SHEERFORCEOFWILLAWillTheoryofContract

NicholasWilliamSage

Athesissubmittedinconformitywiththerequirementsforthedegreeof

DoctorofJuridicalScience

FacultyofLawUniversityofToronto

©CopyrightN.W.Sage2014

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SHEERFORCEOFWILL:AWillTheoryofContract

NicholasWilliamSageDoctorofJuridicalScience

UniversityofTorontoFacultyofLaw2014

Abstract

Intheintellectualhistoryofcontractlaw,oneenduringideaisthe“will

theory”:theideathatthelawofcontractreflectsthewillorchoiceofthe

contractingparties.

Inthecommonlaw(asintheciviliantradition),thisidearemainsboth

influentialandcontroversial.Almostalllawyers,judges,andscholars

acceptthatthewillofthepartiesmustplaysomeroleinexplaining

contractlaw.However,theydebatehowencompassing,andhow

acceptable,thatroleis:theextenttowhichthewilltheory“fits”thelegal

doctrinethatitpurportstoexplain,andwhetheritprovidesa

satisfactoryjustificationfortheinstitutionofcontract.

Inthesedebatestheparticipantsoftentalkpasteachother,becausein

thecurrentscholarshipthereisnodevelopedconceptionofwhatawill

theoryshouldlooklike.Instead,thewilltheoryhasbeendefinedinlarge

partbyimplication,throughtheattacksofcriticswhoassumeitis

susceptibletotheirobjections.

Thisdissertationseekstoshowthatawilltheory,formulatedwith

appropriateprecision,canexplainandjustifythecoreofthecommon

lawofcontract.Wecanunderstandcontractualobligationasarising

throughthesheerforceofthecontractingparties’will.

iii

AcknowledgmentsNewYorkCity,London,Toronto,andeveryoneI’veknowninthose

placesoverthelastthreeyears.

Theinternationalcommunityofcontractandprivatelawscholars.In

particularmysupervisorsandexaminers,pastandpresent:Rick

Bigwood,LiamMurphy,andStephenSmith.

TheTorontoLawFaculty,includingmydoctoralcommitteemembers

andinternalexaminers,ErnestWeinrib,CatherineValcke,Stephen

Waddams,andAlanBrudner,andaboveallmysupervisor,PeterBenson.

Myfamily,especiallyDavid,Shelley,andJessica.

Lucy.

You’vesupportedmeandtaughtmesomuch.Thankyou.

iv

Contents1 Introduction 1

2 Method 21

3 MutualWill 57

4 Transfer? 107

5 Obligation 129

6 Performance 171

7 Consideration 215

1

1 Introduction

“Underthewilltheory,contractsareseenasexpressionsofthehumanwilland,forthatreason,asbeinginherentlyworthyofrespect.Inthatpremisearefoundboththejustificationofcontractlawandthebasisofmanyofitsincidents.”1

“Everythinghasbeenthoughtofbefore,thetaskistothinkofitagain.”2

Thethesisofthisworkisthatawilltheoryexplainsthecoreofthe

commonlawofcontract.

Awilltheoryofcontracthasasitscentralexplanatoryideathemutual

willofthecontractingparties.Amorefamiliarwordfor“will,”whichshall

herebeconsideredsynonymous,ischoice.

Everybodyknowsthatthewillorchoiceofthoseinvolvedin

contractingmustplaysomeroleinanaccountofthelawofcontract.

However,thescopeofthisroleisdebatable.Theexplanatorybreadthof

theideaofpartychoicemaybequestioned:howmuchofcontract

doctrinecanitexplain?Musttheideabesupplementedorlimitedby

otherconceptsinordertoyieldaconvincingaccountofallthelawthatis

properlycalledcontractual?Likewiseonemayquestiontheidea’s

explanatorydepth.Isrespectforthecontractingparties’choicea

foundationalprincipleofcontractlaw,perhapsevensupplyingits

ultimatejustification?Oriscontractlaw’sapparentdeferencetoparty

choicemerelyasuperficialincidentofother,morefundamental

normativeconcerns?

Oneremarkablefeatureofcontemporarycontracttheoryishowlittle

explanatoryscope,intermsofbothbreadthanddepth,isultimately

accordedtheideaofthemutualchoiceofthecontractingparties.

1BrianCoote,TheEssenceofContract(PartI),1J.CONT.L.91,99(1988).2Adaptedfrom10GOETHE,THECOLLECTEDWORKS294(JaneK.Browned.,1995).

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Intermsofbreadth,theparties’mutualchoice—oratleastsomething

akintoit,suchas“intention”or“consent”—isoftendrawnuponto

explaincertaincontractdoctrines.Thisisespeciallysoofofferand

acceptance,intentiontocreatelegalrelations(inthosejurisdictionsthat

requirethis),andthe“vitiatingdoctrines”—duress,undueinfluence,

unconscionability,andsoon.However,fewsupposethattheideaofa

mutualchoicethatthepartiesmakeincontractingcanexplainallof

contractlaw—including,forexample,theimplicationofterms,the

requirementofconsideration,andcontractualremedies.Theorists

thereforetendtoturntootherconceptsorprinciplestoaccountfor

thosedoctrines.

Hereitisnecessarytodistinguishtheideaofthecontractingparties’

mutualchoiceunderpinningthewilltheoryfromtheviewthatcontract

lawisasetof“defaultrules”thattrackthewaysinwhichthemajorityof

contractorswouldprefertoregulatetheirdealings.(Orthewaysin

whichsomeprivilegedoridealizedsubsetofcontractorswouldpreferto

regulatetheirdealings.)Manytheoristssupposethatvirtuallyallofthe

doctrinesofcontractlawaredefaultrules.Insodoing,however,they

denyanyexplanatorybreadthtotheideaofmutualchoicethat

underpinsthewilltheory.Onthewilltheory,contractlawdoesnot

imposerules,evendefeasible“default”rules,baseduponpredictions

aboutwhatcontractorsingeneralmightchoose.Rather,therulesof

contractareunderstoodtoreflecttheactualmutualchoiceofthe

particularpartieswhoarecontracting.

Intermsofdepth,theideaofthecontractingparties’mutualchoiceis

accordedevenlessexplanatoryscopeincontemporarycontracttheory.

