chapter  10
20 Pages

Unfair contract terms legislation: is it good consumer law?

ByPAUL O ’ SHEA

Inequality of bargaining power is one of the structural features of consumer transactions. Standard form contracts are a prime example of this structural inequality. There is no clearer inequality between parties than when one can say take it or leave it to the other.1 Little wonder, then, that this area has attracted so much attention from legislators.2 Standard form contracts present such a challenge to classical notions of freely negotiated contracts that some authors have claimed that they are not contracts at all.3 Yet, standard form contracts are the basis of the vast majority of consumer transactions. These written agreements, almost always in standard nonnegotiable forms, help make consumer transactions special and help distinguish consumer law as an enclave or sub-system in which other norms interact with the black letter prescriptions of contract law. Attempts to address inequality of bargaining power in consumer transactions through the common law, equity and statutory unjust contract provisions have met with limited success. This is not surprising. Consumer law is different. The parties are structurally unequal. It is the structural nature of the inequality which is the appropriate target of good consumer law. Regulatory interventions to address inequality of bargaining power would be better focused less on individual bargains, and their circumstances, than on the structural inequality evidenced in all consumer transactions. The mechanism by which such inequality is often realised is the standard form contract. The Australian Consumer Law 20104 (ACL) is the latest in a series of legislative attempts to regulate standard form contracts.