The Effect of a Stronger Bargain Position on the Perfection and Completeness of a Contract

Laszlo Csorba ()
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Laszlo Csorba: Eszterházy Károly Catholic University

Financial and Economic Review, 2022, vol. 21, issue 3, 101-121

Abstract: With a stronger bargain position, it is possible to achieve more favourable conditions for the potential conclusion of a contract. Although a dominant position is commonly associated with a stronger bargain position, their relationship is neither required nor common. A relatively stronger bargain position usually results from the parties' reliance and dependence on each other. Reliance is generally based on the lack of alternatives and reserves. The effect of basic factors affecting reliance may be influenced by the relevant knowledge and negotiation techniques of a party. Even the conclusion of a so-called perfect contract may be hindered by an intent to abuse a stronger bargain position, and after conclusion, it may lead to performance problems. The conclusion of a so-called complete contract may be hindered as well, since higher risk exposures increase the number of future alternatives. A certain degree of exploitation of a strong or relatively stronger bargain position gained through business successes is an important driving force in market economies, but it is challenging to adjust this to the demands for perfect or complete contracts.

Keywords: bargain position; dominant position; perfect contract; complete contract; moral hazard (search for similar items in EconPapers)
JEL-codes: C50 D82 D86 G21 (search for similar items in EconPapers)
Date: 2022
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