One-Sided Builder Agreement? How the 'Unfair Contract' Rule Helps Bengaluru Buyers

Page 23 of a Bengaluru builder-buyer agreement: if the buyer cancels for any reason, the developer may forfeit a large slice of the amount paid. Page 31: the developer may assign its rights under the agreement to any entity of its choice. Page 40: the developer may terminate the allotment at its discretion. Most buyers sign these pages because everyone else does. The Consumer Protection Act, 2019 gives those same pages a name when they go too far: an "unfair contract".

The short answer. The Consumer Protection Act, 2019, in force since 20 July 2020, defines an unfair contract as one between a trader or service provider and a consumer with terms that cause a significant change in the consumer's rights, including manifestly excessive security deposits, penalties wholly disproportionate to the loss caused by a breach, unilateral termination without reasonable cause, assignment to the consumer's detriment without consent, and unreasonable charges or conditions. Separately, Section 13(2) of the RERA Act requires the agreement for sale to be in the prescribed form. The trade-off: these provisions give you language to challenge one-sided terms, but a challenge takes time, so it is better to negotiate or refuse such terms before signing than to fight them later.

What does the law call an unfair contract?

The government set out the definition in a written reply in the Lok Sabha on 20 September 2020. It said the Consumer Protection Act, 2019 came into force with effect from 20 July 2020, replacing the 1986 Act, and that under the new Act an unfair contract means a contract between a manufacturer, trader or service provider on one hand and a consumer on the other, having terms which cause significant change in the rights of the consumer.

The reply lists six examples. Requiring manifestly excessive security deposits for the performance of contractual obligations. Imposing a penalty on the consumer for breach which is wholly disproportionate to the loss caused to the other party. Refusing to accept early repayment of debts on payment of the applicable penalty. Entitling a party to terminate the contract unilaterally, without reasonable cause. Permitting one party to assign the contract to the detriment of the consumer, without consent. And imposing any unreasonable charge, obligation or condition that puts the consumer at a disadvantage.

Those six examples read like a checklist for a builder-buyer agreement. That is not an accident of drafting: they describe the kinds of imbalance that standard-form contracts tend to carry.

How do those six heads map onto a builder agreement?

Read your draft agreement against each one. The table below is a reading aid, not a legal finding: whether a particular clause is unfair depends on its wording and your facts, and is ultimately for the forum hearing a dispute to decide.

Two of those rows connect directly to RERA. On assignment, PropNewz explained the two-thirds allottee consent rule for transferring a project in our guide to Section 15 project transfers. On forfeiture and cancellation, the agreement's terms need to be read against the form your state's RERA rules prescribe.

Where does RERA's agreement for sale fit in?

It sets the floor. Section 13(1) of the RERA Act says a promoter shall not accept more than ten per cent of the cost of the apartment, plot or building as an advance or application fee without first entering into a written agreement for sale and registering it. Section 13(2) says that agreement shall be in such form as may be prescribed.

Section 13(2) also lists what the agreement must specify: the particulars of development, including construction of the building and apartments, specifications, internal and external development works, the dates and manner of payments, the date of handing over possession, and the rates of interest payable by the promoter to the allottee and by the allottee to the promoter in case of default, along with other prescribed particulars.

The phrase "rates of interest payable by the promoter to the allottee and the allottee to the promoter" is worth pausing on. An agreement that sets a steep interest rate for a buyer's late payment but a token rate for the builder's delay is exactly the kind of imbalance to question. Our earlier piece on builder-buyer agreement clauses to read walks through the main sections clause by clause.

How do you raise an unfair term with a consumer commission?

Through the commission that has jurisdiction, and increasingly online. The government's release of 25 March 2025 on the Consumer Protection Act says the 2019 Act provides a three-tier quasi-judicial machinery at district, state and central levels to give simple and speedy redressal of consumer disputes, including those related to unfair trade practices, and that the commissions can give relief of a specific nature and award compensation where appropriate.

