The Ambitions of Contract as Promise Thirty Years On ... - UCL

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Ambitions of Contract As Promise 24 August 2012 discussion draft: do not quote or reproduce without permission free-market principles and analyses. Today, and for some decades, the main competitor to the promise principle has been the economic analysis of law. Schwartz and Scott state “that the law should pursue the first order goal of maximizing contractual surplus when it chooses rules to regulate merchant-to- merchant contracts.” 78 By limiting their assertions to this context they put to one side arguments that the law of contract might be used to accomplish redistributional goals, 79 or that informational defects or severe disparities of resources orrational ability to calculate advantage might justify paternalistic intervention. Other law-and-economics scholars have been willing to generalize much further. 80 I have already argued that the considerable overlap between contract as promise and the economic analysis of contract is partly explained by the fact that both are concerned with fashioning rules and thus with the ex ante perspective of the parties. 81 Of these two theoretical accounts contract as promise, by reason of its more familiar language and concepts, enjoys a certain advantage. But the economic might respond that, even if the vocabulary and 78 Schwartz & Scott, Redux, supra note 50, at 928. 79 See, e.g., Duncan Kennedy, Distributive and Paternalist Motives in Contract and Tort Law, with Special Reference to Compulsory Terms and Unequal Bargaining Power, 41 MD. L. REV. 563 (1982); Anthony T. Kronman, Contract Law and Distributive Justice, 89 YALE L.J. 472 (1980); but see Louis Kaplow & Steven Shavell, Why the Legal System is Less Efficient than the Income Tax in Redistributing Income, 23 J. LEGAL STUD. 667 (1994). 80 See Craswell, supra note 17. 81 See supra notes 25–27 and accompanying text. 44
Ambitions of Contract As Promise 24 August 2012 discussion draft: do not quote or reproduce without permission conceptual structure of basic contract law corresponds well to contract as promise, the law-and-economics approach overtakes contract as promise in explanatory power, in being able to explain the fringe, and even some of the central, doctrines of contract law. For example, in discussing topics like consideration and unconscionability, I have had to have recourse to explanations other than the morality of trust and the promise principle. Economic analysis is able to comprehend such topics and extend its explanatory framework to them as well. Is this greater generality not a sure sign of a better theory? Does not the promise principle drop out as less powerful and therefore otiose? I think not. It is a proper accomplishment of the promise principle to root this crucial legal institution in the moral principles of mutual respect and trust, and through them to a general moral theory—in broad outline, Kantian—of the right and the good. My appreciation of important third-party considerations in matters like consideration and unconscionability, as well as the limits of the promise principle in dealing with cases of fraud and duress, does not undermine that connection to (what I shall call for ease of reference) Kantian moral theory. That theory claims to deal with such topics as part of a more general moral and political theory. It is a comprehensive theory. But so is the general utilitarian theory that underlies law and economics. The question then is—and it is an old 45
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The Ambitions of Contract as Promise Thirty Years On ... - UCL

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