Unfair terms in standard form contracts under Maltese law

Abstract

Standard form contracts are necessary for the expedient conclusion of modem economic transactions. However, in contrast to the 'traditional' way contracts are concluded, these contracts are not arrived at through the negotiation of all the parties to the transaction. Instead they are pre-formulated by one party to cater for all his future transactions concerning that particular subject matter. In this context, it shall be seen how most persons have no option but to adhere to such contracts, thereby possibly accepting, often unwittingly, to abide by a series of unfair and onerous terms. Since contract law is based on the traditional concept of how a contract is concluded, and since pacta sunt servanda, anyone who contracted by standard form found himself unprotected against the unfair terms contained in the contract prepared by the other party. The second chapter shall deal with the judicial reactions to such terms, both locally and in other jurisdictions. It shall be seen how despite the absence of specific legislation, courts have developed particular 'weapons' to curb the effects of unfair terms in standard form contracts. The third chapter goes on to analyse and compare legislative provisions dealing with unfair terms in three particular European countries. Emphasis shall also be given to the EC Directive on Unfair Terms in Consumer Contracts and the amendments effected in the countries previously discussed in order to implement this Directive in their legal system. Finally, it shall be seen how although Maltese law provides extensive protection for consumers against the use of unfair terms, such protection does not extend to businesses which could likewise suffer the superior bargaining power of a stronger party. This calls for the enactment of provisions wide enough to protect any party against the use of unfair terms in standard form contracts