Martijn Hesselink, ‘Could a Fair Price Rule (or its Absence) be Unjust? On the Relationship between Contract Law, Justice and Democracy’

This paper discusses the relationship between contract law and justice. In particular, it addresses the question whether the presence or absence of an unfair price rule could make a system of contract law, and thus the society to which it belongs, become unjust. The question is not merely a theoretical one; it is also practically relevant. Earlier this year, the European Parliament, in first reading, adopted two amendments to the European Commission’s proposal for a Common European Sales Law (CESL) to the effect that the unfairness control of contract terms be extended both to the adequacy of the price and to individually negotiated terms. The combined effect of these two amendments, if endorsed by the Council, would be that under the CESL, unfair prices, even if they resulted from individual negotiation, would become non-binding on consumers. This would amount to the introduction of a iustum pretium rule for business-to-consumer (B2C) contracts into European contract law.

The main argument of the paper is that principles of justice that would be reasonably acceptable to all, as they should be in a society like our own which is characterised by a reasonable pluralism of worldviews, are unlikely either to prohibit or require an unfair-price rule, while the main existing substantive theories of justice that do clearly require such a rule (eg in the name of the virtue of corrective justice) or proscribe it (eg because of the value of liberty), are too partisan (‘too thick’) to be acceptable to citizens holding different reasonable worldviews. This means that a contract law can be just whether or not in contains an unfair price rule. As a result, the question whether our contract law should contain a fair price doctrine remains a matter for the legitimate democratic lawmaker to decide upon, in a debate where also controversial worldviews are admitted. The more procedural (‘thinner’) principles of justice will still require that the law can (and will at some point) be justified in non-sectarian terms, but given that such more neutral grounds are readily available on either side of the debate, both the presence and the absence of a fair price rule is compatible with a legitimate and just contract law regime.

Hesselink, Martijn W, Could a Fair Price Rule (or its Absence) be Unjust? On the Relationship between Contract Law, Justice and Democracy (June 17, 2014). Centre for the Study of European Contract Law Working Paper Series No 2014-05; Amsterdam Law School Research Paper No 2014-36.

First posted 2014-06-21 07:15:57

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