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Unfair Contract Terms and CESL: a practitioner perspective

Unfair Contract Terms and CESL: a practitioner perspective. Gerard McMeel Barrister, Professor of Law. The Practitioner Perspective. certainty about obligations and risk predictability of outcomes (of disputes) routine and regularity of dealings reducing time and costs of trading

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Unfair Contract Terms and CESL: a practitioner perspective

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  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

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