Abstract
National Westminster Bank plc v Morgan said there is no general doctrine of ‘inequality of bargaining power’ in English law, because statute was the appropriate tool to place ‘restrictions upon freedom of contract’. But if there is no general doctrine, could unequal bargaining power be an unjust factor in specific contracts, to cancel unfair terms? There are compelling reasons to think so. First, for employment contracts, Autoclenz Ltd v Belcher held ‘relative bargaining power … must be taken into account’ to decide ‘whether the terms of any written agreement’ are enforceable. Second, in consumer law ParkingEye v Beavis agreed the law ‘is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge’. Third, in tenancies, Bankway Properties Ltd v Penfold-Dunsford held people have statutory rights because their ‘bargaining position may be disadvantaged’, and courts are bound ‘to scrutinise critically a transaction which is onerous … to see if it constitutes a sham’. These leading authorities reflect the time-honoured maxim of Vernon v Bethell, that ‘necessitous [people] are not, truly speaking, free’. True freedom of contract requires recognition that unequal bargaining power has become a unjust factor, albeit in specific fields. Three kinds of ‘fusion’ are at work: a fusion of law and equity, of statute and case law, and of national and international norms. The judiciary is upholding the reasonable expectation of social rights, recognised by Acts of Parliament, and universal norms of international law.
McGaughey, Ewan, Is Unequal Bargaining Power an Unjust Factor? (June 21, 2018).
First posted 2018-07-13 07:52:15
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