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Travis Rober tson

It was a bleak winter for our law of contractFaced with this abuse of power - by the strong
against the weak - by the use of the small print of the conditions - the judges did what they
could to put a curb upon it. They still had before them the idol, freedom of contract. They
still knelt down and worshipped it but they concealed under their cloaks a secret weapon.1
There has been much debate on whether, and to what extent, courts should enforce standard
form contracts. On one hand there are the traditional concerns of promoting freedom
and certainty of contract.2 On the other hand there is the concern to curb the potential for
unconscionable agreements concluded between parties of unequal barging power.3 While
vitiating factors such as misrepresentation, mistake, and duress operate to control procedural
unfairness the nature of standard form contracts and the circumstances within which they are
agreed combine to produce a substitutive unfairness, which often falls outside the parameters
of actions relying on such vitiating factors.4 This weakness, the result of the common laws
historical preoccupation with libertarian ideals,5 has been increasingly exposed by the
proliferation of standard form contracts in consumer transactions over the past one hundred
years.6 In response common law developed two key mechanisms through which to police the
use of standard form contracts: incorporation and interpretation.7 More recently, parliament
has sought to bolster the courts ability to redress substantive unfairness particularly in

1. George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] Q.B. 284, per Lord Denning at 297.
2. Concerns which grew from the philosophical and economic milieu of the late eighteenth century and to which the
judiciary were predisposed. Samuel Williston, Freedom of Contract, Cornell Law Quarterly 6 (1921): 365 at 366-369;
James Gordley, The Philosophical Origins of Modern Contract Doctrine (Oxford: Clarendon Press, 1991) esp. 214-229.
John Griffith, The Politics of the Judiciary (Manchester: Manchester University Press, 1977). For a critque of the traditional
narrative see; David Lieberman, Contract before Freedom of Contract, in The State and Freedom of Contract, 89-121
(Stanford: Stanford University Press, 1998).
3. In George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd, Lord Denning MR gave a characteristically colorful
summary of the debate and outlined the development of common law and statutory remedies by comparing freedom of
contract with oppression of the weak in the context of exclusion clauses. 296-301. See the epigraph.
4. See below and Mindy Chen-Wishart, Contract Law, Fourth Edition (Oxford: Oxford University Press, 2012) 370.
5. See above note 2 and P.S. Atiyah, The Rise and Fall of Freedom of Contract (Oxford: Clarendon Press, 1985).
6. Martin Cutts and Chrissie Maher, Small Print: the Language and Layout of Consumer Contracts: A Report to the National
Consumer Council (London: National Consumer Council, 1983). This trend is not restricted to England and Wales. More
recently, the National Consumer Law Center has estimated that over 80% of contracts with internet service providers
in Massachusetts are standard form. National Consumer Law Center, Establishing Billing and Termination Practices
for Telecommunications Carriers, (Boston: Commonwealth of Massachusetts Department of Telecommunications and
Enegry, 2006) 3.
7. The principles of interpretation have almost exclusively been developed in case law relating to exclusion and liability
clauses: Glynn v Margetson & Co. [1893] A.C. 351; London and North Western Railway Co. v Neilson [1922] 2 A.C. 263;
Cunard Steamship Co. Ltd. v Buerger [1927] A.C. 1; Canada Steamship Lines Ltd. v The King [1952] A.C. 192; Sze Hai
Tong Bank Ltd. v Rambler Cycle Co. Ltd. [1959] A.C. 576; Levison v Patent Steam Carpet Cleaning Co. Ltd. [1978] Q.B. 69;
Ailsa Craig Fishing Co. Ltd. v Malvern Fishing Co. Ltd. [1983] 1 All E.R. 101; George Mitchell (Chesterhall) Ltd. v Finney
Lock Seeds Ltd. [1983] 2 A.C. 803.
George Mitchell (Chesterhall) Ltd. v Finney Lock Seeds Ltd. [1983] 2 A.C. 803

