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Report No. 199

Chapter IV

Judicial Prouncements in India on Unfair Terms

We see from the preceding discussion in Chapters II and III that though every standard form contract may not be an unconscionable one, there are reasonable chances of some standard form contracts being tainted with unfairness as there is very little scope for negotiations. Further, the existing provisions of the Indian Contract Act, 1872 show that the legal control under the said provisions is also not quite adequate to come to the rescue of the weaker party against harsh contracts.

The judiciary in India has, in several cases, indeed come to the rescue of parties from the menace of unreasonable terms in standard form contracts. The experience has shown however that in the majority of cases where the weaker party, under pressure of circumstances (generally economic or due to ignorance) arising out of inequality of bargaining power, enters into such contracts, the courts may not be able to help because all such cases do not fall within the four corners of Sections 16, 23 or 27 of the Indian Contract Act, 1872.

Unfair (Procedural and Substantive) Terms in Contract Back

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