The Public Law of Private Promising, And Not Even That: LPE 101 for Contracts

Noah Zatz—

What would a 1L Contracts course look like from a law and political economy perspective? I can’t claim to have designed my course from the ground up to answer that question—and indeed I am intentionally more eclectic than that. Nonetheless, several of my choices—about how to thematize the material and what to include at all—clearly reflect an LPE approach.

From start to finish, I present Contracts—perhaps the quintessential “private law” topic—as a study in public power. That is among the main reasons to start with remedies (as many Contracts professors do). Ultimately, the question is whether a government institution (a court) will render a judgment and back it up with the threat of publicly authorized violence: seizing property to satisfy a judgment or throwing someone in jail for contemptuously defying a court order. I underline this point on the first day of class by assigning a recent ACLU report on incarceration for nonpayment of private consumer debt. This reading also challenges conventional field boundaries, enabling students to follow a thread of debt and poverty that connects their Contracts class to Ferguson and racialized mass incarceration.

The publicness of Contracts goes beyond the brute fact that it is law. Rather, the field reflects policy judgments about when to make the force of law available to private parties. Although invocations of party intent typically submerge this point, it actually appears on the surface of the most conventional place to start Contracts: the very first section of the Restatement (Second) of Contracts. “A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.”  Well then, when and how does “the law” (speaking for we, the people) choose to transform private promises into legal duties?

There are two subsidiary points here. First, when the law does transform promises into contracts, it delegates public power to private entities. Those entities then choose how to exercise that power, but this space of empowered private discretion is created by public choices. Such choices require justification in terms of public values. Those values might well counsel the establishment of zones of decentralized ordering, structured by individual promising. But we can only have an honest conversation about whether and how to do so after recognizing that the public constructs the private.

A second point underlines the first: the law draws distinctions among the promises it renders as contracts. Promise-ness alone does not command the law’s backing. This substantive point underlies that most notorious and abstruse of Contracts topics, the doctrine of consideration. Consideration can seem only marginally relevant because ordinary commercial cases rarely dispute it. But that is precisely the point: consideration becomes uninteresting only after bracketing out the full range of real-life promissory practices in order to commercialize Contracts. Indeed, one can flip the point. Arguably, applying contract law or not is precisely how we constitute a domain as commercial in character and distinguish it from other realms—realms where legal duties are allocated in different ways, even when they affect “economic” matters. (I have developed an analogous argument with regard to employment law.)

What best illustrates this constitutive role are the family relationships that by no coincidence populate many classic boundary-drawing cases around consideration. These family relationships, as well as thick relationships of solidarity, reciprocity, and human concern in employment settings, dominate cases like Hamer v. Sidway (uncle-nephew), Ricketts v. Scothorn (grandfather-granddaughter), Webb v. McGowin (saving the boss’ life), Feinberg v. Pfeiffer Co. (supporting the devoted long-term employee). These cases trouble the notion that consideration tracks a pre-existing line between the market sphere of bargains (enforceable) and a nonmarket sphere of gifts (unenforceable). Instead, we see a messy reality of “nonmarket” relationships structured through exchange and of “nonmarket” values governing relationships among commercial actors.

Perhaps most provocative and revealing are those cases where the law overrides its formal categories in order to preserve distinctions among purportedly separate spheres. It does so in classic cases like Sonnicksen v. Sonnicksen and Borelli v. Brusseau where all the consideration in the world cannot get a wife paid, as promised, for her caretaking labor. The boundary-drawing around markets both draws upon and reanimates gendered and raced distinctions among people and forms of interaction.

The family labor cases also reveal another way that public and private interact in Contracts: public judgments are regularly masked by an authorizing discourse of private-ness. Rather than openly relying on policy judgments about the appropriate basis for differentiating—and differently regulating—relationships, contract doctrine often draws the boundary of the market by invoking the intentions it ascribes to the parties regarding legal enforcement. People in family or social settings are deemed to have intended not to be legally bound (or to have expected no compensation), while the opposite presumption is applied to settings deemed commercial (see Restatement § 21; Roznowski v. Bozyk).

This general technique of ventriloquizing policy in the voice of party intent is ubiquitous. We see it also in Cardozo’s declaration in Jacob & Youngs v. Kent that “[i]ntention not otherwise revealed may be presumed to hold in contemplation the reasonable and probable,” and in the legal fictions of “implied” or “quasi” contracts that overcome the absence of consideration (Webb)—and even the absence of any promise at all (Cotnam v. Wisdom). Indeed, such cases raise the tantalizing prospect that not just consideration but even promise is more of a fetish than a firm foundation.

The core ideological function of the promise requirement is to enact freedom from contract, freedom from legal obligation. In this framework, a promise may not be sufficient to enlist the machinery of law in enforcement, but it surely is necessary. A private party must invite the state in. And yet.

