Podcasting a Timeless Theme: Puritanism and Contract Law

Go to your preferred podcast provider (Apple podcasts here; Spotify here) to listen to an hour of a scintillating conversion between Timon Cline (host of the Hale Institute podcast) and me about the development of the common law of contracts in sixteenth/seventeenth England. And, oh yeah, the influence of those disciplined Puritans.

Cline's interest in my co-authored piece goes to show that even old articles (like The Puritan Revolution and the Law of Contracts; download here or here) can have a long afterlife.

I also got to talk about my review of Dairmaid MacCulloch's definitive biography of Thomas (of Wolf Hall fame) Cromwell (here). And even some hints about my upcoming piece (Person-Centered Pluralism About Contract Theory).

A great time all around.

Moving On Up. Or, Podcasting With Sommer

You can go here to listen to my first podcast interview. Current Campbell Law School student (and a successful student a year ago in my 1L class in Contracts), Sommer Prime hosts Legally Blondish (also available here). Summer asked to talk with me about law and practice in the field of contracts, contract theory, and the Christian faith. I was happy to oblige.

Commodifying The Personal: Again

But there's more here: 

Exactly how many donor children Mr. Meijer has around the world is impossible to say. But Ties van der Meer, the director of the Dutch Donor Child Foundation, and his colleagues have calculated that if Mr. Meijer’s known pattern of clinic and private donation was any indicator, the number could run to several hundred, even 1,000.

In an email, Mr. Meijer dismissed that conclusion. “I have approximately 250 children,” he said. “Assumptions of 1,000 are ridiculous. I am disappointed by the obsession of the numbers.

_______________________________________

Interesting piece from the NYT here. The headline says it all: "The Sperm Kings Have a Problem." Elaborating: "Many people want a pandemic baby, but some sperm banks are running low. So women are joining unregulated Facebook groups to find willing donors, no middleman required."

Compensation for sperm donors is prohibited but they may be reimbursed for expenses (typically travel). The cost to prospective donees, however, is high, up to $1100 per vial for the best sperm. ("Best" being from donors who are good-looking, highly-educated, and successful.) With the pandemic, sperm donations to regulated banks are down so, as the article notes, some women are turning to the grey market.

All of which invites some non-market observations. As noted in my posts on the work of Adeline Allen on surrogacy contracts (here and here), there should be more than satisfaction of a personal good when evaluating the ethical; I hope no one takes rule-based utilitarianism (e.g., law and economics) as an adequate moral philosophy. With respect to surrogacy contracts, I believe that Allen successfully argues that the undeniable good of having a child to whom one is genetically related is outweighed by the negative good ("bads") that surrogacy entails. Pregnancy via sperm donation, however, presents the opposite biological scenario; the male, not a female, is the surrogate.

Is this distinction sufficient to render sperm donation licit? Although I think the answer is no, reasonable minds might differ. And even if we conclude that such contributions to human life are unethical, (how) should the law (of, e.g., contracts) incorporate such a moral judgment?

No clear answers from me but certainly questions worth pondering.

Consumer Rights, Consumer Costs, and Justice

The worlds of consumer protection and their powerful antagonists, self-characterized as the financial services industry, are abuzz with the rule proposed yesterday by the Consumer Financial Products Bureau. Read the CFPB press release here. If adopted, the proposed rule would block mandatory pre-dispute arbitration agreements and permit aggrieved consumers to proceed via class action.

As many do not know, virtually every financial contract (e.g., credit card agreements, rent-to-own contracts, payday loan contracts, etc.) into which American consumers enter prohibit the consumer from suing the other party for breach of contract. Instead, consumers who have been injured must proceed to arbitration before an arbitrator chosen by the bank or other sort of lender. The dollar amount of such claims is typically in the hundreds which, when coupled with the expense and low likelihood of success, means that virtually no one even tries. (As many also do not know, most other consumer contracts similarly prohibit litigation as a mean of seeking justice. Read about an example of such a mandatory arbitration agreement in the nursing home industry here.)

Not surprisingly, the sexual financial services industry does not like this. Not one bit. You can read an article expressing their "concerns" in their mouthpiece here. Just as unsurprisingly, the banks' running dogs in Congress are joining the outrage.

Two thoughts. First, routine deprivation of consumers from the system of public justice is simply wrong. Justice is important and a system of justice that is not beholden to one party is a feature of the modern world. (And by "modern" I include the West since the eleventh century. See some of my relevant posts here, here, and here.) Parties should be free to opt out of the public system and arbitration presents one legitimate alternative. Yet opt-out at the will of one party with the power to influence the outcome should not occur before breach in a non-negotiable contract. In other words, non-salient, one-sided terms violate commutative justice.

Second: class actions. Critics of the proposed rule are correct to observe that many--but not all--class action cases redound more to the benefit of the attorneys than the injured parties. A simple solution to this problem would be to provide for an award of reasonable attorneys fees to an individual consumer who prevails in a lawsuit against the financier. The long-standing Magnuson-Moss Warranty Act does so and there's no evidence that it's been abused.

In short, I would take the protestations of concern by the banks and Congressman beholden to them seriously if they showed any evidence that some notion of justice influenced their positions. Until then, I won't.

Straining Toward Natural Law: Margaret Radin and Contract Degradation Part 1.5.2

This represents my third in a series of posts that began here with my initial comments on Margaret Radin's Access to Justice and Abuses of Contract. Yesterday saw my second post here in which I responded to the first of Dean Eric Enlow's critiques, which had to do with whether contract law was a public good. Based on his prodding, I have affirmed that indeed contract law is a public good.

