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Unequal Bargaining Power Agreement

Is the inequality of bargaining power an unfair factor? In 1985, the National Westminster Bank plc/Morgan found that there was no general doctrine in English law of “inequality of bargaining power”, with status being the appropriate instrument for “limiting contractual freedom”. Since then, two major changes have taken place. First, the number of individual rights in the act has increased, particularly for workers and consumers, and there are many rights for tenants. Second, the Supreme Court stressed the need to develop the common law in good standing with the law. This leads to the question of whether unequal bargaining power should now be recognized as an unfair factor, which constitutes genuine informed consent to abusive clauses? This article suggests that the answer is “yes,” but in specific and structurally defined categories of contractual obligations or consent. In cases such as employment, consumer relations or rental relations, the law recognizes the need to “separate” the general law from human rights trade relations, in the words of the Supreme Court. There must always be an inequality of bargaining power between masters and men in every contract, until the day when the victims of each master, on strike or by locking up, will affect his present consolation and his future destiny as seriously as that of each of his workers. “It is now easy to see that in 1906, Parliament may have felt that the only way to give labour egalitarian bargaining power with capital was to grant it special immunities that the common law did not allow. Even now that the criteria have been corrected, it is easy to see that Parliament might think that a strike, reprehensible or not, should not be grounds for litigation and that industrial peace should be sought in another way. While bargaining power is still uneven, the notion of unequal treatment of bargaining power serves as a justification for the application of mandatory conditions in contracts by law or the absence of the application of a contract by the courts.

“To the extent that the resulting reduction in production and distribution costs translates into reduced prices, the company as a whole ultimately benefits from the application of standard contracts… However, the use of contracts has another aspect that has become increasingly important. Typical contracts are generally used by companies with strong bargaining power. The weaker party that needs goods or services is often unable to buy on better terms, either because the author of the model contract has a monopoly (natural or artificial), or because all competitors apply the same clauses. Its contractual intention is only a more or less voluntary submission under conditions dictated by the strongest party, terms whose consequences are often vague, if not never understood. The concept of unequal treatment of bargaining power has long been recognized, particularly with regard to workers. In the Wealth of Nations, Adam Smith wrote that the unequal bargaining power in law, economics and the social sciences refers to a situation where a party that has a good deal (bargaining power), a contract or an agreement, has more and better alternatives than the other party. As a result, one party has more power than the other to not oppose the agreement, and it is more likely that that party will obtain more favourable terms and give them more bargaining power (since they are better able to reject the agreement). Inequality of bargaining power is generally considered a violation of contractual freedom, resulting in a disproportionate degree of freedom between the parties and a place where markets fail. Faced with the unequal bargaining power between the two parties, the courts and legislators have developed certain rules to protect the interests of the weaker party. Despite the absence of specific legislation, the courts have shown a strong willingness to intervene in the standard form of contracts where there is evidence of negot power