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Objectivity and Subjectivity in Contract Law: A Copernican Response to Professor Shiffrin
Published online by Cambridge University Press: 20 July 2015
Extract
This is a response to Seana Shiffrin's recent and important contribution to the continuing debate whether there is a universal moral or economic truth at the heart of contract law. While she adopts an unduly simplistic view of the divergence of morality in promise-keeping and contract law, her most significant advance toward a general theory of promise and contract is her identification of the critical moment at which the interposition of the public in a private matter occurs or is contemplated. This essay carries that theme forward, suggesting that a universal justification for contract law is not possible because the law, by its very nature, objectifies (publicly or with that implicit threat) what was heretofore a private relationship.
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References
1. Shiffrin, Seana Valentine, “The Divergence of Contract and Promise” (2007) 120 Harv. L. Rev. 708.Google Scholar
2. The seminal work on contract law as the product of a universal duty to fulfill promises is Fried, Charles, Contract as Promise: a theory of contractual obligation (Cambridge, MA: Harvard University Press, 1981)Google Scholar. The libertarian account is Barnett, Randy E., “A Consent Theory of Contract” (1986) 86 Colum. L. Rev. 269.CrossRefGoogle Scholar
3. See Lipshaw, Jeffrey M., “Duty and Consequence: A Non-Conflating Theory of Promise and Contract” (2006) 36 Cumb. L. Rev. 321 Google Scholar; Oman, Nathan, “Unity and Pluralism in Contract Law” (2005) 103 Mich. L. Rev. 1483 Google Scholar; Kraus, Jody S., “Reconciling Autonomy and Efficiency in Contract Law: The Vertical Integration Strategy” (2001) 11 Phil. Issues 420.CrossRefGoogle Scholar
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6. Johnny Lee, “Looking for Love,” lyrics available at http://www.cowboylyrics.com/tabs/lee-johnny/lookin-for-love-4352.html.
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11. Schwartz and Scott would define a sophisticated firm as either (1) a firm that is organized in the corporate form and has five or more employees, (2) a limited partnership, or (3) a professional partnership. Schwartz & Scott, supra note 8 at 545.
12. At the Section on Law and Economics program on “Incomplete Contracts—Theory and Practice,” at the annual meeting of the Association of American Law Schools in Washington, D.C. on January 3rd, 2007, Schwartz contended, during remarks on one of the papers presented, that the philosophy of contracts, while perhaps interesting in relation to interpersonal contracts such as contracts of marriage, adoption, or divorce settlement, was wholly irrelevant to a contract between, say, General Motors and General Electric. Consistent with the application of the law to the economic theory of the firm, the only appropriate justification, at least as I heard Schwartz, was allocative efficiency.
13. See Shiffrin, supra note 1 at 710-12.
14. Ibid. at 717.
15. Ibid. at 718-19.
16. Ibid. at 730-33.
17. Ibid. at 722-24.
18. Ibid. at 724-26.
19. Ibid. at 726-27.
20. Ibid. at 740.
21. One of Shiffrin’s important insights is that both morality and efficiency seem to factor into our intuitions about contract law. I focus on the difficulties of unifying the law of contract and the morality of promising in the business-morality quadrant—in short, promise-keeping may be less sacred than she makes it out to be. I leave for another time the challenges of the personal-efficiency quadrant, but as the reaction to Judge Posner’s application of rational actor theory to love and sex demonstrates, it is silly for social science to attempt to impose, at the extremes, a unified theory of human behavior. See Posner, Richard A., Sex and Reason (Cambridge, MA: Harvard University Press, 1994)Google Scholar; Nussbaum, Martha, “‘Only Grey Matter’? Richard Posner’s Cost-Benefit Analysis of Sex” (1992) 59 U. Chi. L. Rev. 1689.CrossRefGoogle Scholar
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28. Shiffrin, supra note 1 at 740.
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30. Her view is that “contract serves a positive normative purpose and not merely an instrumental and deterrent backstopping role.” Shiffrin, supra note 1 at 739.
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33. Ibid.
34. Ibid. at 746.
35. Take this critique of the ‘manager as machine’ model from one of the leading texts on modern management practices:
Don’t dismiss this notion [of the machine] too fast. It had, and continues to have, tremendous appeal to all of us. Why? Because it is an ideal, a vision of perfected human activity. Human beings are just fine; we wouldn’t be anything else. But we are undependable: We get distracted, tired, angry, lusty, and ornery. We get depressed, we’re drawn this way and that, grumbling about doing what’s good for us. We scheme and battle. Organizational machines, or so the metaphor wants us to believe, do not suffer from any of these disabilities.
Champy, James, Reengineering Management: The Mandate for New Leadership (New York: HarperBusiness, 1995) at 13.Google Scholar
36. Shiffrin, supra note 1 at 747:
Furthermore, although the organizations that make commitments are not persons, persons compose them. Within business transactions, individuals often make and receive promises … Individuals make decisions whether to honor or breach these promises. The promises are not thereby made personal, but the involvement of individuals in the acts of commitment, receipt, and intentional breach matters.
37. “In creating a contract, the parties render public their efforts to manage morally their disparate interests, as well as the associated latent or emergent vulnerabilities this disparity may create or feed.” Shiffrin, supra note 1 at 750.
38. The literature is replete with references to relational contract theory. Perhaps the best compendium is the Northwestern University Law School Symposium in Honor of MacNeil, Ian R.: Relational Contract Theory: Unanswered Questions, collected in Volume 94, Issue 3 of the Northwestern University Law Review, 1999-2000.Google Scholar
39. I have in mind what Professor Macauley described in his contribution to the Northwestern symposium. Macauley, Stewart, “Relational Contracts Floating on a Sea of Custom—Thoughts about the Ideas of Ian MacNeil and Lisa Bernstein” (2000) 94 Nw. U. L. Rev. 775 Google Scholar. One can cast the nature of a commercial relationship with descriptors like good faith, solidarity, role integrity, mutuality, custom, and concession, all of which may cause a variance from the original deal (which may or may not be embodied in a contract), but all of that variance is relationship. It may become contract law, but only if the parties seek redress from a court in order to recast the original deal as one amended by relationship.
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41. Kant, supra note 40 at 219-329.
42. Ibid. at 390.
43. Ibid. at 387-93.
44. Ibid. at 398 (explaining the distinction between the faculty of cognition and the faculty of reason, which is thinking). See Arendt, Hannah, The Life of the Mind (New York: Harvest/HBJ, 1978).Google Scholar
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47. Ibid. at 1550.
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50. Cox, Paul N., “An Interpretation and (Partial) Defense of Legal Formalism” (2003) 36 Ind. L. Rev. 57 at 57Google Scholar. See Gilmore, Grant, The Ages of American Law (New Haven, CT: Yale University Press, 1979)Google Scholar. Cox, quoting Gilmore, argues that contemporary formalism is not so much an effort to articulate law as a self-contained, non-referential body of rules as it is a way of recognizing the limit of competence of the social institution that is law. Or, as Dennis Patterson has put it, law is a process of argumentation to a result, but not an avenue to objective truth. Patterson, Dennis M., Law and Truth (Oxford: Oxford University Press, 2005).Google Scholar
51. Even ‘soft’ positivists agree that ‘hard’ positive law is positive law. The question is whether the judge’s importation of moral or natural law into determinations of the positive law is also positive law.
52. Cox, supra note 50 at 59.