Dean Enlow went on to raise a second point, this one about my use of the expression "commutative justice" in connection the social practice of contracting in place of the more common contemporary reference to corrective justice. Quoting my original contention,

Among the components of justice is "commutative," which entails a rough equality in exchange. In other words, when all is said and done, a contractual exchange of money (or information) for goods or services should be a fair one.

To which Dean Enlow responds:

Second, in your discussion of the type of justice relevant to contract law, you follow the later typology in distinguishing between commutative and distributive justice which emphasizes equality in the exchange, rather than the older tradition distinguishing between rectifying and distributive justice, which emphasizes reestablishing equality of position after a harm.

And in addition asks, 

If we consider contract law to be concerned with rectifying the distinct kinds of harms that arise out of the breaking of contracts, i.e., enforcing the obligations that arise to remedy harms caused by certain and only certain kinds of contracts, would this make the analysis above easier than when we focus on equality in bargains as the essence of contractual justice?

Two points should be made here. First, I believe the idea of equality of exchange--commutative justice--precedes rectifying justice. As I argued in Looking for Bedrock: Accounting for Human Rights in Classical Liberalism, Modern Secularism, and the Christian Tradition (download here), we should distinguish between primary rights, what we owe one another on account of our common humanity, and secondary rights of rectification, what is owed when a primary right has been denied. Restoring the status quo ante is often a vital aspect of what the law does to correct a wrong but only follows what the parties have already done.

In any event, the world of primary rights can be divided between commutative (e.g., equality of exchange) and distributive (those owed on account of account of status or dignity). Drawing on the work of Nicholas Wolterstorff, I state my argument about the nature and foundation of primary rights in three lengthy paragraphs of Looking for Bedrock. I won't tax my readers with reproducing them here but would direct anyone who is interested to pages 627-629 of the linked article for more detail. (Alternatively, look at some of my blog posts on Wolterstorff's book "Justice: Rights and Wrong" here, here, and here which, while they do not exactly make my point, have the advantage of easy accessibility.)

Second, I would appreciate anything that would make the task of identifying examples of Margaret Radin's "contract degradation" any easier. Yet I'm not sure how moving the initial focus from commutative justice to rectifying justice, as Dean Enlow wonders, would do so. If we leave aside the idea of equality in exchange, how do we identify when a particular contract causes harm? Or, how do we identify which "certain kinds of contracts" from which harm arise should not give rise to a legally enforceable claim? Perhaps there are simpler answers to these questions than there are to when a particular term of the underlying contract is so unfair as to have deprived a party of commutative justice but I'm not sure what they are.

Straining Toward Natural Law: Margaret Radin and Contract Degradation Part 1.5.1

Last week I posted some initial comments about Professor Margaret Radin's article Access to Justice and Abuses of Contract here. I had planned to get to Part 2 this week but an apposite comment by Eric Enlow, dean of Handong International Law School in Pohang, Korea, has forced me to reconsider two points I made my first time around.

Dean Enlow first questions my conclusion that, just as contracts are means by which humans obtain private goods, so too public remedies for breach of contract are private goods. Quoting myself,

[I]s a right to claim damages for breach of contract a public good? It seems not: the remedy of contract damages--like the practice of contracting--is a private good. 

To which Dean Enlow responds, 

I don't understand why the practice of courts' remedying of breaches of contract concerns only private good. To the contrary, if courts create a state of affairs where the public knows that a breach of a private contract may be remedied, then it creates public conditions where people may contract at lower costs and with greater confidence. Courts thereby facilitate more commercial transactions by lowering transaction costs. Courts may also promote the moral development of personal responsibility in taking responsibility for certain commitments with others and making amends for harms caused by failing in those commitments. 

In other words--my words--provision of a civil remedy for a private wrong (damages suffered as a result of breach of a contract) contributes to the public good in two ways. First, contract law works to increase the frequency of the social practice of contracting and, second, contract law functions as a tutor of private virtue, in particular the virtue of promise-keeping or fidelity. The first promotes an increase in the aggregate number of private goods while the second, the goad of potential civil liability for contract breach, works to increase our individual well-doing, our individual flourishing. In turn, individual flourishing contributes to the flourishing of society as a whole.

In response, I agree with the second of Enlow's points but not the first. With respect to his first criticism, increasing the quantity of private goods (what economists call welfare maximization) may be good for an individual but the effects of American consumerism (my thoughts about consumerism here; even better ones here) suggests that welfare maximization may in fact detract from growth in individual and collective virtue. (Some earlier thoughts on that point here.) In any event, and returning to a point I made in my initial post, I remain unconvinced that welfare maximization is a condition sufficient to identify a public good. I suspect that nothing can be a public good that affirmatively reduces our capacity for private goods but I don't believe the converse follows. In other words, increasing welfare is a necessary but not a sufficient condition by which to identify a public good.

I stand corrected by Enlow's second observation. Promotion of the virtue of fidelity is a public good and contract law can promote fidelity. It is particularly vexing to have overlooked this point because I've made it on previous occasions (see my posts here and here). We all must admit that we need socially instantiated practices to grow in virtue, a habitual turn to the good, and contract law is one such practice. Thus, I affirm that contract law is a public good.

In conclusion, I am grateful to know that someone reads what I write and takes the time to respond thoughtfully to it. Dean Enlow raised an additional point about my Aristotelian account of justice to which I hope to respond soon.