Indeed,noneoftoday’sleadingcontracttheoriestreatsthemutualchoice

ofthepartiesas,initself,normativelysignificant.Noneofthemtreatsit

assomething“inherentlyworthyofrespect.”

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Formanyoftoday’sleadingtheoreticalaccounts,achoicemadein

contractingissignificantonlyinsofarasthishappenstoaffectsomeother

stateofaffairsthatisitselfimportant.Forexample,itisoftenthought

thatachoiceincontractingissignificantbecauseenforcingsuchchoices

leadstoastateofeconomicefficiency.Orbecauseachoiceincontracting

mayleadtosomeonerelyingharmfullyonthecontractbeingperformed.

Ineachoftheseaccounts,thechoiceincontractingissignificant,notin

itself,butbecauseofthewayitimplicatessomeotherstateofaffairs—

efficiencyorharmfulreliance—thatisitselfofnormativeconcern.

Now,theotherstateofaffairswithwhicheachoftheseaccountsis

concernedmayitselfbedefinedbyinvokingsomenotionakintoparty

choice.Forexample,efficiencyisoftendefinedasthemaximizationof

preferencesatisfaction,andhavingone’spreferencessatisfiedissimilar

tomakingachoice.Anactofrelianceonacontractpresumablyinvolvesa

choicesotoact;furthermoretheharmsufferedbecauseofthereliance

mayconsistoftherelier’sfrustratedorforegonechoices.Inthisway,

eachoftheseaccountsseemstoturnbacktowardsthewilltheory,re‐

incorporatinganotionredolentofpartychoice.

Orconsideranotheroftoday’sleadingcontracttheories:theviewthat

respectingpartychoiceincontractingpromotesautonomyorfreedom.

Roughly,autonomyisthestateofaffairsinwhichindividualshavethe

maximumrangeofpotentialchoicesopentothem.Thisdesirablestate

ofaffairsseemstohavesuchacloseaffinitywiththewilltheory—the

ideathatcontractlawreflectsthecontractingparties’mutualchoice—

thatthelattermightbethoughtmerelyaninstantiationoftheformer.

Yetnomatterhowcloselytheyturntowardsit,noneofthese

accounts—efficiency,reliance,orautonomy—canbeequatedwithawill

theoryofcontract:atheorybasedonthemutualchoiceoftheparties

contracting.Thisforatleastthreereasons.First,althoughwehavenot

yetdefinedtheterm,itisclearthateachoftheaccountsisconcernednot

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withthecontractingparties’actualchoiceitself,butratherwith

somethingslightlydifferent:thesatisfactionoftheirpreferences,their

chosenactsofharmfulreliance,ortherangeofpotentialchoices

availabletothem.

Second,awilltheoryofcontractisconcernedonlywiththechoices

thatpartiesmakeincontracting,whereaseachoftheotheraccountsis,

byitsownlights,notsoconstrained.Afullefficiencyanalysiswould

evaluatetheeffectsthatcontractinghasuponaperson’stotalsetof

preferences(orexpressedpreferences),notjustuponthosepreferences

expressedincontractformation.Arelevantactofharmfulrelianceona

contractneednotitselfariseoutofachoicethatestablishes(or

breaches)acontract.Andanevaluationofsomeone’sautonomywould

naturallyconsidertheirtotalrangeofavailablepotentialchoices,

whetherthosearecontractualornot.

Third,thewilltheoryconcernsonlythemutualchoicemadebythe

two(ormore)partieswhocontract.Incontrast,anefficiency,reliance,or

autonomyanalysisisnotlimitedtostatesofaffairsthatobtainmutually

betweenthecontractingparties.Thoseaccountsare,bytheirownlights,

alsointerestedintheeffectsthatacontracthasupononlyoneofthe

parties(forexample,ifjustoneofthemisinducedtorelyharmfully);in

divergenteffectsthatacontracthasuponeachofthetwoormoreparties

(perhapsoneparty’sautonomyisincreasedandtheother’sreduced);

andinthecontract’seffectsuponnon‐parties(forexample,thosenon‐

partieswhosepreferencesthecontractsatisfiesorthwarts).

Thislastpoint,aboutmutuality,leadsustoanotheroftoday’sleading

contracttheories,whichalsolimitstheexplanatorydepthoftheideaof

mutualchoice.Thisisthetheorythatachoicetocontractamountstoa

promise,triggeringamoralprinciplethatpromisesoughttobekept.A

promiseisasortofvoluntaryobligation—itissourcedinthepromisor’s

choice.HenceCharlesFrieddescribedhisseminalContractasPromiseas

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a“willtheory”ofcontract.3However,apromisetheorysuchasFried’sis

notawilltheorybyourdefinition.Becausewhileapromisetheorymay

invokeanotionofpartychoice,itisnotultimatelyconcernedwiththe

mutualchoiceofbothcontractingparties.Instead,inanalogizingor

equatingcontractandpromise,atheorysuchasFried’sconceivesof

contractasa“self‐imposed”obligationundertakenbyjustoneperson,

thepromisor.Thus,thepromisetheory,liketheefficiency,autonomy,

andreliancetheories,doesnottreatthemutualchoiceofthecontracting

partiesasitselfnormativelysignificant.Forthepromisetheory,theevent

ofamutualchoiceissignificantonlybecauseitcoincideswiththe

individualundertakingofapromissoryobligation.

Finally,theleadingcontemporaryapproachperhapsclosesttothewill

theoryconceivesofcontractastransfer—asakintoatransferof

property,inwhichtwopartiesagreetoconveysomethingfromoneof

themtotheother.Atransferdoesrequirethechoiceorwillofeachofthe

twopartiestothetransaction.Butatransferalsohasotherfeatures:

theremustbesomethingorobject(physicalorconceptual),initiallyheld

byoneparty,whichisthenconveyed,sothattheotherpartyhasit.Thus,

thetransfertheory,liketheotherleadingtheoriesofcontract,doesnot

treatthecontractingparties’mutualchoiceasnormativelysignificanton

itsown.Thetransfertheoryalsolookstootherfeaturesofa

transaction—theshiftingofsomethingfromonepartytotheother—in

ordertoexplaincontract.

