Duties of Refusal and the Weaker Party

Abstract Duties of refusal are now a familiar (albeit still relatively exceptional) concept in the financial sector. What they have in common is that under a statutory provision, financial institutions are prohibited (in certain circumstances) from concluding a certain type of contract or performing a certain type of transaction with a certain type of counterparty. In such cases, the financial institution must therefore refuse to enter into the contract or carry out the transaction. Duties of refusal constitute a breach of the freedom to decide whether to enter into a contract or to perform a transaction. The purpose of these duties of refusal is to protect parties that contract or intend to contract with a financial institution and are regarded as the weaker party. These cases are discussed in this chapter.