Bill aiming to protect parties from unfair and unconscionable terms represents a marked shift in Kenyan contract law

Kenya’s National Assembly has gazetted the Law of Contract (Amendment) Bill, 2025 (Bill), signalling an intention to build protection against unfair and unconscionable terms into Kenya’s contract law framework. If enacted, the Bill would impose statutory limits on unfair and unconscionable contract terms.

The gazettement of the Bill follows a clear judicial trend towards the scrutiny of unfair and unconscionable contractual terms, most recently through the Court of Appeal decision in Dhiman v Shah [2025] eKLR, where the Court reaffirmed the doctrine of unconscionability in contract law and the power of courts to intervene where a resulting agreement is highly oppressive or unfair.

The Bill, whose objective is to protect contractual parties from unfair and unconscionable terms, is yet to undergo first reading at the National Assembly.

Key proposals

The Bill contains the following key proposals:

• Requirement of reasonableness: The Bill introduces a new standard of ’requirement of reasonableness’ under which a contractual term must be fair and reasonable in light of the circumstances that were known, or ought reasonably to have been known, at the time the contract was entered into.

• Prohibition against exclusion of liability for negligence: Under the Bill, a person cannot, through a contractual clause, exclude or restrict liability for death caused by negligence unless the contractual clause satisfies the ‘requirement of reasonableness’. Further, the Bill stipulates that where a contractual term limits or restricts liability resulting from negligence, a contracting party’s agreement to such a clause will not indicate a voluntary assumption of risk.

• Prohibition against exclusion of liability for breach of contract: the Bill precludes suppliers from relying on a contractual clause to exclude or restrict their liability to a consumer when the supplier is in breach of the underlying contract, unless the contractual terms meet the requirements of reasonableness.

• Prohibition against exclusion of liability arising from the sale of defective goods: under the Bill, for goods supplied for consumer use, liability for loss or damage arising from defects due to manufacturer or distributor negligence, or arising from the goods proving defective while in consumer use, cannot be excluded by terms in or operating through a written guarantee.

• Prohibition against exclusion of liability for conditions or warranties for agreements not governed by the hire purchase or sale of goods acts: the Bill proposes to preclude the exclusion or restriction, by reference to a contract of liability, where the liability is in respect of the right to transfer ownership or give quiet possession.

Practical implications

Overall, the proposed amendments represent a marked shift in Kenyan contract law, away from the traditional emphasis on freedom of contract towards enhanced judicial scrutiny underpinned on contractual fairness. By introducing a statutory ’requirement of reasonableness’ and limiting the enforceability of exclusion and limitation clauses in specific circumstances, the Bill, if enacted, would materially recalibrate how contractual risk may be allocated between parties. We therefore anticipate that the Bill, if enacted, would open the door for more contractual scrutiny.

More broadly, it is likely that the changes in the Bill may also stifle the predictability that underpins contract law. The introduction of a reasonableness assessment, to be applied by courts with reference to the circumstances at the time of contracting, may affect how parties evaluate and structure risk. For example, by providing that contractual clauses will not constitute a voluntary assumption of risk, the Bill, if enacted, would significantly weaken the ability of parties to conclusively allocate negligence risk by contract. This may expose contracting parties to liabilities they believed had been contractually ring-fenced.

Taken together, if enacted, it is likely that the Bill would significantly alter contractual autonomy and certainty, particularly in relation to the drafting and enforceability of exclusion and limitation of liability clauses and thereafter, the determination of any disputes arising out of such clauses.

Cecil Kuyo is a Partner in the Nairobi office of Bowmans who specialises in alternative dispute resolution, local and international arbitration, and court litigation. Radhika Arora is a Senior Associate with particular experience in insolvency and restructuring, construction, banking and financial services, and shareholder disputes. Charles Omondi Oyeng’ is an associate in the Nairobi office who specialises in the dispute resolution and litigation practice in Kenya.