Unfair Contracts
It is an intuitively attractive proposition that commercial activity on the vast scale, and at the pace at which modern economies operate, requires finality and certainty of contracts. Once a contract has been signed it should be immutable. Proponents of the view that people should have an untrammelled freedom of contract in relation to commercial transactions would moreover assert that the courts and the legislature should not interfere with the bargains reached by parties who willingly enter into contracts with each other.
Critics of this model of the law and economy hold that there is often an imbalance of power and information between consumers and suppliers, that suppliers often impose unfair terms of contract on consumers, and that by enforcing such contracts the courts disregard the underlying realities of consumer contracts and the weakness of consumer contracting power.
The inviolability of bargains reached between consenting persons, and the enforcement of promises made voluntarily, is not only a significant condition for economic growth, but is also an important part of any legal system that strives to achieve maximum fairness, and our courts have often emphasised the importance of this principle.
Especially during the twentieth century so-called standard form contracts have become an accepted and universal mechanism for the conclusion of contracts between consumers and suppliers. It is understood by both consumers and suppliers that very often such contracts will not be read by the consumer (for example when the consumer purchases an airline ticket or rents a motor vehicle). Some suppliers however abuse the principle of freedom of contract by inserting provisions in contracts that are one-sided and that it knows consumers would not expect to find in the contract.
The Consumer Protection Act now allows the Consumer Tribunal and the Consumer Courts to review certain unfair consumer contracts.
Critics of this model of the law and economy hold that there is often an imbalance of power and information between consumers and suppliers, that suppliers often impose unfair terms of contract on consumers, and that by enforcing such contracts the courts disregard the underlying realities of consumer contracts and the weakness of consumer contracting power.
The inviolability of bargains reached between consenting persons, and the enforcement of promises made voluntarily, is not only a significant condition for economic growth, but is also an important part of any legal system that strives to achieve maximum fairness, and our courts have often emphasised the importance of this principle.
Especially during the twentieth century so-called standard form contracts have become an accepted and universal mechanism for the conclusion of contracts between consumers and suppliers. It is understood by both consumers and suppliers that very often such contracts will not be read by the consumer (for example when the consumer purchases an airline ticket or rents a motor vehicle). Some suppliers however abuse the principle of freedom of contract by inserting provisions in contracts that are one-sided and that it knows consumers would not expect to find in the contract.
The Consumer Protection Act now allows the Consumer Tribunal and the Consumer Courts to review certain unfair consumer contracts.