Queen Mary Law Journal

consumer contracts.8 This essay considers the problems raised by standard form contracts and
assesses how well the law deals with them. The first section outlines the problems that such
contracts raise while considering any benefits that arise from the use of stand form contracts.
In the second section the techniques that are available to the courts to control any problems are
described before the third section evaluates how effective these techniques are.
Perhaps the greatest problem with standard form contracts is that there is rarely a mutually
understood and consented agreement as the offeror has carefully constructed the agreement
in their best interests while the offeree usually does not understand the terms or has not even
read them.9 The law has a general presumption that a signature is binding regardless of what
is regarded as ancillary circumstances which surround the conclusion of the agreement.10 This
presents the offeror a, sometimes irresistible, opportunity to include terms so advantageous
to them that they amount to a substantive unfairness towards the other party. The extreme
example of this behavior is where the offeror includes terms which are designed to exclude or
limit liability that might arise as a result of its contractual obligations. Such terms are especially
unfair in standard form consumer contracts as consumers often fail to read or understand the
contracts they sign.11 The situation is magnified in agreements involving consumers of low
socio-economic standing, as they are even less likely to have read the contract, more likely to
be faced with exclusion clauses (because of the greater risks they present) and often are unable
to afford to challenge the contracts.12 These problems are often exacerbated because consumers
are given little choice as standard form contracts have become the default means of structuring
many types of everyday transactions and service providers and merchants are less willing to
negotiate with individuals preferring a take it or leave it approach to customer relations.13
The courts have recognized that in contracts between two sophisticated parties such as those
between businesses exclusion and limitation clauses provide an efficient means of allocating
risk are often agreed upon quid pro quo.14 Even where sophisticated parties use standard form

8. i.e. Unfair Contract Terms Act 1977 [http://www.legislation.gov.uk/ukpga/1977/50] and The Unfair Terms in Consumer
Contracts Regulations 1999 [http://www.legislation.gov.uk/uksi/1999/2083/contents/made].
9. In one sense standard form contracts could be said to exist without consensus ad idem in a broad sense however, on
most occasions the parties intend to enter into a legally binding agreement for exchange of goods or services and are
only without agreement to the [same] thing in respect of the conditions under which the contract they consent is to be
executed. As to the requirement and extent of consensus ad idem see; Household Fire and Carriage Accident Insurance
Co. Ltd. v Grant (1879) 4 Ex D 216; Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256; R. Austen-Baker, Gilmore
and the Strange Case of the Failure of Contract to Die After All Journal of Contract Law 18 (2002): 1. cf. the American
approach in Baltimore & Ohio R. Co. v United States (1923).
10. When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add,
misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.
LEstrange v E. Graucon Ltd. [1934] 2 K.B. 394 per Scrutton LJ at 403; Peekay Intermark Ltd. v Australia and New Zealand
Banking Group Ltd. [2006] 2 Lloyds Rep. 511.
11. Research commissioned for the Crowther Committee in 1971 suggested that over 50% of consumers concluding
hire-purchase agreements did not properly read the documents. Commitee on Consumer Credit, Survey of the Past
and Present Borrowing Patterns of Consumers in Britian (London: Department of Trade and Industry, 1971) 17. A 1980
report by the National Consumer Council revealed that only 26% of consumers entering into a hire purchase or credit
sale agreement had read the entire agreement. National Consumer Council, Consumers and Credit (London: National
Consumer Council, 1980) 216. More recently, the Office of Fair Trading found that just 23% of consumers had a good
read of the contract or its terms and conditions before signing. Gavin Ellison, Quantitative Survey of Consumers Appendix
D to Consumer Contracts Report (London: Office of Fair Trading, 2011) 31.
12. Ibid.
13. Merchants of digital content and computer software uniformaly adopt the take it or leave it approcah leaving no
room for negeoation, however these catagories of contract were the less likely to result in consumer dissatiffaction or
complaints. Office of Fair Trading, Consumer Contracts, (London: Office of Fair Trading, 2011).
14. Granville Oil and Chemicals Ltd. v Davies Turner and Co. Ltd. [2003] 1 All E.R. 819; Watford Electronics Ltd. v
Sanderson CFL Ltd. [2001] IP & T 588

