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Unfair Contract Terms
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Full Contract law lecture notes, with cases, case descriptions, current law and everything that could be on the exam.
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Unfair contract terms The case for state interference cf free markets
[A] The use of standard form contracts
Schroeder Music Publishing v. Macaulay –
“Standard forms of contracts are of two kinds. The first, of very
ancient origin, are those which set out the terms upon which
mercantile transactions of common occurrence are to be carried
out... The standard clauses in these contracts have been settled
over the years by negotiation by representatives of the commercial
interests involved”
“The same presumption, however, does not apply to the other kind
of standard form of contract. This is of comparatively modern
origin… The terms of this kind of standard form of contract have not
been the subject of negotiation between the parties to it… They
have been dictated by that party whose bargaining power, either
exercised alone or in conjunction with others providing similar goods
or services, enables him to say: …
The contract of adhesion – if you want these goods or services at all,
these are the only terms on which they are obtainable – take it or
leave it
State interference & unfair terms:
Rules specifically focused on fairness, but principles or
misrepresentation, estoppel and mistake also have this effect, albeit
indirect.
Policy makers forced to resolve tensions between freedom to
contract and enforcing ‘unfair’ agreements
The cost of non-interference: e.g. credit terms:
Relationship between level of service and price – max 5% APR –
have to have a good credit score – greater market for illegitimate
markets (loan sharks)
Effect on market development
Change nature but no substance of unfairness (e.g. if impose max
interest rate)
Identifying and resolving market failure
Collins regulating contracts (1999)
“The correct inference is that [unfair] contracts are much harder to
detect than we might suppose”
One rule or many?
‘Open textured’ tests – behavior much be reasonable
Allows consideration of fairness in all the circumstances
Cf. fixed, rigid standard
How to enforce?
Private enforcement – consumers: resources and expertise
Public bodies and monitoring costs
[B] Regulation: A brief history:
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