The Inequality of bargaining power in consumer contracts

Abstract

Freedom and sanctity of contract are principles well found in our law, however, true freedom of contract has become undermined with the increased use of standard-form contracts and this has an effect on equality. An important feature of the supreme law of the country, the Constitution of the Republic of South Africa, is the principle of equality, which is provided for in section 9. The application of this principle has a significant effect on contract law. Inequality of bargaining power occurs when the terms and provisions of a contract are unfair, unjust and unreasonable. This is the case when a term is excessively one-sided or provides for a provision that is adverse to the consumer. The case is the same where one party is afforded greater protection while the other is defenseless. There is a possibility that the Consumer Protection Act, 68 of 2008 (the CPA ), in trying to promote equal bargaining power, has caused the opposite to happen. The consumer has now been afforded with greater protection and more rights. It is perhaps possible to conclude that, whether the contract will continue is now more strongly determined by the consumer, even though the supplier has fulfilled his obligations in terms of the CPA. A party to a contract who enjoys a large amount of bargaining power in comparison to the other party to the contract may be able to persuade others to act while they themselves do very little or nothing at all.