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The Morality of Contract

What is the theoretical basis for contracts? One important theory of contracts posits that contracts should be understood as promises. Professor Randy Barnett explains why he thinks that the morality of promise is the wrong morality to focus on in contractual relationships. Rather, he argues that contracts should be understood as based on the morality of consent. https://youtube.com/watch?v=Tusy0glQ9b8


Don't break your promises. That's a normative argument that we've heard our whole lives from our parents and our teachers and everyone else - don't break your promises, keep your word. That's a very important normative principle. So it makes sense that if contract law seems to be about promising, then it might be based essentially on the morality of keeping your promise. But I think that's a mistake. So the problem with contract as promise was not that it was focused on morality, but it was the wrong morality. It was what you might call private morality, how we ought to act towards each other as opposed to consent, which is based on what you might call public morality. And that is the rights that we have against each other, and the power that each one of us has to affect our legal relations with our fellow citizen. Remember, just like monarchs, we have the power to engage in treaties and agreements with our fellow monarchs. And when we do so, we're going to be bound by those treaties, just the way kings and queens are bound by their treaties that they enter into with other kings and queens. The alternative to promise theory is what I call consent. Consent refers to the manifest intention to be legally bound. So promise plus something means promise some plus some indication that you mean that promise to be legally enforceable, because that's what at issue when you find a contract. What's at issue when you find there to be a contract, is that there's now going to be law enforcement involved. So you need promise plus whatever it takes to justify law enforcement, and what I think it takes to justify law enforcement in contract law, as opposed to other aspects of law, is a commitment to be legally bound. That commitment to be legally bound can be shown by the existence of a bargain, because normally if you go into the store and you say, I'll do this for you if you did that for me, you need to be legally bound. It can be shown by the existence of our formality. When you go to rent a car and you start signing documents, you know you're meant to be legally bound, whether there was consideration or not. Those were legally binding things you were signing and you knew they were. What matters is what you have objectively manifested to the other party. Have you manifested an intention to be legally bound? Whether or not you subjectively meant to or not, that's what you manifested. It explains the gap filling rules of contract law, which actually should be considered as default rules that apply in the absence of you saying something else. And so you basically manifest your intent to be governed by contract law when you agree to be bound by a contract, unless you say otherwise. So you're essentially agreeing, or you're consenting to contract law, applying in your contract. You're essentially agreeing you have manifested your intention to be bound by contract law, unless you specify where you disagree with contract law by a special term in your contract. And finally, when it comes to morality, the morality of consent is the right morality. It exists in the realm of the morality of duty rather than the morality of aspiration.

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