In the Wealth of Nations Adam Smith wrote, It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms.
The Webbs also pointed out that discrimination can decrease job opportunities for women or minorities, and that the legal institutions underpinning the market were skewed in favour of employers.
When the unemployed are crowding round the factory gates every morning, it is plain to each man that, unless he can induce the foreman to select him rather than another, his chance of subsistence for weeks to come may be irretrievably lost.
"The real measure of market power is not whether a supplier presents his terms on a take-it-or-leave basis but whether the consumer, if he decides to ‘leave it’ has available to him a workably competitive range of alternative sources of supply.
"The point is obvious but worth making because it affects the conditions under which relief should be given: whereas advice as to value will normally save the contract with the ‘poor and ignorant person’, the master of the ship drifting onto the rocks would still have been open to exploitation even if he had had the entire House of Lords on board to advise him.
"Schroeder Music Publishing Co Ltd v Macaulay [1974] 1 WLR 1308, 1316, per Lord Diplock: “To be in a position to adopt this [‘take it or leave it’] attitude toward a party desirous of entering into a contract to obtain goods or services provides a classic instance of superior bargaining power.” "In so far as the reduction of costs of production and distribution thus achieved is reflected in reduced prices, society as a whole ultimately benefits from the use of standard contracts… The use of contracts has, however, another aspect which has become increasingly important.
The weaker party, in need of the goods or services, is frequently not in a position to shop around for better terms, either because the author of the standard contract has a monopoly (natural or artificial) or because all competitors use the same clauses.
The former naturally desire to obtain as much labor as possible from their employees, while the latter are often induced by the fear of discharge to conform to regulations which their judgment, fairly exercised, would pronounce to be detrimental to their health or strength.