Alloftoday’sleadingcontracttheoriesthereforeconstrainthe

explanatorydepth—inadditiontoanylimitationstheyimposeonthe

breadth—oftheideaofthecontractingparties’mutualchoice.

Furthermore,althoughtheyhaveherebeendescribedseparately,

elementsoftheefficiency,reliance,autonomy,promise,andtransfer

accountsarecombinedinmanycontracttheories,therebyfurther

attenuatinganysignificanceattributedtomutualchoice.Forexample,3CHARLESFRIED,CONTRACTASPROMISE2,6,19(1981).

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somepromisetheoristssuchasFriedattempttojustifythelaw’s

enforcementofcertainpromisesbycontendingthatitfostersautonomy,

orpreventsharmfulreliance.RandyBarnett’stransfertheory

characterizesacontractasaconsenttotransferrights,whichthelaw

enforcesinordertoallowindividualstopursuetheirinterestsefficiently,

andtorelyuponeachother.4

Incontrast,thesignatureofawilltheoryistheencompassing

explanatoryscope,intermsofbothbreadthanddepth,thatitaccordsthe

ideaofthemutualchoiceofthepartiescontracting.5Indeed,atruewill

theorywouldtreatthisastheonlyideathatisneededtoaccountfor

contractualobligationinparticular.(Oratleast,theonlyessentialidea—

giventhatsundryadministrativeconcernsalsoinevitablyshapeanylegal

doctrine.)Onthisapproach,theideaofmutualchoiceoccupiestheentire

field—thefullbreadthanddepth—ofthetheoryofcontract.

Thisworkaimstoadvancesuchatheory.Herethemutualchoiceof

thecontractingpartiesispresentedasnotjustacentral,butthesole,

ideaexplainingcontractualobligation.Thesourceofcontractual

obligationisthesheerforceoftheparties’mutualwill.

However,thescopeoftheworkmust,fortheusualmundanereasons,

beconstrainedinbothdepthandbreadth.Intermsofdepth,thescopeof

theworkisconstrainedinthatthereshallbenoattempttosupplyan

ultimatejustificationforthevalueofchoice.Theworkseeksonlyto

formulatetheideaofmutualchoicethat,itiscontended,uniquely

explainscontractualobligation.Theexpositionofthatidearequiresusto

makeanimportantpresupposition:that,atleastinthecontextof

contractlaw,achoiceisitselfsomethingtobevalued—something4E.g.RANDYE.BARNETT,CONTRACTSxix‐xi,128‐47(2010).5See,e.g.,A.W.B.Simpson,InnovationinNineteenthCenturyContractLaw,91L.Q.REV.247,265(1975)(theideaofthewill“asadoctrinalgrundnorm,fromwhichallotherrulesarederived”).SeealsoMORTONJ.HORWITZ,THETRANSFORMATIONOFAMERICANLAW1780‐1860160‐61(1977);JAMESGORDLEY,THEPHILOSOPHICALORIGINSOFMODERNCONTRACTDOCTRINE7‐8(1993);DAVIDIBBETSON,AHISTORICALINTRODUCTIONTOTHELAWOFOBLIGATIONS232(1999).

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“inherentlyworthyofrespect.”Moreprecisely,itmustbepresupposed

thataperson’schoiceisinherentlyworthyofrespectbyotherchoosing

persons.Thatpresupposition,slightlyreformulated,constituteswhatthis

workcallsthe“fundamentalnormativeprinciple”underlyingcontract

law:nopersonmay,throughtheirchoice,usurpanother’schoices.This

workpresumesthatprincipleanddoesnotattempttojustifyit.

Itisworthnotingattheoutsetthattheoperationofthisfundamental

principleofrespectforchoiceisalmostcertainlynotlimitedtocontract

law.Mostobviously,itmaybeimplicatedwhereonepersoninterferes

withanother’sbodilyintegrityorobjectsofproperty.Theprinciple

wouldthereforeseemtobeatworkinotherareasofprivatelaw—torts,

property,andunjustenrichment—inadditiontowhateverroleitplaysin

contract.Theoperationoftheprincipleinthosenoncontractualcontexts

shallsometimesbeassumed,inthiswork,forthepurposesofexposition.

However,itisnotcrucialtotheargument.Again,theargumenthereis

onlythatcontractinparticularcanbeunderstood,bypresupposingthe

fundamentalnormativeprinciple,andthenelucidatingtheideaofmutual

choicethatuniquelyexplainscontractualobligation.

Itisfurtherassumedherethatviolationsofthe“fundamental

normativeprinciple”canbepreventedornegated;andalsothatsuch

preventionornegationshouldifnecessarybecoercedbythestate.Itis

beyondthescopeofthisworktodevelopafulltheoryofhowalegal

remedy,afterthefactofawrongfulviolation,cannegateawrongdone.

Heretheperhapsnaïveviewthatalegalremedycansomehowremedya

wrongislargelyassumed.Likewiseatheoryofcoercionisbeyondthe

scopeoftheproject.Itshallheresimplybetakenforgrantedthatthereis

“noincongruity,butaspecialcongruity”whenthestateoverridesone

person’schoiceinordertopreventornegatetheirattempttooverride

another’s.6

6H.L.A.Hart,AreThereAnyNaturalRights?,64PHIL.REV.175,178(1965).

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Thiswork’spresuppositionofafundamentalnormativeprincipleof

respectforchoicedoesnotimplythataperson’schoiceistheonlything

worthyofrespectorvalue.(Anotherobviouscandidate,forexample,is

personalwelfare.)Oneanxietyaboutalegaltheorythattreatsanideaof

choiceasexplanatorilysufficientisthatthisexcludestheoperationof

otherimportantvalues.Whilethatanxietycannotbedispelledhere,a

fewcommentsmighthelptosubdueitforthedurationofthework.

Firstofall,itisworthremembering,thisisatheoryofcontractlaw,

andnotalllawiscontractlaw.Otherbranchesofthelawmayaddress

valuesignoredbycontract,accordinglysupplementing,limiting,or

modifyingtheoperationofcontractualvalues.(Oneobviouscandidate

hereisthelawofthewelfarestate.)Furthermore,lawisnoteverything.

