The sacred and profane contracts machine: the complex morality of contract law in action.

• Author: Braucher, Jean
• Position: 'Contract as Promise' at 30: The Future of Contract Theory

When e're you make a promise Consider well its importance And when made Engrave it upon your heart (1) I. INTRODUCTION

The central argument of this article is that the song sung by Brownies about the importance of keeping promises needs a second verse, one about forgiving others who have made promises to you. A forgiveness principle is conventional but under-articulated promissory morality, crucial to building sound relationships in business as well as other realms of social life. In his 1981 book Contract as Promise: A Theory of Contractual Obligation, Charles Fried begins with a Kantian exposition of why keeping promises is a moral thing to do. (2) Promise-keeping, in this view, is moral behavior because it vindicates the autonomy of the promisor and also respects the promisee's trust and confidence. (3) Fried sees promissory morality not as communitarian but as based on respect for individuals' ability to plan and define the good for themselves. (4) Reacting to ideas at the time that contract was being absorbed into tort, with obligations imposed by law based on duty, (5) Fried pushed back. For example, he stressed that the expectation interest is ordinarily the appropriate remedy for contract breach because that is what was promised. (6) Contract, for Fried, is not about the wrong of inducing reliance, but about the liberty to engage in private ordering. (7)

My purpose is not to evaluate how successful Fried was in his attempt to explain contract doctrine as primarily based upon autonomy, trust, and respect for persons, vindicated by enforcing promises. (8) Rather, we should applaud his lack of embarrassment about talking about law and morals in the same breath and see where that might take us today in the study of contractual relationships. in a forward-looking spirit, i want to suggest some projects to build on the legacy of Fried's focus on contractual morality. The first area of inquiry is whether there is any way to explain contract law in action--in its many varieties--in moral terms, Kantian or otherwise. (9) Fried is explicit that his concern is with common-law doctrine. He is a case-law man, not an empiricist, quantitative or qualitative, and he makes no pretense of examining the business of business. He does not delve into the mechanics of how businesses and individuals, sometimes aided by lawyers but often not, adjust their deals to preserve relationships and reputation to the greater glory of making money, keeping customers and suppliers happy, and spending as little as possible on law, which is not free. (10) Along the way, as will be discussed in Parts III and IV below, those doing deals are often guided by moral concerns, although not necessarily the same ones reflected in law on the books or Fried's theory. Contract law in action seems to involve recognition of a need for flexibility about adjustment, release, and forgiveness, operating in tension with promise-keeping, as an important part of promissory morality.

Fried lists Ian Macneil and Lawrence Friedman as among those who saw legal obligation enforced by the state as inevitably pursuing community concerns, thus presenting a challenge to his autonomy-based theory. (11) However, Fried does not engage with Macneil's ideas about relational rather than discrete contract being the paradigm in practice, largely regulated by nonlegal norms and sanctions. (12) Nor does Fried answer Friedman's criticism of a focus on common-law doctrine as opposed to the making and adjustment of deals in the context of the modern regulatory state. (13) Fried does not even cite Stewart Macaulay's Non-Contractual Relations in Business, published eighteen years before Fried's book. (14) Macaulay found that businesses often deliberately fail to plan completely, mostly do not use legal sanctions to deal with disappointment, and have norms that are different from legal norms, such as regarding canceling the order as something different from breach of contract and seeing the reliance interest as the appropriate remedy for doing so. (15) Using a moral lens to examine actual business relationships and how they are adjusted could be a fertile line of inquiry. For legal education, there is a quite crucial point that young lawyers would be led seriously astray if sent forth in the world thinking that business people are necessarily interested in detailed, unambiguous planning or in holding each other to expectations as legally defined; law students should be exposed to business norms to prepare them to be effective as lawyers. (16)

