Is Unequal Bargaining Power an Unjust Factor?

Abstract

Is unequal bargaining power an unjust factor? In 1985, National Westminster Bank plc v Morgan held 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’. Since then, two major changes have unfolded. First, the number of individual rights in statute has increased, particularly for employees and consumers, and many rights exist for tenants. Second, the need to develop the common law consistently with statute has been emphasised by the Supreme Court. This leads to the question, should unequal bargaining power now be recognised as an unjust factor, which vitiates fully informed and true consent to unfair terms? This article suggests that the answer is ‘yes’, but in specific and structurally defined categories of contract or consent-based obligation. In cases like employment, consumer relationships, or tenancies the law recognises the need, in the words of the Supreme Court, to ‘segregate intellectually’ the common law of commercial relationships from those with statutory, or indeed human rights.