Standard form contracts

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Standard form contracts (or adhesion contracts) are business contracts which are prepared by a business to be used repeatedly in similar scenarios (car hire, travel, loans).[1] They are almost always non-negotiable.

s 27 of the Australian Consumer Law[2] specifies what constitutes a standard form contract.

This article is a topic within the subject Contracts.

Required Reading

Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 340-346 [12.10-12.25].

Introduction

[3] There are several issues with standard-form contracts. On the one hand,standard-form contracts have been perfected by the business and have been tested in court.

  • Removes cost and time of negotiations, and both parties know that the terms are likely to be enforced by the court.

However, it is for businesses to exploit the consumer as:

  • Standard-form contracts are rarely read
  • Even if they are read, some terms may be hidden through difficult language, small print, or within a large document
  • Change or negotiation of the contract is impossible (competitor businesses' contracts will likely be similar)
  • There is social pressure to sign (i.e. the customer just wants to hire his car)

Exploitation is deterred by courts and the consumers themselves. The courts provide protection through applying the Australian Consumer Law and other forms, whilst the consumers protect themselves by shunning or bad-mouthing businesses which employ exploitative tactics (thus dissuading them from doing so).

References

Casebook refers to Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009).

Textbook refers to Paterson, Robertson & Duke, Principles of Contract Law (Lawbook Co, 3rd ed, 2009).

ACL refers to the Australian Consumer Law.

  1. Robert A Hillman and Jeffery J Rachlinski, 'Standard-form contracting in the electronic age' (2002) New York University Law Review 429 in Casebook, pp. 340-5 [12.15]
  2. Part of the Competition and Consumer Act 2010 (Cth) and applies throughout all Australian jurisdictions.
  3. Robert A Hillman and Jeffery J Rachlinski, 'Standard-form contracting in the electronic age' (2002) New York University Law Review 429 in Casebook, pp. 340-5 [12.15]
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