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Thursday, April 07, 2005
Contracts Theory
Over at The Conglomerate, there is an interesting discussion about the theory of contract law. Nate Oman has written two fascinating articles on the subject here and here. At the core of his most recent article is the claim that autonomy theories of contract should not be precluded merely because corporations must be seen as central to the practice of contract law. I whole-heartedly agree with this thesis and hope it gets the attention it deserves.
My own foray into contracts theory emphasizes that a general theory of contract will need to address three different sorts of contracts, all of which have a rightful place in contract law: contracts between individuals (Type I), between firms (Type III), and contracts between individuals and firms (Type II). No doubt, autonomy theories may have a proper place in all three Types. But surely the general theory of contract will need to be able to explain and provide guidance on the differences between the three Types. As the literature stands now, most theorists try to cabin one Type as the core of contract and proceed from there in theory-construction. In this forthcoming piece, (Download types_of_contracts_and_their_relevance.doc), I argue that this strategy must be abandoned. I'll be fixing the draft over the summer and welcome comments.
Posted by Ethan Leib on April 7, 2005 at 03:05 PM | Permalink
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» Corporations and Autonomy from Tutissima Cassis
My latestest offering on contract law is up on SSRN and is seeking a home amongst the law reviews even as we speak. The piece is entitled "Corporations and Autonomy Theories of Contract: A Critique of the New Lex Mercatoria."... [Read More]
Tracked on Apr 8, 2005 10:18:33 AM
Comments
Sure they're nice articles, Ethan, but do you really think that they're really "fascinating"? I'll conceded "not terminally boring," sure. "Marginally more interesting than the average law review article" -- maybe. But "fascinating"? That's a pretty high hurdle for a contract piece. Now if the pieces had been on the Takings Clause, it becomes a different matter altogether.
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Nice digs, Dan. And congratulations on the job, of course. I still think you would have made a nice addition to Tutissima, but the desire for one's own proprietary blog is certainly understandable. (Now I'm wondering if you're going to try to steal Chad.)
Posted by: Kaimi | Apr 7, 2005 10:21:31 PM
Part of this gets into the question of what is contract law. Interestingly, Fried and Stephen Smith "save" their theories by contracting what counts as contract law, e.g. damages rules aren't part of contract law. Schwartz & Scott make a similar but expansive move, eg many contracts are governed by propertly law, etc.
FWIW, Brian Bix has a paper that he is working on that addresses this issue.
As for the holy grail, I frequently have my moments of doubt. I am working on a piece on duress right now, and I began my research by going through a bunch of cases, treatises, and basic practice materials, eg CJS, Am.Jur, etc. There is such a bewildering amount of factual nuance in the cases that it makes me despair of the possibility of creating meaningful legal theories. Maybe it really is ad hoc-ery all the way down.
Posted by: Nate Oman | Apr 7, 2005 3:28:42 PM
I am only first trying to get theorists to focus on the problem Dan-Cohen highlighted back in 1986: that different Types of contracts may deserve different treatment and different theoretical underpinnings. But maybe you are right that there is a holy grail that can unify contract theory. Much work to be done indeed!
Does the doctrine recognize the differences in contracts? That's an empirical question that I will only first be able to undertake when I start teaching contracts in the fall. But Schwartz & Scott surely suggest that there are different regimes for Type I contracts, which often fall to property law to handle, and Type II contracts, which often fall to consumer protection law. We'll see where this inquiry takes us.
Posted by: Ethan Leib | Apr 7, 2005 3:22:20 PM
Ethan: Thanks for the kind words. My contracts piece is a bit conflicted because while I don't think that you can use corporations to dismiss autonomy theories, I don't ultimately think that autonomy theories are adequate as theories of contract law. It makes me a bit mealy mouthed, but I hope I make up for it with fun factoids about medieval Italian corporate law.
I think that the typology you propose (endorse) is tremendously important. One theoretical problem is that the law of contracts itself doesn't make a distinction between these sorts of contracts, at least at the level of doctrine. (Realistically, I think that judges notice who is sueing who in the lawsuits before them.) The theory tends to be homogeneous because the doctrine is homogeneous. Once the heterogeneity is recognized, I think that the theoretical respons has been as you portray it. My question, however, is that if theory becomes sensitive to the heterogeneity of contracts what happens? Do we end up having three more or less independent contract theories? Will every theory yield results at odds with current doctrine, namely policy suggestions that different sorts of contracts be treated differently?
The good news, is that the standard categories of efficiency, autonomy, and reliance that have dominated the theoretical debate for the last several decades are not going to get the job done. Lots of interesting stuff to be done. The problem is that working these sorts of theories out is damn difficult!
Posted by: Nate Oman | Apr 7, 2005 3:14:35 PM
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