Abstract

http://ssrn.com/abstract=2419171
 


 



The Incoherent Role of Bargaining Power in Contract Law


Max N. Helveston


DePaul University - College of Law

Michael S. Jacobs


DePaul University - College of Law

April 1, 2014

Wake Forest Law Review, Forthcoming

Abstract:     
Contracts that result from the abuse of unequal bargaining power have long been a concern of contract law. Courts have proscribed efforts by the "powerful" to take unfair advantage of the "weak" through contracts of adhesion and standard form contracts. Certain kinds of clauses — liability waivers, and covenants not to compete, among others — regularly attract judicial suspicion because their appearance is deemed indicative of such advantage-taking. In books, symposia, and journal articles, generations of legal scholars have debated the role of bargaining power considerations in the analysis of contracts and contractual terms. The "bargaining power" construct has become deeply embedded in the law.

But the construct suffers from two insoluble problems. First, no one knows how to define or measure "bargaining power." No court or scholar has adopted or even proposed a coherent definition of the term. Nor has anyone come up with an objective means for measuring power disparities. These fundamental failings are no simple oversight, but result from the inherent and irresolvable indeterminacy of the "bargaining power" concept itself. Second, "bargaining power" performs no useful work for contract law. It divides otherwise identical contracts and terms into two arbitrary groupings: those resulting from "significant" inter-party "power" disparities; and all others. Courts apply heightened scrutiny to contracts placed in the first group, while applying very little, if any, to those in the second.

The "bargaining power" construct should be replaced or eliminated. If courts use the construct as a guise for public policy determinations, then the public policy defense would itself serve that purpose better. If they employ it to eliminate types of contract terms that are systematically abusive, then legislation or regulation would provide a superior tool. Everything that "bargaining power" analysis seeks to accomplish can be achieved better and more coherently by alternative means.

Number of Pages in PDF File: 43

Keywords: contract law, bargaining power, contracts of adhesion, commercial regulation

Accepted Paper Series





Download This Paper

Date posted: April 3, 2014  

Suggested Citation

Helveston, Max N. and Jacobs, Michael S., The Incoherent Role of Bargaining Power in Contract Law (April 1, 2014). Wake Forest Law Review, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2419171

Contact Information

Max N. Helveston (Contact Author)
DePaul University - College of Law ( email )
25 E. Jackson Blvd.
Chicago, IL Cook County 60604-2287
United States
312-362-5557 (Phone)

Michael S. Jacobs
DePaul University - College of Law ( email )
25 E. Jackson Blvd.
Chicago, IL Cook County 60604-2287
United States
Feedback to SSRN


Paper statistics
Abstract Views: 772
Downloads: 136
Download Rank: 126,843

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.359 seconds