Does the UCTA and UCTTR impede on the freedom of contract.

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Ylli Haxhiu                                       LW597: Law of Obligations                              Kerry Poole

Special Study Essay

There have been claims, that contract law impedes freedom of contract in favor of consumer protection. Discuss.

When discussing whether contract law impedes freedom of contract in favor of consumer protection, it is first important to define both freedom of contract and consumer protection in order to ensure a clear and thorough understanding is obtained. The discussion will advance to look into how the concept of freedom of contract originated and how contract law has shifted towards enhancing consumer protection. These grounds lay the foundation towards a complete understanding of the full notion of the essay. The critical discussion will begin by illustrating how vitiation doctrines directly and indirectly restrict freedom of contract. Then proceed to look at how certain statutes and case law have made a big difference towards the restriction of freedom of contract and the enrichment of consumer protection. Furthermore, the essay will move to analyze the justification towards the shift by looking at two key reasons: standard form contracts and unequal bargaining power. Finally, critically observe whether this movement is the right thing to do and the consequences that could follow as a result of restricting freedom of contract. The purpose of the content outlined below is not to just merely discuss the different grounds to the question at hand but to present an impartial essay through critical discussions and justifications with the use of different forms of research ranging from academic commentary to case law. This will ensure that the reader can understand the entirety of the context from start to finish and an impartial answer is reached.

The full concept of ‘freedom of contract’ is difficult to grasp within one single definition, however Mindy Whishart is clear in defining it to its simplest form: “Freedom of contract demands that parties be given complete choice whether, when, and to what they bind themselves via contracts." [1] The main purpose of this is to reach an extensive range of outcomes because parties do not want to be burdened with restrictions towards making good bargains, as what might be a good bargain to one party may not be to another. It has also been stated that it is for the better of the economy “Contractual exchanges maximize individual and, overall wealth…parties will only contract to obtain something they value more.”[2] There is no current agreed legal definition of consumer protection, as it is not archaic within contract law. It can be defined as ‘a concept, which aims to ensure fair competition and equal bargaining power in the marketplace in order to protect the consumer.’ The main issue is that consumers are most at risk towards unequal bargains because they do not possess ‘equal negotiating power’[3] and recent consumer protection statutes such as the Unfair Contract Terms Act 1977[4] and common law aims to ensure this does not happen.

The origination of freedom of contract could be said to have been within the 19th century when the concept ‘classical law of contract’ was born. “Classical Law contract reflects laissez-faire economic attitudes within the 19th century.”[5] Personal freedom and wealth were defined as going hand in hand with the freedom of contract.[6] The view then was that each party was sovereign; it is up to them to decide what terms they wish to contract. The law was said to play a minimal role in limitations and contract law should be clear.[7] Those notions were reinforced through the caricature paradigm contract. “This presumed equality between parties, the contract is negotiated and therefore fair, contract has clear boundaries and contract parties act out of self interest and adopt an adversarial stance.”[8] This model was the main model that resolved cases. The shift from freedom of contract towards consumer protection happened in the 20th century when the UCTA 1977 first came into force. There were a lot of conflicting views, such as that of Lord Wilberforce and Lord Diplock in 1980.[9] However those conflicting discussions did not last long, because individuals soon sensed and agreed that there was a need for equality, fairness to facilitate the market, even for those small businesses and not hinder our economy. Therefore it is clear that freedom of contract has shifted to a huge extent to uphold the key principles of equality and fairness.

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It is crucial to illustrate the vitiation doctrines that were used to limit freedom of contract and partially protect any type of consumer before UCTA 1997 and UTCCR 1999 came into force and treated the main root of the problem. The duress doctrine serves the purpose of declaring a contract void if entered in through illegitimate pressure. For example if an individual holds a knife to your throat and says ‘sign or I will kill you’, that contract would not be enforced through the use of this vitiation doctrine. Lord Wilberforce stated in Barton v Armstrong[10]: “ In ...

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