The same release lists features that help a buyer who has moved since booking: online filing of a complaint with the commission that has jurisdiction over the consumer's place of work or residence, irrespective of where the transaction took place; hearings by videoconference; and deemed admissibility of a complaint if admissibility is not decided within 21 days of filing.

Which tier hears your complaint depends on the value paid as consideration. PropNewz set out those limits, and how to file on e-Jagriti, in our explainer on consumer commission jurisdiction.

Why did the unfair contract idea land in consumer law?

Because contract law was left as it was. The same September 2020 reply explains that the Indian Contract Act, 1872 determines the obligations of parties to perform their promises, and that the Law Commission of India, in its Report No. 199 titled "Unfair (Procedural and Substantive) Terms in Contracts", recommended that the provisions of the Indian Contract Act, 1872 and the Specific Relief Act, 1963 need not be disturbed. The consumer route is therefore where a buyer, as a consumer, finds the specific list of unfair terms.

A second body also matters for marketing claims made before you sign. The March 2025 release says the Central Consumer Protection Authority, an executive agency, came into existence on 24 July 2020. It is designed to intervene to prevent consumer detriment arising from unfair trade practices and to initiate class actions, and its core mandate is to prevent and regulate false or misleading advertisements prejudicial to the public interest.

For a buyer, that splits the problem in two. A misleading brochure or advertisement is an advertising question. A one-sided clause in the signed agreement is a contract question. Keep evidence of both, because a dispute often involves the gap between what was advertised and what the agreement actually says.

Is there a step before a formal complaint?

Yes, the National Consumer Helpline. The March 2025 release describes it as a single point of access for grievance redressal at the pre-litigation stage, reachable on the toll-free number 1915 and through WhatsApp on 8800001915, SMS, email, the NCH app, the web portal consumerhelpline.gov.in and the Umang app. It says grievances can be registered in 17 languages, including Kannada.

The release adds that 1,049 companies have voluntarily partnered with the helpline under its Convergence programme and respond directly, while complaints against companies that have not partnered are forwarded to them for redressal. A helpline grievance does not decide whether a clause is unfair, but it creates a dated record and sometimes prompts a response without litigation.

What should a Bengaluru buyer do before signing?

Use the definition as a negotiating tool while you still have leverage. Work through this checklist.

1. Ask for the full draft agreement for sale before paying more than the booking amount.
2. Compare it with the form prescribed under your state's RERA rules, as Section 13(2) requires.
3. Mark every forfeiture, deposit, termination, assignment and extra-charge clause.
4. Check that the interest rates for the builder's delay and your late payment are stated and comparable.
5. Ask in writing for any clause that looks one-sided to be changed, citing the unfair contract examples in the Act.
6. Keep the developer's written reply, whatever it says, in your file.
7. If a dispute arises later, consider the National Consumer Helpline first, then a complaint before the commission with jurisdiction.

Frequently asked questions

What is an unfair contract under the Consumer Protection Act, 2019?

The government's Lok Sabha reply of 20 September 2020 describes it as a contract between a trader or service provider and a consumer with terms causing significant change in the consumer's rights, such as excessive security deposits, disproportionate penalties, unilateral termination without reasonable cause, assignment without consent, or unreasonable charges and conditions.

When did the Consumer Protection Act, 2019 come into force?

The Consumer Protection Act, 2019 came into force with effect from 20 July 2020 and replaced the Consumer Protection Act, 1986, according to the government's written reply in the Lok Sabha on 20 September 2020. The Central Consumer Protection Authority came into existence on 24 July 2020.

What must a RERA agreement for sale contain?

Section 13(2) of the RERA Act says the agreement must be in the prescribed form and specify development particulars, specifications, internal and external development works, the dates and manner of payments, the possession date, and the interest rates payable by the promoter and the allottee to each other in case of default.

Can a consumer complaint be filed where the buyer lives now?

Yes. The government's release of 25 March 2025 says the 2019 Act allows online filing of a complaint with the consumer commission having jurisdiction over the consumer's place of work or residence, irrespective of the place of transaction, along with videoconference hearings and deemed admissibility after 21 days.

Last updated 2026-10-24. PropNewz Team.