GERHART AND PRIVATE LAW'S MELODY OF REASONABLENESS.

• Author: Gergev, Mark P.
• Position: Tribute to Professor Peter M. Gerhart

CONTENTS INTRODUCTION I. GERHART'S ACCOUNT OF TORT LAW AND PROPERTY LAW II. PARTS OF PRIVATE LAW OUTSIDE GERHART'S ACCOUNT A. Power-Conferring Rules and Weak Equitable Safeguards B. Rules that Privilege Harm-Doers over Harm-Bearers III. GERHART'S ACCOUNT OF CONTRACT LAW IV. CONTRACT INTERPRETATION V. READING GERHART ALONGSIDE BENSON CONCLUSION INTRODUCTION

Peter Gerhart was an intellectual hedgehog. In three books on tort law, (1) property law, (2) and contract law, (3) he successfully accounted for much of private law through the lens of a simple but powerful set of ideas. According to Gerhart, private law rules often reflect how people, as social and moral beings, do and should reason about choices they make that involve other people's well-being. Social moral reasoning is "other regarding" and consists of "think [ing] appropriately about the well-being of others when deciding how to behave." (4) In his terms, thinking appropriately involves applying the Golden Rule ("Do unto others as you would have them do unto you" (5)) behind a veil of ignorance. (6) In more colloquial terms, when you are considering an action that could harm another person, you should put yourself in their shoes (while remaining in your own shoes), put aside personal biases and self interest, and imagine a conversation between the two of you to determine how best to balance your competing interests in deciding how to act. My impression is that Gerhart lived his life guided by this rule. If everyone emulated him, it would be a much better world.

This paper will argue Gerhart largely achieves the goals he set out for himself when he began this project over a decade ago, and that in doing so he captures a melody of reasonableness that runs through much of private law. Gerhart's goal was to provide a unified account of "how we think about" tort, property, and contract cases (7) that is "conceptually coherent," "determinate in its application," and able to bridge the divide between corrective justice and economic theory. (8) Importantly, the "we" to whom Gerhart refers is more than lawyers and judges. The "we" includes people going about their lives who the law instructs to think appropriately about a decision that involves other people to whom a duty to think appropriately is owed. Equally importantly, the method is "determinate in its application," but not because it is an algorithm that can be applied mechanically to yield a demonstrably correct result. The method is determinate in its application because it provides a structured way for people to think about how to act appropriately when an action affects the well-being of another person, and for judges to evaluate choices people make when a duty is owed to think appropriately. Sometimes no specific choice will be dictated because reasonable people could disagree about what is a reasonable choice. (9)

Part I begins with Gerhart's account of parts of tort law and property law that require people to act reasonably. He largely leaves to the side parts of tort law and property law that cannot be explained in these terms. Part II takes up where Gerhart leaves off by sketching these parts of the law. He does not address power-conferring rules in property law that make private-ordering possible. Particularly in property law, these rules tend to be highly formal to facilitate exercise of a power. They also generally allow people to exercise a power to pursue their own goals without regard for the well-being of others. Nor does Gerhart address equitable rules that sometimes excuse noncompliance with a power-conferring rule to prevent people from taking unfair advantage of someone's mistake or their vulnerability. While these equitable rules are highly moralistic, they provide limited justice and so tolerate a great deal of unreasonable conduct. Also largely outside of Gerhart's account are rules in tort law that privilege a harmdoer's interest in liberty of action over a victim's interest in freedom from harm when harm is nonphysical, and particularly when harm is purely economic. These rules also tolerate a great deal of unreasonable conduct.

Part III turns to Gerhart's account of contract law. Gerhart's account of tort law and property law assumes the traditional premise that, insofar as private law is concerned, people are independent and owe limited duties to others. (10) Private law generally takes the existing distribution of wealth and other sources of power and advantage as a given. His account of contract law derives the traditional conclusion from this premise, which is that when people make a contract, the agreed exchange defines the obligations that they owe each other. (11) He argues that much of contract law can be understood as implementing a requirement of reasonableness within the parameters of the agreed exchange. I observe that while rules regulating contract performance generally are amenable to this interpretation, the law of conditions and the rules on contract formation are not. Part IV gives separate attention to Gerhart's proposal on contract interpretation, for it is an important contribution to the literature on interpretation that stands alone.