Annual Essay Contest: First Year Contract Law

contracts there is a greater understanding of what terms are involved through independent
legal advice or knowledge of trade custom. In these circumstances standard form contracts can
considerably reduce legal costs while speeding up transactions without seriously undermining
the fairness of the agreement.15
Standard form contracts involving consumers do reduce merchants legal costs enabling them
to sell goods at lower prices yet this saving may not always be passed on to the consumer.
Standard form contracts do speed up consumer transactions allowing customers to enter into
complex service provision agreements in a matter of minutes although the eventual price for
such connivance may be higher than originally anticipated. Despite this it is ridiculous to
imagine a situation where before boarding a train or bus one would first have to spend time
negotiating conditions of carriage and drafting an agreement. Such a situation while it may
protect consumers from unexpected exclusion clauses surely undermines the purpose of the
contract: to enable one to get from A to B quickly at low cost and without inconvenience.
A second major problem with standard form contracts arises where both parties are using a
standard form. This situation is almost exclusively restricted to contracts between businesses.
Where the parties negotiating an agreement each have their own standard form contract and these are exchanged - there may be a presumption in law that the last form presented
takes precedence.16 Due to the uncertainty of the law in this area it may be more prudent to
construct a mutual contract.
The legal attitude towards standard form contracts has been to accept the legitimacy of the
contracts, as a means of preserving freedom of contract, while targeting specific terms which
produce substantive unfairness, as a means of preventing unconscionable conduct. Common
law polices unfair contract terms in two main ways. Firstly, the law seeks to restrict the
circumstances where such terms can be incorporated into the agreement. Secondly, it operates
to interpret unfair terms restrictively and against the interests of the party seeking to rely
upon the term. In addition the Unfair Contracts Terms Act 1977 (UCTA) and the Unfair Terms
Consumer Contracts Regulations 1999 (UTCCR) provide the courts with mechanisms whereby
unconscionable terms can be removed from contracts altogether.17 It must be noted that while
the act specifically targets exclusion and exemption clauses the regulations have a wider scope
as they operate against a wide range of unfair terms.18

15. The use of standard form contracts by small businesses is officially encouraged in Australia for these reasons:
Department of Industry, Innovation, Science, Research, and Tertiary Education, Working with Contracts, (Canberra:
Commonwealth Government, 2012) at 23-24. cf. the Law Commissions recommendations that contractual relations
between small and medium enterpriese should be govenrned by similar principles used in the policing of consumer
contracts: The Law Commission and The Scottish Law Commission, Unfair Terms in Contracts (London: Her Majestys
Stationery Office, 2005) at 4, 14 and esp. 15-17 [Law Com. No. 292, Scot. Law Com. No. 199].
16. Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd. [1979] WLR 401.
17. The power to override exemption clauses found to be unreasonable had previously been introduced in the case of
implied terms in the sale of goods by the Supply of Goods (Implied Terms) Act 1973. Similar powers now exist in section
55 of the Sale of Goods Act 1979. The UCTA however, provides more extensive controls to a broader category of contracts
and is therefore discussed here more fully.
18. But section 13(1) includes clauses making enforcement of liability subject to compliance with a condition, clauses
excluding or limiting any right or remedy that would otherwise be available, and clauses restricting or excluding rules of
evidence or procedure. See: Stewart Gill Ltd. v Horatio Myer & Co. Ltd.[1992] 1 Q.B. 600. Terms which purport to modify
expected obligations are also covered by section 13: Smith v Eric S. Bush [1990] 1 A.C. 831.