Inliberalsocietiesthelawaddressesonlysomepartof“allthathuman

heartsendure.”Otherdomainsofnormativity,suchaspersonalmorality

andcivilsociety,alsohaverolestoplay.Finally,atleasttosomeextent,

contractlawiswhatitis,irrespectiveofwhatanygiventheoristsays

aboutit.If,then,ourcontractlawisjusttheexpressionofasingularidea

ofchoice—suchthatwemay,uponreflection,considerittobe

unacceptablyideologicallyimpoverished—itissurelybettertoreveal

thisthantoplayPollyanna.

Thepresentworkisalsolimitedinbreadth.Hencethethesisthata

willtheoryexplainsthecoreofthecommonlawofcontract.The“core”

comprisesthemaindoctrinesofcontractformation—offerand

acceptance,consideration,intentiontocreatelegalrelations,privity,

strictliability,andtheinterpretationandimplicationofterms—andof

contractualremedies.Itexcludesmuchelse,mostnotablythe“vitiating

doctrines.”Thisexclusionisregrettable,butdefensibleifonly

provisionally.Thedoctrinesofcontractformationandcontractual

remediesaretakentoform“thecore”ofcontractlawbecausethey

enableustoanswerthebasicquestionsaboutcontractthatare

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promptedbythemethodologicalapproachthisworktakes:theinternal

approachtocontractlaw.

Method

Thenatureoftheinternalapproach,andwhyonemightwanttoadopt

it—whyindeedonemust,iftheaimistounderstandcontractlaw—are

thefocusofChapterTwo.Asthatchapterexplains,theinternal

approachprecludesanyattempttoexplaincontractlawbyreferenceto

its“external”effects:theimpactsthatitsapplicationmayhaveupon

somestateofaffairswhoseimportanceisindependentofcontractlaw

itself.Thatis,astateofaffairswemightcareabouteveniftherewereno

contractlaw—suchasastateofefficiency,harmfulreliance,or

autonomy.Explanationsthatfocusoncontract’seffectsonotherstatesof

affairsareunsatisfactorysimplybecausetheycannotexplainthe

doctrinalconceptscontainedinthelawofcontractitself.

Theinternalapproachalsoprecludesanyattempttoexplaincontract

byseekingcausesorreasonsforcontractlawthatareexternaltoit:

causesorreasonsthatcanbeunderstoodindependentlyofcontractlaw

itself,suchasasubconsciousneurologicalorpsychologicalprocess.Any

explanationofthissort“explainsaway”contractlawasadeception—as

eitheradelusion,orafraud.Thisisimplausible.

Whatisthealternativetoexplainingcontractbyreferencetoits

externaleffectsorcauses?Howcancontractbeunderstood“internally”?

Ontheinternalapproach,contractlawisexplainedonlybyofferingmore

abstractandmoreexplicitformulationsoftheconceptsthatthelaw

alreadycontains.

Thisapproach,ChapterTwosuggests,forestallsmostofthestandard

questionsthatcontemporarycontracttheoristsask.Itpreventsone

asking,forexample,whatstatesofaffairscontractshould“foster”or

“promote”or“protect”or“prevent,”orwhichpromises,transfersor

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otherarrangementscontractlawshould“enforce”or“facilitate.”Those

questionspresumeanexternalstandpoint.

Insteadtheinternalapproachpromptsustobegintheorizingabout

contractwithtwobasicquestions.First,howdoesacontractarise?That

is,howdoesonecomeintobeing?Second,whatisacontractual

obligation?Howshouldwecharacterizetheextantcontractualright,

onceithasarisen?

Inthiswaytheinternalapproachdirectsustoconsidertheformation

andtheformofacontract.

Formation

Thefirstofthesetwobasicquestions,abouttheformationofacontract,

isfamiliartobothlawandtheory.Itisexplicitlyaddressedbythe

doctrineofcontractformation,andbyanytheoristwhoseekstoexplain

thatdoctrine.Inthiscontexttheoristsoftenacceptthatpartychoicemust

playsomeexplanatoryrole.Yetevenheretheidea’sexplanatorybreadth

anddeptharerestricted.Furthermore,theprecisenatureofthe“choice”

(orintention,consent,will,etc.)involvedisnotoftenspecified.

ChapterThreesecuresamoreexpansiveandmoreprecise

explanatoryroleforthecontractingparties’mutualchoiceincontract

formation.Ittherebyaccountsforthedoctrineofofferandacceptance,as

wellastheinterpretationandtheimplicationofterms,evenontheso‐

called“objective”approach—addressingthecommonobjectionthatthe

willtheorycallsforanunacceptable“subjective”approachtoformation.

ChapterThreedescribeswhata“choice”is,incontractformation:an

effectiveintention.Italsoexplainsthatacontractcanbeformedonlyby

twocontractingparties’mutualchoice.Itisa“mutual”choiceinthateach

party’schoiceiseffectiveonlybecauseoftheother’slikechoice;together

thepartiesarethejointcauseofwhatischosen.

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Butwhat,exactly,dothepartieschoose?Thisquestionhastroubled

theoristssinceHumeraisedit.7Whatcouldtheparties’choicehere

possiblyeffect,oraffect?Clearly,itisnotanyphysicalchange.Norcan

individuals,attheirmerewhim,changethenormsthatapplytothem.

ChapterThreecontendsthattheparties’choiceincontractformation

canonlyamounttotheirchosenconceptualization,orrecognition,of

something.Theeffectofthechoiceiswhollyideal;thereisno

independentobjectorstateofaffairsthatiteffectsoraffects.Atthis

stage,wecanroughlycharacterizethe“something”thattheparties

recognizeinformationas“thepromiseehavingthecontractright.”

Itmayseemstrangethatcontractingpartiescanchangetheirlegal

entitlementsmerelybyadoptingadifferentconceptualizationofwhat

theyhave.However,itshouldseemlesssoifweconsidercommon

situationswheresomethingsimilarhappens.Wheneverwechooseto

recognizeanotherpersonashavingacertainstatus—asafriend,ora

colleague,oraleader,ortheholderofsomeoffice,forexample—the

recognitionofthestatusisanactofchoice.Thischoicedoesnotchange

anypartofthephysicalornormativeuniversethatexistsindependently

ofus.Wemerelychangehowweconceiveofthepersonwiththenew

status:wenowconceiveofthemasbeing,orhaving,somethingdifferent

frombefore.

