Examining the Origins and Nature of Significant Imbalance in Commercial Contracts

Abstract

Whenever there is an imbalance in the rights and obligations of the contracting parties, the contract is considered unfair. This concept is referred to as "unfairness" in English law and as "significant imbalance" in French law, with the distinction that in English law, it falls under consumer protection law, whereas in French law, it is incorporated into contract law. The concept of significant imbalance, which is the focus of the present article, is a legal standard derived from French consumer law and is used by courts to evaluate whether a contractual term is unfair. However, over time, a more flexible form of significant imbalance was extended to commercial law and, with the reform of the 2016 French Contract Law, was included in contract law. The novelty of this concept and the contracting parties' lack of awareness about it may lead to the creation of unfair contractual conditions. This research examines the nature of the principle of imbalance and its impact on international commercial contracts. It concludes that the longstanding discussions on justice and fairness across various legal systems have taken on a modern form within French contract law. French courts seriously pursue and address this doctrine, which, in essence, respects and protects the weaker party in commercial contracts.