Queen Mary Law Journal

There are four main ways which the courts recognize can incorporate terms into contracts;
(1.) incorporation by signature into a written document,19 (2.) by reasonable notice, (3.) on
the basis of consistent dealing, and (4.) through the common understanding of the parties.20
Incorporation by signature as discussed above stems from the presumption that in written
agreements a signature is legally binding. The other three requirements can be used to assess
incorporation where the contract is formed without written assent. Reasonable notice must be
given at or before the contract is made and must be found in a document which a reasonable
person would expect to contain contractual terms.21 Notices referring to another document
containing terms are capable of incorporating terms contained therein.22 As general rule the
more onerous or unusual a term the more demanding the requirements of notice will be.23
Incorporation on the basis of consistent dealing requires that the clause have been brought to
the other partys attention in a consistent manner,24 although its application is limited where
the dealings have been on relatively few occasions spread over a substantial period of time.25
Incorporation through the common understanding of the parties is an application of the trade
custom principle,26 which works to recognize widespread use of standard contracting terms
within in a particular industry, to exclusion and limitation clauses.27
If an exclusion or limitation clause meets the requirements for incorporation then it will be
constructed contra proferentem.28 The courts will not imply any exemption greater than that
contained in the clause.29 The clause must expressly exempt the proferens from negligence
to be operative unless its wording is wide enough to cover negligence and there is no other

19. Under section 7 of the Electronic Communications Act 2000 electronic signatures are valid instruments of incorporation.
20. Terms may also be incorporated by the importance attached test: City and Westminster Properties (1934) Ltd. v Mudd
[1959] Ch. 129 and may be found enforceable although not incorporated by the implication of a collateral contract:
Evans & Son (Portsmouth) Ltd. v Andrea Merzario Ltd. [1976] 2 All E.R. 930.
21. Parker v South Eastern Railway [1877] 2 C.P.D. 416; Chapelton v Barry Urban District Council [1940] 1 K.B. 532;
Olley v Marlborough Court Hotel [1949] 1 K.B. 532; Thornton v Shoe Lane Parking Ltd. [1971] 2 QB 163; Grogan v Robin
Meredith Plant Hire
[1996] C.L.C. 127; Photolibrary Group Ltd (t/a Garden Picture Library) & Ors v Burda Senator Verlag GmbH & Ors
[2008] 2 All E.R. 881. For a useful general summary of the key decisions see: Claire Strickland, Tickets Please!, (Legal
Executive, February 2003): 20.
22. Parker v South Eastern Railway; Gibaud v Great Eastern Railway Company [1921] 2 K.B. 426; OBrien v Mirror Group
Newspapers Ltd. [2001] E.W.C.A. Civ. 1279.
23. the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses which I have seen
would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could
be held to be sufficient. J. Spurling Ltd. v Bradshaw [1956] 1 W.L.R. 461 per Denning LJ at 465; Parker v South Eastern
Railway; Interfoto Picture Library Ltd. v Stiletto Visual Programmes Ltd. [1989] Q.B. 433; Ocean Chemical Transport Inc.
v Exnor Craggs Ltd. [2000] 1 All E.R. 519. For insight of the reasonable test in operation see: Kaye v Nu Skin U.K. Ltd.
[2012] C.T.L.C. 69 here a clause providing that disputes were to be resolved by arbitration in Utah was held to not to
be unreasonable or onerous. Elizabeth Macdonald, The Duty to Give Notice of Unusual Contract Terms, Journal of
Business Law, (September 1988): 375.
24. McCutcheon v David MacBrayne Ltd. [1964] 1 Lloyds Rep. 16; Hardwick Game Farm v Suffolk Agricultural and
Poultry Producers Association Ltd. [1969] 2 A.C. 31; Petrotrade Inc. v Texaco Ltd. [2002] 1 W.L.R. 947; Balmoral Group
Ltd. v Borealis Ltd. & Ors. [2006] 2 Lloyds Rep. 629.
25. Hollier v Rambler Motors (AMC) Ltd. [1972] 2 Q.B. 71; Eric Barendt, Exemption Clauses: Incorporation and
Interpretation, The Modern Law Review 35, no. 6 (November 1972): 644.
26. Linda Mulcahy, Contract Law in Perspective (Oxford: Routledge, 2008) 160; WN Hillas & Co. Ltd. v Arcos Ltd. (1932)
147 L.T. 503.
27. British Crane Hire Corporation Ltd. v Ipswich Plant Hire Ltd. [1973] Q.B. 303 cf. Scheps v Fine Art Logistic Ltd
[2007] E.W.H.C. 541 (Q.B.); Richard Austen-Baker, Implied Terms in English Contract Law (Cheltenham: Edward Elgar
Publishing, 2011) at 79-99.
28. Beck and Co. v Szymanowski and Co. [1924] A.C. 43; Houghton v Trafalgar Insurance Co. Ltd. [1954] 1 Q.B. 247.
The contra proferentem rule is now expressly incorporated in relation to consumer contracts in the Unfair Terms in
Consumer Contracts Regulations 1999, SI 1999/2083, reg. 7(2).
29. Andrews Bros. (Bournemouth) Ltd. v Singer & Co. Ltd. [1934] 1 K.B. 17.

