Standard form of contract is a contract where the contract is drafted by one party and signed by the other party without any change or modification in it.

In other words, the standard form of a contract is a contract between two parties that does not do any negotiation in the preprinted standard format of the contract.

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Standard Form of Contract

Standard Form of Contract

Standard form of contract means “take it or leave it” in the layman’s words. Standard form contract is a type of contract where two parties are legally bound to do a certain thing, in which one party has all the bargaining power towards the other and uses this power to write the contract for his advantage.

Black’s Law Dictionary defines the meaning of a standard form of contract as “A standard form of contract is prepared by one contracting party and which is to be signed by the other party, whereas the other party is not able to negotiate with the terms and conditions of the contract.”

In this type of standard form of contract, the other party has not any scope to negotiate the terms and conditions of the contract, whereas the other party has only two options either to accept the contract with those conditions or leave it.

Standard Form of Contract in India

Standard Form of Contract in India or the Form of Contract Agreement in India is nowhere defined in the Indian Contract Act. In India, the law of contracts does not provide any specific provision between the standard form of contract and the general contract.

The Indian contract law system provides the legal provisions for the type of general contract and the standard form of contract is governed by the laws provided for the general contract. But in different countries like USA and UK, the role of natural justice and good conscience comes into the picture to safeguard the rights of the weaker party.

In the case of State of Rajasthan v/s Basant Nahata, the Supreme Court of India held that the opposed public policy with respect to the standard form of contract under section 23 of the Indian Contract Act, as

  1. Sec. 23 of the Indian Contract Act,
  2. Sec. 7(l) (ii) of Foreign Awards (Recognition and 35 Enforcement) Act, 1961,
  3. Sec. 3 (1) of U.P. (Temporary Control of Rent and Evictions) Act 1947 and
  4. Sec. 34(2) (b) (ii) of Arbitration and Conciliation Act, 1996.

Legal Status of Standard Form of Contract (SFC)

The difference between the standard form of contract and the general contract is nowhere provided under the Indian Contract Act, 1872. Whereas, the standard of a contract is a type of contract which is governed by the legal provisions which are provided for the general contract under the contract act.

This type of contract is common where there is heavy industrial development and nowadays these contracts are executed on the large scale.

In the case of Henderson v/s Stevenson, the plaintiff bought a steamer ticket on the face of which was these words mentioned only: “Dublin to Whitehaven”; on the back were printed certain terms and conditions one of which excluded the liability of the company for loss, injury or delay to the passenger or his luggage. The plaintiff did not see the back of the ticket, nor was there any indication on the face about the conditions on the back. The plaintiff’s luggage was lost in the shipwreck caused by the fault of the company’s servants. This was laid down by the House of Lords that the plaintiff is entitled to recover the loss that he suffered from the company in spite of the exemption clauses.

Conclusion

Standard form of contract is always in the written document with all terms and conditions of the contract. One of the contracting parties prepares all the terms and conditions and the other party has the option to accept or leave the contract.

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