Straining Toward the Natural Law: Margaret Radin and Contract Degradation Part 1

Speaking Aristotelian-ish, the social practice of contracting is an example of a formal means [cause] by which human beings achieve their natural end of flourishing. Flourishing entails growth in the virtues, one of which is justice. And among the components of justice is "commutative," which entails a rough equality in exchange. In other words, when all is said and done, a contractual exchange of money (or information) for goods or services should be a fair one. (Caveat: a fair exchange need not be on arithmetically equal terms; it need only be a fair chance at arithmetical equality.)

Contract law exists in part because sinful human beings sometimes fail to contract in a just manner. It's unlikely that contractual assent produced at the end of a gun represents a fair exchange. Contract law thus concludes that the party under duress need not uphold her end of the bargain. (Indeed, the law of unjust enrichment goes one step further than contract law and permits such a victim to recover what has already been transferred.)

But what about contractual assent to terms that a party had no knowledge and, even if the terms had been known, wouldn't have been understood? I'll Margaret Radin provide an example taken from Access to Justice and Abuses of Contract (download here):

Facebook promulgated new terms of service in January 2015. Many readers of this essay, perhaps a large majority, are users of Facebook. But very few users know that new terms were imposed recently, and fewer have read them.

If someone did read the terms and wished to disconnect and delete her account, she would discover that certain things will nevertheless stay in Facebook’s power: “Information associated with your account will be kept until your account is deleted, unless we no longer need the data to provide products and services.” [italics added] Moreover, “information that others have shared about you is not part of your account and will not be deleted when you delete your account.” In other words, Facebook will continue to feature your stories and photos in advertisements. You are deemed to “agree” to Facebook’s terms by having continuing to use Facebook after January 1, 2015.

Facebook's terms of service are relatively benign, and use of Facebook is without charge to its users. (It's marketers to whom Facebook sells information that make it extremely profitable.) Nonetheless, all of us have clicked "I agree" for goods or services that we have purchased that include sets of terms we have not read, and at least some of which limit our rights (e.g., to complain publicly about shoddy products or to litigate if the other party breaches). Are such terms a legitimate part of the social practice of contracting? In other words, do they represent a rough equality in exchange? And, even if they don't, should the law of contracts do anything about it?

On the one hand, contemporary contract law is agnostic about the legitimacy of such terms. In other words, the law doesn't care about (or perhaps doesn't believe in) commutative justice. And even if a judge believed that a contract was using terms in an unjust manner, he must conclude that contract law as it now exists provides no recourse. Unlike an unfair exchange produced at the end of a gun, an unfair exchange produced by terms is beyond the power of the law to redress.

Radin, on the other hand, says no, such terms are not legitimate; and yes, the law of contracts should do something about them. But, one asks, how does she know any particular term and the resulting exchange is illegitimate? And how does she argue that the law of contracts should do something about it?

With respect to the first question, she suggests that terms in contracts for goods or services for which there is market failure are almost certainly so one-sided as to be wrong. Market failure occurs in the presence of two factors: (i) when a rational consumer cannot acquire sufficient information about the product to evaluate its value and (ii) the term disclaims liability for damages caused by the product's defects. Consider Radin's example:

Fine print embedded in a composite product may be deployed in a non-competitive market or in a market in which too many consumers lack information about the product, a situation that leads to a race to the bottom. If consumers do not have the information needed to evaluate a product (a situation known as information asymmetry, because the firms themselves do have the information about their products), firms can lower quality without lowering the price, or can lower the price but lower quality more. When that happens, firms that do not lower quality will receive lower revenues and perhaps be driven out of the market.

Even if we agree that there's something "wrong" about that, what should contract law do about it? Are civil governments in the business of reversing races to the bottom? Surely, no one wants to pay more and get less but why should courts or even legislatures get involved in fixing this problem? At this point Radin provides no argument relying, it appears, on moral intuition. (For the limits of moral intuition as a basis for human rights, not to mention contract remedies, see my piece Looking for Bedrock.)

Is there an argument that would warrant Radin's desire to modify the rules of contemporary contract law and forbid certain disclaimers? As I suggested in Who Bears the Burden? The Place for Participation of Municipal Residents in Chapter 9, public choice theory may be that argument. Can disallowing disclaimers in conjunction with defective goods be justified by application of public choice theory?

Let's start with the first question: What is public choice theory?  Public choice theory provides a framework of analysis to identify public goods, goods that that should be provided by civil government at taxpayer expense. Other goods are private and need not be provided by civil government. Public choice theorists posit two markers to distinguish public goods from private ones: First, quoting from Who Bears the Burden?: "A public good is one which should be produced, but for which there is no feasible method of  charging the consumers." Second, provision of such goods at public expense prevent the problem of free riders, those who would take advantage of a good, such as residential streets, without paying. If non-payers can't excluded from using a good without paying, free market participants won't provide (much of) it.

On such an understanding, is a right to claim damages for breach of contract a public good? It seems not: the remedy of contract damages--like the practice of contracting--is a private good. Thus, public choice theory does not justify disallowing contract disclaimers. (Indeed, as I argued in Principled Pluralism and Contract Remedies, civil government need not provide a remedy for breach of contract although it certainly may do so.)

