Duress, Undue Influence, and Inequality of Bargaining Power

Abstract

The law of contract has always placed limits upon the exercise of economic power by contracting parties (see Reiter, 1981). This role has traditionally been played by the doctrines of duress and undue influence, although recent years have also witnessed a (largely abortive) attempt to introduce into the common law a doctrine of inequality of bargaining power. While the English courts appear to have abandoned the attempt to create a doctrine of inequality of bargaining power, the Unfair Terms in Consumer Contracts Regulations 1994 (SI 1994, No. 3194), which give effect to an EC Directive on Unfair Terms in Consumer Contracts, have now conferred upon the courts significant powers to regulate unfair terms in consumer contracts (see 1.6 and 17.6). In this chapter we shall give separate consideration to each of these issues and conclude by discussing the extent to which the law of contract is concerned with the fairness of the bargain reached by the parties.