The Unfairness of One-Sided Agreements


Posted On : June 20, 2023
The Unfairness of One-Sided Agreements
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ABSTRACT

One-Sided agreements are sometimes unequal because the provisions they include are significantly weighted in favour of the party that has stronger negotiating power, putting the other side in a worse position than they would otherwise be in. The injustice of one-sided agreements has been the topic of a great deal of discussion and criticism, with some proposing that they ought to be outlawed entirely. On the other hand, there are many who believe that they still have a place in specific contexts, but only if they are given a greater sense of objectivity and transparency.

 

INTRODUCTION

A contract is a written agreement in which both parties participate in formulating the conditions and parameters that will eventually make up the contract. When we state that a contract is an agreement, we mean this. It is difficult for one person to sit down with each party and negotiate the details of each agreement, but, when a specific party is needed to engage in contracts with several parties. This is so that each contract may be signed with the required number of parties. That would not only waste the contractors' time but would also limit the number of parties that one could enter into a contract with.

To get over this problem, it is normally utilized a traditional kind of contract, which is often used and typically referred to as a unilateral and one-sided agreement. On the other side, these agreements were immediately abused to transfer the majority of risk to the opposing party. Similar behavior is seen in contracts related to construction, such as those between the builder and the buyer. Right now, one-sided agreements are problematic because they lead to an imbalance.

 

WHAT ARE ONE-SIDED AGREEMENTS?

One-sided contracts are those in which only one party agrees to act following the terms of the agreement while the other party defers to acting following the agreement's provisions. These agreements vary from bilateral agreements in that only one party is expected to carry out the obligations, and neither party is given the assurance that the other will likewise fulfill its obligations. When both parties have agreed to and accepted all of the terms and conditions of the agreement, the contract is said to be bilateral. One-sided contracts typically include two parties: the offeror, who makes the offer to the other party, and the offeree, who either accepts or rejects the offer made to them.

In the case of an invitation to offer, the offeror is required by law to uphold the conditions of the contract if the other parties act in reliance on the promise made by the offeror. One-sided contracts, such as those between a builder and a buyer, are one example. It's simply just an "agreement of sale" that governs the relationship between the builder and the client. It is a legally required agreement that specifies the rights and obligations of both parties and meticulously describes the transaction down to the tiniest of details. It is created at the time of sale, and its contents are determined by the terms and circumstances of the contract that controls the transaction.

 

WHAT ARE UNFAIR TRADE PRACTICES?

Unfair trade practices, often known as "unfair commercial conduct," are frequently referred to as "deceptive trade practices." To get more consumers or clients, businesses may engage in dishonest, dishonest, or unethical behavior known as unfair commercial practices. Unfair business practices include deception, deceptive advertising or depiction of a product or service, tied selling, phony promises of gifts or prizes, deceptive pricing, and failure to comply with manufacturing regulations. According to regulations passed under the Consumer Protection Law, which regards such actions as illegal business practices, consumers have the option to seek remedy in the form of monetary compensation or severe fines.

 

PROBLEMS WITH ONE-SIDED CONTRACTS

In today's world, it is common practice to use one-sided agreements as a means to extort the assent of the opposing party. But, there are also several drawbacks to consider.

Because the buyer is frequently forced to accept and abide by the terms of the agreement while being placed on the defensive by stipulations added by the opposing party, these contracts are also known as monotonous agreements. This is because the buyer is forced to accept and abide by the terms of the agreement. Another problem with a contract that only favors one party is that the other party has no power and can only choose between two options: either accept the bargain or reject it. The offeror may have an unfair advantage if the contract has arbitrary provisions that favor just them.

To acquire an unfair advantage, it is also possible to manipulate contracts by introducing misleading provisions. For instance, a standard agreement between a builder and a buyer would contain clauses demanding twenty percent interest from the buyer if the payment was late. If the construction project is late in being completed, the contractor will only be subject to a fine of 2% interest.


POSSIBLE SOLUTIONS TO IT

Many people just agree to the terms of the contract and hope for the best. Even while this type of blind confidence sometimes works, the likelihood of that happening is just one in a thousand. But, there are a few simple adjustments that may be made to the contract to make it more egalitarian.

By sending the contractor a request to change a particular set of terms and conditions. They use the same contract for all parties involved since they wanted things to be as simple as possible. Yet, the fact that the drawing has certain clauses that only benefit one party does not mean that the contractor won't change such clauses to satisfy the other party. Despite this, many people were unaware of it since they believed the contract was final and could not be changed.

By being aware that not all of the contract's clauses are legally binding. There are clauses in some of the contracts that are not enforceable by law.

Last but not least, being prepared to walk away from an unjust transaction is one of your strongest defenses. If you can do so, you will also be able to sign a contract that you believe will be in your best interests.

 

VIEWS OF SUPREME COURT

A term of a contract will not be considered final and binding if it can be shown that the flat purchaser had no option but to sign on the dotted line, on the contract that was created by the builder. This was the decision that was handed down in one of the landmark cases. In this particular case, the Supreme Court determined that the insertion of one-sided limitations in a builder-buyer agreement constituted unfair commercial conduct in violation of Section 2 (1)(r) of the Consumer Protection Act of 1986. This provision was interpreted following the law. The court, which was comprised of Justices Indu Malhotra and UU Lalit, also decided that it was not permissible for a builder to attempt to bind a flat buyer to unfavorable provisions of the builder's Buyer's Agreement. This decision was taken by the court, as held in the case of Pioneer Urban Land And others v. Govindan Raghavan (2019)

The Supreme Court of India in the case of Ireo Grace Realtech Pvt. Ltd. vs Abhishek Khanna & Ors. confirmed that the Consumer Protection Act of 1986 gives consumer forums the ability to reject one-sided elements in contracts if such clauses amount to unfair commercial practices. This ruling effectively changes the situation of the Act into the scenario of the 2019 Act, and it is possible that it does not merely apply to claims brought against developers. In addition, the inclusion of "unfair contract" clauses in the Act as well as the ability to reject such clauses may cause merchants and service providers to reevaluate their use of traditional "take it or leave it" contracts when interacting with customers. This is because the clauses prohibit "unfair" business practices.

 

CONCLUSION

The Supreme Court wants to make sure that parties in unfair negotiation situations are placed on an equitable basis, as stated in a number of its rulings. Even though legislators have introduced several pieces of legislation intended to address the one-sided character of contracts, many individuals are still forced to sign the contract that was drafted by the other parties to the deal. Last but not least, it is possible to argue that a party shouldn't compete with another party since the terms of the contract exclusively benefit them.

Written By:
Anik

Anik

Bangalore

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