What is standard form of contract? The 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.
|Standard Form of Contract
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.
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 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
- Sec. 23 of the Indian Contract Act,
- Sec. 7(l) (ii) of Foreign Awards (Recognition and 35 Enforcement) Act, 1961,
- Sec. 3 (1) of U.P. (Temporary Control of Rent and Evictions) Act 1947 and
- Sec. 34(2) (b) (ii) of Arbitration and Conciliation Act, 1996.
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.