Freedom of contract, unequal bargaining power and consumer law on unconscionability

Abstract

Introduction This chapter examines the compatibility of the common law concept of unconscionability with various categories in civil law, with particular reference to Spanish legislation, which has no general principle that corresponds directly to that of unconscionability, at least to the extent that this term exists in common law systems. Yet, Spanish law, in Article 1255 of the nineteenth-century Spanish Civil Code (hereafter CC), also provides a number of disparate tools that limit the basic principles of freedom of contract and free will, thereby offering similar remedies to those available in common law. The chapter focuses on the interpretation of the general good faith clauses contained in Articles 1258 CC and 116–7 of the Catalan Civil Code (hereafter CCCat) as a general remedy in a nineteenth-century liberal Civil Code, as well as additional prohibitions such as pactum commissorium . It then analyses an unusual text in the Spanish system that seeks to counter the imbalance between parties: the 1908 Act for the Repression of Usury. Finally, I conclude by turning my attention to the present-day situation which defends the rights of the weaker parties in consumer law and, in particular, to unfair contract terms (UCT). Freedom of contract and the interpretation of the good faith clause in the Spanish Civil Code of 1889 The nineteenth-century Spanish Civil Code was founded on the basis of liberal doctrine and, as such, freedom of contract was placed at the heart of its contractual regulations.