Well, if not public choice theory, is there any other foundation on which to base a rule disallowing disclaimers? There might be, and that's where the need for a substantive account of natural law becomes necessary. Radin and other Progressives are onto something--enforcing unbargained-for disclaimers of remedies for breach of contract may be unjust--yet the thinness of the Progressive account of justice fails to provide warrant for their disallowance. By contrast, a natural law account offers a basis for limiting the ability of one party to use the form of contract to deny its substance.

Natural Law and Contracts: An Outline

Who knew there was a University of the Arctic? Apparently there is because it's one of the affiliations listed for Dawid Bunikowski. Go here to download Bunikowski's paper (really an amplified outline) tilted Going Back to Natural Law in Contract Law: Necessity of Metaphysics in Law.

Bunikowski makes the standard critiques of the non-foundational turn of modern jurisprudence and urges a return to the metaphysically thick accounts of contract law developed in the Medieval and Early Modern periods of European jurisprudence. In his own words, "poetically saying, philosophy, theology, and law are marching together, what is a beautiful way, crystallizing the way itself like going back to the true origins of our law in Europe, and in contract law especially."

Nothing new but a nice (and short, i.e., 24 pp.) introduction to how we got here and what Bunikowski thinks we should do about it.

Contracts, Abortion, And Consuming Our Children

Some time ago I posted here under the title "Perfecting Children and Raising Children." I concluded with words that, in retrospect, continue to disquiet me:

Both using abortion to cull the heard, so to speak, and raising children in middle-class America have the same goal: perfection. But not moral perfection; not excellence in the virtues of character. Perfection understood in the narrow sense of controlled material success. The market meets the family, and the market wins. When parents in effect consume their children, the family has been turned inside-out. Of course, such parents should be wary of how their children might consume them when their performance begins to slip after, say, age 70 or so. (Emphasis added.)

Two things refreshed my recollection about this issue. First, during the fall semester of Contracts I again covered two cases that dealt with the contractual implications of an agreement between the parents of embryos conceived in vitro. In one case, the court enforced the contractual disposition and in the other it did not. Putting aside the courts' contractual analyses, I observed that the effect of each decision was to prohibit the mother from implanting the zygote and bringing the child to birth. In other words, each case relieved the sperm-donor/husband from the financial obligations of fatherhood thus permitting him, metaphorically speaking, to "consume" his child.

Second, and more recently, I came across this article about a California case in which the "father" likewise escaped financial responsibility for the child he had conceived in vitro. This time the language of the agreement was clear. What is also clear, according to the court, is that due to cancer treatments the mother will never be able to bear a child and that the father was afraid that mom "would use a child to exploit him financially."

Especially if the father's fears about mom's bad faith are true, we see even more clearly the consumptive nature of contemporary child creation. Either mom wanted a child to consume dad's assets or dad's primary interest was to keep his money. Or both.

The trend toward commodification of human life continues unabated. It has been the case for decades that we no longer see child-bearing an expression of openness to the future. Instead, it's about dollars and cents. What has changed more recently is the consumptive and destructive effects of subjecting human life to the vagaries of the market.

The Aesthetics (!) of Contract Theory -- Part 3

Given the lengthy breaks between posts you might want to prime the pump by reading Part 1 here and Part 2 of this short series here. A very brief recapitulation. Co-authors Efi Zemach and Omri Ben-Zvi argue here that neither of the two leading theories of contract law can account for all the "facts" of that law without remainder. In other words, many of rules of contact law are consistent with furthering human autonomy (particularly the rules of contract formation) while others are better justified by considerations of utility or welfare maximization.

Autonomy and efficiency are thus pictures of the law (hence the authors' use of aesthetics in their title) but contract law cannot be derived from either of them. Autonomy and efficiency are merely lenses by which the otherwise bewildering array of of discordant rules of contract law can be brought into focus. Yet the narrowing effect of either len's focus inevitably omits significant amounts of material that is outside its field of vision. To paraphrase only slightly, contract law is not really a rigid grid of formal rules, nor is contract law a social force moving toward ever-increasing supply of subjective wealth; instead, we choose to see contract law as one or the other since that allows us to make sense of it.

As they proceed, Zemach and Ben-Zvi suggest a recently bruited solution to the tunnel-vision effects of autonomy or efficiency: Why not both?

Drawing on the notion that each theory contains genuine and valuable insights, but none is capable of explaining or justifying the complete normative sphere, pluralists have argued against the exclusiveness of a single approach, suggesting instead a synthesis of many principles.

This solution to the problem caught my eye. After all, I consider myself a pluralist of contract theory. (For examples of my pluralistic endeavors download Principled Pluralism and Contract Remedies (here) or Mission Possible: A Paradigm for Analysis of Contractual Possibility (here) or even Consideration in the Common Law of Contracts: A Biblical-Theological-Critique (here)). Nonetheless, the pluralism  to which Zemach and Ben-Zvi attend differs from mine.
 
While I ground my triperspectival approach to contracting and contract law in the covenantal relationship among God, creation, and human beings existing in/as images of God, Zemach and Ben-Zvi "focus on unprincipled pluralism, which holds that there is no meta-principle or overarching theory that determines a-priori which of the principles is superior when justifications collide." (Emphasis added.)

In any event, they paint in broad stroke the aesthetics of unprincipled pluralism:

Our analysis reveals that pluralism too rests on a single (one is tempted to say unitary aesthetic). The pluralist project is informed by a particular aesthetic vision. This aesthetic--the "dissociative aesthetic''--is responsible for pluralism's unique characteristics.

