The State and Freedom of Contract.

• Author: ELY, JAMES W. JR.
• Position: Review

* The State and Freedom of Contract

Edited by Harry N. Scheiber

Stanford: Stanford University Press, 1998. Pp. vi, 378. $55.00 cloth.

Because contracts are at the heart of a free-market economy, it is not surprising that contractual freedom has long been a vital concern for jurists and scholars. With some important exceptions, American law has traditionally left private parties free to advance their own interests through contracts. Courts enforced agreements but did not supervise the substantive content of bargains. As Joseph Story pointed out (Commentaries on Equity Jurisprudence, 14th ed. [Boston: Little, Brown, 1918], vol. 1,337): "Every person who is not from his peculiar condition under disability is entitled to dispose of his property as he chooses; and whether his bargains are wise and discreet or profitable or unprofitable or otherwise are considerations not for courts of justice but for the party himself to deliberate upon." This understanding of contract law was supportive of individual decision-making, and it had sweeping implications for the evolution of modern society from a social order grounded on a fixed and closed hierarchy. In 1861 Henry Sumner Maine famously declared that "the movement of the progressive societies has hitherto been a movement from Status to Contract." (Ancient Law [1861; reprint, London: J. M. Dent, 1954], p. 100).

Deep regard for the autonomy of private contracting informed the process of fashioning constitutional limitations to governmental authority. The contract clause of the Constitution was designed to halt state legislative interference with existing contractual arrangements. Under the leadership of Chief Justice John Marshall, the Supreme Court employed the contract clause vigorously to safeguard both public and private contracts from state abridgment, and thereby clearly linked contract and constitutional law. Fueled in part by the ideology of the antislavery movement, courts and commentators in the nineteenth century gradually insisted that freedom of contract enjoyed constitutional protection. Revealingly, the Civil Rights Act of 1866 specifically listed the right "to make and enforce contracts" among the safeguarded liberties. Reflecting the vital role of freedom of contract in the polity, the Supreme Court concluded that the right to enter contracts was among those liberties protected by the due process clauses of the Fifth and Fourteenth Amendments. Although legislators might seek to justify...