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Tofaris on the Indian Contract Act



Stelios Tofaris (Cambridge University) has published "The Regulation of Unfair Terms in Indian Contract Law: Past, Present, and Future" in Mindy Chen-Wishart and Stefan Vogenauer, eds., Studies in the Contract Laws of Asia III: Contents of Contracts and Unfair Terms (Oxford University Press, 2020). Here's the opening: 

The law governing contracts in India is primarily found in the Indian Contract Act (ICA) of 1872. A painstaking perusal of the Act, however, offers little guidance on how unfair terms are regulated. This does not signify the lack of relevant rules in Indian law. Instead, one has to look more closely and broadly. "Where?" and "why?" are important questions that go to the heart of Indian contract law. Seeking answers requires an understanding of historical developments and present-day problems, which in turn inform future challenges. 

Section II provides an examination of the theoretical and doctrinal framework of the ICA in light of its history. This exposes the analytical parameters within which the issue of unfair terms was perceived at the time of its drafting.

Section III analyses the problems of unfair terms in the form that they have typically arisen, i.e. in standard form contracts, and discusses the way in which Indian courts have understood those problems.

Section IV describes the attempt to deal with unfair terms within the ICA. In view of the Act's theoretical orientation and doctrinal framework, this required innovative  use of its provisions, but such an approach was not without problems. .

Section V examines the alternative route adopted by Indian courts, which was to regulate such terms outside the ICA by following closely the techniques used by their English counterparts. This, however, brought its own set of problems.

Section VI looks at other legislation pertaining to unfair contract terms, especially the recently enacted Consumer Protection Act 2019, which seeks to  provide  a major overhaul in unfair terms regulation in consumer contracts.

Section VII identifies some of the future challenges facing Indian law in this area, including the desirability of drawing a firm distinction  between  consumer  and commer­cial contract law.

Section VIII concludes by highlighting some of the broader lessons for Indian contract law that emerge from the study of the regulation of unfair terms.

Further information is available here.

--Mitra Sharafi 

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