A new term to account for the free volume effect in the UNIFAC model has been developed. The new term is simpler and more sophisticated than the present free volume term. The new free volume term has been developed following the work of Elbro et al. and Flory. A complete description of the UNIFAC model is given. The results obtained by applying the model with the new free volume term to aqueous-polymer systems and nonaqueous- polymer systems are given.