In other words, from an aesthetic perspective, pluralism is not pluralistic; it "is on equal terms with other first-order contract theories in the sense it is presented in a manner that presupposes a single aesthetic." Unprincipled pluralism's dissociative aesthetic, however unitary in description, is not unifying in effect, at least not immediately so. In practice, the dissociative aesthetic briefly suspends belief in any unifying theory and thus permits the lawyer or judge to freely associate the rules of law, which "allows us to begin with a 'clean slate' on which we proceed to construct our desired projects."

While I understand the point Zemach and Ben-Zvi are making, that good lawyers and judges can temporarily prescind from any theory they might otherwise hold, yet they must "put Humpty together again" when and as they reach a conclusion. Thus on my account even this dissociation and subsequent re-association is not unprincipled.

Or, perhaps better put, the principled version of pluralism I have described deploys pluralism for at least two reasons or ends. First, principled pluralism recognizes human finitude; in other words, no human-generated account of the phenomenon of contract law will ever be complete. Pluralism recognizes our limits when it comes to explaining anything, including contract law. Second, principled pluralism is more than a catch-as-catch-can means of bringing a disordered state of reality into momentary focus. It is instead an example of the relationship between practical and theoretical reason, phronesis and episteme. On the one hand, finite human beings can never fully get their hands around any phenomenon. On the other, the universe, including human activity, is ordered to an ultimate end. In short, pluralism of a principled sort is the best means of justifying and criticizing contract law.

This three-part account should be enough for anyone's taste. However, I have it on good authority that a response/rejoinder may be forthcoming so stay tuned.

The Aesthetics (!) of Contract Theory -- Part 2

How quickly time flies. It's been more than two months since my initial post on this mashup of a topic here. Paraphrasing myself,

The authors of the paper under discussion, Efi Zemach and Omri Ben-Zvi, use "aesthetics" as a primarily cognitive (or pre-cognitive) form of analysis "by understanding aesthetics as the space within which jurists make pre-theoretical commitments that shape the way they experience the structure of legal discourse."

In short, how judges and lawyers perceive the "real world" in which they operate cabins the possibilities of their ultimate judgments. The same, as it turns out, is true of legal scholars. Thus, one's pre-theoretical commitment to, say, autonomy over efficiency, disposes one toward a certain conceptualization of the world of contract law.

The aesthetic analysis of Zemach and Ben-Zvi partakes of none of the standard inquires of the contemporary or classical science by that name. Instead, their "aesthetic" analysis runs on a two-track dialectic. In other words, legal theorists can be characterized as pre-scribing to either energy aesthetics or grid aesthetics. Energy folks "see" contract law as about increasing welfare-- dynamo--because,"law itself is but a force, the amalgamation of many individual's choices about how their society should be regulated." And human beings are, as everyone knows, rational wealth maximizers.

Such is old hat but Zemach and Ben-Zvi use the "energy grid" aesthetic as a means to demonstrate that such an approach is pre-theoretical. Its overwhelming contemporary plausibility consists in substantial part in what the scholar and her audience believe even before doing their analysis.

Opposite energy are grid aesthetics. Despite their best efforts, Zemach and Ben-Zvi cannot help but reveal their own pre-theoretical preference for the worldview of energy aesthetics but their preference does not undermine their apt description of grid aesthetics:

Jurists who subscribe to the grid aesthetic think of law as a space that can be surveyed, mapped, and analyzed. Legal questions are answered by first dividing law into sub-sections ... and placing the facts of a given case on the conceptual grid.

In other words, the aesthetic of the classroom at the typical non-elite law school.

Before considering Zemach and Ben-Zvi's discussion of various multi-perspectival approaches to legal theory (which would include me, see here and here), let me end with their trenchant observations of the contemporary world of legal theory:

Commonly put, aesthetics are only useful when not closely examined--that is when the logical implications of the picture they imply are not meticulously pursued. Figuratively speaking, we may say that just like with one's heroes, it is best to keep an appropriate distance from one's aesthetic: Too far, and the excitement eventually wears off; too close, and the illusion becomes clear for what it is.

In other words, "Law is not really a rigid grid, nor is it a moving social force; we choose to see it as such since it allows us to come in contact with it." But a pre-theoretical commitment to an aesthetic--even if inescapable--comes at a price:

This process of aesthetic construction involves some degree of falsification, in the sense that we necessarily have to focus on something and in the process treat other phenomena which we encounter as unimportant. But when we insist on seeing the world solely through the eyes of our aesthetic, the world eventually resists; ... and we are constantly reminded that we have chosen to forget some things that perhaps should not have been forgotten.

The Aesthetics (!) of Contract Theory: Part 1

For too long I've been getting easy pageviews by posting about student loans. (By my rough count, I've posted on student loans upwards of 40 times.) Thus, it's about time I get to something important like the intersection of aesthetics and contract theory. Or rather, it's time to post a few times about an article by Efi Zemach and Omri Ben-Zvi by that title, which you can download and read for yourself by going here.

Zemach and Ben-Zvi captured my interest because most contemporary contract theory is framed in terms of efficiency. Regardless of its appearance of mathematical precision, law and economics--by far and away the leading framework for contract theory for the past 30 years--is little more than what J.S.Mill characterized as a glorified pig's philosophy. Which kinda works for contracts because folks regularly use them for rather piggish purposes.

