Promise and private law.

• Author: Oman, Nathan B.
• Position: 'Contract as Promise' at 30: The Future of Contract Theory

1. INTRODUCTION II. THE BILATERALISM OF CONTRACTUAL DAMAGES A. From Promise to Expectation Damages B. Reconstructing Promise and Expectation Damages III. PROMISE AND PRIVATE STANDING A. Private Standing as Disaggregated Enforcement B. Civil Recourse and Contract as Promise IV. PLURALISM, PROMISE, AND PRIVATE LAW V. CONCLUSION I. INTRODUCTION

   Charles Fried's Contract as Promise (1) is a justly celebrated work. Published in 1981, it arrived at a moment when contract scholarship, particularly in its most theoretical inflections, was turning against the idea that contract law could be presented as a coherent normative practice. Grant Gilmore had announced the death of contract a few years before, insisting that contract as a form of self-imposed liability had reached a point of intellectual and practical exhaustion. (2) The less idiosyncratic Patrick Atiyah had just finished his magnum opus, The Rise and Fall of Freedom of Contract, which put forward a far more rigorous version of the same historical argument. (3) The Critical Legal Studies movement was in its rambunctious childhood, and Duncan Kennedy was likewise taking aim at the coherence of contract law. (4) In this environment, Fried's claim that "contract[] can be traced to and is determined by a small number of basic moral principles" (5) with promissory morality at their center was an iconoclastic defense of classical liberal principles and the basic coherence of contract law. (6)

   Fried's theory has attracted more than its share of critics, including from among those who share his basic liberal orientation. (7) Far from dying, however, promissory approaches to contract law have become a prominent feature of the philosophy of contract. (8) Nevertheless, a great deal has happened in private-law theory since Fried published his book thirty years ago. The most dramatic develoPMent has been the spectacular rise of the law-and-economics movement. (9) Unlike, perhaps, when Fried published his book, no serious work on contract theory can afford to ignore economic arguments in the way that Contract as Promise does. (10) To his credit, Fried has announced his interest in updating his argument in light of the profusion of economic work on contract law. (11)

   This essay revisits Fried's Contact as Promise in light of further develoPMents in the private-law scholarship: the rise of corrective-justice and civil-recourse theories. Corrective-justice theory and civil-recourse theory have arisen primarily in debates over the law of torts, (12) although efforts have been made to apply both approaches to contract law. (13) Corrective-justice theory began as a critique of economic theories of tort law. (14) Those theories conceptualize tort as a mechanism for creating optimal incentives for agents to invest in precautions against harming others, primarily by forcing tortfeasors to internalize costs through money damages. (15) As Jules Coleman and other corrective-justice theorists point out, this theory cannot account for the bilateralism of damages. Damages in private litigation are always paid by defendants to plaintiffs, yet if damages are merely fines that internalize externalities, the payment to the plaintiff makes no sense, and in some circumstances is economically perverse. In contrast, corrective-justice theorists, harking back to Aristotle, have argued that wrongdoers have a duty to compensate their victims and that it is this duty that accounts for the bilateral structure of private-law remedies. (16)

   Civil-recourse theory is a response to corrective justice. Recourse theorists share with corrective-justice theorists a skepticism about economic theories of private law, but they believe that the duty to compensate provides an equally incomplete account. (17) Strictly speaking, the private law does not enforce any particular set of duties. (18) If someone commits a tort or breaches a contract, no state prosecutor will step in to enforce the norms of tort or contract law. Rather, nothing will happen unless a plaintiff chooses to exercise her right to bring suit against the wrongdoer. This plaintiff-empowering aspect of private law demands an explanation, according to recourse theorists, and neither economics nor corrective justice provides an adequate justification. (19) At best, those approaches see plaintiff empowerment as a system of disaggregated enforcement, much like qui tam actions. (20) The problem, however, is that doctrines such as the privity requirement in contract mean that only victims have the ability to bring an action, whereas systems of disaggregated enforcement--like whistleblower statutes--allow anyone with information about wrongdoing to sue. (21)

