Contract and collaboration.

• Author: Markovits, Daniel

CONTENTS INTRODUCTION I. INTRODUCING THE PROMISE RELATION A. Truth-Telling and Community B. From Truth-Telling to Promising C. Making and Keeping Promises 1. Promises and Discretion 2. Promises and Obligations 3. The Grounds of Promise-Keeping II. CONTRACT A. The Collaborative Ideal 1. Joint Intention 2. Collaboration B. Who Can Collaborate III. ILLUSTRATIONS AND ELABORATIONS A. Consideration 1. The Conventional Wisdom 2. The Collaborative View B. Expectation Damages 1. The Conventional Wisdom 2. The Collaborative View CONCLUSION INTRODUCTION

Promises lie at the center of persons' moral experience of one another, and contracts lie at the center of their legal experience of one another. Many of the most important relationships in our moral and legal culture characteristically arise in connection with promises and contracts of some form or other: Persons' families are connected to marriage promises, their work is connected to employment contracts, and even their citizenship is connected (albeit metaphorically) to the social contract. In all these cases, and in myriad others, promises and contracts establish relations among the persons who engage them.

But in spite of the obviously communal character of promise and contract, the most prominent accounts of these practices remain firmly individualistic, seeking to explain the obligations they involve in terms of one or another service that these practices render to the several parties who engage them. Some theories emphasize that promissory and contractual obligations increase the freedom of promisors, by enabling them to project their intentions into the future and rendering plans of action that require such precommitments available to them. (1) Other theories emphasize that promissory and contractual obligations reflect concern for the reasonable expectations of promisees and the harms that promisees suffer when these expectations are disappointed. (2) And, most prominently, yet other theories emphasize that promissory and contractual obligations promote the well-being of both promisees and promisors, by increasing the reliability of social coordination and promoting the efficient allocation of resources. (3) These theories differ from one another in many ways, to be sure, and they often cast themselves as competitors. But they are of a piece insofar as they all seek the roots of the morality of promise and contract in properties of the several individual participants in such agreements.

I do not doubt that the individualistic values from which these theories begin can give rise to reasons for action and indeed to moral obligations. I insist, however, that individualistic theories do not capture or reflect the distinctive moral center of promise and contract, which cannot be found in any properties of the parties taken severally but appears instead in the relations among persons that promises and contracts create. I develop the insight that promise and contract establish relations among the persons who engage them into a mature theory of promise and especially of contract, in which I describe the relations among persons that promises and especially contracts establish, and I characterize these relations in terms of familiar and attractive moral and political values. I claim that promises generally, and contracts in particular, establish a relation of recognition and respect-and indeed a kind of community--among those who participate in them, and I explain the reasons that exist for making and for keeping promises and contracts in terms of the value of this relation. (4)

Moreover, I argue that contract participates in this ideal of respectful community even though contracts typically arise among self-interested parties who aim to appropriate as much of the value that contracts create as they can. Respectful community, as I understand it, is a capacious ideal, which encompasses many forms of joint endeavor, including contract. The centerpiece of my approach to the morality of contract is an argument that finds the value of community directly in the form of the contract relation rather than in any substantive ends that the parties to contracts pursue. I present a detailed account of the characteristic relations that this form of community, which I call collaboration, involves.

Finally, because my ultimate purpose is to develop a theory of contract law, I show that the contract relation as I characterize it is no mere academic conceit but is instead immanent in our legal practice. In particular, I consider two familiar doctrinal puzzles presented by the law of contracts--involving the consideration doctrine and the expectation remedy--in light of the values that I claim lie beneath the contract relation. I argue that the general theory of contractual obligation I am proposing underwrites a more satisfactory account of these doctrines than has so far been possible.

I seek, then, to reclaim for practical philosophy the communal character that is the essence of both the obligations and the lived experience of promise and contract, and that the dominant, individualistic accounts obscure. Furthermore, instead of deriving the morality of promise and contract from more general and more fundamental moral principles (of freedom, harm, or welfare), I understand promise and contract as presenting distinctive and freestanding moral ideals. These ideals, moreover, radiate outwards from promise and contract, to illuminate aspects of practical life that lie beyond the narrow confines of these practices. I propose, at the end of the argument, that the collaborative ideal I find in the contract relation represents a crucial foundation stone for the authority of modern, pluralist economic and political institutions. In addition to developing a legal theory of contract, these pages therefore also contribute to the political theory of the market, and indeed of liberalism.

At the same time, the theory that I develop remains humble in other important ways, and it pays to identify these before commencing with the argument, in order to avoid appearing to claim more than I do. I do not deny that a wide array of moral obligations arise in and around promise and contract or that many of these obligations may be illuminated by reference to the ideas of freedom, harm, and welfare that figure so prominently in the familiar theories of contract that I seek to supplant. (5) I deny only that these obligations are of a piece with promise and contract, and that these familiar explanations capture the characteristic moral and legal core of promise and contract. Moreover, I focus my attention on contracts among individual, natural persons. I take these cases to represent the core of contract and content myself to address contracts that involve organizations in a derivative fashion only. (6) Each of these restrictions is intimately connected to my broader ambitions. A theory that understands contract as a distinctive and freestanding fount of moral obligation will naturally distinguish between contract proper and various associated forms of obligation; and a theory that seeks to connect contract to the basic structure of liberal political authority will naturally emphasize the individual persons to whom political justifications must be addressed.

1. INTRODUCING THE PROMISE RELATION

   I have proposed to develop the morality of promises and contracts--including both the reasons for making and for keeping promises and contracts--in terms of the relations that promises and contracts engender. In this Part, I develop the basic ideas that figure in the morality of promises quite generally. I delay any more specific discussion of special cases of promise--including, in particular, contract--until later Parts. The larger argument therefore proceeds through several increasingly specific stages. In this first stage, I introduce the promise relation, and the values that it involves, in generic terms. In the next stage, I develop a more precise account of the particular form that the promise relation takes on through the legal institution of contract. (One of the main challenges of the argument, once again, is to show that even a form of promise so impersonal and instrumental as contract--a practice in which the parties each try to take advantage of the other--produces a relation of community that can sustain substantial reasons for making and keeping contracts.) Then, in the argument's final stage, I connect this philosophical characterization of the contract relation to certain central components of that relation's legal, and indeed doctrinal, expression.

   1. Truth-Telling and Community

      I begin at some distance from contract and indeed even from promise by considering the reasons that support truth-telling and oppose lying. I explain these reasons by reference to the relation of community that truth-telling creates between a speaker and her listeners, and that lying destroys. The account of truthfulness that I develop provides the material out of which I construct the theories of promise and eventually of contract that remain my ultimate goal. (7)

      When a person tells the truth, she promotes a kind of community between herself and her listeners. By telling the truth, a person gives her listeners access to what she knows, to her point of view of the world, or at least of her subject, and in this way she enables them to share it: The truth-teller and her listeners can approach the subject matter of her truth-telling together, and on equal terms. Lying, by contrast, places a speaker actively out of community with her listeners. At least insofar as a lie succeeds--insofar as the listeners are deceived--the liar and the listeners cannot share a point of view with respect to the lie's subject matter: The liar knows something that the listeners do not--this is precisely the nature of a lie--and this combination of knowledge and ignorance opens up a gulf between them.8 And even when a lie fails, so that the...