Annual Essay Contest: First Year Contract Law

ground on which damages may be sought.30 Limitation clauses, while still being construed
contra proferentem, are not regarded with the same hostility as exemption clauses.31
The application of the UCTA may render an exemption clause either totally unenforceable
or unenforceable unless shown to be reasonable. Section two makes terms purporting
exemption for death or personal injury resulting from negligence invalid while establishing a
reasonableness test for assessing the validity of clauses which limit or exclude liability for other
losses or damage.32 Where one party deals as a consumer33 terms implied by the Sale of Goods
Act 1979 and the Supply of Goods and Services Act 1982 cannot be excluded but if the contract
is between businesses the exclusions will stand if shown to be reasonable.34 The act therefore
contains an important distinction between those dealing as consumers and others.35
The UTCCR provides that unfair terms will not be binding on consumers in a contract
concluded between them and a seller or supplier. The regulations apply only in the case of
consumer contracts, although their application is extended beyond exemption clauses to
unfair terms in general, while certain core terms are excluded from the scope of the UTCCR.
It regulates contracts by finding terms unfair if they; are contrary to the requirement of good
faith, cause a significant imbalance in the parties rights under the contract, to the detriment
of the consumer.36
The most striking deficiency in the laws approach to policing standard form contracts is
its presumption that a signature binds regardless of whether or not the contract has been
read or understood. Given that only 23% of consumers read standard form contracts before
signing there seems an enormous gap between the laws view and the day-to-day reality of
the ordinary people it is there to protect.37 This difference between the formalism of the law

