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Charles Fried wrote Contract as Promise because he objected to the idea—growing increasingly prevalent in the years preceding the book’s publication—that something other than moral duty underlay the social institution through which the state intervenes to enforce, at the request of one private party, the promissory obligations of another private party. Under one view, for example, contract law is a product of social development since the Industrial Revolution, the means by which large, impersonal institutions—corporations, unions, governments—regulate their affairs. According to another line of thought, contract law is merely a way of doing justice and imposing social policy on parties who have come, in one way or another, to interact with each other. Professor Fried perceived a wholesale abandonment of the justification of contract law as a means by which the state affirms classically liberal individualism. Or, as he put it, “[t]he validity of a moral, like that of a mathematical truth, does not depend on fashion or favor.” The book is an unapologetic paean to Enlightenment (and particularly Kantian) conceptions of the free and autonomous self, able to injure another not just by way of inducing detrimental reliance, but also by acts of individual will that create disappointed expectations and undermine trust in the recipient of a promise.
For most of the thirty years since its publication, Contract as Promise has carried the lion’s share of the burden of deontological justification for contract law as against theories grounded essentially in consequentialism (the underlying moral basis of welfare economics) or sociology. This issue of the Suffolk University Law Review records a celebration of a man and his work that has stood the test of thirty years’ time as theoretical explanation, normative assessment, and an essential lightning rod for thinkers whose philosophical inclinations may well not accord with Professor Fried’s. On March 25, 2011, we gathered a stellar group of Professor Fried’s friends, admirers, and critics (not mutually exclusive categories, by the way) to consider the impact of his arguments, the current state of contract theory, and the likely direction of future work in the field. . .
Thirty years after its publication, Contract as Promise remains the canonical presentation of a liberal, autonomy-based conception of contractual obligation. In Charles Fried’s words, “The moral force behind contract as promise is autonomy: the parties are bound to their contract because they have chosen to be,” and their “rights and duties [are] as far as possible a function of their own will and not of standards of justice external to that will.” While other strains of liberal contract theory (consent-based, obligation-based) may differ from Prof. Fried’s “will” theory of contracts in other respects, they all share his foundational commitment to the view that promissory obligations, unlike most other forms of obligation, are voluntarily assumed. The same is true of most liberal, autonomy-based conceptions of promissory obligation in the moral realm. The question I wish to pursue here is this: Having established the voluntary nature of promissory obligation, has liberal contract theory (LCT) put itself out of a job? What further role, if any, does it have to play in elaborating the nature and content of promissory obligation? . . .
In the 1980s, Charles Fried was right to focus on what was missing from both the “death of contract” and “law and economics” approaches to contract law: the internal morality of contract. But he focused on the wrong morality. Rather than embodying the morality of promise-keeping, the enforcement of contracts can best be explained and justified as a product of the parties’ consent to be legally bound. In this essay, I observe that, in Contract as Promise, Fried himself admits that the “promise principle” cannot explain or justify two features that are at the core of contract law: the objective theory of assent and the content of most “gap fillers” or default rules of contract law. After summarizing how consent to contract accounts for both of these features, I explain that, whereas the morality of promise-keeping is best considered within the realm of ethics or “private” morality, legally enforcing the consent of the parties is a requirement of justice or “public” morality.
This article begins to articulate a theory that a central moral concern in contract law in action is flexibility to recognize the need for adjustment, release, and forgiveness among good faith parties, most obviously in relational contexts. The article explores some telling examples, from the morality of the businessmen Stewart Macaulay wrote about in Non-Contractual Relations in Business to that of the characters in Harriet Beecher Stowe’s satiric novel The Minister’s Wooing, which puts the need for promissory forgiveness at the center of the dramatic action. Also examined in this article are the animating moral concerns of the law in action school of thought itself. The overall aim is to promote inquiry by contracts scholars into the moral concerns of contracting parties, particularly concerning the question whether a forgiveness principle may be as important as a principle of promise-keeping. . .
Charles Fried’s Contract as Promise is the first post-realist will theory of contract. It is post-realist in two senses. First, Fried has learned the lessons of the realist critique of Langdellian formalism. He does not attempt to deduce the entire law of contract from a single promise principle. The theory is attuned to the multiple purposes and principles, as well as the practical exigencies, that figure into contract law. In his discussion of Red Owl, for example, Fried writes that “contract as promise has a distinct but neither exclusive nor necessarily dominant place among legal and moral principles.” While Fried minimizes the conflict between those different principles and purposes—imagining established boundaries and diplomatic relations rather than competing armies and territorial dispute—his approach is mildly pluralist. Second, the book is post-realist in its implicit rejection of Holmes’s suggestion that scientific study of the law must “wash it with cynical acid.” Fried has also learned the lessons of Lon Fuller’s critique of the realists. While Fried disagrees with much in The Reliance Interest in Contract Damages, I think he is sympathetic to its complaint that “at a time when men stand in dread of being labeled ‘unrealistic’ . . . we have almost ceased to talk about reasons altogether.” Contract as Promise is an inquiry into the reasons for a law of contract—its justification. It attempts to provide a principled account of contract law. . .
