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Friday, November 26, 2010

"Religious" Contracts

As part of my recent thinking about the "new multiculturalism," I've been giving some thought to a category of contracts I'd call "religious" contracts (here's an abstract for the project).  What I mean by this category is contracts where parties enter some sort of financial arrangement, which also entails or incorporates some religious term or practice into the agreement. 

I think most people, when considering this category, typically raise examples related to divorce proceedings (e.g. the Jewish practice of executing a divorce through a get) and some of the challenges courts have faced when addressing agreements to execute a religious divorce.  But I've been wondering more about commercial agreements, which are also interwoven with religious practices.  Some prominent examples include the enforcement of mahr agreements (entered into within the context of Islamic marriages) and heter iska agreements (entered into to avoid Jewish law's anti-usury laws).  I'm curious if there are any other prominent examples of religious contracts that come to mind? 

I've been collecting examples to see how courts interpret such agreements as instances of the challenges courts faced when trying to regulate and enforce religious commercial conduct.  My own sense, which I sketch after the jump, is that courts have frequently adopted one of two adjudicatory tactics when faced with such conduct.   

In some instances, courts – fearful of the Establishment Clause – reflexively refuse to adjudicate cases implicating the enforceability of religious commercial conduct.  In so doing, courts often exhibit a hyper-sensitivity to entanglement concerns, without truly considering whether or not the religious overtones of the case actually require dismissal on Establishment Clause grounds.  Such a risk-averse approach to constitutionality can leave aggrieved parties without a venue to seek redress of legal wrongs.

Alternatively, some courts embrace adjudication of disputes implicating religious commercial conduct by pushing the religious undercurrents of the case to the margins and focusing instead on the familiar secular features of the case.  By so doing, courts can enforce religious agreements and resolve religious disputes under the umbrella of the neutral-principles doctrine, finding increased constitutional comfort in adjudicating cases impacting religious conduct when they can take religion out of the equation.

As courts face more and more cases of religious commercial conduct, my own view is that they'll have to start developing more of a middle-of-the-road approach.  Without appreciating the religious beliefs and practices intertwined with religious commercial conduct, courts will be hard pressed to determine whether or not entanglement concerns truly preclude a court from adjudicating a particular claim.  Moreover, to enforce an agreement by focusing only on the secular features of a case likely can distort the very terms of the agreement.  Instead, I think courts would be better served in educating themselves as to the implicated religious issues - allowing the parties to present evidence to explain the religious aspects of the agreement - in order to accurately determine what a particular contract entails and where commercial conduct ends and religious conduct begins. 

Posted by Michael Helfand on November 26, 2010 at 12:47 PM in Constitutional thoughts, Religion | Permalink


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Another Islamic instrument, which I am working on a piece right now (so maybe we can compare notes at some point) is the Waqf, or religious endowment trust. Waqf's have all of the typical elements of trusts, with the religious restrictions of limiting the ability to move the capital once dedicated for purposes other than the religious based endowment.

Posted by: Marc Roark | Dec 3, 2010 2:27:48 PM

Islamic banking is one area where this concern is central. Traditional money transfer services (regulated after 9-11) come to mind. Traditional master-servant traditions have often been viewed with disfavor in the U.S. as a form of indentured servitude, slavery or domestic abuse.

Food purity from a variety of religious perspective (Kosher, Hallel, Hindu food purity standards) is another.

Funeral and cemetary services produce a steady stream of low grade litigation with a religious component. How long will it be before some U.S. cemetaries follow the Japanese practice of keeping remains only as long a descendants pay rent on the plot?

Jubilee forgiveness provisions come to mind.
Mosque financing (and indeed all church lease and mortgages reliant on assumptions about future contributions to the entity) is quite interesting and has its own elaborate tradition somewhat akin to the legacy gifts made by robber barons to endow professorships, build museums and libraries, and the like.

A non-traditional, but not precisely religious form of commercial arrangement is a gifting pool, where everyone makes a big gift to one of the pool members once a month with a different person getting all of the gifts and using that to start of business or make another major expenditure. Tongs and parallel Chinese mutual benefit societies were once commercially important.

Another hot area is the extent to which an assertion of a common religious bond or religiously affirmed oath or "super promise" in a commercial transaction converts a mere contract duty into a fiduciary duty. In practice, this situation comes up a great deal in a variety of faiths. It also comes up in evaluating where an affirmation of a debt in bankruptcy is conscionable.

Another issue I have seen come up which is cultural rather than truly religious, is the use of notary services where common law countries would not use them, by people from civil law countries. In the same vein, imagine that someone comes from a society (e.g. Mexico) where it is not legally permissible to disinherit a disrespectful child and that child attempts to use that inheritance as collateral for a loan and someone relies in good faith on that not understanding that the collateral is not as sound in the U.S., or assuming that U.S. law notwithstanding, that religious obligation will effectively bind that person. What if the would be heir deliberately abuses that faith to get loans with full intent to dishonor them, pledging the unpledgable expectency many times over?

Less common in the U.S., but sometimes relevant is "traditional" and customary resolution of disputes by "tribal leaders" (a concept that sounds incredibly foreign until one recalls that just this kind of customary law was incorporated by reference on a formal basis into English common law jurisprudence for many centuries).

Some of the other issues include holiday observance and the extent to which customers of an openly religious vendor who markets on that basis has any legal interest in the failure of that vendor to act accordingly. One can imagine this particularly in the case of vendors who advertise in religious themed merchant directories, and can also imagine vendors protesting being dropped by the directory despite having paid fees by the operator of it. Advertising contacts with celebrities that touch on religious aspects that have a commercial impact of the celebrity's life come to mind.

Suppose you are Anne Rice's publisher and she has signed a contract to right a series of books disavowing her vampire book legacy and taking on Biblical themes and then she does, as she did, renounce her religious conversion and presumably determined that she is not fit to finish the contract credibly.

Consider students who pay tuition to a private religious school which then fails to live up to the standards that the parents thought were a core part of the deal, for example, by adopting a non-creationist curriculum or keeping a gay teacher in a secular subject like math who wasn't subject to religious screening in the interview.

The Islamic tradition of "temporary marriage" has all manner of potential for mischief. Is it commercial sex? Is it a marriage that is subject to a true divorce? Is it something else?

Suppose a man sells necessities to a non-American in a plural marriage in a place where it is legal to a secondary spouse under a contract that says that U.S. law applies? (Perhaps in Afghanistan or Iraq or Sudan). The secondary spouse has no real assets, but the husband is a prominent businessman with considerable wealth. Is the husband responsible for the purchase of necessities by the secondary wife?

Is a contract that requires a religious offering as part of the consideration enforceable? How is it taxed? Does it matter if the person making the actual payment cares about the religious component even if the person who made it the third party beneficiary of the agreement does?

When can a business organized as a corporation sole have religious obligations not to engage in self-dealing enforced?

Posted by: ohwilleke | Nov 29, 2010 10:51:57 PM

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