Recalibrating the governance of remedial clauses in contract law
Keywords:contracts, liquidated damages, bargaining powers, wealth extraction
Yawning gaps in bargaining powers between transacting parties have always been a source of concern in commercial relations and the legal governance of such relations. In modern times, the likely implications of gaps in bargaining powers are not only palpable as it concerns the affairs of transacting parties with weaker bargaining powers, but also on the welfare of society, at large. That is particularly so in this milieu of pervasive oligopolistic market structures, organised commercial networks, digitisation, and big data. The imperative to guard against the use of contractually agreed remedial clauses to consolidate market power and as tools for wealth extraction is the concern of this article. To this end, this article makes a case for a recalibration of the rule against penalties in contract law.