Published on: 12 July 2023 at 14:00 IST
Court: Supreme Court
Citation: Central Inland Water Transport Corpn. V. Brojo Nath Ganguly (1986)
Honourable Supreme Court of India held that a Hon’ble Court’s duty is not only to assess whether the parties have unequal bargaining power relative to one another but also to ascertain whether a contractual term or a contract is unfair, unreasonable or unconscionable. A contract (or a term in a contract) can be said to be unfair or unreasonable if it is one-sided or devoid of any commercial logic. It is held that when one party has unequal bargaining power relative to the other party, any terms and conditions which are unreasonable may not be enforced as against the party with lower bargaining power.
89. This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. … It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them.
It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. … there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances.
Drafted By Abhijit Mishra
