First Principles of Business Law

4. Protection against unfair terms in contracts

4.4. How unfair terms are dealt with

A, a music student, inherits a large sum of money and decides to buy a top quality piano for herself. She finds the piano she wants at UTunes Music Store. It costs $50,000. When she asks to buy it, the store owner gets A to sign a printed contract which contains the price and a description of the piano . The contract contains a term that states that A gives up any right to complain if the piano, when delivered, suffers from any superficial scratches or marks. A signs the contract. When the piano is delivered, it has several superficial scratches, caused when the piano was delivered.  Assuming that the term by which A gave up her right to complain about scratches is an unfair term under the ACL, which of the following statements best describes A's legal position?

Click here to see section 23.

(a) Unfair terms in standard form consumer contracts are treated as void. The rest of the contract remains valid and enforceable. A could therefore enforce her contractual rights against UTunes Music Store as if the term was not part of the contract.

(b) If unfair terms are included in a standard form consumer contract, the whole contract is unenforceable. Accordingly, the seller can take the piano back and A is not bound by the agreement.

(c)  If unfair terms are included in standard form consumer contracts, the party who included them is subject to a penalty, but the terms that have been agreed to remain binding on the parties.