Stop, look, listen

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EDWARD P. CHICO

EDWARD P. CHICO

The proliferation of standard form contracts in today’s market calls for a law that would regulate, and in some cases prohibit outright unfair contract terms which deleteriously affect the buying public.

Standard form contracts, commonly referred to as “adhesion contracts,” are agreements where the terms and conditions are prepared by one party, placing the other in a take-it or leave-it position with little or no opportunity to negotiate terms acceptable to both.

Almost all contracts consumers enter into belong to this category. From cable subscription to gym enrolment, you are presented with a ready-made form of contract, usually spelled out in very small prints, forcing you to merely affix your signature thereto, while leaving you no chance to bargain in equal footing.

The fact that most of the terms are legalese, of course, only exacerbates your woes.

Sadly, companies that sell goods or offer services have long utilized this to take advantage of their clients. They normally present the attractive terms, e.g. free expensive phone for a reasonably priced two-year subscription post-paid plan—on the visible or shopped terms, then slip grossly one-sided terms, e.g. hidden charges, forfeiture of payments—in small, less visible fine prints that are least likely read or understood by consumers.

At the end of the day, you end up paying way more than the monthly P2,000 indicated on the plan, and discovering you can no longer back out from the two-year period stipulated without forfeiture and penalties.

The only consolation probably is you can brag about your new iPhone5. But that is another story.

Unfortunately, there is no law right now that addresses unfair contract terms. The Consumer Act of 1991, for all its breadth, does not really touch on the issue but merely focuses on consumer products quality and safety standards. So, unless your concern as a consumer relates to defective, substandard or hazardous goods, the Department of Trade and Industry will most likely never answer your call.

What we only have are Supreme Court decisions, which consider these boilerplate contracts binding, however unconscionable and unfair their terms may be. The rule is: “one who adheres is giving his consent,” since he or she has the opportunity to “accept or reject it.”

The only exception is when the consumer shows he or she was under duress or forced to sign the contract, which is really like saying there is almost no way to avoid it since it is rare that someone is compelled to sign a contract under threat of being shot or fed to the lions, whichever is more effective.

Of course, I am exaggerating. But sometimes, you need to exaggerate to emphasize the truth. And here’s the sad truth. There is almost no escape when you sign an adhesion contract. Either you comply or get miserable. This is a well-settled rule and we just have to suck it up.

Hopefully, Congress will enact a law that would define unfair contract terms, regulate transactions that involve adhesion contracts, and to a certain extent declare void or invalid those that deceptively and fraudulently take advantage of the vulnerability of consumers, usually caused by their plain gullibility, if not stupidity.

In the meantime, stop, look and listen. Anything that’s too good to be true, more often than not, is not really true. So, be very careful. You just cannot think twice, let alone thrice, if you don’t even have the habit of even thinking once.

Atty. Edward P. Chico is the vice chair of the Commercial Law Department of the Ramon V. del Rosario College of Business, De La Salle University. He may be emailed at edward.chico@dlsu.edu.ph. The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty and its administrators.

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1 Comment

  1. Arnel Crisostomo on

    Good article Atty Chico. Who is going to make the next step to address this concern?