Monday, December 27, 2010

Unfair contract terms

We have a law against unfair contract terms. How does the law define what is an unfair contract term? Would the following contract terms be deemed to be unfair to consumers?

a) The bank imposes a penalty for late payment that is why above what it cost the bank to process the late payment? If the actual cost is $2, can the bank impose a fee of $200?

b) If an personal accident policy require the consumer to notify the insurance company about a change of occupation, can the insurance company deny a claim due to failure to comply with this requirement, even though the change of occupation did not have any impact on the nature of the risk?

As businesses now aim to increase their profits, they may be imposing penalties and conditions that are onerous and unfair to consumers. What redress does the consumer have under the law against unfair contract terms?

Tan Kin Lian
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3 comments:

Tan Kin Lian said...

I search for the law on unfair contract terms. It is complicated. A law is supposed to be written for the ordinary people to understand. This law is convoluted. Why is the society and law so complicated>

December 28, 2010 8:28 AM
C H Yak said...

It is complicated because "unfair" terms are written into what appears to be a "fair" contract ... which ends up being an "unfair" contract. Hence, too much technical rules and interpretations in the legal context...which means ordinary people must look for a lawyer and pay expensive fees.

In contracts, there is a "contra proferendum" rule - meaning the Court may interpret against the party that actually draft this "unfair" contract.

December 28, 2010 11:31 AM
Vincent Sear said...

(a)Banks claim on top of admin costs, they charge extra fees to deter people from late payments, writing bad cheques etc. Since when banks are enpowered legislative powers to impose fines? People didn't complain about the unfairness and illegitimacy of it and by silent acceptance, it became accepted practice by convention. Worse, it's been allowed to be written into contract with the client cluelessly and helplessly signing.

(b) In PA policy change of job unnotified for adjustment in premium, and there's a claim, the insurer should pay out the claim less the adjustment amount, not reject the claim outright. PA is in principle guaranteed renewable until the stipulated last age regardless of change of jobs. It's just a question of class of premium and all the risks fairly excluded across all classes as too expensive or hazardous to insure.

December 28, 2010 1:57 PM

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