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Report No. 199

(b) Specific Relief Act, 1963 (Substantive unfairness):

There are two provisions in section 20 of the Specific Relief Act, 1963 in part of cl.(a) and in cl.(b), which relate to substantive unfairness and they are as follows:

Under clause (a) of sub section (2) of section 20

(a) Where the terms of the Contract are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or

Under Clause (b) of sub section (2) of section 20:

(b) When the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non performance would involve no such hardship on the plaintiff.

Are the above provisions of Indian law as to 'procedural' and 'substantive' unfairness sufficient?

It will be seen that the sections of the Indian Contract Act, 1872 which deal with procedural unfairness, while they do deal with undue influence, coercion, fraud, and misrepresentation and those of section 20 of the Specific Relief Act, 1963, do not deal with other circumstances under which a contract is entered into which may lead to an unfair advantage to one party, thereby making it unfair, such as

(a) where the terms are not negotiated or

(b) where they are contained in standard terms of contract or

(c) where the terms are in small print or are camouflaged and not transparent and other situations.

These and other aspects, in our opinion, require to be considered in depth for the purpose of 'procedural' fairness.

Likewise, in the matter of 'substantive' unfairness, the sections 10, 21 to 30 of the Contract Act, deal with several types of 'void' contracts and section 20 of the Specific Relief Act, 1963 with other situations, but not with contracts or terms which are otherwise oppressive, harsh or cast unreasonable burden on one of the parties. Such provisions require to be considered and added.

Nor does section 67A as proposed in the 103rd Report of the Law Commission (1984) deal with the other 'procedural' and 'substantive' aspects of unfairness which today have been brought into the law in several countries. We have already segregated the 'procedural' unfairness provisions in other countries from the 'substantive' unfairness provisions in those countries in Chapters VIII and IX, with a view to consider which of them can be brought into our law with such modifications as may suit our country.

It is, therefore, proposed to deal with certain new provisions regarding unfairness, both procedural and substantive, which require to be incorporated into the statute law, in addition to what are contained in the Contract Act, 1872 and the Specific Relief Act, 1963 and such general provisions of unfairness, procedural and substantive, will be dealt with in Chapter XI.

Unfair (Procedural and Substantive) Terms in Contract Back

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