Report No. 199

Chapter XII

Discussion and Recommendations for Draft Bill (2006) on Unfair Terms (Procedural and Substantive)

We have referred in Chapter No. XI to some of the provisions of the proposed Bill. We have stated that we shall bring in new provisions to deal with 'procedural' and 'substantive' unfairness, and that, at the same time, we do not propose to disturb the existing provisions of the Indian Contract Act, 1872 and of the Specific Relief Act, 1963. In fact, as stated earlier, we propose to merely list existing procedural and substantive provisions of these Acts for purpose of mere classification and will not disturb them. However, we propose to have 'general provisions' both for 'procedural' and 'substantive' unfairness in the new Bill, as stated earlier. We now proceed to explain certain aspects of the proposed Bill.

Initially, we propose to give certain general definitions of 'procedural unfairness' and 'substantive unfairness' but so far as the existing procedural provisions of the Indian Contract Act, 1872 and Specific Relief Act, 1963, are concerned, we do not want to use the word 'unfairness' lest it may be wrongly understood that the existing provisions are subject to the new definitions. Instead, as stated above, we propose just to describe the respective provisions as merely 'procedural' and 'substantive' and we shall eschew using the word 'unfairness' while referring to these sections.

(A) Chapter I of the Bill will contain definitions. There are a few words which require definitions.

(a) 'contract':

The Indian Contract Act, 1872 defines both 'agreement' and 'contract' separately and several sections too use these words separately.

"Section 2(e) of the Contract Act defines an 'agreement' as follows:

"2(e): Every promise and every set of promises, forming consideration for each other, is an 'agreement'.

"Section 2(h) defines a 'contract' as follows:

"2(h): an agreement enforceable by law is a "contract".

Section 10 of the Contract Act states as to 'what agreements are contracts' while several other sections use the word 'contract'. Section 19 refers to 'validity of agreement without consent', section 20 deals with void agreements, so do sections 23, 24, 25, 26, 27, 28, 29 and 30.