ABSTRACT
A civil rights secret hides in plain sight: a federal antidiscrimination statute, 42 USC § 1981, is a foundational part of contract law in the United States. Originating in the Civil Rights Act of 1866 and amended by the Civil Rights Act of 1991, Section 1981 prohibits racially discriminatory formation, performance, modification, termination, and enforcement of contracts. The statute thus forbids parties from racially discriminating in nearly every phase of every contractual relationship.
Despite Section 1981’s evident concern for contracts, comprehensive summaries of contract law – including Restatements, treatises, and casebooks – usually ignore the statute. This omission might make sense if Section 1981 does not count as contract law, a tempting view given its status as federal antidiscrimination law. But this Article argues that – for conceptual and normative reasons – Section 1981 already counts as part of contract law and should be recognized as such. The statute also expresses an important part of contract law because, apart from aspiring to guarantee equal citizenship regardless of race, the statute governs nearly every aspect of every contract – indeed, every attempted contract – in the United States.
These claims have far-reaching theoretical and practical implications. Contract law theories must account for the possibility that antidiscrimination rules reinforce contract law’s most basic values rather than thwarting them. Practically, editors of treatises and other comprehensive doctrinal summaries should include some non-trivial discussion of Section 1981, such as its origins and contemporary applications. Applying doctrines traditionally recognized as part of contract law, like good faith and fair dealing, will require assessing whether contracts are performed without racial discrimination. And law professors should consider modifying their syllabi to include Section 1981 in their courses on contract law.
Contract law needs antidiscrimination law to realize its basic values including economic freedom and minimally respectful commercial exchange. Rather than undermining contractual freedoms, sound antidiscrimination laws like Section 1981 play an essential role in facilitating them. So, the possibility that some antidiscrimination rules form part of contract law should come as no surprise.
Encarnacion, Erik, Section 1981 as Contract Law (October 15, 2024), University of Texas Law, Legal Studies Research Paper (forthcoming).
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