Theideathatcontractformationamountstotheparties’chosen

recognitionofsomethingalsoilluminatesanotherlongstandingdebate,

concerningthetransfertheoryofcontract,whichChapterFour

addresses.Contemporarytheoristsdisputewhethercontractformation

shouldbeconceivedasthetransferofthecontractrightfromthe

promisortothepromisee,oralternativelyasthecreationofthatrightin

thehandsofthepromisee.Bothviewsareunsatisfactory.Thetransfer

conceptionfoundersbecauseinmanycasesitisimpossibletolocateany

7DAVIDHUME,ATREATISEOFHUMANNATUREIII.2.v(1740).

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object(physicalorconceptual)thatisinitiallyheldbythepromisorand

thenconveyedtothepromisee.However,theopposingnotion,that

contractingpartiescreatearightexnihilo,lacksanyexplanatorycontent.

Anescapefromthisdilemmaisprovidedbytherecognitionapproach,

whichallowsustoseecontractformationasneitheratransfer,noran

inexplicableconjuringoflegalrights,butastheparties’constitutionof

thecontractrightthroughtheirmutualrecognition.Again,anaptanalogy

istherecognitionofastatus.Insum,then,ChaptersThreeandFour,

throughamovement“fromstatustocontract,”seektorevealcontract

formationtobeintelligibleasawhollyidealmutualchoice.

Form

Unlikethequestionofformation,thesecondbasicquestionpromptedby

theinternalapproach,abouttheformofacontractualobligation,ismore

obscure.Noparticularcontractualdoctrineisexplicitlydevotedtoit.

Nevertheless,addressingthisquestioniscriticaltoanunderstandingof

contractlaw.Withoutdoingsosatisfactorily,notheoryofcontracteven

getsofftheground,conceptuallyspeaking.

Therearetwowaystoseewhythisisso,eachofwhichhasan

eminentlineageinthehistoryofcontracttheory.Oneapproachtothe

problemposestherelevantissuesinthelanguageofrights,theotherin

thelanguageofobligation.

First,understandingwhatacontractualpromiseeacquiresbya

contractisindispensableforunderstandinghowshecouldhavearightto

thecontract’sperformance.Unlessweregardthepromiseeasacquiringa

righttoperformanceatformation,itbecomesmysteriouswhy,inthe

eventofanactualorthreatenedbreach,acourtwillawardthepromisee

aremedyofspecificperformanceoritsequivalentindamages.AsFuller

andPerduesaw,ifthepromiseehadnorighttoperformance,itwould

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makemoresensejusttocompensateherforanyharmsufferedin

relianceonthepromise.8

Itmightbetempting,then,toconcludethatthecontractualpromisee

acquiresa“righttoperformance”atformation,andleaveitatthat.It

turnsoutthatthisapproachrendersinexplicablecorecontractual

doctrines,suchasprivityandstrictliabilityforbreach.Evenbeforewe

reachthosepoints,however,itisapparentthatthenotionofa“rightto

performance,”withoutfurtherexplanation,isopaque.Whatisthisthing,

the“right”?Howdoweexplainitsexistence—howisitthekindofthing

thatthecontractingpartiescanmakeorassumethroughtheirmutual

recognitionofit?Weneedtosaysomethingmoreaboutwhatacontract

rightis—abouttheright’sform.

Thesecondwaytomotivatethequestionofthecontractright’sform

istoseetheinadequacyoftheaccountofcontractformationjust

adumbrated,basedontheparties’mutualchoice.Thataccountis

inadequatebecausetwopersonscanmakeacommonplacesortof

mutualchoice—anagreement—withoutestablishinganycontractual

obligation.AsHumenoted,twooarsmenmayagreetorowaboat

togetherwithoutestablishinganyobligationtodoso.9What,then,sets

contractapartfromothermutualchoicessuchasmereagreements?

Atruewilltheorymustexplainnotonlycontractformation,butalso

theformoftheextantcontractrightorobligation,entirelythroughan

ideaofmutualchoice.Consequently,wereachanimpasse.Ifweare

confinedtoexplainingcontractthroughanideaofmutualchoice,it

appearsthatwehavenowheretoturntodistinguishcontractsfrom

other,nonbindingmutualchoices.Weseemtohaveexhaustedthe

conceptualresourcesofthewilltheoryintheaccountofcontract

formation,leavingusunabletoaddressthecontractualobligation’sform.

8L.L.Fuller&WilliamR.Perdue,Jr.,TheRelianceInterestinContractDamages:1,46YALEL.J.52(1936).9HUME,supranote7,atIII.2.ii.

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Thesolutiontothisdifficultyistoseethatcontractsmustbe

distinguishedfromnonbindingagreementsbecausethecontracting

parties’mutualchoicetakesaparticularstructureorarrangement.We

mustlookfortheparticularpermutationoftwopersons’mutualchoice

thatisuniquetocontractlaw.Discoveringthepermutationofmutual

choicethatconstitutestheformofacontractrightorobligationisthe

taskofChaptersFiveandSix.

ChapterFivetackleswhathasbeencalled“theproblem”ofvoluntary

obligation—inrealityanumberofdistinct,andseeminglyintractable,

difficultiesinlegalandmoraltheorythatariseoutofconcernsraisedby

Hume.10Onewaytoput“the”problemofvoluntaryobligationisthis.

Howcanapromisorestablishanobligation—thatis,bindherself—bya

merechoicetodoso?Thepromisor’sinitialchoicetoassumethe

obligationcannotexplainwhyshecontinuestobeboundbyit,becauseif

werespectherinitialchoicetobebound,weshouldsurelyalsorespect

anysubsequentchoiceofherstoresile.

ChapterFiveseekstoexplainwhytheproblemofvoluntaryobligation

issointractableandtoresolveit,atleastwithinthecontextofcontract

law,fromthestandpointoftheideaofchoice.Theproblemarises

becausetheoristsareperpetuallytemptedtoseekthesourceof

obligationineither,orboth,oftwoplaces:(1)thepromisor’smere

individualchoicetobebound(asinpromisetheories,andsome

autonomytheoriesofcontract);(2)insomestateofaffairs,object,or

valuethatliesentirelybeyondindividualchoice(asinanyexternal

accountofcontractlaw).Anyaccountthattakeseitherofthosetwo

routesisdoomed.

