Contractual Justice and Market Efficiency in the Supply Relationships within the Agro-Food Chain

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Abstract

The paper examines, from an economic, ethical and legal perspective, some regulatory instruments through which the civil law can enhance the efficiency and fairness of trade in the food chain. In this respect, vertical integration contracts play a key role in regulating the supply relationships, requiring farmers to comply with specific criteria and techniques of cultivation and breeding and to sell all their products to the other party, who, in turn, is obliged to purchase the products after having verified the compliance with all the agreed standards. However, such an integrated system of production exposes farmers to the hazard of abuse because of their position of economic dependence. As a consequence, it’s necessary to develop legal instruments, which could prevent the abuses of bargaining power. In those systems that identify the foundation of law in social values and inalienable individual rights incorporated in the Constitution, it would be unacceptable reading the rules governing economic relations as exclusively aimed to promote market efficiency. The protection of other interests calls for a mandatory discipline of contractual relationships, coherent not only with the economic, but also with the ethical function of the market. In the free market, however, the law does not impose authoritatively a contractual settlement, considered as an a priori right; but it corrects the imbalances generated by abuse of bargaining power that would limit the freedom of the economically weaker party, forcing it to accept unfair conditions. In this view, however, differently from the neo-liberal model, public intervention is not limited to establishing organizational and procedural rules, with reference to a principle of formal equality of contracting parties, but aims at removing social and economic barriers that, by limiting the freedom and equality of the parties, prevent the full development of the human person even in the context of business.
Original languageEnglish
Pages (from-to)80-90
Number of pages11
JournalRIVISTA DELLA REGOLAZIONE DEI MERCATI
Volume2016
Publication statusPublished - 2016

Keywords

  • Contractual justice
  • Market efficiency

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