Standard form contracts

Prakash s Deshmukh (Querist) 11 February 2013 This query is : Resolved
what are the socio-legal implications of the standard form contract in India? if at all any socio-legal implications leading to cause problems how that problems can be overcome with the help of existing laws and what amendments do you suggest to resolve the problems arising due to standard form contracts in India.

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Adv.R.P.Chugh (Expert) 11 February 2013
Although it's an academic query, I'd still try to pen down my thoughts on it, it is an area of profound concern as in these cases the freedom of contract is a myth and in light of inequality of bargaining power opens up a great possibility of exploitation of the weak. There is a need for legislation in this regard on the lines of UK's unfair contract terms act. I believe the Law Commission has also recommended the same in one of it's reports. However the consumer or the weaker party does not always stand unprotected and the judiciary has come up with certain safeguards, which may be briefly enumerated as under :-
1. Reasonable Notice – Company to give adequate notice of terms to customer.
2. Notice should be contemporaneous with Contract – and not subsequent. If subsequent - need not bind.
3. Theory of Fundamental Breach – where breach of fundamental core of contract by co. even widest of exemption clauses won‟t save from liability.
4. Strict construction – Exemption clauses to be strictly construed – contra preferentum
5. Liability in tort – even where liability in contract excluded – tort liability may be fastened.
6. Unreasonable terms – disregarded by courts in appropriate cases
7. Liability cannot be imposed on third parties by exemption clauses.

Hope this answers in some measure your curiousity.

Good Luck !

Adv. Bharat Chugh
Supreme Court of India