Thesolutionistoabandonboththeviewofcontractualobligationas

sourcedinmereindividualchoice,andtheviewofitassourcedbeyond

choice.Instead,itissuggested,contractualobligationmustarisefroma

10Id.atIII.2.v.

15

relationshipbetweentwoindividualchoices.Moreprecisely,thesource

ofthepromisor’sobligationmustbethepromisee’schoice:the

contractualperformancemustbesubjecttotheexclusiveorindependent

choiceofthepromisee.

Thenthequestionofwhyacontract“binds”thepromisorbecomesthe

samequestionaswhyaproprietor’spropertyright“binds”other

persons.Theansweristhattheobjectoftheright—thecontractual

performanceorarticleofproperty—isrecognizablysubjectedtoa

person’sexclusivechoice.Thatbeingthecase,aninterferencewiththe

objectoftherightiswrongfulbecauseitviolatesthefundamental

normativeprinciplethatnopersonmayusurpanother’schoice.

However,thisaccountofthecontractrightleadstoanothersetof

problems.Oneofmanywaystoposetheseisintermsofthedoctrinesof

privityandstrictliability.Whyisit,atleastinthefirstinstance,onlythe

contractualpromisorwhoisliabletoensurethatthepromisee’schoice

astothecontractualperformanceisrespected?Andwhyisacontractual

promisor(subjecttotheparties’agreement)“strictly”liableforbreach,

whereassomeonewhointerfereswithanother’spropertymay,incertain

circumstances,beliableonlyfornegligentinterferences?

ChapterFiveconcludesthattoanswerthesequestionsacrucialtwist

mustbeaddedtoourunderstandingoftheformofacontractual

obligation.Whatissubjecttothepromisee’sexclusivechoicemustbe,

notjustthecontractualperformance,butthepromisor’schoiceastothe

contractualperformance.Thepromiseehasthepromisor’schoiceasto

performance.Thisistheparticularpermutationofmutualchoicethat

constitutestheformofacontractualobligation.

Thispermutationofmutualchoiceiswhatthepartiesestablishin

contractformation(whentheyrecognizethepromisor“ashavingthe

contractright”).Althoughwehaveaddressedtheformationandformofa

contractseparately,wecannowstatetheminunifiedfashion.Informing

16

acontract,bothpartiesmutuallyrecognizethepromiseeaschoosinga

performancethroughthepromisor’schoice.

ChapterSixreinforcesthisconclusionabouttheformofacontract

rightorobligationbyconsideringcontractremediesdoctrine.In

particular,thechapterrejectsFullerandPerdue’ssuggestionthata

contractmightconferarighttosomethingotherthanperformance—

suchasarighttorely,ortoreceiverestitution.Italsorejectsmorerecent

claimsbycertaintheoriststhatthecontractual“performance,”thatis,the

objectofthecontractright,mustbeconceivedaseitheran“act”orasa

“thing.”Thoseclaimsthatarelinkedtoadebateaboutwhetherthose

differentcharacterizationsaffecttheavailabilityofdisgorgement

damages(damagesmeasuredbythepromisor’sprofitfrombreach).

ChapterSixsuggeststhat,forthepurposesofcontractremediesdoctrine,

thecontractrightshouldbeunderstoodasjustarighttothecontractual

“performance,”where“performance”iswhateverthepartieschoose.

Thereisnoneedtofurthercharacterizetheobjectofthecontractright.

Theavailabilityofso‐calledreliance,restitution,anddisgorgement

remediesforbreachofcontractdoesnotalterthisanalysis.

Finally,inthecommonlaw,thegreatestobstacletoawilltheoryof

contractisthedoctrineofconsideration.ChapterSevencontendsthat

oncetherequisiteformofacontractualobligationisunderstood,awill

theorycanmeetthetwindemandsthatshouldbemadeofanyaccountof

consideration:toexplain,first,whythedoctrineissoimportantand

enduring;second,whyitisinherentlyandirredeemablyproblematic.

Thedoctrineofconsiderationseekstoensurethatacontractual

obligationhastherequisiteform:thatthepromiseehasthepromisor’s

choiceastoperformance.(Herewehaveavariationonthetraditional

“considerationasform.”)11Thisrequisiteformorpermutationofchoice

11LonL.Fuller,ConsiderationandForm,41COLUM.L.REV.799(1941).

17

isnotsecuredbyotherdoctrines,suchasofferandacceptanceand

“intentiontocreatelegalrelations.”

Thus,thecoreofthecommonlawofcontract—theformationand

formofcontractualobligation—canbeunderstoodentirelythroughan

ideaofmutualchoice.Indeed,thepresentworkisnothingotherthana

sustainedefforttoholdontothatidea,resistingthetemptation,which

reappearsinnewguisesateverystageinthedevelopmentofatheoryof

contract,torelinquishit—tolookbeyondthemutualchoiceoftheparties

toobjects,statesofaffairs,orvaluesthatareindependentofthatchoice.

Theproductofthiseffortisapurewilltheoryofcontract.

Tradition

Manyaspectsofthistheory,especiallythecentralroleaccordedtheidea

ofchoice,thefundamentalprinciplethatnopersonmaydetermine

another’schoice,andthecharacterizationoftheformofthecontract

rightasthepromisee’shavingthepromisor’schoice,reiterateKant’s

understandingofcontractlaw.(Ifthisseemsapaltryachievement,itis

neverthelesshardwon.)

Yetitwouldbesomewhatmisleadingtocallthetheoryadvancedhere

Kantian.Foronething,ontheinternalapproachtocontract,theinsights

ofevensogreataphilosopherasKantarevaluableonlytotheextentthat

theyhelptoarticulateideasfoundinthelawitself.Moreover—and,itis

hoped,consequently—thisworkadvancesanumberofargumentsthat

Kant,oratleasthismostlearnedexpositorstoday,wouldregardas

heretical.

