ABSTRACT
We have already encountered standard form contract documents on several occasions: for example the sales agreement in L’Estrange v Graucob Ltd, the standard conditions of the freight forwarding trade in Evans (Portsmouth) Ltd v Merzario Ltd and the documents in the Butler Machine Tool ‘battle of the forms’ case. In the USA, and there is no reason to believe the position is different here, it has been said that:
It is clear therefore that standard forms of contract are to be found in operation in both the inter-business and the consumer contract fields. In the Parliamentary debate prior to the passing of the Unfair Contract Terms Act in 1977 (which specifically recognises the existence of ‘written standard terms of business’), the point was made that: ‘It is probably the case that most contracts are based on standard conditions to some extent irrespective of the relative bargaining strength of the parties.’ There is no statutory definition of a standard form contract in this country but in Israel the legislature has defined it as ‘a contract ... all or any of whose terms have been fixed in advance by, or on behalf of, the person supplying the commodity or service ... with the object of constituting conditions of many contracts between him and persons undefined as to their number or identity.’ (It is not necessarily only a supplier who draws up such a contract. If this were so, there would be no ‘battle of the forms’.)
It was not considered advisable to attempt to define ‘standard form contract’ in the Unfair Contract Terms Act, but to leave the question when it arose to the judiciary. Section 3 of the Act is concerned with, among other things, the reasonableness or otherwise of an exclusion clause where ‘written standard terms of business’ are used – indicating thereby situations in which there has probably been a lack of genuine negotiation between the parties. A Scottish case, McCrone v Boots Farm Sales Ltd (1981), raised the issue of what is a ‘standard form contract’, and, without attempting a comprehensive definition, Lord Dunpark was of the opinion that the phrase was ‘wide enough to include any contract,
whether wholly written or partly oral, which includes a set of fixed terms or conditions which the proponer [offeror] applies, without material variation, to contracts of the kind in question’. (This was a case involving a consumer and a business entity, the latter drawing up the contract terms.)
In an earlier case, Schroeder Music Publishing Co Ltd v Macaulay (1974), Lord Diplock gave his views on the nature of standard form contracts at some length:
This account enables us to develop some important points:
(1) The basic reason underlying the widespread use in present-day business of the standard form of contract is the need to ‘facilitate the conduct of trade’. This may be because the parties regularly enter into complex technical and legal relations (as in the fields of, for example, international trade, civil and mechanical engineering and building) or because the dealings in question throw up a multiplicity of transactions involving to some significant degree the standardised and mass-produced products, services and marketing techniques which are a common feature of modern business.
