Introduction
Now, we see that the legal system has reformed and developed compared to past rules and regulations of contract law. These evolutions of law resolve some of the difficulties that come with changes in time and situations. We can often observe that the standard form of a contract is evolving now. The standard form of contract is a kind of contract that includes some terms and conditions that are fixed and exclude liabilities towards the contract.
With the development of the economy and industry, the contracts cross thousands of limits daily. We often see that a customer or a person who has entered into a contract does not read the terms and conditions mentioned in a contract. The giant company takes advantage of the weakness of the consumer and imposes some complex terms and conditions that look like private legislation. That falls under a unique technique to exempt all liabilities under the contract whi, which results in a conversion in litigation in the court. Sometimes, It is difficult for the court to protect the rights of a weaker party. The standard form of the contract is done worldwide, meaning the same problem exists worldwide; it must evolve legally.
What is the Standard Form of Contract?
In simple words, we can say that the standard form of contract is a type of contract in which the other contracting party does not want to negotiate the terms and conditions described in the contract. In this situation, a party who intends to enter the contract has only limited options: either enter into such a contract or leave it.
These types of contracts are also known as adhesion or boilerplate. The right to negotiate is a basic fundamental right that is affected by such types of agreements. Insurance company contracts, purchasing products from online or e-commerce sites, signing up via e-mail and social networking websites, etc., are the best examples of the Standard contract form.
What is the legal Entity of a standard form of contract (SFC)?
When it comes to the formation of Indian contracts, there is little difference between the standard form and the general contract. The standard contract form is also governed by the various provisions of the Indian Contract Act 1872.
SFC is commonly made in large quantities on a daily basis. The main reason for that is the fast growth of industrial development; that’s why it is made and executed on a big scale nowadays. There are demands for creating standard rules and regulations on SFC to protect the rights of the weaker party of the standard form of contract.
The reasons for people to accept the standard form of contract
Some of the common reasons for people accepting SFC which is given below;
- People need to read the clauses of the agreement carefully, or even if they read, they purposely ignore putting it in writing.
- Sometimes, when a person wants to enter into a contract, it may have some different clauses that are mandatory and required to be accepted to proceed to the next terms. Then, after they tell you the remaining terms and conditions,
- Most of the standard forms of the contract are based on the take it or leave it. In this way, the contracting party has no choice but to accept it.
- The most common reason for accepting SFC is that the contracting party mainly focuses on the price mentioned in a contract. The contracting party does not care about any other clauses of the contract that may cause harm to his rights.
- Giant companies apply some tricks, such as forcing the contracting party to say that all terms and conditions were orally discussed before signing SFC. In that situation, the contracting party unwillingly becomes bound.
How do we become safe from exploitation from the standard form of contract?
In the standard contract form, the contracting party quickly becomes a sufferer from exploiting their rights. However, some rules enable them to protect their right. By following that rules, a weaker party can defend their right, which is given below;
Send a notice to the other contracting party:
Initially, this is the first step that needs to be taken by the affected party of the contract. They must notify the other party reasonably to provide adequate information about the contract. Through the notice, the contracting party can learn all the terms and conditions laid down in the contract. In the case of Henderson Vs. Stevenson, from the House of Lords, laid down that principle: as per the case facts, a person who purchases a ship ticket on the front of the ticket mentions the boarding place and arrival place. But on the back side of that ticket, note the terms and conditions, which the party did not see because they are not mentioned on the face of the ticket. The party has to turn over and see the back side of the ticket; the court held that a party can only agree to those terms if they have seen or told them about that. The information on the terms and conditions needs to be provided before or at the time of the contract when the party enters the contract.
Contractual Document
Making a standard contract means creating a contractual document between the parties and signing it, and it is also valid and enforceable in a court of law. Sometimes, the contracting parties need clarification on whether it is a contractual document or a receipt. But there is little difference between them. A contractual document may clearly explain the conditions and how they are expressed and implied. But if it needs to be demonstrated that it is a receipt. The contracting parties must sign the contract after accepting the terms and conditions mentioned in such document. The contracting parties need to ensure that some misleading clauses, such as misrepresentation, fraud, mischief, etc., are not included in a contract, which creates a void agreement. As a result, it can not be enforceable in a court of law.
Avoid unreasonable or unfair terms in a contract
Unreasonable terms must be mentioned for the safety of the weaker party in the contract. The contracting parties must exclude these terms in a contract. Unreasonable terms may lead to conflict and go against the purpose of an agreement, or they may become against public policy. it will help to protect your right against the standard form of contract.
The doctrine of a fundamental breach
The theory of fundamental breach of contract is one of the most effective tools for safeguarding the weaker party of a contract. An essential basis for a contract is that it is binding to both parties. Suppose one of the parties does not follow that rule, which will result in a breach of contract. In that situation, the weaker party of a contract will also not be bound to follow the contract. In this way, the fundamental breach protects the rights of the weaker party.
Exemption clauses and third-party
This clause refers to the doctrine of privity of contract, according to which the contract is made between the contracting parties who are directly involved in it. Any third party has no right to enjoy the rights provided in the contract, and nor can they hold any liability toward the contract. In this way, the third party has no right to get benefits from the contract because they do not hold any responsibility for the irregularity of the agreement.
Ambit and authority of the contract act
No strait jacket formula is available in the Indian Contract Act, which prescribes particular terms and conditions legally binding to the contracting parties. Thus, the parties are free to create, as per their convenience mode, a contract on the base they agree upon, which is not prohibited by law.
A common issue that comes out under the Indian Contract Act is that there are different provisions provided for different acts. No particular rule is provided under the act that governs all different acts in the same way regarding the contract. For example, there are different rules governing different kinds of contracts. There are particular provisions governed under the Railway Act and Different rules for public transport rules, which the government governs. Moreover, different types of rules are applied in different industry sectors.
Conclusion
The standard contract form clearly spells out all the terms and conditions in printed form. The Indian Contract Act governs the rules and regulations of all kinds of contracts. However, no particular act regulates or deals with the standard contract form. As a result, the weaker party of the contract suffers exploitation, and there is no rule defined for the dominant party to punish for such an act.
The legal system is evolving, and the courts have acquired different methods for protecting the rights of the weaker party. Based on natural justice and other methods, the court protects the interest of the weaker party. Because of economic and industrial growth, such types of contracts are made on a large scale daily. Providing a suitable platform for consumer awareness is one of the best ways to protect the protection of the interest of the weaker party. The contracting parties also need to adopt adequate safeguards. For example, they must carefully read the terms and conditions of the agreement, and if they feel any confusion, they can make a specific query about that.
Also Read:
What Is Implied Contract Under The Contract Law?