Manyofthoseargumentsareinfluencedbytheworkofother

philosophersinthemodernnaturallawtraditionofwhichKantisapart:

thetraditionrunningfromGrotiustoPufendorfandthencetoFichteand

Kant,beforeculminatingwithHegel.Inparticular,theHegelian

influencesherearguablyoutruntheKantian.Theyincludetheportrayal

18

ofthechoiceincontractformationasarecognition,andgeneral

presuppositionsabouttheconceptualrelationshipbetweenproperty

rights,contractrights,andwrongs.Again,however,theworkalmost

certainlydepartsinimportantwaysfromHegel’spresentationof

contractlaw.(Almostcertainly,becauseHegel’spresentationisso

scandalouslyobscure.)

Ratherthanadoptingthemonikerofanyparticularthinker,therefore,

thisworkseekstolinkitselftothemodernnaturallawtraditionasa

whole.Thattraditionisvariousinmanyrespects,butunitedinsofarasits

exponents,althoughtheyalsohadwide‐rangingphilosophicalviews,

approachedcontractfromaninternalstandpoint.Furthermore,they

developedtheoriesofcontractthat,whilealsocontainingother

features—inparticular,mostincludesomenotionoftransfer—

understandcontractstobeexpressionsofthehumanwill,forthatreason

worthyofrespect.

Thisworkseeksmerelytocontributetotheongoingarticulationof

thisunderstandingofcontract.Itishubristicenoughtosuggestthatthe

understandingcanberefined,insomerespects,toproduceapurewill

theory.Theworkalsoseekstoaddresstheconcernsaboutthis

understandingthatarelikelytotroubleanaudienceofcontemporary

contractsscholars.Thataudienceisrepresentedhereinpartbythe

specterofHume,whichreappearsfrequentlytodisturbanydogmaticor

slumberingassumptionsabouttheintelligibilityofvoluntaryobligation.

Inlinkingitselftothephilosophyofthemodernnaturallawtradition

thisworkalso,ofcourse,betraysamoreimmediateinfluence.Itisa

meageroffshootofthegreatrenaissanceinprivatelawtheorythathas

recentlytakenplaceattheTorontoLawFaculty.Inparticular,the

scholarshipofErnestWeinrib,ArthurRipstein,andaboveall,

PeterBensonhasshapedeveryaspectofwhatfollows.

19

Theterm“willtheory”isalsointendedtoconnectthisworkto

anothertradition:thatofthegreatcontractsjurists,inboththecommon

andcivillaw,whowereinfluencedbynaturallawideasandwhoshaped

contractasweknowittodaythroughthetreatisestheywroteinthe

eighteenthandnineteenthcenturies.Theyincluded,forexample,

Addison,Anson,Chitty,Langdell,Pollock,Pothier,andSavigny.Those

juristsattemptedtosupplymoreorlessunified,internalaccountsof

contractdoctrinelinkedtonotionsofpartychoice.

Theirachievementswerecalledintoquestionbythetwentieth

centurycontractsscholars—especiallymembersorassociatesofthe

AmericanLegalRealisttradition—whopopularizedtheterm“will

theory”intheireffortstorepudiateit.12Thetwentiethcenturyscholars’

effortswereofcoursesuccessfulasfarastheacademicconsensusis

concerned.Today,thewilltheorygenerallyreceivesmentiononlyasitis

beingdismissedoutofhand,asananachronismalreadythoroughly

repudiated.

Thesupposedrepudiationoftheolderunderstandingopenedtheway

fortheproliferationofcontracttheoriesthatwehavetoday.These

includenotonlytheleadingschoolsofefficiency,reliance,autonomy,

promise,andtransfer—aswellasthemanyindividualvariations

thereon—butalsocountlessothers,currentlylessinfluential,thatcannot

besurveyedhere.

Itispartlyinresponsetothestateofcontemporarycontract

scholarshipthatthisworkinvokestheterm“willtheory”andthe

associatedphilosophicandlegaltraditions.Todayitseemsthatevery

ambitiousacademiccontractlawyermustadvancehisorherownnovel

12E.g.ROSCOEPOUND,ANINTRODUCTIONTOTHEPHILOSOPHYOFLAW187‐88,270(1922);MorrisR.Cohen,TheBasisofContract,46HARV.L.REV.553,575‐78(1933);MaxRadin,ContractObligationandtheHumanWill,43COLUM.L.REV.575(1943).Analogousciviliandevelopmentspresagedthis.See,e.g.,VERONIQUERANOUIL,L’AUTONOMIEDELAVOLONTE:NAISSANCEETEVOLUTIOND’UNCONCEPT(1980).

20

theoryofthelaw.Everyonepurportstounderstandcontractafresh.The

resultingstateofaffairswaslamented,inanothertimeandplace:

[W]ehaveampleopportunitytowonderatthetoneandpretentiousnessthatcanbedetectedinsuchwriters,asifallthattheworldhadhithertolackedwasthesezealousdisseminatorsoftruths,andasiftheirreheatedbrewcontainednewandunheard‐oftruthswhichought,astheyalwaysclaim,tobetakenparticularlytoheart….Butontheotherhand,wecanseehowwhatevertruthsofthiskindarehandedoutbyonepartyaredisplacedandsweptawaybytruthsofpreciselythesamekinddispensedbyotherparties.[What]if,amidstthisjumbleoftruths,thereissomethingthatisneitheroldnornewbutenduring…?13

Ofcoursecontractlawitselfremainslargelyunscathedbythe

pretensionsofcontemporaryacademictheorizing.Everyday,almost

everyonemakes,breaks,orperformsanumberofcontracts.This

practicecontinuesunperturbedbythe“newandunheard‐oftruths,”in

theformofthelatestcontracttheoriescurrentlyhittingthelawreviews.

(Nottoworry—moretheorieswillcomealongtomorrow.)

Meanwhilemighttherebesomething“neitheroldnornewbut

enduring”inourunderstandingofcontract—somethingthathasbeen

lurkinginthebackgroundallalong?Afterall,contractisaninstitution

whosecoreelementshaveremainedunchangedforhundreds,perhaps

thousands,ofyears.Overthecourseofthatlonghistory,manyofthe

greatestphilosophersandjuristshaveendeavoredtounderstandit.

