Who is Afraid of the Total Constitution?
The question to be focused on here is not who would prevail or the details of the existing consumer protection law, but how the issue would be framed and how constitutional rights could enter the dispute. To begin with this seems to be a straightforward private law contracts case that does not involve constitutional rights at all. Substantively what is at issue is the freedom of contract on the one hand, and the protection of the weak contractual party against usurious interest rates on the other. The standard justifications for holding someone to a contract – promise, legitimate expectations, and general considerations of economic efficiency
goes only so far and allows for some degree of protection of the weak contractual
party. According to received wisdom, there is a line to be drawn somewhere. This line-drawing exercise can be legally structured in different ways. The German Code contains a general clause that invalidates contracts that “violate the good customs of the community.”35 One of the purposes of this clause has traditionally been to provide some degree of protection of the weak party in certain cases.36 In the United States the doctrine of unconscionability that has been developed as part of the common law by courts37 has a comparable function. In both cases the line drawing exercise is effectively managed by ordinary courts balancing the relevant concerns and, over time, articulating more specific rules that determine the conditions under which a contract will not be judicially enforced. Today it is just as likely that this balance will have been struck by the legislator. Beyond the general code or the common law some consumer protection legislation exists in most jurisdictions. In Europe, national consumer protection legislation, complemented by EU directives, address such issues as standard contracts, installment sales contracts, or consumer credit contracts.38 To the extent this legislation consists of specific and clear easily administrable rules, the line-drawing exercises between freedom of contract and consumer protection are no longer undertaken by the respective courts, but by legislators.
How then could constitutional rights come into the picture?
See sec. 138 para. 1 BGB: “Ein Rechtsgeschäft, dass gegen die guten Sitten verstsst ist nichtig.”
For a discussion of usury see PALANDT (62d ed. 2003), HEINRICHS para. 242, recital 65-76.
See Campbell Soup Co. v. Wentz, 172 F.2d 80 (3d Cir. 1948). See also Section 2-302 UCC: “If the courts as a matter of law finds a contract or any clause of the contract to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clauses as to avoid any unconscionable result.” 37
See e.g. EC Directive 13/93 addressing consumer protection against unfair practices. See also the Swedish “Act on the Prohibition of Unconscionable Contractual Terms” of 1971. 38