CONTRACT ESSAY - FREEDOM TO CONTRACT

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CONTRACT ESSAY – FREEDOM TO CONTRACT

The law relating to freedom of contract refers to those choices available to the individual as to who they contract with and what they contract for and on what terms.  It comes from the classical model of contract where an individualistic approach is of the highest importance. In the classical theory there is minimal state intervention.

Atiyah was central to the classical model.  His fall came about when pragmatism, consumer welfarism and reliance took the place of the laissez faire approach and the bargaining model.

The notion of freedom of contract has come under scrutiny as legislation has been passed in the UK that has implications on such ‘freedom of choices’.

There are many examples of statutory interference with the freedom of contract, for example in the fields of employment law, racial and gender discrimination.

A wide variety of legislation was passed that helped shape the law of contract.  The Unfair Contract Terms Act 1977 and the Sale of Goods Act 1979 to name but a few.

The law of contract, like the legal system itself, involves a balance between competing sets of values. Freedom of contract emphasises the need for stability, certainty, and predictability, but, important as these values are, they are not absolute, and there comes a point where those most vulnerable need protection.

The law began to recognise that not all parties have equal bargaining power as was previously thought.  One particular group that were particularly affected were consumers.  For this reason, new regulations such as the afore mentioned examples were implemented.  I think this has been of benefit to the law of the United Kingdom.  Not only does it ensure social justice, it redresses equality of bargaining power.  This is particularly of benefit to those disadvantaged from the start.

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Notion of freedom of contract is not always an ideal one.  In Suisse Atlantique Societe d'Armement Maritime S.A. v N.V Rotterdamsche Kolen Centrale [1967] 1 AC 361. Lord Reid said, at p. 406:  

"Exemption clauses differ greatly in many respects. Probably the most objectionable are found in the complex standard conditions which are now so common. In the ordinary way the customer has no time to read them, and if he did read them he would probably not understand them. And if he did understand and object to any of them, he would generally be told he could take ...

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