INEQUALITY OF BARGAINING POWER AND PROVING IT IN COURT

 

Bakulin A.F.¹, Kuzmina А.V.²*,

¹ Senior Lecturer of the Department of Civil Law and Procedure of the Law Faculty, Mari State University, Mari El Republic, Russia, baculin.af@marsu.ru

² Candidate of Legal Sciences, Associate Professor of the Department of Civil Law and Procedure of the Law Faculty, Mari State University, Mari El Republic, Russia, tsyplenkova@mail.ru

*Corresponding author

 

Abstract

Good faith of the parties at the time of the making and performance of the contract has been recognized in Russia as a leading principle of civil-law transactions. However, many contracts are drafted in the context of inequality of bargaining power. The authors of this article examine problems related to observing good faith in negotiation of contractual terms, discuss the criteria of inequality of bargaining power and the peculiarities of proving them in court.

This article proposes developing standards of proof, unknown to Russian procedural law, and using the experience of common law countries. In the authors’ opinion, inequality of bargaining power is presumed to exist unless proven otherwise. Circumstances restricting bargaining power of the weaker party, impeding their negotiation, and other forms of onerous imposition of mutual rights and obligations without the maintenance of the balance of interests of the parties, are among the facts to be proven, when challenging compulsory contractual terms. The court may, on its own initiative, to redistribute the burden of proof and to impose on the drafting party a higher standard of proof of good faith in negotiations and of the fairness of contractual terms.

The authors believe that courts may revisit unfair contractual terms between business parties only in exceptional circumstances, if the weaker party had no cognizant choice when entering into the contract, if its terms were initially favorable for the drafting party, and if such terms were accepted without a detailed discussion and without a possibility to understand their meaning when reading them.

Keywords: contract of adhesion, inequality of bargaining power, good faith, unfair contractual terms, reform of law of obligations.