On the other hand, a relatively few folks find the center of contract theory in some form of neo-Kantian autonomy while fewer yet (like my erstwhile colleague Kenny Ching) find the paradigm for contract theory in Aristotelianism as reworked by Thomas Aquinas; in other words, virtue theory. There are evev a very few reliance-theory holdouts, to whom Zemach and Ben-Zvi direct some sustained attention.

On yet another hand, a significant number of generally right-minded folks frame their contract-theoretical work around three poles of this trilemma (efficiency, autonomy, and virtue) in what is commonly known as contract theory pluralism. For examples of my pluralistic endeavors download Principled Pluralism and Contract Remedies (here) or Mission Possible: A Paradigm for Analysis of Contractual Possibility (here) or even Consideration in the Common Law of Contracts: A Biblical-Theological-Critique (here). Zemach and Ben-Zvi 

Utilizing an aesthetic approach seemed like a breath of fresh air on what has become an intractable discussion. My intrigue was initially disappointed. Zemach and Ben-Zvi quickly disclaimed applying serious aesthetic theory to contracts. Instead, they explained, they use "aesthetics" as another primarily cognitive (or pre-cognitive) form of analysis "by understanding aesthetics as the space within which jurist make pre-theoretical commitments that shape the way they experience the structure of legal discourse." Or, in a more poststructuralist vein, aesthetics "determines how one experiences oneself as already situated in certain (contingent) space." Almost gibberish.

In my opinion, one can skim Part II of Zemach and Ben-Zvi's article without great loss. There are some interesting insights, like the authors' admission that their aesthetic analysis is just as embedded in their pre-theoretical commitments as any other starting point: "We briefly discuss the claim that our discussion of aesthetics begs the question since our explanation of aesthetics is also informed by a certain aesthetic." Yet they hasten to add that "this is true--but unimportant." Why? Because "aesthetics are [merely another] way of being in the world and cannot, by themselves, make anything correct or incorrect." Are they certain about that?

After concluding their rationale for not writing anything at all, Zemach and Ben-Zvi go on in Parts III, IV, and V to deploy their aesthetic analysis to the autonomy, reliance, and utilitarian theories of contract law. Sadly, they disregard virtue theory. While occasionally misbalanced in application, we here see the authors perform valuable work as they get at the pre-theoretical "takes" characteristic of these theories. Then in Part VI, they take on pluralism(s) to mixed reviews. But more of all of this in subsequent posts.

What's an Offer Anyway?

At least two weeks of my first semester of Contracts is spent examining the concept of "offer." When and under what circumstances does a person's expression amount to an offer? If an offer is made, how long does it last? And, assuming the offer is still alive, what amounts to its acceptance?

All good questions for a class in contract law but what about offers in other areas of the law? Trademark law, patent law, securities law, and even the criminal law use the word "offer" but does "offer" in those fields mean the same thing as it does in Contracts?

In short, the answer is no. For those who want a fuller explanation I recommend a recent article by my Campbell Law School colleague Lucas Osborn, "Offer to Sell" as a Policy Tool (abstract here). Lucas contrasts the purpose of "offer" in contract law (balancing the private law policies of freedom to contract and freedom from contract) with the public law purposes underlying the criminal and administrative law regimes. Overall, a deft job of unpacking and explaining the what's and why's of an area of law close to my Contracts professor's heart.

Subcontractor Blues

WARNING: A bit on the lawyerly side.

The risk subcontractors undertake when bidding on public jobs came up the other night at a men's meeting. I regularly teach Drennan v. Star Paving and SoCal Acoustics v. CV Holder in first-semester Contracts so I asked a local electrical contractor what his experiences had been. In case you've forgotten, the California Supreme Court held in Drennan that a subcontractor could not withdraw its bid if the general contractor had relied on it in submitting its own successful bid to the owner of the project. However, not many years later the same court held that under the common law a sub could not rely on the GC's non-rejection of the sub's bid even where the the the GC had used the sub's bid in preparing its own, the owner had awarded the GC the job, and the GC had published the names of its anticipated subs pursuant to a state "naming statute." What was good for the goose was most definitely not good for the gander. (Note that SoCal Acoustics ultimately prevailed in its action against the GC under a California statute addressing public contracts that specifically protected subs in this situation.)

My local electrical subcontractor sputtered. Several times he had submitted what the GC told him was the lowest bid only to have the GC shop it around and get someone else to do it for less. Just the sort "bid shopping" that the California statute was designed to prevent.

Not nice, of course, but did the GC breach an agreement with the disgruntled sub? It doesn't appear so and that's Victor Goldberg's conclusion in his lengthy article Traynor (Drennan) Versus Hand (Baird): Much Ado About (Almost) Nothing (download here.) In short, unless the sub gets the GC to promise to award the sub its contract if the GC gets the project, the sub should not have a contractual claim against the GC if matters don't go as hoped.

But what about the flip side: Should a GC be able to hold a sub to a bid in the face of the sub's revocation before the GC's acceptance? In other words, should freedom from contract go both ways? The answer I believe, and I'm glad to see that Goldberg agrees, is that unless the sub has explicitly offered to make its bid irrevocable, it isn't. If one isn't bound, then neither should the other. Foisting an obligation on one who has not assented to it is no more consistent with contract law than it is with constitutional law.

Economic Liberty, Contracts, and the Constitution

Randy Barnett is an excellent writer. He is, moreover, as many folks now realize, the intellectual father of the attacks on the the constitutionality of the Patient Protection and Affordable Care Act (popularly known, among its opponents at least, as Obamacare). Barnett is out with a new essay, Does the Constitution Protect Economic Liberty? (abstract here) in which he argues briefly and cogently that the answer is a resounding yes.

