standard form contract
Examples are insurance policies, bank account terms, tickets, and online terms of service. The weaker party has no real power to negotiate, so courts protect it in three ways: the terms must be brought to the party's notice before or at the time of the contract; exclusion clauses are construed strictly against the drafter (contra proferentem); and unconscionable terms may be struck down as opposed to public policy under Section 23 of the Contract Act, as in Brojo Nath Ganguly.
The Consumer Protection Act, 2019 adds a statutory remedy against “unfair contracts” between manufacturers or service providers and consumers.
Example
The clause allowing the employer to terminate permanent staff on three months' notice, imposed in a standard form contract, was held unconscionable and void.
In Indian law
- Section 23, Indian Contract Act, 1872; Section 2(46), Consumer Protection Act, 2019 (unfair contract)
- Central Inland Water Transport Corporation v. Brojo Nath Ganguly, 1986 INSC 66: unconscionable terms in contracts between unequal parties are void under s.23
See also
contra proferentem · contract · consumer
Read more in the study notes
- Unlawful consideration and object; e-contracts (Contract I)
- Insurance: nature, history and classification (Insurance Law)