   The structural features that motivate these theories--the bilateralism of damages and the private standing of plaintiffs--are both elements of the law of contracts that Contract as Promise sets out to explain. This essay does not ultimately provide final answers to how a promissory theory of contract should deal with these issues. (22) Rather, my hope is to frame the problem, suggest possible avenues that promissory theories might take, and discuss some of the problems that those approaches face. I begin with the issue of bilateralism. Remedies--in particular the defense of expectation damages--occupy much of Fried's attention in Contract as Promise, and he insists that this particular remedial response flows from a commitment to promissory morality. I am skeptical of this claim and seek to show the implausibility of grounding compensatory damages in a duty to keep a promise. Rather, I argue it is more natural to see such damages as vindicating a corrective-justice duty to make promisees whole in the face of promisors' misbehavior. Such a move requires a commitment to Fried's promissory principle, as the harm suffered consists of the deprivation of the promisee's entitlement to the promisor's performance, but the duty to compensate is not ultimately a promissory duty.

   I next turn to the issue of private standing. First, I seek to demonstrate that our plaintiff-centered system of contract law is a genuine puzzle. We cannot dismiss the issue of private standing as a pragmatic and ad hoc response to problems of enforcement. As a decentralized system of enforcement, our current law is a poorly designed institution at best. Given the way in which recourse through the courts is limited to the victims of promise breakers, it seems more plausible to suppose that there is something peculiar about being a victim that entitles one to bring suit and that empowering victims to act against wrongdoers serves some distinctive normative goal. This goal, however, is not ultimately promissory. Rather, I argue that a better candidate can be found in the work of civil-recourse theorists who seek to elucidate the value of victims in a liberal society holding wrongdoers accountable for their wrongs.

   Finally, I address some of the problems associated with the arguments presented in this essay. How exactly do promissory morality, corrective justice, and civil recourse relate to one another? Are they theories of different things that can be neatly sealed off from one another, or rather must we find some way of ranking and reconciling them? My conclusion is that, at best, there is an uneasy and ill-defined relationship between these different goals. It is by no means clear that they ultimately belong together in the same theory. On the other hand, I hope to show that promissory theories of contract nevertheless must take the issues of private law raised by these theories seriously. The bilateral structure of liability and the system of private standing are major institutional features whose existence must be acknowledged and accounted for in future efforts to defend a promissory vision of contract.

   The remainder of this essay proceeds as follows. Part II discusses the issue of bilateralism. Part III turns to the system of private standing. Part IV looks at the issue of pluralism in contract theory, raising the question of how the various approaches taken in this essay related to one another. Part V concludes.

2. THE BILATERALISM OF CONTRACTUAL DAMAGES

   Picking a date for the birth of the contemporary philosophy of contract law is an arbitrary exercise, (23) but Lon Fuller and William Perdue's article The Reliance Interest in Contract Damages (24) is surely a good candidate. In that article, Fuller and Purdue pose the question of why the default remedy in contract law is to put the promisee in the place she would have been in had the promise been performed, as opposed to, for example, the position that she would have been in had the contract never been made. (25) Not surprisingly, Fried provides an extensive discussion in which he lays out his answer to this question.26 His discussion of this problem provides a starting place for a discussion of the bilateralism of contract damages and how this feature of contractual liability might figure in a promissory theory of contract.

   1. From Promise to Expectation Damages

      Fried clearly links promissory morality and the expectation measure of damages. He writes:

      If I make a promise to you, I should do as I promise; and if I fail to keep my promise, it is fair that I should be made to hand over the equivalent of the promised performance. In contract doctrine this proposition appears as the expectation measure of damages for breach. (27) Stated in these terms, Fried's claim is deceptively weak looking. He seems to be claiming only that it is fair to award expectation damages. Given that he is explicitly responding to reliance theorists such as Grant Gilmore and Patrick Atiyah, who are critical of expectation damages, such a limited and defensive reading of his claim might seem plausible. (28) Read in these terms, Fried's argument seems to be speaking to a criterion similar to that put forward recently by Seanna Shiffrin, namely that legal rules should not be inconsistent with or...