Martín Hevia, Reasonableness and Responsibility: A Theory of Contract Law

Ch 1 – Introduction
Justice is the first virtue of social institutions, as truth is of systems of thought. A theory however elegant and economical must be rejected or revised if it is untrue; likewise laws and institutions no matter how efficient and well-arranged must be reformed or abolished if they are unjust.

Ch 2 – Setting the Scene: Distributive Justice, Corrective Justice, and Monism in Political Philosophy and Contract Law
This chapter introduces the notions, first developed by Aristotle, of distributive and corrective justice. I connect the distinction between those notions with a view referred to as “monism” in political philosophy and contract law.” Monists reject the distinction between distributive and corrective justice. The chapter discusses the basic tenets of two monist positions. On the one hand, those holding “the distributive approach” hold the view that there is no such thing as “private ordering”; on the other hand, libertarians argue that there is never anything else. This introductory discussion is a preliminary basis for the discussion in the following two chapters, where two monist accounts of the foundations of contract law are discussed.

Ch 3 – The Distributive Understanding of Contract Law: Kronman on Contract Law and Distributive Justice
This chapter examines Anthony Kronman’s idea that the voluntary basis of contracts should be conceived wholly in terms of a conception of distributive justice. For Kronman, voluntariness cannot be understood simply in terms of the idea of individual freedom; for him, in order to determine whether one party voluntarily consented to a particular contract or not, we have to determine whether the other party took advantage of her in an impermissible way. I argue that this way of looking at private transactions is problematic. My claim is that Kronman’s focus on distributive justice inhibits him from explaining the private nature of contractual transactions, which is precisely what he claims to be addressing. In particular, I argue that Kronman’s distributive approach cannot explain neither the privity rule, which is a central doctrine in contract law, nor the role of consent.

Ch 4 – Libertarianism and the Law of Contracts
In this chapter, I concentrate in Robert Nozick’s libertarian theory of justice and its account of contract law. Nozick is right in pointing out that people want to have resources to use them in whatever way they want. Furthermore, the insight that a distribution of resources may change without giving rise to distributive injustices is very strong. My point in this chapter will be that libertarians go wrong in thinking that they have a monopoly on these ideas. Nozick claims that what he calls patterned theories of distributive justice are necessarily upset by the exercise of freedom. The chapter shows that Nozick’s argument actually does not work against dynamic theories of distributive justice such as Rawls’.

Ch 5 – The Division of Responsibility and Contract Law
This chapter situates contract law in terms of what John Rawls calls “the social division of responsibility”: society as a whole has to provide individuals with an adequate share of opportunities and resources that they need in order to set and pursue their own conception of the good. Once individuals have those fair shares, citizens have to take responsibility for how their own lives go. An important way that people may pursue their plans is by entering into arrangements with others. This requires a system of contract rules. I argue that justice requires that we understand contract rules in terms of the idea of fair terms of interaction—that is, terms that would be accepted by reasonable persons moved by a desire for a social world in which they, as free and equal, can cooperate with others on terms they accept. The underlying idea is that of reciprocity, that is, the idea that individuals should not set the terms of their interactions with others unilaterally. I claim that contractual interactions should be approached from the perspective of the reasonable person.

Ch 6 – Explaining Contract Doctrine
This chapter seeks to understand contractual doctrines from the perspective of the Rawlsian division of responsibility. First, against the idea that any effort to look at private law obligations as a coherent unit is worthless, I present a Kantian account of private law obligations. The foundational idea is that of personal independence. Then, I explain how that idea, together with the distinction between persons and things, explains the sense in which tort, contractual, and fiduciary duties are different from one another. These distinctions are the basis for the idea that a contract gives rise to a personal right—that is, a right in personam—against the promisor to the performance of the contractual duties. I make my point by explaining that before the actual performance, the promisee acquires something through the contract, to wit, the promisor’s performance. I continue to explain the standard remedy for breach of contract in the common law, that is, expectation damages. Then, I explain the principle of no liability for mere nonfeasance in terms of the division of responsibility.

Ch 7 – The Objective Standard of Interaction in Contract Law: The Reasonable Person
In this chapter, I claim that contractual interactions should be approached from the perspective of the reasonable person. This chapter develops in more detail the idea of the reasonable person. I show how it can be used to explain several contractual doctrines. In particular, I argue for an objective test of contract formation and against a subjective account. Finally, against both communitarian and feminist objections, I argue that this Rawlsian idea provides a better justification for the legitimate use of state coercion.

Ch 8 – Fuller, Fried, and the Nature of Contractual Rights and Remedies
Fuller and Perdue’s “The Reliance Interest in Contract Damages” and Charles Fried’s Contract as Promise are two of the main contributions to contract theory in the last hundred years. In this chapter, my aim is to suggest that, as theories of contract law, both fail because they make the same mistake: they cannot properly account for the transactional nature of contract rights and remedies. On the one hand, Fuller and Perdue argue that, if private law is about corrective justice, the expectation remedy cannot be justified. Against that view, I’ll argue that, if a contract gives the plaintiff an entitlement against the defendant, then the expectation remedy makes sense. In turn, Fried claims that contracts are a special case of promises. I argue that his account cannot explain the sense in which contractual rights and duties are personal and correlative.

Ch 9 – Contracts and Third Parties
This chapter outlines an account of the rights and duties that, within the Rawlsian framework of the division of responsibility, a contract may create for third parties. Although individuals can get together to pursue their plans, they do not do so in entire isolation from the rest of the world. As a consequence, the contract between two or more parties may affect the context in which other individuals pursue their plans. Sometimes, an agreement between two or more parties may interfere with the rights of others. Also, the breach of a contract may cause some type of harm to someone who is neither the breacher nor the victim of the breach. So, for example, sometimes the parties to a contract agree to provide a benefit to a third party. And, whenever that benefit is not provided, the question arises of whether that third party is legally entitled to complain in some way for not having received that benefit. At the same time, third parties may also interfere with the contract between the parties in different ways that may not allow those parties to achieve their aims. This chapter deals with all of these issues from the perspective of the division of responsibility.

Ch 10 – Material Nondisclosure, Corrective Justice, and the Division of Responsibility
This chapter is about how corrective justice accounts of contract law manage to explain material nondisclosure in the common law. Following the distinction proposed by Marc Ramsay, I will differentiate between what he refers to as “robust corrective justice” and “nonrobust corrective justice”. First, I argue that the robust corrective justice theory demands too much from the parties to a contractual agreement, leading to the transformation of obligations undertaken between parties into obligations of distributive justice. Second, I will defend the position held by nonrobust corrective justice accounts that seems consistent with the common law of contracts: the bargaining principle and the reasonable transparency principle proposed by Ramsay well explain the existence of what Ramsay refers to as an asymmetry between the obligations of the vendor and the buyer in terms of each one’s respective duty to make information known. My contribution will be to offer a theory of justice as a background for explaining why Ramsay’s vision is satisfactory. The theory of justice I propose is that of the division of responsibility.

Martín Hevia (ed), Reasonableness and Responsibility: A Theory of Contract Law. Springer. Law and Philosophy Library, Volume 101, 2013, DOI: 10.1007/978-94-007-4605-3.

Leave a Reply