Unfair Terms in Commercial Contracts and the Two Laws of Competition: French Law and English Law Contrasted

Abstract

The laws controlling the fairness of the terms of non-consumer contracts in French and in English law have recently grown much further apart. French law has introduced two new general sets of controls modeled on the European consumer law test: the first in the Commercial Code governing all ‘commercial contracts’ and forming part of a wider law of unfair competition with a background in ‘abuses’ by large retailers of their suppliers; the second in the Civil Code governing the terms of contrats d'adhesion where a contracting party's ‘will’ is not properly engaged. By contrast, English law controls the terms of commercial contracts principally only as regards exemption clauses and penalty clauses. However, while it possesses no general law of unfair competition, where the practices of grocery retailers towards their suppliers revealed a partial market failure, the UK competition authorities imposed a dedicated Code of Practice with a general requirement of fairness and good faith.