Indian Law on Standard Form Contracts

Journal of Indian Law Institute, Volume 62 Issue 4 (2020)

23 Pages Posted: 25 Aug 2021

See all articles by M. P. Ram Mohan

M. P. Ram Mohan

Indian Institute of Management Ahmedabad

Promode Murugavelu

Shardul Amarchand Mangaldas & Co, Advocates & Solicitors

Gaurav Ray

Supreme Court of India

Anmol Jain

Yale Law School; Melbourne Law School; National Law University, Jodhpur

Date Written: 2020

Abstract

A standard form contract is a reality of modern business setup. Its usage has evolved in two forms. First, where equal bargaining powers among parties ensure fairness; and second, where organisations with relatively higher bargaining power exploit this mechanism to include favourable terms. This paper, while elaborating on the evolution of standard form contracts in India, finds that to check this misuse, Indian courts have applied special rules of interpretation ascribing higher value to the purpose of the contract, and have even nullified contracts when their material part was affected by unconscionability. Another difficulty that these contracts face is called the battle of forms. However, the courts in India have failed to employ a uniform rule to unravel this difficulty. After analysing the current legal position on this subject, this paper develops the doctrine of ‘varied standpoints’ and argues that the courts should constantly apply the knock-out rule as it balances the law on consensus ad idem and the principle of acceptance of the contract by performance.

Keywords: Contract terms, Standard form contract, Bargaining power, Battle of forms, Counter-offer, Unconscionable terms

Suggested Citation

M. P., Ram Mohan and Murugavelu, Promode and Ray, Gaurav and Jain, Anmol, Indian Law on Standard Form Contracts (2020). Journal of Indian Law Institute, Volume 62 Issue 4 (2020), Available at SSRN: https://ssrn.com/abstract=3892293 or http://dx.doi.org/10.2139/ssrn.3892293

Ram Mohan M. P.

Indian Institute of Management Ahmedabad ( email )

Vastrapur
Ahmedabad, Gujarat 380015
India

Promode Murugavelu

Shardul Amarchand Mangaldas & Co, Advocates & Solicitors ( email )

India

Gaurav Ray

Supreme Court of India ( email )

New Delhi, 110001
India

Anmol Jain (Contact Author)

Yale Law School ( email )

127 Wall Street
New Haven, CT 06511
United States

Melbourne Law School ( email )

185 Pelham Street
Melbourne, VIC 3053
Australia

National Law University, Jodhpur ( email )

NH-65, Mandore
Jodhpur, Rajasthan 342304
India

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