ABSTRACT
In 1965, the US Special Committee on Retail Instalment Sales posed the following question: ‘It is fair to ask precisely what it is that the consumer is to be protected from. Must he be protected from his own lack of knowledge or discipline? … Is he to be protected from the “fringe” operator who may take advantage of the ignorance and gullibility of the consumer to cause him to overbuy or pay too much?’1 This question is still relevant today not only from a historical standpoint but also from its updated perspective. At that time, consumer protection answered this question by formulating the major rationales for government regulation of the marketplace: the inequality of bargaining power,2 the growing and frequently total disparity of knowledge concerning the characteristics and technical components of the goods or services and the disparity of resources that reflected itself in a consumer’s difficulty to obtain redress unaided for a legitimate grievance.3 Amongst these rationales, unequal bargaining power was considered as a discrete rationale for consumer protection, ‘an umbrella concept for those market and private-law failures which cause consumers to suffer economic detriment.’4 The major part of the doctrine5 described unequal bargaining as including two major aspects: unfair standardised terms and the ineffectiveness of consumer redress mechanisms. The first aspect evolves from the premise that contracts should be based on the negotiation of terms and conditions between consumers and traders. The lack of bargaining power was compared with the phenomenon of ‘standards contracts’ or ‘contracts of adhesion.’6
