating by reference to a guarantee of the goods where the loss or damage arises from the goods proving defective while in consumer use; and results from the negligence of a person concerned in the manufacture or distribution of the goods,’ reads the bill in part.
The bill states that goods will be deemed to be in consumer use when a person is using them or possesses them for purposes other than exclusively for business.
Further, the bill says ‘anything in writing is a guarantee if it contains or purports to contain a promise or assurance that defects will be made good by complete or partial replacement or by repair, monetary otherwise.’