You may recall that some time ago in Contract Law Pluralism: Incorrect, Incoherent or True? I concluded that Jodi Kraus and Robert Scott failed to make the case they argued in The Case Against Equity in American Contract Law (download here). They had claimed that only contract law rules consistent with advancing personal sovereignty were consistent with the internal dynamic of the historical development of the common law. You can read their article and my post linked above and reach your own conclusion.
Even if I'm right that Kraus and Scott are wrong, that the rules of contract law should find warrant apart from increasing personal sovereignty, exactly how can another perspective be effectively deployed to support or critique the rules we see? (And by another perspective on the rules of contract law I mean the perspective of virtue.)
Virtue--human character aimed toward the ultimate human end (purpose, goal, telos)--was part and parcel of ethical analysis for much of Western history. I won't take time to argue the point but the genius of the Western tradition was its synthesis of Greek ethical philosophy and Roman law under the aegis of the Christian faith. Shorn of Greek pretensions and then grounded in the Christian doctrines of creation of an orderly natural world and human beings with the power to know and do the Good, recognition of the range of effects of humanity's fall into sin, plus God's two-stage restoration of all things in the person of Jesus Christ, virtue occupied a first place in Western ethical thought. Fine for ethics but what about legal thought?
As I explain at some length in my book chapter "Revisiting Unconscionability: Reciprocity and Justice", the virtue of commutative justice was long-embedded in the Western tradition of contract law. In short, from the twelfth century onward, judges on the Continent (and in the Church courts) would not enforce a contract to sell something for less than half its market price or to buy something for more than twice its value.
In Merrie Old England, however, judges almost never intervened. But that reticence didn't mean that unjust contracts were strictly enforced. Instead, juries were instructed to "‘Do that which God shall put in your minds to the discharge of your consciences." The consciences of jurors, at least those who paid attention to their priests (and pastors), would have known that contracts were framed by justice. Justice trumped personal sovereignty. In other words, jurors would (or at least should) have believed that their consciences were bound to do justice regardless of what a contract may have provided.
All well and good when contracts were relatively simple and the nature of injustice was limited to gross over- or under-payment. Your average English juror would have had a good sense of what, say, a horse, was worth and would award damages appropriately. But what about nowadays when most online contracts would run for ten or more pages if printed? And what juror could be expected to know whether a particular over-the-counter derivatives contract is just?
As I explained in connection with corporate law here (but also here) (and here in connection with criminal law), the complexity of modern life makes it nearly impossible to balance the terms of sophisticated contracts against the norm of justice.
And as if the complexity problem isn't enough, what about institutional capacity? Even if a judge actually understands a several-hundred page debenture for second-lien subordinated debt, what are the chances the same judge has a well-formed conscience when it comes to the canons of commutative justice? And jurors? Well, I'd probably trust the consciences most juries over most judges but then again maybe not. To the extent consciences are the object of formal education today that formation is more likely to be in terms of Wokeness than Justice.
So where does that leave me? 1. Kraus and Scott are still wrong; the Grundnorm of contracts is not personal sovereignty. 2. Contract law is cabined by Justice. The consciences of contract parties (and their lawyers) should cause them to refrain from/take part in transactions in terms of commutative justice.
Then, taking into account practical wisdom: 3. In simple transactions where a party pleads that a price is sufficiently imbalanced as to violate commutative justice, we should trust the consciences of jurors to return a verdict for the just price. 4. In more complex transactions, at least those to which ordinary persons are a party, legislative/regulatory bodies may act to limit non-salient ancillary terms that tend toward injustice. 5. In complex transactions, especially between non-human entities, Kraus and Scott are ultimately correct, courts ex post should respect the parties' ex ante allocation of rights, powers, duties, risks, and even remedies. Whether such contracts are unjust will be left to a higher authority.
Even if I'm right that Kraus and Scott are wrong, that the rules of contract law should find warrant apart from increasing personal sovereignty, exactly how can another perspective be effectively deployed to support or critique the rules we see? (And by another perspective on the rules of contract law I mean the perspective of virtue.)
Virtue--human character aimed toward the ultimate human end (purpose, goal, telos)--was part and parcel of ethical analysis for much of Western history. I won't take time to argue the point but the genius of the Western tradition was its synthesis of Greek ethical philosophy and Roman law under the aegis of the Christian faith. Shorn of Greek pretensions and then grounded in the Christian doctrines of creation of an orderly natural world and human beings with the power to know and do the Good, recognition of the range of effects of humanity's fall into sin, plus God's two-stage restoration of all things in the person of Jesus Christ, virtue occupied a first place in Western ethical thought. Fine for ethics but what about legal thought?
As I explain at some length in my book chapter "Revisiting Unconscionability: Reciprocity and Justice", the virtue of commutative justice was long-embedded in the Western tradition of contract law. In short, from the twelfth century onward, judges on the Continent (and in the Church courts) would not enforce a contract to sell something for less than half its market price or to buy something for more than twice its value.
In Merrie Old England, however, judges almost never intervened. But that reticence didn't mean that unjust contracts were strictly enforced. Instead, juries were instructed to "‘Do that which God shall put in your minds to the discharge of your consciences." The consciences of jurors, at least those who paid attention to their priests (and pastors), would have known that contracts were framed by justice. Justice trumped personal sovereignty. In other words, jurors would (or at least should) have believed that their consciences were bound to do justice regardless of what a contract may have provided.
All well and good when contracts were relatively simple and the nature of injustice was limited to gross over- or under-payment. Your average English juror would have had a good sense of what, say, a horse, was worth and would award damages appropriately. But what about nowadays when most online contracts would run for ten or more pages if printed? And what juror could be expected to know whether a particular over-the-counter derivatives contract is just?
As I explained in connection with corporate law here (but also here) (and here in connection with criminal law), the complexity of modern life makes it nearly impossible to balance the terms of sophisticated contracts against the norm of justice.
And as if the complexity problem isn't enough, what about institutional capacity? Even if a judge actually understands a several-hundred page debenture for second-lien subordinated debt, what are the chances the same judge has a well-formed conscience when it comes to the canons of commutative justice? And jurors? Well, I'd probably trust the consciences most juries over most judges but then again maybe not. To the extent consciences are the object of formal education today that formation is more likely to be in terms of Wokeness than Justice.
So where does that leave me? 1. Kraus and Scott are still wrong; the Grundnorm of contracts is not personal sovereignty. 2. Contract law is cabined by Justice. The consciences of contract parties (and their lawyers) should cause them to refrain from/take part in transactions in terms of commutative justice.
Then, taking into account practical wisdom: 3. In simple transactions where a party pleads that a price is sufficiently imbalanced as to violate commutative justice, we should trust the consciences of jurors to return a verdict for the just price. 4. In more complex transactions, at least those to which ordinary persons are a party, legislative/regulatory bodies may act to limit non-salient ancillary terms that tend toward injustice. 5. In complex transactions, especially between non-human entities, Kraus and Scott are ultimately correct, courts ex post should respect the parties' ex ante allocation of rights, powers, duties, risks, and even remedies. Whether such contracts are unjust will be left to a higher authority.
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