Contract Law as a matter of public policy - Admission/Application Essay Example

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Introduction There is not a doubt that there are unequal bargaining positions between consumers and companies. Consumers are generally unsophisticated, and, even if they are literate and educated, often do not read the contracts because these contracts are long-winded, boring, and filled with terms which a sophisticated attorney would struggle to comprehend…
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Contract Law as a matter of public policy
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Download file to see previous pages However, it seems that, absent some kind of major overhaul of the contracting system, this kind of reform will not be forthcoming. This paper will analyze several of the problems that consumers face, as well as the potential remedies for these problems. Discussion The default rule in contract law is freedom of contract, which means that parties determine their own rights and obligations on the contract (Cserne, 2007, 1). This is the basic rule in contracts, and classical contract law is what is used when gaps need to be filled in the contract. Cserne (2007) states that breach of contract cases in the Western world are handled by the court determining “1) determine whether contract formalities are satisfied; 2) if so, determine whether there was real consent (no fraud, duress, mistake); 3) if so, determine what the contract says; 4) if there is a gap (that is if the contract does not address the contingency that caused the dispute apply a default rule; and 5) if an explicit or implied term was violated, award a remedy” (Cserne, 2007, 1-2). ...
This rule, according to Cserne, is the rule that, in the case of the ambiguous contract, the contract shall be construed against the party who is the most responsible for the creation of the contract. This method of interpretation benefits the consumer, as the consumer is not normally the person who creates the contract. Rather, it would be the large corporation who creates the contract. Cserne explains that, in the European Union, there has been, since 1994, a contract interpretive presumption in favor of consumers, and their 93/12/EC Directive on Unfair Terms in Consumer Contract states that any doubt as to the meaning of a contract term shall be construed in favor of the consumer. This would be tantamount to using the doctrine of contra proferentem (Cserne, 2007, p.14). Cserne goes to explain the policy reasons in favor of the contra proferentem. One of these is that, when a corporation does not make a term clear to a consumer, that this is wrong. To allow this contract term to stand and to construe it against the consumer would thus be tantamount to allowing the party to benefit from his or her own wrong. Another policy consideration is that the ambiguous term might have misled the consumer or induced him to sign the contract. Finally, there is unequal bargaining power between the parties. Therefore, the party with the most bargaining power should have the ambiguous contract terms construed against it (Cserne, 2007, p. 15). Cserne offers interesting scenarios for the use of contra proferentem. He states that judges may use this doctrine in the case of unfair terms which are otherwise clear. In other words, the judge may read the clause in an artificial manner so that the clause seems to be ...Download file to see next pagesRead More
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