Private Law Theory

ABSTRACT
Scholars have long debated whether contract law should prioritize maximizing efficiency and social welfare or, instead, prioritize justice, fairness and other deontological values. The debate is partly prescriptive (what should we try to do with contract law rules) and partly conceptual (how should we understand contract law). This chapter surveys central positions in this debate, distinguishing between the corrective and redistributive functions of contract law and between doing justice between the parties and more systemic effects. It highlights an impossibility theorem that underscores the self-defeating nature of redistributive policies in price-based contractual relationships, using a numerical example to illustrate the inherent trade-offs.

Bix, Brian and Parisi, Francesco, Fairness in Contract Law: An Impossibility Theorem (December 30, 2024). Forthcoming in Yesim M Atamer and Alexander Hellgardt (eds), Handbook of Regulatory Contract Law (Oxford University Press, 2026); Minnesota Legal Studies Research Paper No 24-48.