Part V places Gerhart's account of contract law in the landscape of modern contract law theory alongside Peter Benson, Justice in Transactions: A Theory of Contract Law. (12) Gerhart and Benson have very different aspirations for their accounts of contract law, and their accounts differ greatly in scope and method. Still, their accounts converge on several key points. They share the traditional premise that, insofar as private law is concerned, people are independent and owe limited duties to other people. They both draw the traditional conclusion from this premise that when people make a contract, the agreed exchange defines the obligations they owe each other. They also both agree that parties to a contract have a duty to treat each other reasonably within the parameters of the agreed exchange. This leads both Gerhart and Benson to support progressive doctrines that most U.S. courts reject, including a robust form of the duty of good faith and fair dealing and use of the doctrine of reasonable expectations to police boilerplate terms in form contracts.

While I largely agree with these prescriptions as a matter of policy, I will argue that Gerhart's and Benson's accounts of contract law overlook several points that undercut their arguments in support of these progressive doctrines. Neither considers how supplementary requirements for contract formation, like the statute of frauds and the definiteness requirement, might extend the domain of independence and limited duty into contract formation. Neither addresses the important disagreement within contract law over whether the baseline contract is the parties' agreement in fact or terms in a writing the parties adopt as an expression of their agreement. More generally, neither adequately addresses the tension created by defining contract law as a domain of reasonableness that lies within a larger domain in which people are independent and owe limited duties to others.

1. Gerhart's Account of Tort Law and Property Law

   This Part sketches Gerhart's account of tort law and property law. His account of both bodies of law flows from an optimistic account of human nature and society. People are social and moral beings who achieve social cohesion by "factoring the well-being of others into how they determine their own well-being." (13) People are empathetic. They are able to "to understand the world as others experience it." (14) People reciprocate. They make sacrifices for others so others will make sacrifices for them. Over time, "[a]s individuals interact, they develop ways of accommodating each other's projects and preferences." (15) Patterns of accommodation become norms that define "social morality." (16) This social morality "allows individual human enterprise to flourish in a community that flourishes." (17)

   On Gerhart's account, private law institutionalizes norms of conduct that people have largely worked out for themselves. (18) Negligence law institutionalizes social morality by instructing a person whose action creates a risk of harm to others to think appropriately about the well-being of a risk-bearer when deciding how to act. In the case of non-intentional harm, thinking appropriately basically involves a risk-creator putting herself in the risk-bearer's shoes (while staying in her own shoes), setting aside individual biases and self-interest, and imagining if she and the risk-bearer talked the matter through, how they would decide the risk-creator should act. (19) Gerhart's account of negligence law centers on the Hand formula because it can be interpreted to require just this sort of decision-making by risk-creators. (20) According to Gerhart, negligence law also institutionalizes social morality by requiring a harm-doer to compensate the victim when the harm-doer's action suggests she failed to think appropriately about the well-being of the victim. (21)

   Gerhart's account of property law flows from the observation that people and societies gradually work out norms of recognition of resource ownership to handle conflicts over resources and to encourage cooperation. According to Gerhart, property rights exist "because, and to the extent that, the community, or a large proportion of the community, recognizes the justness of the claims of possession, labor, or other attributes of ownership." (22) Property rights often are not absolute because they "are conditioned on constraints embedded in those norms that are designed to promote the interests of individuals vis-a-vis other individuals and vis-a-vis the community as a collective entity." (23) As with tort law, property law institutionalizes these norms of recognition and their embedded constraints.

   Gerhart argues much of property law and tort law institutionalizes methods of interpersonal decision making...