Inequality of Bargaining Power

Abstract

This article examines the disconnect between the judicial approach to the legal concept of inequality of bargaining power in contract law and the analysis of power in general by the social sciences, negotiators, military strategists, businesspeople, and politicians. As a consequence of this disconnect, courts have ignored how bargaining power is actually used by contracting parties. Instead, courts focus upon crude heuristics such as the availability of meaningful alternatives, opportunities for negotiation, and a series of fixed, status-based party characteristics to assess relative bargaining power disparities. As a result, small businesses, middle-income consumers and similar entities have been largely denied access to contract doctrines that employ the legal concept of inequality of bargaining power (explicitly or implicitly), including unconscionability, adhesion contract analysis and, to a lesser extent, duress, fraud, parol evidence, consideration and public policy analysis. This article recommends that courts begin to assess power imbalances in contract relationships as complex and dynamic influences subject to radical changes throughout the parties' interaction.