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The Judicial Regulation of Improper Bargaining and of Violations of Law and Public Policy


The doctrines considered here are regulatory in nature and are often described as policing mechanisms. They allow the court to go behind the apparent manifestation of assent to examine the bargaining conduct of one of the parties and to determine whether that conduct exceeded acceptable bounds. It is important to understand that courts apply these doctrines carefully so as not to intrude more than necessary in the process of contract formation. The contracting parties are expected to try to serve their own interests and to use their available information and resources to obtain the best deal possible. There is nothing inherently wrong in the resourceful use of superior information, clever sales techniques, and the exploitation of market advantage. Furthermore, it is to be expected that transactions routinely occur between parties having great disparity in power, sophistication and resources. Regulation aims, not at “leveling the playing field” by cutting down economic advantage, but rather at allowing the court to step in when behavior crosses the line from hard bargaining to unacceptable exploitation. In obvious cases, such as Attila’s gun up Lilly’s nostril, it is clear that the line has been crossed. But in more equivocal cases opinions differ on the question of when intervention is appropriate. Some courts and commentators see robust judicial regulation of bargaining practice as a crucial means of curbing abuse. Others favor policing for only the more extreme cases and see judicial regulation as leading to inefficiency and market interference.

  In classical contract law the policing doctrines were very clearly distinguishable and each had relatively firm and specific elements, making it applicable to a narrow range of situations. As they have developed in more recent times (some courts having moved further away than others from the categorizations of classical law), the doctrines have become more fluid so that they have a greater tendency to meld into each other. While they still retain many of their characteristic elements, their points of connection have become more obvious. This means that although the facts of some cases may support the invocation of only one of the doctrines, others may permit alternative analyses under more than one of them. Together, the doctrines form a network of rules that permit courts to deal with a variety of sins that might be committed during the formation of a contract. As we examine the doctrines individually, we will keep an eye on their common ground and interconnections.

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