Contextualizing Contract Law: An LPE 101 Reading List

Luke Herrine—

Contract is, of course, part of the core legal infrastructure that makes markets possible. But it is more than that. As an ideal type, it is at the core of all individualist social, moral, and political theories that seek to account for human sociality while avoiding social structure. Contract represents the ideal of being able to choose how to calibrate others’ demands with one’s own life plan. It presents the possibility of a social obligation that is not imposed upon one from the outside—by family or tradition or etiquette or the state. The rational choice theories that form the basis for neoliberal economic thought do not just understand chosen obligation as an ideal or a possibility: it is how they model all social institutions, even highly complex ones. No wonder “social contract” has been such an enduring model of the legitimate exercise of state power in the liberal tradition.

Theories based on the contractual ideal have proven especially useful for justifications of capitalist ordering. When the law has taken such theories too seriously, it has found it easy to endorse and even mandate all sorts of market-mediated exploitation as necessary to a free society. Lochner and its ilk were supposed to protect freedom of contract, after all.

The contractual ideal and the promissory morality that comes with it is part of our culture, and not just our legal culture. Even those of us who have been on the business end of exploitative contracts—for debt, for labor, for rent, for whatever else–have a hard time shaking the notion that we are obligated to do what we said we would (even if we didn’t know what we “said we would” via the fine print): that we chose, and therefore have responsibility for, the rules imposed upon us.

Thinking about—and teaching—contract from an LPE perspective requires denaturalizing with this tendency of thought and the forms of moral, political, and legal justification that have grown out of it. And doing that requires dealing with contracts not as the shadows of an ideal Form but as institutions shaped by socio-legal context. It requires dealing with the law of contract not as a self-contained and coherent body of judge-made doctrine but as an overlapping set of rules that deal with different contractual forms in different contexts. And it requires highlighting how the decontextualized contractual ideal can serve ideological functions when used as a map for this complex terrain.

Below is a list of texts I have found helpful in my own process of de/reprogramming:

-Barbara Fried, The Progressive Assault on Laissez Faire.

Robert Hale’s recasting of contract and market ordering as the process of mutual coercion rather than mutual consent is an incredibly useful pivot point for thinking about how contract and market choice are shaped by social structure. Fried’s book is the best account of Hale’s work (which is worth reading on its own), but it is so much more: a primer on marginalism, institutional economics, the relationship between liberal and socialist thought, and a meditation on how economic freedom can coexist with economic power.

-Ian Macneil, The Many Futures of Contracts.

Macneil’s work goes about as far as one can along the road of embedding contracts in social context. Building on the work of sociologist Stewart Macaulay, he examined contracts as sociological phenomena governed by situationally variable norms and without clear entry and exit points. His central insight that contracts are incomplete and “relational” has been enormously influential, mostly because it has been tamed by “New Institutionalist” transaction-cost economists. But when Macneil first published this article, he was contributing to a growing sense in the legal academy that the classical view of contract as discrete transaction would be subsumed into more collectivist forms of social ordering. LPE might recover and rethink that possibility.

-Duncan Kennedy, Distributive and Paternalist Motives in Contract and Tort Law.

Kennedy is the most relentless critic of any and all tendencies to make contract law/theory coherent on its own terms. Over the course of multiple articles and books, he has argued that what underlies all of the doctrinal divisions and justifications thereof is the dialectic between individualism and altruism. He tends to focus an undue amount of attention on the hypocrisy of judges who fail to enact socialism from the bench at the expense of a more holistic examination of how social power shapes markets (and judging!), but even so he has much to teach. This article is just one example of his work. See also “Form and Substance in Private Law Theory” (more philosophical), “From the Will Theory to the Principle of Private Autonomy” (more hardcore on the evolution contract law and theory), “The Stakes of Law: Hale and Foucault!” (most accessible and least adjudication focused). All can be found on his website.

-Todd Rakoff, The Law and Sociology of Boilerplate.

Nearly every contemporary contract involves boilerplate, even though the contractual ideal is based on the ideal of a fully dickered agreement. This is a short piece in which Rakoff argues for developing a thicker concept of boilerplate, embedded into social context. He also written longer articles that develop a contextualist and pragmatic approach to evaluating contracts: most influentially “Contracts of Adhesion: A Reconstruction”, but also “Implied Terms of Contract” and “The Five Justices of Contract”. His is a more reformist approach, focused on shifting judge-made doctrine.

-Margaret Jane Radin, Boilerplate.

This book doubles as a clear analysis of the normative problems that consumer-facing boilerplate present and an excellent introduction to tendencies in contemporary contract theory. It is an extended argument that the latter cannot account for the former and that, when it tries, it provides moral cover for exploitation (Radin calls this “normative degradation”). Radin tends to treat consumer-facing boilerplate as a perversion of contract rather than a demonstration that contract takes a variety of forms depending on its context of use, but hers is the most extended critical engagement with the way contemporary contract theories occlude reality.

-Elizabeth Anderson, Private Government.

“Freedom of contract” employs a thin/formalist concept of freedom and equality. Anderson points the way forward for developing thick/substantive versions of these concepts. In this book, she traces the ideal of free markets to the idealization of the early stages of capitalism before industrialization made private property, free exchange, and free labor mere ideology for corporate dictatorship (which she inexplicably and infuriatingly refers to as “communist”). She then asks how freedom ought to be conceptualized once we take seriously the power that profit-oriented firms have over our lives. In passing, she deliciously deconstructs a leading economic theory of firms that relies on the idealization of contract.

-Roy Kreitner, On the New Pluralism in Contract Theory.

Kreitner surveys recent literature reviving pluralist and realist approaches to contract and asks what a theory of contract built on these foundations might look like. He argues that you don’t need a full theory of what contract law is and what it does in order to think morally about any given contract–theory should be oriented towards developing principles to mediate between the multiple values of contractual ordering. A useful set of arguments for those of us interested in thinking about contracts as embedded in social context and in cultural and moral pluralism.

-Noah Zatz, State Power and the Construction of Freedom, LPE Blog.

Noah’s post illustrates the way contracts are and have been used to moralize fundamentally immoral social relationships, especially in combination with white supremacist ideology. To boot, he provides a number of useful references to historical and legal literature that would allow curious readers to investigate the tensions between contract ideology and the reality of human relationships shaped by hierarchical social forms.

-Charles Mills, The Racial Contract.

Although Mills’s book is about the social contract, it unflinchingly illustrates the way that the idealization of contract as applied to exploitative systems creates intellectual tensions that have been resolved through the evolving ideologies of race. I would note that thinking about the assumptions behind the “social contract” is not merely analogous to thinking about the assumptions behind actually existing contracts: the modern concept of contract developed in conversation with social contract theorists.

-David Graeber, Debt: The First 5,000 Years.

This book is life changing. At least it was for me. Graeber’s book traces the social embeddedness of obligations across time and space, with a special focus on obligations denominated in money. He provides a new way of thinking of everything from debt jubilees to the Axial Age to chattel slavery to stateless contract enforcement to peasant rebellion.

Luke Herrine is a Ph.D Candidate at Yale Law School.