Carlotta Rinaldo - Business negotiations and the law : the protection of weak professional parties in standard form contracting

Business Negotiations and the Law: The Protection of Weak Professional Parties in Standard Form Contracting aims to explore the issues surrounding contract negotiations between entrepreneurs and other professionals when one of the parties does not have the same level of bargaining power as the other. The need to protect weaker parties from unfair contract terms exists not only in relationships between businesses and consumers, but in business to business contracts also.

This book focuses on the problem of small enterprises, independent contractors and other professional weak parties and examines these from a European point of view. There are significant differences between Member States as to decisions regarding regulatory context on the protection of weaker professional parties in asymmetrical contractual situations. However, European businesses are overwhelmingly smaller in size, so protecting weaker parties becomes key in facilitating successful and efficient negotiations. The book provides a critical and comparative overview of the area and recent regulatory developments, both to clarify the direction that European legislation is heading, and to explore the tools needed to assure the effectiveness of the common market.

This text will be of interest to policy makers, researchers of European legislation, and students of commercial and business law.

Carlotta Rinaldo is a Researcher of Commercial Law at the Universit degli Studi di Padova, Italy.

Young Feltrinelli Prize in the Moral Sciences

Roberto Antonelli, President, Class of Moral Sciences, Accademia Nazionale dei Lincei.

Alberto Quadrio Curzio, President Emeritus, Accademia Nazionale dei Lincei.

Alessandro Roncaglia, Joint Academic Administrator, Accademia Nazionale dei Lincei.

The Accademia Nazionale dei Lincei, founded in 1603, is one of the oldest academies in the world. Since 2018 it has assigned four Young Antonio Feltrinelli Prizes every two years, directed to Italian researchers in the fields of moral sciences and humanities who are less than 40 years old. Each winner is then requested to write a book-length essay on their research and/or the perspectives of research in their field, directed to the general public. The Routledge Young Feltrinelli Prize in the Moral Sciences series thus includes high-quality essays by top young researchers, providing thoroughly readable contributions to different research fields. With this initiative, Accademia dei Lincei not only gives a remarkable grant to the winners of the prize in order to support their research activity, but also contributes to the international diffusion of the research of eminent young Italian scholars.

Business Negotiations and the Law

The Protection of Weak Professional Parties in Standard Form Contracting

Carlotta Rinaldo

First published 2020

by Routledge

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2020 Carlotta Rinaldo

The right of Carlotta Rinaldo to be identified as author of this work has been asserted by her in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

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British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Names: Rinaldo, Carlotta, author.

Title: Business negotiations and the law: the protection of weak

professional parties in standard form contracting / Carlotta Rinaldo.

Description: New York: Routledge, 2020. | Series: Young feltrinelli prize in the moral sciences | Includes bibliographical references and index.

Identifiers: LCCN 2019047237 (print) | LCCN 2019047238 (ebook) | Subjects: LCSH: Commercial lawEurope. | Business enterprisesLaw and legislationEurope. | Negotiation in businessEurope. | ContractsEurope.

Classification: LCC KJC2045 .R56 2020 (print) | LCC KJC2045 (ebook) | DDC 346.407dc23

LC record available at https://lccn.loc.gov/2019047237

LC ebook record available at https://lccn.loc.gov/2019047238

ISBN: 978-0-367-42052-9 (hbk)

ISBN: 978-0-367-82304-7 (ebk)

Typeset in Times New Roman

by codeMantra

How far can a free and liberal market go so as not to result in anarchy, where the pre-legal dominance of the strong over the weak is in force?

Freedom of competition requires that economic relations should not be subject to dirigiste measures by State intervention, because the protection granted to a certain category of contracting parties leads to unjustified imbalances in the market. Even without sharing the extreme view supported by the anarcho-capitalist theories, a State regulation in business relations should only take place to guarantee an effective competition and avoid market failures that could be brought about by wild economic initiative, thus precluding distortions of competitive relations. Regulation only aims at restoring and correcting the functioning of the market mechanisms, it is not directed to governing the economy or impose industrial strategies in specific sectors. Provisions should only aim at preserving the contestability of the market and this does not mean protecting individual market actors from potential damages.

Plato, Protagoras or the Sophists, in Plato in Twelve Volumes (vol 3, Walter R.M. Lamb tr, Harvard University Press/William Heinemann Ltd 1967).

Ennio Russo, Imprenditore Debole, Imprenditore-Persona, Abuso di Dipendenza Economica, Terzo Contratto (2009) Contratto e impresa 120, 124ff. On this topic see also Mathias Mogendorf, Der strukturell unterlegene Unternehmer (Mohr Siebeck 2016) 20ff.

See for all David D Friedman, Law as a Private Good (1994) 10 Economics and Philosophy 319327.

Not all business parties, however, work on a fair and level playing field. They are not always well informed nor are they always counselled before and when entering into commercial transactions. Indeed, as Flume points out,

What if a professional party does not have the same strength as the other? There may indeed be strong differences in the bargaining position of contractual parties. Accordingly, in certain contractual situations between businesses there may be similar qualities of asymmetry as in business-to-consumer (in the following b2c) relationships.

This can be the case, among others, in the relationship between a trader and a large retailer, between a manufacturer and a purchasing centre, between an independent and a general contractor, between farmers, processors, traders and large operators in the food supply chain. In a very early example, dating back to 1906, the German Imperial Court recognised the asymmetry of the power relations in the negotiations between a ship owner and the operator of the Kiel Canal and therefore it did not enforce a term of their contract.