Unfair Contract Terms and CESL: a practitioner perspective

1
Unfair Contract Terms and CESL a practitioner
perspective

• Gerard McMeel
• Barrister, Professor of Law

2
The Practitioner Perspective

• certainty about obligations and risk
• predictability of outcomes (of disputes)
• routine and regularity of dealings
• reducing time and costs of trading
• facilitating innovation in trading
• limited judicial/arbitral power to override
  contractual terms

3
The range of B2B dealings

• each party legally represented and each has input
  into final document
• trade association/professional body standard
  terms
• battle of the forms supplier/customer
• take it or leave it one-sided forms

4
Three hypothetical regimes

• power of judicial review of all pre-formulated
  standard contract terms
• limited judicial review of one-sided terms
  (excluding liability for breach of principal
  obligation imposing penalties)
• freedom of contract B2B no judicial review

5
Good faith and fair dealing

• tension with goal of securing uniformity
• balancing with party autonomy
• generality of openness
• uncertainty about requirement to give
  consideration to the interests of the other
  party

6
Not individually negotiated

• width of definition may embrace law firms and
  businesses precedents
• focus on individual terms not on pre-printed
  forms
• meaning of not been able to influence
• derived from B2C regulation
• reversal of burden of proof

7
Advantages of standard terms

• setting standards/industry norm trade
  association or professional body forms
• savings in business time and legal costs
• eliminates uncertainty of poorly drafted
  contracts
• facilitates quicker and more predictable dispute
  resolution

8
Reading the terms

• certainty favours a reasonable person standpoint,
  not common intention
• predictability favours adopting the conventional
  meaning of words
• costs may result from rule admitting prior
  negotiations and conduct as aids
• lack of clarity about strict construction

9
Duty to raise awareness

• difficulties in attaining compliance
• rewarding inattentiveness
• encouraging speculative claims
• imposing costs on reputable businesses
• proliferation of explanatory notes
• no magic in a signature, even in B2B

10
Test for unfairness

• all provisions save price and subject-matter
  subject to judicial review
• uncertainty of good faith test and grossly
  deviates
• no structure or guidance to assist lawyers
  advising on impact of the test
• all factors relevant but no list of commonly
  material considerations