in Consumer Law Contracts Law
Asked June 17, 2021

Unfair Contract

  • 1 Answer

I signed a contract with a financial service provider but looking back, it seems like the terms of the contract were skewed in favour of him. Should I file a complaint? How do I determine if a contract is fair or unfair?

Answer 1

Section 2(46) of the Consumer Protection Act, 2019 defines what an ‘unfair contract’ is. It mentions six scenarios where a contract entered into between a manufacturer, trader or service provider and a consumer will be unfair by abridging the rights. Firstly, if the contract requires manifestly excessive security deposits or if it imposes a penalty for breach of contract that is ‘wholly disproportionate’ to the loss occurred due to the said breach, the contract will be unfair. Further, with regard to the aforesaid penalty, if the contract refuses to accept early repayment of debts, it will be unfair. Entitling a party with the power of unilateral termination of contract without reasonable cause will also make a contract unfair as will permitting one party to assign the contract to the detriment of the other party without consent. Any other imposition of unreasonable charges, obligations or conditions that are disadvantageous to the consumer can also amount to an unfair contract. So you can decide whether to file a case or not depending on whether the aforesaid scenarios hold true.

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