The Control of Unfair Contract Terms

Where the overall validity of a contract is not in doubt, a party may be allowed to rely on the invalidity of one of its clauses because it has not become part of the contract or is found to be ‘inappropriate’, ‘unreasonable’, ‘unfair’, contravenes ‘good faith’ or in some other way ‘grossly disadvantages’ a party. Some legal systems allow the judge to strike down such clauses only where they have been preformulated by one party and thus form part of its ‘standard terms of business’. Judicial control may also be limited to cases where the clause disadvantages a ‘consumer’. The chapter discusses the purposes of the judicial control of such clauses and the reasons on which their ‘unfairness’ may be based. In a final section the chapter deals with the preventive control of such clauses by way of criminal sanctions, group actions, and administrative controls.