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