Beginning with the Ninth Amendment (“The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.”), amplified with judicious references to State constitutional ratifying debates, Barnett shows how economic liberty, along with personal liberty, was not far from the hearts of the Founding generation. Good stuff but nothing new.

Better is Barnett's deft analysis of the interplay among the Thirteenth Amendment (abolishing slavery), the Civil Rights Act of 1866, and the Fourteenth Amendment (protecting the privileges and immunities of citizens). He grounds his conclusion that with the Civil War Amendments the states too are prohibited from denying their citizens the benefits of economic liberty. Of course, Barnett acknowledges, the Supreme Court obtusely rejected what was obvious only five years later in The Slaughter House Cases and has never gotten things back on track.

Does all this mean in Barnett's view of the matter that there is no role of the states in regulating economic liberty or, more germane to my interests, contracts? No. Just as states may impose reasonable time, manner, and place restrictions even on freedom of speech, so too may they impose limits on contracts ("prescribing the manner of the exercise" of the right to contract).

All very invigorating to those bent in the libertarian direction but what about Art. I, Sec. 10, cl. 1 of the Constitution? (Which, as I'm sure everyone knows, provides that "no State shall ... pass any law ... impairing the obligation of contract.") Are we to understand by Barnett's elegant trail from the Ninth to the Fourteenth Amendments that since 1868 the states have had less power over contracts than they had for the preceding 80 years? Seems a bit of a stretch, if you ask me.

I have no doubt that the Supreme Court made a seriously wrong turn in The Slaughter House Cases; the Privileges and Immunities clause of the Fourteenth Amendment--and not Due Process or Equal Protection--was intended to protect our liberties from legislative overreach. And I also have no doubt the Thirteenth Amendment provided a constitutional basis for the Civil Rights Act of 1866. What I doubt is that the Fourteenth Amendment meant to protect (whatever exactly "protect" means) anything as broad "economic liberty."

All hat and no cowboy? No, I won't go that far but, as much as I'd like to conclude otherwise, I think Barnett has overshot the constitutional mark in this essay.

Another Loss

One of my favorite law professors, John Kidwell, passed away last week. John was a kind man who taught well. I had him only for Remedies and thoroughly enjoyed the class. While I can't remember how the subject came up, at some point during the course we discovered we shared a mutual affection for the works of American short story writer Ambrose Bierce. We also shared an interest in Contracts and legal history and he was one of those who provided "encouraging comments" on an early draft of what was eventually published as the Puritan Revolution and the Law of Contracts. John will be missed.

Yet More on Contracts and Justice

The third time's the charm, I hope. I've already posted here on the theme of contracts and justice. We first saw an influential federal appellate judge give vent to his loathing of appeals to justice in contracts cases. I suggested that Judge Easterbrook's antipathy toward justice, if taken to its end, would eviscerate the legitimacy of judicial remedies for breach of contract. After all, if it isn't somehow just to sanction contract breachers, then why do it? Perhaps, I surmised, because contract law enhanced welfare but what, I wondered, justified enhancing welfare as the aim of civil government?

Then in part 2 here I responded to the sensible suggestion that perhaps the good judge meant nothing more than that courts should not rewrite contracts to achieve the "just," preferring instead, to enforce that to which the parties agreed, no matter (well, almost no matter) how apparently unjust. That suggestion lead me to pursue the hermeneutical tangent: by what standard are courts to determine what the parties meant? Given that the parties rarely provide a standard of interpretation (and, even if they did, the court would first be required to interpret the standard, ad infinitum), courts should (and do, IMHO), consider the claims of justice, no matter how understood, when choosing a hermeneutic.

Now I've come across a recent working draft of an article by Thomas Joo who teaches at UC-Davis. Titled Contracts, Courts, and the Construction of Consent (abstract here), Joo observes that for over 400 years common law courts have, on the one hand, asserted that party consent created the contract on which courts could adjudicate but, on the other hand, realized that courts can never know whether a party actually subjectively consented when signing on the dotted line, so to speak. Thus, instead of actual consent, contract law relies on manifestations of assent. It doesn't matter if you didn't really agree, you're bound to the meaning of the contract (however determined).

But what justifies that? How can a liberal civil state justify sending the sheriff to seize the property of a losing contract party who never actually agreed to the contract? Joo examines the most common justification for concluding there was consent without proving the state of a party's mind: efficiency. Thus,

The supposed identity of consent and efficiency is sometimes invoked as a solution to this problem. If the efficient allocation and the consensual bargain are necessarily the same, the law can find the consensual bargain by identifying the efficient allocation.

But here's the rub, according to Joo, "the 'efficient' allocation is at least as difficult to identify and normatively contingent as the “consensual” bargain." There are two problems lurking not far beneath the surface of efficiency. First, on what theory of justice is wealth-maximization or efficiency made the determining factor? In other words, substituting efficiency for consent is inconsistent with political liberalism, which is the presupposition underlying Western political legitimacy. And second, how do courts know what is the efficient result in a particular case? Substituting efficiency for subjective assent is like substituting phrenology for astrology.