30. Canada Steamship Lines v The King [1952] A.C. 192 per Lord Morton at 208; White v John Warwick Co. Ltd. [1953]
1 W.L.R. 1285. cf. the more relaxed approach in recent cases: Investors Compensation Scheme Ltd. v West Bromwhich
Building Society [1998] 1 W.L.R. 898; HIH Casualty & General Insurance Ltd. v Chase Manhattan Bank [2003] 1 All E.R.
349. Although: Monarch Airlines Ltd. v London Luton Airport Ltd. [1997] C.L.C. 698; E.E. Caledonia Ltd. v Orbit Valve
Co. plc. [1994] 1 W.L.R 1515.
31. Ailsa Craig Fishing Co. Ltd. v Malvern Fishing Co. Ltd. [1983] 1 W.L.R 964 per Lord Wilberforce at 966; George
Mitchell v Finney Lock Seeds [1983] 2 A.C. 803; BHP Petroleum v British Steel [2000] 2 All E.R. 133. cf. the approach
taken by the High Court of Australia in Darlington Futures Ltd. v Delco Australia Pty. Ltd. (1986) 161 C.L.R. 500; John
Kidd, Exclusion and Limitation Clauses in the Australian High Court, The Modern Law Review 50, no. 7 (November
1987): 952.
32. Other loss or damage includes property damages and financial loss: Robinson v P.R. Jones (Contractors) Ltd. [2011]
3 W.L.R. 815.
33. Dealing as a consumer is defined in UCTA 1977 s. 12 and clarified by the Court of Appeal in R. & B. Customs
Brokers Co. Ltd. v United Dominions Trust Ltd. [1988] 1 W.L.R. 321 although not without criticism esp. cf. the same
courts definition of in the course of a business in Stevenson v Rogers [1999] 2 W.L.R. 1064. The argument to harmonize
these two seemingly apposite definitions was rejected in Feldarol Foundry plc. v Hermes Leasing (London) Ltd. (2004)
101 (24) L.S.G. 32.
34. UCTA 1977 s. 6, s. 7, s. 12; SGA 1979 ss. 13-15; SGSA 1982 s. 2; Southwark London Borough Council v IMB U.K. Ltd.
[2011] 135 Con. L.R. 136.
35. A distinction reflected in the case law: Granville Oil and Chemicals Ltd. v Davies Turner and Co. Ltd. [2003] 1 All E.R.
819; Watford Electronics Ltd. v Sanderson CFL Ltd. [2001] IP & T 588.
36. UTCCR reg. 5(1).
37. See above n. 11; cf. Stewart Macaulay, Non-Contractual Relations in Business: A Preliminary Study, American
Sociological Review 28, no. 1 (February 1963): 55.

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and the socio-legal reality is a well recognized with convincing arguments on both sides.38
Yet, as Spencer demonstrates the signature rule is challengeable from within the strict
confines of legal formalism.39 Even though, there is no subjective assent to unknown contract
terms objective agreement is itself in doubt when the established exceptions to the rule are
considered. Where the promisee actually knows or should have known that the promisor
was not actually assenting, there is no agreement on those terms.40 Surely, the mere presence
of onerous exclusion terms is enough to negate any presumption by the promisee that the
promisor actually assents, after all who would in their right mind sign a document headed I
agree to pay for your goods even if they are useless?41 As convincing as this argument is, it fails
to consider that the promisee might reasonably agree to such a term if other elements in the
contract outweigh this consideration. Often exclusion clauses are part of the parties attempt
to price risks that might arise out of their obligations. The risk of inexpensive useless goods
might be preferable to the certainty of expensive reliable ones. Perhaps it would be preferable
to apply the ordinary requirements of notice of terms to written agreements.42 Yet given the
benefit of certainty that the signature rule provides43 and the alternative means of protection in
the UCTA and the UTCCR this might be a moot point.44 Indeed an alternative reading of the
statics could suggest that the extremely low numbers that read contracts before assenting to
them might be a product of consumers confidence in the law policing these agreements. But
just how effective are the UCTA and the UTCCR at policing agreements?
There most significant problem raised by the UTCA stems from the ambiguity of the
reasonableness test. Although the validity of a contract term often rests on its reasonableness
the act provides no definition. It does however contain a set of guidelines that inform a courts
assessment of the offending clause. In determining reasonableness the court must therefore,
entertain a whole range of considerations, before concluding the enforceability of the terms.45
This in turn limits the value of precedent,46 which in itself contributes to the confusion and
uncertainty that the complex process creates as cases on the same exclusion clause have
been decided differently.47 In addition the small value of precedent that might be useful has

