Equal bargaining power

[martinwhite]

I've just read the McAlpine V TileBox case linked in the library.

 

Of particular interest was the judge's comments regarding bargaining power. In that case, negotiated between two commercial equals, the liquidated damages clause was accepted in pre-contract scrutiny, and the judge said that courts should be predisposed to uphold such clauses (with proviso re: level of damages etc)

 

HOWEVER - the major difference here, with the banks, is that we, the public consumers, have NO bargaining power with any one of the banking institutions. Furthermore, since all the banks make roughly the same charges, it's not as though we can vote with our feet.

 

So - even if the "charges" could be construed as an estimate of genuine loss - it seems to me the weak position of the consumer (in the acceptance of the T&C) makes it all the more likely to be construed as an out-and-out penalty and therefore unenforceable.

 

Sorry if this has already been covered somewhere else, I thought it was worth pointing out.

 

M

[martinwhite]

Agreed - Tilebox were able to come up with a concrete reason for the figures in the penalty clause. In fact, they may even have underestimated their losses.

 

Key points for me:

 

- The pre-estimate does not have to be accurate to be reasonable, as long as it is based on sensible criteria. As you have said, Dave, in the case of the banks there is a grossly over-estimated mark up (i.e. profit). However, to argue this point the banks will be forced to disclose their costs or their sensible criteria.

- McAlpine, as a commercial party with equal buying power, did not have to agree with the term in the first place. We, as consumers, are not negotiated with at all. We are trapped in the cartel of charges with banks a necessity for modern life.

[richardc]

Yes. Thi is the reason we quote the case.

[martinwhite]

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