Joo works his way through several examples of judicial legerdemain, where courts assert ipse dixit that parties intended the (judicially asserted) efficient result, regardless of any facts to the contrary. I won't track his argument except to observe that Judge Easterbrook is the author of one particular decision featuring efficiency rather than consent. He concludes by observing that the idea of consent is simply a fig leaf to provide rhetorical cover to what courts actually do. Joo seems simply to believe only that courts should be honest, and that no justification for departing from consent need be given:

In fact courts act based on nonconsensual efficiency all the time. They tend, however, to invoke the rhetoric of consent as a fig leaf. The question isn’t why the law doesn’t do this, but why the law seems ashamed when it does it, and thus pretends not to do it.

Joo suggests no answer to this question, perhaps because his short paper is only in draft form. Yet, one wonders if something like, say, justice might be relevant. But as Judge Easterbrook so eloquently expressed, the last thing we want to see in contract law is the ugly head of justice.

More On Contracts and Justice

Several days ago I posted this on Judge Frank Easterbrook's rant about justice in the context of contracts. Someone asked if Easterbrook was simply saying that courts should interpret contracts as written. Well, I suppose, although he's rather animated about such a prosaic nostrum.

But the simplicity of the sentiment--which virtually no one denies--is rendered a bit more complex when we ask how courts should interpret "what the parties wrote." Anyone familiar with a field like literary interpretation should realize that the answer is not as straightforward as we might like to think. Should the court interpret the contract language according to what the judge believes it meant? Or what the parties thought it meant? Or what an innocent third party bystander would have thought? Or what a sophisticated commercial party would have thought? Or should we just punt the question of meaning to the jury and tell 'em to go at it?

The answer to this question, a question of hermeneutics, can rarely be answered by looking to the written form of the contract. The answers (and there are many floating around among different courts) generally involve an interplay between what a court believes to be its own (in)competence, judicial economy, and, yes, justice. Contract law doesn't answer pre-contractual questions. A court's understanding of justice often does.

The "Ugly Head" of Justice

Click here for a short clip from Judge Frank Easterbrook. Really. It's only a minute 39 seconds and it's rare to see a judge at such a senior level (United States Court of Appeals for the Seventh Circuit, sitting in Chicago) demonstrate such passion.

Justice is an "empty concept," it has "no content," and Judge Easterbrook is furious whenever it rears its "ugly head."  Well, other than that Mrs. Lincoln, how did you enjoy the play?

Several thoughts. First, there's not a whole lot than can be argued cogently in 99 seconds, and we should cut Easterbrook some slack for failing to provide a well-rounded demonstration for his conclusion that justice has no place in contract law. But Easterbrook is really bright and he provides enough of an argument to criticize.

First is the question of legitimacy. If contract law (not necessarily the social practice of bargaining for the exchange of goods and services) has no connection to justice, why are we willing to expend public resources to interpret contracts and ultimately utilize public officials to vindicate a judgment that a contract has been breached? I pursued the answer to the "legitimacy question" at length here. For Easterbrook the answer would run along the line that state sanctions for breach of contract increase public welfare (i.e., wealth maximization is the chief end of the law); he's a rule-utilitarian. But who says that wealth maximization should be the purpose of the law? In any event, for Easterbrook, without coming out and saying so explicitly, a net increase in public welfare amounts to justice, and I believe a reading of some of his opinions confirms this to be the case.

Second, long-established rules of contract law incorporate substantive conceptions of justice. At the front end are defenses to contract formation like fraud, mistake, duress, and the like. We can see midstream justice-oriented rules like the doctrines of implied terms, constructive conditions of exchange, material breach, impracticability/frustration, etc. Finally, at the back end, so to speak, we see limits on remedies and excuse of conditions that would otherwise constitute a forfeiture. Party autonomy (what I prefer to call liberty; take a look here) may get the contractual ball rolling but the "ugly head" of justice is threaded all along the way to judicial enforcement. And lest we forget, the law has long provided a remedy "off the contract" for parties who "unjustly enriched" (oh, the horror!) another in connection with a failed contract. (Quantum meruit, anyone?)

But what of Judge Easterbrook's concerns that courts might impose one of a variety of competing conceptions of justice to re-write the parties' agreement? What of it? Judges make foolish decisions all the time and we don't therefore get rid of the office. For what it's worth, justice (specifically its commutative form) is the formal cause by which courts have the authority (not merely the power) to vindicate breached contracts with a legal remedy. Enforcing that to which the parties agreed (cabined by the sorts of doctrines noted above) is the just thing to do.

More could be said but I hope this is enough.

Contractual Myopia

Two gents from University College London, George Letsas and Prince Saprai, have recently posted Private Law and Moral Practices Part 1: Contract (abstract here). Given their request at the head of the piece ("please do not quote or cite without permission"), I will refrain from delving deeply into this short piece. I will, however, on the one hand recommend it for warning against attempts to justify any substantial set of legal relationships (like, say, contract) based on a single moral principle (therein the danger of legal myopia). Reminds me of my legal multi-perspectivalism even if I do have to say so myself. (Look here for a short account of what I mean by "multi-perspectivalism.") I fear that such myopia often characterizes legal and political theorists, not to mention folks who make a living in talk radio.

On the other hand, sad to say, is that while Letsas and Sarprai do a fine job of describing the problem of legal myopia and the related distortions of inflation, repudiation, and stipulation, they don't do as well when explaining how multiple moral perspectives on a practice like contract should be related to each other. We can see that more than one moral principle may be at work once we identify the problem of myopia but we can do no more. They cannot say whether and what additional principles should be at work.

More accurate descriptions of what's going on in the law are to be preferred to less accurate ones but more than description must be done to justify any practice.