Charles Fried’s 1981 book, Contract as Promise, started the modern discussion in the United States and many other places on contract theory, and remains an influential view to which all contract theorists who have come later must respond. This Article will consider two important themes connected with Fried’s project: first, the nature of the theoretical claims in Contract as Promise; and second, the question of whether contract law, especially when this area is equated with the enforcement of promises, is in tension with John Stuart Mill’s “Harm Principle.”
Part I of this Article looks at Fried’s book from the perspective of theory construction, evaluating Fried’s claims in the context of the project of offering a theory of contract law. Part II looks at the way that Contract as Promise has become the center of a question about whether contract law “enforces morality” in an inappropriate way. . .
What sanctions should the law inflict on those who break their contracts? Would it matter if more severe sanctions were likely to cause prices to rise? What if most contracting parties prefer higher sanctions and higher prices, or what if they prefer lower sanctions and lower prices? And whatever the answer to these questions might be, why do economists and philosophers think about these issues so differently?
Of course, when I speak of “economists” I mean something closer to “most economists, though not necessarily all of them; and including the many lawyers (like me) who do not have advanced degrees but who use economics in their scholarship.” An analogous but even broader qualification should be presumed whenever I speak of “philosophers.” Indeed, on the issues I discuss here, many philosophers of a utilitarian or welfarist persuasion will be closer in spirit to my “economists” than they will be to other professional philosophers. So, too, will contractualist philosophers such as T.M. Scanlon. . .
The concept of “efficient breach”—the idea that a contracting party should be encouraged to breach a contract and pay damages if doing so would be more efficient than performance—is probably the most influential concept in the economic analysis of contract law. It is certainly the most controversial. Efficient breach theory has been criticized from both within and without the economic approach, but its most prominent criticism is that it violates deontological ethics—that the beneficiary of a promise has a right to performance, so that breaching the promise wrongs the promisee. This essay argues that this criticism is misplaced, and that efficient breach theory, properly understood, is not inconsistent with parties’ complying with their deontological obligations. Instead, the intuitive resistance that most people experience to the concept may be better explained by aretaic concerns—specifically, that failing to complete a contractual relationship is not conducive to virtuous character or to the maintenance of a flourishing community. While efficient breach can be squared with deontological ethics, it cannot be squared with virtue ethics unless one is prepared to argue that seeking efficiency is a virtue, or at least that it is not a vice. . .
Charles Fried’s Contract as Promise stands as a model of principled legal argument. It took a single, integrating thought—that a promise lies at the heart of every contract—and then reconstructed broad swaths of doctrine as elaborations of that thought.
The book’s argument is all the more impressive because the promissory ideal in whose name it seeks to unify contract law is not straightforward. On the contrary, grounding contract in promise highlights two of contract law’s most distinctive yet least understood features: that the law establishes liability strictly, rather than based on fault; and that it creates forward-looking rather than the usual backward-looking entitlements, entitlements to be made better off rather than to secure the status quo ante. These features of promissory obligation have long been considered mysterious by a chain of thinkers whose pedigree goes back at least to David Hume and, in the law, to Lon Fuller and William Perdue.
Fried understood the unusualness of promissory obligation and hence the shaky foundation that emphasizing promise places beneath contract law. He thus began Contract as Promise by addressing the problem of establishing the ground of promise head on, in two separate ways. . . .
To a generation of law students, lawyers, and legal scholars, Contract as Promise has provided a liberal theory of contract that explains fundamental features of contract law and provides a normative foundation for evaluating the legal doctrine. As is well known by now, the promissory theory of contracts justifies the legal enforcement of contracts in terms of respect for individual freedom and autonomy to make binding commitments. The touchstone of contractual analysis from this perspective is the intent of the promisor. Together with other moral theories of promising, this perspective on contract law has generated voluminous scholarship. Thirty years after the book’s publication, I am unlikely to shed new light on the merits of the perspective. Rather, I take the occasion of this symposium as an opportunity to explore how economic analysis since the book’s publication might elaborate its thesis. . .