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Standard Form Contracts

Standard form contracts are contracts when one of the parties involved can't negotiate with the terms and conditions of the contract; either they can enter the contract or avoid it.

A standard form contract is the type of contract signed between two parties. In these contracts, one party sets the terms and conditions, whereas the other one does not have any ability to negotiate. 

Strictly speaking, these are legally binding agreements entered into through the events to perform or abstain from performing something in which one party holds all the bargaining strength; therefore, employs it to write the deal mainly to their benefit. For that reason, this sort of arrangement strikes the fundamental right to barter.

What is a standard form contract?

The standard form contracts are standardised contracts that include an extensive range of phrases and situations in exceptional print, limiting and often excluding legal responsibility beneath the contract. In addition, it gives the large employer a unique opportunity to make the most of the individual’s weakness via enforcing upon him terms that regularly seem like a sort of private law. It may match the volume of exempting the business enterprise from all legal responsibilities beneath the settlement. The battle against the abuse of this contract has, thus, fallen to the courts.

The role of courts in case of Standard Form Contracts

There’s a lot of debate on a theoretical level whether or not, and to what extent, courts need to enforce popular form contracts.

On the one hand, they undeniably satisfy an essential role of selling economic performance. 

On the other hand, there may be the capacity for inefficient and even unjust phrases to be standard through signatories to those contracts. Such expression is probably seen as unfair if they allow the vendor to avoid all legal responsibilities, unilaterally alter phrases, or terminate the settlement.

Those terms regularly come within the shape of forum choice and mandatory arbitration clauses; however, they aren’t confined to these clauses. Being within the shape of forum choice and mandatory arbitration clauses could limit or foreclose a party’s entry to the courts. The liquidated damages clauses set a restriction to the amount that may be recovered or require a party to pay a particular quantity.

They might be inefficient if they avoid the chance of terrible final results, such as defective production, at the client who is not inside the high-quality role to take precautions.

Issues Concerning Standard Form of Contracts

Mistakenly missing out to read clauses

Courts have held several times that contracts, even if entered into within the general shape, are supposed to be executed and cannot be set aside until proven to be entered into using fraud, misrepresentation, mistake, or coercion. 

Unequal bargaining powers

Courts have ruled against those contracts that exploit the employees’ function through employers. In the case of employment agreements between the agency and employee, there’s a tendency to insert phrases and conditions favourable to the employers, leaving no other alternative for the employees aside from accepting it.

Irrational terms or unconscionable nature

Courts have refused to interfere in cases that judged the parties’ bargaining power equal but otherwise.

The legal status of a standard form contract

The Indian contract system does not have any specific differentiation among Standard Form Contracts (SFCs) and well-known agreements. The SFC is a form of settlement governed by the laws provided for popular contracts in the Indian Contract Act, 1872.

Due to heavy commercial improvement, those kinds of contracts have to become familiar and are completed in huge numbers nowadays.

Why do people accept a standard form contract?

  • The first reason people are given the Standard Form Contract is that they don’t examine the settlement clauses very well. Even after analysing, they don’t consider it worth giving a lot of time writing down the clauses.
  • In some contracts, there are clauses like if you are given a set of phrases and circumstances, they may tell the whole terms and conditions of the agreement.
  • A Standard Form Contract is typically cognizant of the charge noted in the agreement; it doesn’t genuinely care about different specific clauses that are probably exploitative.
  • The party creates a manufactured pressure by another party to sign a Standard Form Contract, stating that all negotiations and terms had been discussed orally and explained to them earlier. So it becomes abounding on the party to sign the contract.
  • The contract is either to be taken or to leave.

Ways to limit exploitation from Standard form contract:

  • The party must give reasonable notice about the terms and conditions of the contract before or while signing the contract.
  • There must be a contractual document between the parties to enforce it in court.
  • It should protect the interest of the weaker party.


In the Indian context, instances are entertained underneath the rules supplied by the Indian Settlement Act. 

There is no action made to specifically address the standard form contract. This type of contract leads to the exploitation of the weaker party, and there’s no particular rule for preventing this sort of action by the dominating party.

Take it or leave it, the nature of the settlement leads to the graduation of some instances in court dockets in which there’s an instantaneous urge to offer justice to the weaker party without knowing the specific clauses entered into the settlement.


Frequently asked questions

Get answers to the most common queries related to the UPSC Examination Preparation.

Define standard form contracts.

Ans. IT is a legal form of contract that does not allow one of the parties to negotiate the terms and conditions of ...Read full

What are the issues concerning the standard form contract?

Ans. Issues concerning standard form contracts include mistakenly missing out to read clauses, unequal bargaining po...Read full

What is the nature of standard form contracts?

Ans. The standard form contract is a take-it-or-leave-it type of contract, which does not allow any negotiations wit...Read full

Why do people accept a standard form contract?

Ans. The foremost reason people accept the Standard Form Contracts is that they don’t examine the settlement c...Read full