Emile Durkheim's ideas of the sacred and the profane can help situate Fried's project as well as possible future projects that might make use of his legacy of moral inquiry in the contracts field. (17) Fried's focus on the world of appellate argument and appellate decisions has a sacred quality. opposed though he is to seeing contract as communal, (18) Fried's imagined moral order based on law on the books nonetheless serves a symbolic, totemic function of advancing communal unity. (19) It is a sacred vision of the rule of law enabling personal autonomy. Meanwhile, the contracts machine of actual business affairs hums or grinds in another realm, a profane one in the sense of mundane and often self-interested. Neither realm is necessarily good or evil, but they are separate, meeting only occasionally and not necessarily with much influence on each other. The morality of contract doctrine, if one exists, cannot explain the profane machine, which might or might not be moral. Furthermore, what is missing in contract doctrine is often supplied in some other body of law that governs the same activity, such as bankruptcy law. (20) So the good news for the next generation of contracts- and business-law scholars is that much work remains to be done, and part of the job involves studying business deals in their full context of self-regulation and regulation by many bodies of law operating in concert. Can there be a moral theory or moral theories of all that?

Another important line of inquiry is to explore further the moral concerns animating the law in action school of thought and, in particular, its examination of contractual relationships as they in fact operate, rather than the image of them projected in decisional law. (21) This approach to law is, in part, about understanding social phenomena better by studying them systematically at the ground level, where legal doctrine is typically at most a faint shadow over a small corner of the stage. But there is more to the law in action perspective than neutral observation. This approach also raises critical and moral concerns, particularly about unintended consequences and even hypocrisy in the slip between law on the books and law as delivered (or not) by legal machinery as well as about how institutions other than law channel behavior. Exposure to these strands of thought should also be part of a legal education. (22) For contract scholars, two promising kinds of projects are examination both of the morality of the living law of contractual relations and of the values underlying the law in action school of thought itself, projects this article seeks to encourage.

2. THE PROFANE CONTRACTS MACHINE

   A significant contribution of Contract as Promise at the time of its publication was to introduce a note of balance to the embarrassment about morality exhibited by law and economics proponents, led by Richard Posner. (23) Squeamishness about morals in relation to law can be traced, unfairly, to Oliver Wendell Holmes Jr., whose thinking about law, morality, and contracts has been misunderstood. (24) There is no necessary inconsistency between Fried and Holmes as far as considering the morality behind legal rules, (25) and, indeed, Fried is decidedly Holmesian in his focus on law on the books, as will be discussed. Future scholars may enrich their perspective by considering the morality of law, but not just on the books. Fried went half way on this journey.

   When we talk about promissory morality, we of course immediately think of Holmes's bad man. (26) Holmes advocated separating law and morality, but not for long. Rather, he urged temporary separation only for the purpose of learning and understanding the law and not for purposes of thinking about how to behave:

   I take it for granted that no hearer of mine will misinterpret what I have to say as the language of cynicism. The law is the witness and external deposit of our moral life. Its history is the history of the moral development of the race. The practice of it, in spite of popular jests, tends to make good citizens and good men. When I emphasize the difference between law and morals I do so with reference to a single end, that of learning and understanding the law. For that purpose you must definitely master its specific marks, and it is for that that I ask you for the moment to imagine yourselves indifferent to other and greater things. (27) Holmes only wanted to put aside morality "for the moment" in order to understand law as prediction about what the courts will do. The reason for putting aside morality has to do with his views about what law is. The essence of Holmes's thinking about the bad man was very tightly entwined with his ideas about the nature of law. Of the bad man, he said:

   You can see very plainly that a bad man has as much reason as a good one for wishing to avoid an encounter with the public force, and therefore you can see the practical importance of the distinction between morality and law. A man who cares nothing for an ethical rule which is believed and practised by his neighbors is likely nevertheless to care a good deal to avoid being made to pay money, and will want to keep out of jail if he can. (28) Of the law, he believed that it is a prediction about what courts will do: "When we study law we are not studying a mystery but a well known profession. We are studying what we shall want in order to appear before judges...