Contract Law When the Poor Pay More

TL;DR

This paper explores how contract law and consumer markets contribute to wealth inequality, especially through pricing practices that disproportionately affect the poor.

Contribution

The paper introduces a critical legal analysis of contingent pricing models and their impact on wealth distribution.

Findings

Contractual terms in consumer markets can enable firms to divert resources upwards in wealth distribution.

Contingent charges challenge traditional contract law principles and lack justification in market failure analysis.

The UK Supreme Court's validation of contingent pricing in Beavis v ParkingEye is legally and economically questionable.

Abstract

Taking inequality as a key challenge of our time, this article aims to highlight consumer markets, and their underpinning legal ground rules, as important contributors to inequitable wealth distributions. It illustrates how product design, as manifested in contractual terms, can allow firms to evade competition and divert resources upwards along society’s wealth distribution curve. It then highlights the contestable legality of certain pricing practices, such as ‘contingent charges’, and the challenge they pose to fundamental principles of contract law. An in-depth view of the 2015 case of Beavis v ParkingEye argues that the UK Supreme Court has validated contingent pricing models in a manner unsupported by traditional contractual reasoning and unjustified by contemporary market failure analysis. The article asks contract law to confront the reality that it shapes market distributions in economically and politically significant ways, and appeals for greater scrutiny of the contribution of contract law adjudication to inequality.