One startling omission from standard Contracts curricula is antidiscrimination law. This partly reflects the anachronistic distinction between the common law of contracts and various specialized statutory domains that sound in contract, whether IP licenses or labor law collective bargaining agreements. But even setting aside statutes specific to housing, employment, or public accommodation discrimination, what about Section 1981? It guarantees a general right to “make and enforce contracts” without race (or alienage) discrimination. Derived from the Civil Rights Act of 1866, its dusty historical pedigree rivals that of other statutory mainstays of “common-law” Contracts, like abolition of the seal and (ahem) statutes of frauds, not to mention the newfangled 1952 Uniform Commercial Code.

The ban on discriminatory contracting means that some “private” promises are legally obligatory. This makes sense if all contractual promising ultimately serves some public purpose (such as allocating access to important resources)—a public purpose that ultimately trumps the mere presence or absence of promising. The discrimination context in particular highlights the deep connection between contract and “civil rights,” both in its older and newer senses. The “private” field of contract is a public forum for belonging as equals, to paraphrase Patricia Williams.

Antidiscrimination law’s neglect within Contracts curricula also exemplifies the broader bracketing off of power relations that is enabled by fetishizing the private promise. Racism and all manner of inequality simply are pushed offstage, to be addressed alongside the regulatory intrusions of other professors’ upper-division courses. But just as there is no natural, pre-legal core to “regular” contract, nor can the constituting context be kept entirely at arm’s length.

In the classic common-law cases of refusal-to-contract, discrimination appears as purely private preference, however misguided. Refusal may be grounded equally in the “cut of his coat or color of his hair [or] the color of his skin,” among which the law will not distinguish. Law’s role can be elusive when it merely refusals to obligate, in contrast to its much more visible enforcement of “private” promises. But rather than accepting this passive/active distinction, I push my students to see the law at work through the interconnection of contract and property. In Bowlin v. Lyon, the opinion just quoted, the proprietor of a skating rink refuses to sell a ticket of admission. The proprietor’s resulting non-obligation, however, becomes meaningful only because it sits atop a legally constituted baseline in which the Black skater is legal obliged not to enter the premises without the property owner’s consent. The hands-off posture with respect to contract is meaningless without the prospect of the police laying hands on the skater and dragging him away—or worse.

These points—about the public constitution of private power and how it is obscured by the fetish of private intentions and by legal claims to colorblindness—bring me to Bailey v. Alabama, the Supreme Court’s pathbreaking 1911 peonage decision. As I explored on the blog here, Bailey shows how understanding power and freedom within a contractual relationship requires some account of the surrounding circumstances. The Court had to decide whether to treat the consequences of breach as the responsibility that comes with freedom, or instead as a device of enslavement. That assessment depended on considering the full range of legal consequences, including those formally outside contract law: here, exposure to criminal prosecution on account of breach. More subtly, as discussed here, to understand why the contract was formed, and whether it might be blessed as “free,” one had also to understand—as the Court clearly did—the legally-structured background distribution of property rights under Jim Crow. Despite this, the Court protested mightily that racial context was irrelevant.

Bailey also illustrates how even results that reach toward justice may still reinforce a broader sleight of hand, one by which Contracts purports merely to ratify the smooth operation of a pre-legal sphere of market exchange among private parties. As Robert Gordon has written, where contract doctrine does internalize explicit concern for power and inequality, it shunts them off into exceptional defenses articulated so as to reinforce the rule. This occurs, for instance, in the law of contracts of adhesion.

Today, analysis of contracts of adhesion largely has been shunted into the defense of unconscionability. That doctrinal location marks unconscionability as operating outside “normal” contract doctrine. (Justice Alito did something similar in a bizarre opinion that treated the common-law doctrine of good faith as some kind of external regulatory intrusion into pure contract law—and thus subject to preemption.)

But another way to view adhesive contracts is through the lens of ordinary contract interpretation. There, the general objective test makes one party, especially the drafter, responsible for the meaning reasonably attached to the agreement by the other party. As the Restatement itself provides in section 211, this principle applies to circumstances in which one reasonably expects the other party not to read and understand a text. And those circumstances might include (among other things) conditions of power imbalance that make it seem futile to read the fine print with an eye toward renegotiating or seeking a better deal elsewhere. In such circumstances, the drafting party ought reasonably to treat the other party as attaching its reasonable expectations, not a parsing of fine print, to the agreement. Yet such considerations typically are shunted off into “procedural unconscionability.”

What then, are the contents of “reasonable expectations?” The gist of “substantive unconscionability” is that consumers do not reasonably expect harsh and exploitative terms. And yet (internal to objective analysis) one might respond that, no, in a society like ours, it should be no surprise that the powerful exploit and abuse the powerless. The powerless ought to know and expect that when they click “I agree.” That would be a refreshingly candid, and morally embarrassing, explanation for binding signatories to adhesive contracts, more so than the fictional, fetishizing claim—contrary to objective analysis—that the signatory agreed to the specific meanings of words that no one expected them to read.

If nothing else, such an analysis would direct our attention to the pervasiveness of inequality, and its pervasive legal relevance. Contract law may well be ill-equipped to remedy that inequality, but it ought not be allowed to obscure and legitimize it.

 

Noah Zatz is a Professor of Law at UCLA School of Law.