Reasons to Regulate Contractual Terms:
Freedom of Contract:
Contractual obligations are voluntarily undertaken and parties have the power to negotiate and agree on the terms. Following this, the law should not intervene in voluntary negotiations. However, most contracts are not negotiated, and the terms are not read due to impracticality – ‘take it or leave it’.
Unequal Bargaining Power:
‘take it or leave it’ contracts provide the promisor an unequal power when offering a contract. The freedom of contract is only on the side of the offeror.
‘no freedom [of contract] for the little man’. [1]
Fairness:
Procedural fairness addresses the process of bargaining: whether there could have been negotiation.
Substantive fairness addresses the content of the bargain: whether it was a fair / good agreement.
Statutory Regulation:
The common law is limited by its incremental nature. Statutes are better at making more radical changes to specific issues in the law.
Resources:
References:
[1] George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1982] EWCA Civ 5 (Denning LJ)
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