Using Standard Form Contracts: How to Avoid a Nasty Surprise

The increasing use of standard form contracts is a subject to which solicitors and lawyers have paid only casual attention. Business-to-consumer standard form contracts fulfil an important efficiency role in the mass distribution of goods and services. These contracts have the potential to reduce transaction costs by eliminating the need to negotiate the many details of a contract for each instance a product is sold or a service is used. However, these contracts also have the ability to trick or abuse consumers because of the unequal bargaining power between the parties. The terms, often portrayed in fine print, are drafted by or on behalf of one party to the transaction. With few exceptions, the terms are not negotiable by the consumer. The consumer may not even see these contracts until the transaction has occurred, and in some cases, the seller knows and takes advantage of the knowledge that consumers will not read or make decisions on these unfair terms.