38. See; Stewart Macaulay, The Real and the Paper Deal: Empirical Pictures of Relationships, Complexity and the
Urge for Transparent Simple Rules, The Modern Law Review 66, no. 1 (January 2003): 44; Hugh Collins, Regulating
Contracts (Oxford: Oxford University Press, 1999) cf. Alan Schwartz and Robert Scott, Contract Theory and the Limits
of Contract Law, Yale Law Journal 113 (November/December 2003): 541; John Gava and Janey Greene, Do We Need
a Hybrid Law of Contract? Why Hugh Collins Is Wrong and Why It Matters, The Cambridge Law Journal 63, no. 3
(November 2004): 605.
39. J. R. Spencer, Signature, Consent, and the Rule in LEstrange v. Graucob, The Cambridge Law Journal 32, no. 1 (April
1973): 104.
40. Hartog v Colin & Shields [1939] 3 All E.R. 566.
41. Spencer, Signature, Consent and the Rule in LEstrange v. Graucob, at 115.
42. Matthew Chapman, Common Law Contract and Consent: Signature and Objectivity, Northen Island Legal Quarterly
49, no. 4 (Winter 1998): 364; this is the case in Canada where notice is required in consumer contracts: Tilden Rent-ACar Co. v Clendenning (1978) 83 D.L.R. (3d) 400. Toll Pty. Ltd. v Alphapharm Pty. Ltd. (2004) 211 A.L.R. 342 per Gleeson
CJ at 54.
43. P.S. Atiyah, Form and substance in Legal Reasoning: The Case of Contract, in The Legal Mind: Essays for Tony
Honor, ed. N MacCormick and P.B.H. Birks, at 34 (Oxford: Clarendon Press, 1986); Peekay Intermark v Australia & New
Zealand Banking Group [2006] 2 Lloyds Rep. 511 per Moore-Bick LJ at 543.
44. Indeed this reasoning was adopted by the High Court of Australia in Toll Pty. Ltd. v Alphapharm Pty. Ltd. (2004) 211
A.L.R. 342.
45. George Mitchell (Chesterhall) Ltd. v Finney Lock Seeds Ltd. [1983] 2 A.C. 803 per Lord Bridge at 816.
46. It is important therefore that our conclusion on the particular facts of this case should not be treated as a binding
precedent in other cases where similar clauses fall to be considered Phillips Products Ltd. v Hyland [1987] 1 W.L.R.
659 per Slade LJ at 669.
47. Thompson v T. Lohan (Plant Hire) Ltd. [1987] 1 W.L.R. 649 cf. Phillips Products Ltd. v Hyland

Annual Essay Contest: First Year Contract Law

become, until recently, difficult to find because there are few reported decisions regarding the
reasonable test as a result of the courts denial of its value and because consumer cases are likely
to be decided by county courts.
The UTCCR also relies upon vague and ill-defined criteria. In particular the drafting of
regulation 5(1) does not make clear whether the requirement of lack of good faith is additional
to the condition of imbalance between the parties, or if it is evidence of a lack of good faith
itself. Neither the directive nor the regulations provide clear guidance on this matter or on
what constitutes a significant imbalance. Regulation 6(1) provides that unfairness be assessed
by taking into account the subject matter, the circumstances surrounding formation and the
other terms of the agreement. This vagueness is partly offset by the provision of a long list of
terms, which are unfair against which others are gauged. Although this undoubtedly creates
uncertainty and complexity it leaves the courts substantial room to strike out terms and thereby
increases the potential scope of protections afforded to consumers.
The modes adopted for the policing of standard form contracts while, having a substantial
impact on legal certainty and perhaps being over-complicated, achieve their aim of providing
broad protection to vulnerable parties. The vagueness of the legislation and regulations makes
their application more readily fact specific which, while it can create uncertainty, operates
against the inherent discrimination of standard forms. Although the uncertainty of the UTCA
and UTCCR contrast sharply with the formalistic approach of the signature rule it may be
better placed to bridge the gap between the laws understanding of contracts and the realities of
everyday life. Paradoxically, this combination of clarity and vagueness seems to be an effective
means of regulating standard form contracts as recent research indicates that only 4.8% of
consumer contracts result in a problem or dissatisfaction.48 Whether this impressive statistic
is the result of the laws approach or a cultural shift is hard to determine. Either way the bleak
winter of exclusion clauses seems to have thawed significantly.

48. Ellison, Quantitative Survey of Consumers Appendix D to Consumer Contracts Report, at 13.