Should We Have A General Doctrine Of Unfairness - Contract Law

Should we have a general doctrine of unfairness?

Why hasn’t the law adopted one?

• Cautious incremental extensions are better than wider reform

  • Chen Wishart: garbage, this must be weighed against the desirability of recognising a general principle which highlights the similarities underpinning discrete categories

    • Such as the neighbourhood principle in tort law under negligence

    • COUNTER: but the neighbourhood principle (proximity) is liable to change in different circumstances – in different situations it will be different, not the same.

      • Shows that while you can have a general concept, you need to tailor it specifically to a situation – which is what is done at the moment.

• General doctrine would lead to uncertainty

  • Piecemeal doctrines also lead to uncertainty

• A general principle against unfairness would undermine freedom to contract

  • Chen Wishart: there are already loads of restrictions on the freedom to contract

    • E.g. consumers, tenants, employees all protected by Statutory regulations and restrictions

    • Vitiating factors such as duress and undue influence tend to have this function as well

    • Judges will use backward reasoning to avoid an unfair result anyway

    • Remedies are also concerned with fairness to the contract breaker.

Suggested means of implementation

• Undue influence

  • Lord Scarman in Pao On v Lau Yiu Long [1980]:

  • Royal Bank of Scotland v Ettridge

    • Doctrine of undue influence is wide enough to assimilate the various doctrines of duress, unconscionability, undue influence etc.

      • Chen Wishart: however, this only seems to target relationships of influence, not anything else.

• Inequality of bargaining power

  • Lord Denning in Lloyds Bank v Buddy

    • Thread running through doctrines is inequality of bargaining power – we look to unfair results, parties who enter into transactions without independent advice, whose bargaining power is impaired and who is put under pressure

      • We’re not looking at proof of wrongdoing, only the result

      • Lord Scarman in Pao On v Lau Yiu Long [1980]:

• Unconscionability

  • Per US Law – anything the court thinks it shouldn’t give effect to

    • Potentially very wide indeed.

• Good faith

  • Ugh, French and European Law quite like this.

• General doctrine?

  • Chen Wishart: Law tends to cluster around three areas

    • Substantive Unfairness – Moi – not necessarily for duress or undue influence.

    • Bargaining Weakness

      • Whether a personal impairment – disability, romance, relationship of influence

      • Or circumstantial disadvantage – e.g. susceptibility to illegitimate pressure (duress) or being in need of rescue (relief) or belonging to a protected class

    • Exploitation of that weakness

      • Party exploiting that weakness either actively and confrontationally or passively and emotively.

  • Chen Wishart:

    • Cases should be allowed...