Elgar original reference
Edited by Jan M. Smits
Chapter 19: Consumer protection*
Why, the sceptic may ask, might one suppose that the law should play a role in protecting the consumer? Why not let the market take the strain? Producers have to sell their goods to consumers in order to survive. They will only be able to sell to consumers what consumers choose to buy. Consumer preference will dictate what is made available. The ‘invisible hand’ of competition steers producers to behave in a manner that is responsive to consumer preference. This model of ‘perfect competition’ in the market places the consumer in a position of dominance. His or her choices serve to organise the market and they drive an efficient allocation of resources. Where, then, might there be a role for the law? It is pertinent in the first place to acknowledge that it is tendentious to assert that markets possess autonomy from legal rules. At least in its modern form the ‘market economy’ is built on assumptions about a supporting network of legal rules – contract, tort and the wider law of obligations – and an institutional underpinning supplied by the state, most prominently in the shape of courts. The operation of the market is sustained by the willingness of the state to provide facilities that ensure the viability of essential components in a properly functioning market such as the credible enforcement of long-term contractual commitments.
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