Theories of contract law and enforcing promissory morality: comments on Charles Fried.

• Author: Bix, Brian H.
• Position: 'Contract as Promise' at 30: The Future of Contract Theory

INTRODUCTION

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." (1)

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.

1. THEORIES OF CONTRACT LAW

   Theories about doctrinal areas of law--theories of property, contract, or tort--are common and well-known. (2) Most of these theories sit uneasily between description and prescription/evaluation. On one hand, they purport to fit most of the existing rules and practices; on the other hand, they re-characterize the practices to make them as coherent and/or as morally attractive as possible. (3) This sort of approach to theorizing comes under various titles: rational reconstruction, "philosophical foundations of the common law," and constructive interpretation. (4) As both Ronald Dworkin and Michael Moore have argued, there is a strong connection between theories of law understood this way, and the way (Anglo-American) judges and advocates argue about what the law requires in some novel cases. (5)

   The subtitle of Charles Fried's enormously influential book, Contract as Promise, is "A Theory of Contractual Obligation." However, the extent to which the book presents a theory of contract law remains controversial and unsettled. In the book, Fried proclaims that "the promise principle" is "the moral basis of contract law." (6) Does this mean that the enforcement of promises is the moral basis for having contract law, or perhaps for shaping contract-law doctrine one way rather than another? The question of whether there is something problematic about having the enforcement of promises as the primary justification of contract law will be explored at greater length in Part II.

   Fried wrote in a more recent piece that he saw "contract as rooted in, and underwritten by, the morality of promising. ..." (7) Fried presents his promissory theory of contract law as a variation of the will theory of contracts, (8) which has deep roots, especially in Continental european theories about contract law. (9) Will theories and their promissory-theory variations have a long history and have been subject to detailed criticism before, (10) though Fried's book does not tarry long to reconsider those old debates, considering them mostly in passing, while concentrating more on contemporary alternative theories of contract law.

   A question first about the scope of the claim Fried makes in Contract as Promise: Is Fried's theory of contract law "as promise" a general and universal theory, covering not only all past and current contract-law systems, but all possible ones? or is it less ambitious, perhaps a theory only of American contract law--or, given that contract law is primarily a matter of state law and that it changes significantly over time--perhaps Contract as Promise should be seen only as a theory of Massachusetts contract law circa 1981?

   While there is little textual support for that last, most-narrow reading--there are plentiful citations from jurisdictions other than Massachusetts--the book contains relatively few citations to non-United States contract-law cases, and these are mostly older English cases, which American courts have usually accepted as highly persuasive, and, at times, as paradigm cases (for certain doctrines). One finds few, if any, references to contract-law cases--or statutes or regulations--from other non-United States sources.

   Thus, on one hand, from the cases and doctrinal rules cited and discussed, the theory appears to be one whose subject is contemporary American contract law. On the other hand, much of the general language implies something even more ambitious: a (general) theory of (all) contract law. After all, the title of the book is not "American Contract as Promise," nor is the subtitle "A Theory of American Contractual Obligation." There are passing references to the way in which the contract law from other jurisdictions might vary from American contract law, but no indication that Fried considers American law as distinctive in its connection to promising. (11)

   This uncertainty about the scope and nature of the claim(s) being made is by no means unique to Contract and Promise. The question of whether a theory of contract law is confined to a single jurisdiction (or a small number of jurisdictions with similar laws, and perhaps an overlapping history, like the United States and England) is rarely discussed. (12) Nor is the problem often considered from the other end of the discussion: how one could ground the claim that one's theory was meant to explain not just a single legal system's rule for contract law, or rules from a group of legal systems, but rather to explain the contract law of all current, past, and hypothetical legal systems.

   There is a different, and perhaps even more basic, issue relating to theorizing about doctrinal areas of law. Contract law, like most social practices and social institutions, is complex and varies across different instances and over time. Does it even make sense to speak of a single nature of something so complex and changeable? As already indicated, Contract as Promise does not spend a lot of time on such methodological or meta-theoretical questions, but there are some scattered comments relating to the issue. At one point, Fried wrote: "Contract law is complex, and it is easy to lose sight of its essential unity." (13) Certainly, it would be too easy for a skeptic simply to note the variety of contract rules--within the contract law of any single jurisdiction, across different American states, and (if relevant) from one country to another--and assume from that fact that a general and universal theory of contract law was untenable. Variety, on its own, does not foreclose that there is some unitary essence common to all the different instances. However, it would be helpful to have more discussion of what is gained and lost, either by emphasizing unity while downplaying variety, or, by doing the opposite, emphasizing variety while downplaying unity. (14)

   In Contract as Promise, Fried characterizes his thesis as being that "the basis of contract is promise. ..." (15) And in his response at this conference, he has characterized his position, and that of Contract as Promise, as being that contract law is "built on" the enforcement of promises. (16) While almost all theoretical claims regarding a whole area of law are somewhat amorphous and difficult to verify or falsify, a claim that an area of law is "built on" some concept or ideal, or that this concept or ideal is "the basis" of the area, seems especially difficult to pin down as to what it might mean or how one would go about verifying or falsifying it if one chose. Perhaps these metaphors mean nothing more than that keeping promises is an important component to understanding why we have rules of contract law and why we offer state enforcement to (most) contracts--an argument Fried makes forcefully throughout Contract as Promise. (17)

   From the start, Contract as Promise notes the gaps between the promissory principle and (American) contract law. After a long critique of consideration doctrine, noting its internal inconsistencies and its poor functional fit with its purposes as well as its tension with the promissory principle, Fried writes: "I conclude that the life of contract is indeed promise, but this conclusion is not exactly a statement of positive law. There are too many gaps in the common law enforcement of promises to permit so bold a statement." (18) Fried rejects as mistaken the consideration doctrine in general, (19) as well as its application specifically to keeping offers open. (20) Fried also offers a partial dissent from American contract law's treatment of unilateral contracts, (21) arguing that contracts contain significant gaps that are filled by principles other than the promissory principle, (22) and observing that there are equitable principles other than the promissory principle that govern issues of disclosure in negotiation and good faith in performance. (23)

   In general, there is little doubt that the promissory principle fails to explain (account for) large parts of "contract law" as defined by Restatements, treatises, casebooks, etc. (24) This is especially true if one focuses on contract law--that is, the rules that are taught in contract-law cases, and interpreted, applied, and contested in litigation about contracts. (25) In response to the limitations of Fried's contract-as-promise theory as a descriptive or conceptual theory, some commentators have even suggested that it might be best understood as (primarily) a normative theory, not (primarily) an explanatory theory. (26)

   In what sense is Fried offering us a theory of contract law? As noted, by the author's own account, large segments of the rules governing the regulation of transactions (which promises or exchanges are enforceable, how the terms are to be construed, and when will performance be deemed a breach of the agreement) fall outside the promissory-principle theory, as well as certain forms of obligation often associated with contract law. (27)

   Barbara Fried has pointed out that the way American contract law works, what is central to contract law is not morality, or even...