FREE DOM TO CONTRACT

In law the common parlance “FREE DOM TO CONTRACT” means that the Courts will be slow to impose its interpretation about the intentions of parties in a contract, unless the contract is vague. The policy consideration behind this, is to promote commerce. In essence, the law encourages businesses to contract as they see fit, with minimal interference (except when the subject matter of the contract is illegal or immoral).

This is the theory, but for many SMEs, it does not translate into reality. Often, they lack the bargaining power. Nearly all my clients who ask me to review standard form contracts from their large clients complain that they cannot amend or even vary terms that are not in their favor. In a sense, they are afraid to even meet their clients to try and negotiate for better terms. This fear of losing the contract, forces them to enter into contracts which they are unhappy about and a feeling of “no choice”.

By entering into such “no choice” contracts, they unwittingly or knowingly make their employees suffer too. This is particularly so for foreign workers who eventually will have to do the work for very small pay. Contracts are now used by big companies to “dominate” the small companies, so that labour can now be obtained nearly for “free”. I call this type of freedom; “free-domination”.

In a recent course on Negotiations at the University of Oxford, my tutor, Dr. Marta Coelho, mentioned that the lack of bargaining power is often a perception rather than reality. This insight made me reflect on my own experiences. Over the past 26 years, I have engaged with many larger entities and individuals as a small law firm. 

I have worked with clients who were billionaires in their personal capacity, and handling them can be challenging. Additionally, I’ve managed accounts for multinational companies with complex bureaucracies. In other cases, I have dealt with very large law firms, Senior Counsels, and Queen’s Counsels on opposing sides. What did my course and my experiences reveal to me? I learned from my tutors at this course that behind every decision is a person. That person is just like you and I. No matter how wealthy, powerful, or talented a person is, they still have basic human needs. These include love, community, values, and dignity.

The problem with law school is that it trains us to focus only on problems and issues. We are so good at it that we think we can solve and negotiate or argue our way out simply by using the power of logic. This was what I believed as well. I am now convinced that I am wrong.