This Article offers a novel interpretation of contract law, which I call ‘Contract as Empowerment’. On this view, contract law is neither a mere mechanism to promote efficiency nor a mere reflection of any familiar moral norm — such as norms of promise keeping, property, or corrective justice. Contract law is instead a mechanism of empowerment: it empowers people to use legally enforceable promises as tools to influence other people’s actions and thereby meet a broad range of human needs and interests. It also empowers people in a special way, which reflects a moral ideal of equal respect for persons. This fact explains why contract law can produce genuine legal obligations and is not just a system of coercion.
The purpose of this Article is to introduce contract as empowerment and argue that it reflects the best general interpretation of contract. Contract as empowerment is an ‘interpretive’ theory in the sense that it is simultaneously descriptive, explaining what contract law is, and normative, explaining what contract law should be.
To support contract as empowerment’s interpretive credentials, I identify a core set of doctrines and puzzles that are particularly well suited to testing competing interpretations of contract. I argue that contract as empowerment is uniquely capable of harmonizing this entire constellation of doctrines while explaining the legally obligating force of contracts. Along the way, contract as empowerment offers (1) a more penetrating account of contractual remedies than exists in the current literature; (2) a more compelling account of the consideration requirement and its standard exceptions; and (3) a concrete framework to determine the appropriate role of certain doctrines — like unconscionability — that appear to limit freedom of contract. Contract as empowerment also explains the main differences between claims for breach of contract, promissory estoppel, restitution and quasi-contract. It explains key doctrines and answers key puzzles at each basic stage of contract analysis: formation, interpretation and construction, performance and breach, the standard defenses and the standard remedies.
The whole of this explanation is, moreover, greater than the sum of its parts. Because of its harmonizing power, contract as empowerment demonstrates how a broad range of seemingly incompatible surface values in modern contract law can work together — each serving its own distinctive but partial role — to serve a more fundamental principle distinctive to contract. These surface values include the values of fidelity, autonomy, liberty, efficiency, fairness, trust, reliance and assurance. Although many people think that contract law must involve trade offs between these values, contract as empowerment suggests that tensions between them are not always real. So long as the complex system of rules that governs contracts is fashioned in the right way, these doctrines can work together to serve a deeper and normatively satisfying principle distinctive to contract. This framework can therefore be used to guide legal reform and identify places where market regulation is warranted by the principles of contract in many different contexts of exchange — from those involving consumer goods to labor, finance, credit, landlord-tenant, home mortgages and many others.
There is a further implication of contract as empowerment. Contract as empowerment absorbs many economic insights but gives them a fundamentally different interpretation. It suggests that contracting and modern market activities are not simply spheres where self-interest runs wild. They are instead spheres of moral interaction, which can engage people’s natural sense of obligation and generate genuine legal obligations — at least so long as contract law is simultaneously personally empowering and reflective of a moral ideal of equal respect for persons. An important moral fabric has, in other words, been running through contract law and many forms of modern economic activity for some time now. This fabric has been obscured by classical economic interpretations but cannot be ignored in any true social science of the phenomena. Understanding this moral fabric can help people lead better and more integrated lives, as both moral and economic agents. We must, however, learn to strengthen this fabric and protect it from growing tear.
Kar, Robin Bradley, Contract as Empowerment (February 20, 2015).