. Characterise the economic environment at the time of the contract’s conclusion and expiration

. Characterise the economic environment at the time of the contract’s conclusion and expiration

At the time of conclusion of the contract, the Polish economy was planned centrally. This had a significant effect on the terms of the contract between the parties to the agreement. The insured parents lacked choices as to the best policies for purchase and were left with a single opportunity to purchase the policies from PZU. This is because PZU was simply a monopolist at that time which is an indication that PZU influenced its prices and thus accrued supernormal profits. The entity, PZU, as a monopolist in a centrally planned economy, the entity exercised a greater level of power than a monopoly would in a free market environment. The entity accrued such power given that it accrued favoritism from the government in terms of incentives provided in its favor within the market (CLARK, 1999, pp. 34).

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