Contractual freedom vs illegality and business fairness

• Author: Calvin A. Eversley
• Position: LL.M. (Harvard), LL.B (Hons), LEC., DPA (Distinction), Senior Lecturer in Law, University of Guyana, Attorney-at-Law (US Third Circuir Court of Appeal, New York; Guyana)
• Pages: 226-245

CONTRACTUAL

FREEDOM

vs

ILLEGALITY

AND BUSINESS

FAIRNESS*

CALVTN

A. EVERSLEY**

INTRODUCTION

Given the competitive nature of our world, it is inconceivable that there would

ever be the absence of any significant degree of tension between the rights and

freedom of contracting parties to develop and change whatever contractual

terms may serve their business interests, on the one hand, and a particular

Society's need to inculcate certain standards of fairness and propriety in

contractual agreements in an attempt to discourage illegal and unconscionable

conduct, on the other hand. In this paper, the writer intends to give a

comparative sketch of certain aspects of the law of contract pertaining to this

subject matter as they are applied in the United Kingdom and certain jurisdic-

tions of the United States and the West Indies.

The common law of the United States and the West Indian jurisdictions is

rooted in the common law of England. However, statutory changes and/or

judicial interpretations have, in some respects, significantly altered the legal

landscape in the area of contract law in these jurisdictions. Even the United

Kingdom itself has made somewhat substantial statutory inroads into the

pervasiveness of the principle of contractual freedom.1 Notwithstanding these

changes , however, the doctrine of contractual freedom has remained wide-

spread and dominant in all of these jurisdictions.

*This Article

is reprinted with the land

permission

of

the

Guyana

Law

Review.

**LL.M.

(Harvard),

LL.B

(Hons),

LEC., DPA (Distinction), Senior Lecturer in Law,

University of

Guyana,

Attorney-at-Law (US

Third Circuir Court

of

Appeal,

New

York;

Guyana),

Former Assistant

Attorneys-General,

USVI Dopt,

of

Justice.

1

See the Unfair Contract

Terms Act

1977

(as

amended by the

Sale

of

Goods

Act

1979,

Supply

of Goods

and

Services Act

1982 and

Occupiers Liability Act

1984);

Supply of Goods

(Implied

Terms)

Act

1973;

Consumer

Credit Act

1974;

Consumer

Safety Act

1978;

Insurance

Companies

Act

1932;

Unfair

Terms

in Consumer

Contracts

Regulations 1994.

CONTKACTUAL FREEDOM

Jurisprudentially speaking, the doctrine of contractual freedom could arguably

be classified as one of those inalienable, but certainly not unfettered, rights of

man which our Creator has endowed us with from the beginning of creation.

The underlying freedom which supports the freedom of contract

is,

essentially,

the freedom of

choice.

This foundational freedom was explicitly given to Adam

and Eve in terms of their choice to obey or disobey God. One could say that

God, on the one hand, and Adam and Eve on the other hand, entered into an

oral contract in which mutual and valuable consideration moved between the

parties. When Moses came upon the scene, and after God's miraculous

deliverance of the Israelites, we see a more formal contract being established

called a covenant.3 It is instructive to note that the people solemnly agreed to

obey God before this covenant was ratified, so to speak-

In more modern times, the doctrine of contractual freedom rests on less

impressive grounds, which are no less legally binding. For instance, the

constitution of the United States enjoins states from impairing the obligations

of

contracts.5

There is no comparative provision in any of the written consti-

tutions of the various West Indian states. However, these jurisdictions have

inherited, and faithfully apply, the doctrine of contractual freedom. In the

United Kingdom, there is no written constitution, but the principle of

contractual freedom, nonetheless, rests on firm common law grounds. The

general tenacity of this freedom is no mystery since, without it, both interna-

tional and national commerce will come to a dramatic halt.

Contractual Freedom vs Illegality

The United States Supreme Court in the case of Kelly v.

Koswga6

underscored

the dominance of contractual freedom when it upheld a sale which it found

to be made pursuant to and as an "indivisible part of an agreement which

violated the Sherman Antitrust Act," because it was "guided by the overriding

2 Book of Genesis, Holy Bible, Chapter

2;vv

16-17.

3 Book of Exodus, Holy

Bible,

Chapter

19:VV

5-8.

4

Ibid.

5 See section 10 of Article

1

of

the

US Constitution.

6 358 U.S. 516.