Perhapstheymadesomeprogresstowardsanunderstanding.Itshould

comeasnodisappointment,therefore,ifinsteadofpurportingtostart

afresh,themaintaskforatheoristofcontractlawistoplayasmallpart

inthearticulationofideasthathavealreadybeenthoughtbefore.

Thisworksuggeststhatthereisanenduringunderstandingof

contractlaw.Itsvestigessurviveintoday’sscholarshipmainlyinpassing

referencestotheidea—usuallymadejustastheideaisbeingdismissed,

asananachronismlongsincerepudiated—ofawilltheoryofcontract.

13G.W.F.HEGEL,ELEMENTSOFTHEPHILOSOPHYOFRIGHT(H.B.Nisbettrans.,1991)(1821).

21

2 MethodChapterOnenotedthatmanycontemporarytheoriesattempttoexplain

contractlawbyconsideringtheeffectsthatitsapplicationhas,upon

statesofaffairswhoseimportanceisindependentofthelawofcontract

itself—suchasstatesofefficiency,harmfulreliance,orautonomy.In

contrast,thetraditionofthewilltheorywasassociatedwithadifferent

approach:theendeavortounderstandcontract“internally.”Butwhat

doesitmeantounderstandcontractinternally?Andwhywouldone

want,orneed,todoso?Thosearethequestionsforthischapter.

Toanswerthemwemustreconsideraspectsofanintellectualactivity,

understanding,thatwegenerallytakeforgranted.Attheoutset,itis

worthrecallingthatanyattempttounderstandsomethingproceedsfrom

withinaparticularframeworkormodeofunderstanding.Itiseasyto

forgetaboutthis,andassumethattheworldappearstoustransparently.

Butofcourseeachofusisacertaintypeofcreature,withgivencognitive

traitsandlimitations,whichhasinheritedanddevelopedparticularways

ofunderstandingexperience.Builtintothosemodesofunderstanding

aredecisivepresuppositionsabouthowtheworldworksandhowto

makesenseofit.1

Herelegaltheoristsmightprotest:theyarewellawarethat

understandingthelawcaninvolvetheapplicationofavarietyofdifferent

conceptualmodelsoranalyticaltools,andthatthepresuppositionsbuilt

intothosemodelsortoolsdeterminethenatureoftheresulting

understanding.Butthisispreciselytheproblem.Theveryideaoftaking

amodelortoolandapplyingittothelawis,whilepartofthedefault

modeofunderstandingofmostlegaltheoriststoday,irreconcilablewith

theinternalapproachtolegaltheory.

1MICHAELOAKESHOTT,EXPERIENCEANDITSMODES(1933).

22

Althoughitisthereforealientomanyoftoday’slegaltheorists,the

internalapproachisneverthelessaworthwhilewaytounderstand

contractlaw.Indeed,inasenseitistheonlywaytounderstandcontract

law.

Inattemptingtounderstandcontract,weturnourunderstandingback

uponourselves,scrutinizinganaspectofhumanconduct.Moreover,we

turnourunderstandingbackuponitself,becausecontractlawisalready

anunderstanding.Wemustthereforeapproachcontract“internally”in

ordertoavoidoverwritingtheunderstandingitembodieswitha

different,“external”understanding,therebyeffacingcontractlawinour

veryefforttocomprehendit.

Thischapterbeginsbyconsideringwhatcontractlawis.Itthen

explainswhycontractmustbeunderstood“internally,”andwhatit

meanstodoso.Nextthechapteraddressesanassortmentofimportant

issuesconcerningtheinternalapproach:howitdealswithlegalerror;

whethertheapproachisdescriptive,prescriptiveorinterpretive;

whetheritisexplanatoryorjustificatory;howitrelatesto

“noninstrumentalism”;andwhatistheappropriateroleoflegal

philosophyandlegalhistory.Finally,thechapterintroducesthe

questionsthattheinternalapproachpromptsaboutcontractlaw,which

theremainderofthisworkseekstoanswer.

2.1 WhatisContract?

Theaimistounderstandcontractlaw.Whatthenisthisthing,“contract

law,”thatweseektounderstand?Whatistheobjectofinquiry—the

initialdatumor“given”forinvestigation?2

Asastartingpoint,contractlawisjustwhatlawyerssayitis.3Itisthe

groupofconceptsfoundmostreadilyincontractstreatises,which

2MICHAELOAKESHOTT,ONHUMANCONDUCT1(1975).

23

identifyandcharacterizeaparticularcollectionoflegaljudgments,

doctrines,rules,principles,maxims,tests,andsoon.

Thisgroupofconceptsrangesfromtheveryspecific,suchas

descriptionsoftheordershandeddowninparticularcases,tothemuch

moreabstract,includingbroadencapsulationsofcontractdoctrinesand

overarchingprinciplessuchas“pactasuntservanda.”Themorespecific

andthemoreabstractaspectsofcontractlawreciprocallydefineeach

other.Abstractlegalconceptsareelucidatedbyconsideringthemore

specificconcepts—includingparticularlegal“results”orcase

outcomes—thattheirapplicationyields.Conversely,specificconcepts

areidentifiedandcharacterizedthroughtheoperationofmoreabstract

ones.Inthejargon:all(legal)dataistheory‐laden.4

Ifcontractlawisthegroupofconceptslawyersidentifyassuch,then

adoptingitasourobjectofinquiryimmediatelyrulesoutsomeofthe

mostinfluentialapproachesinrecentcontractsscholarship.Forexample,

itrulesoutthe“relational”approachtocontract,whichconsiders

sociologicalnormsthatfigureintherelationsbetweencontracting

parties—irrespectiveofwhetherlawyersrecognizethosenormsaspart

ofcontractlaw.5Likewise,adoptingcontractasourobjectofinquiry

3STEPHENA.SMITH,CONTRACTTHEORY8‐9(2004). 4Thisworkdoesnotaddresstheissueoftheindeterminacyoftheabstractionsofcontractlawandtheoryvis‐à‐visitsspecifics,aspressedbyJodyKraus.E.g.PhilosophyofContractLaw,inTHEOXFORDHANDBOOKOFJURISPRUDENCEANDPHILOSOPHYOFLAW(JulesColeman&ScottShapiro,eds.,2002);TransparencyandDeterminacyinCommonLawAdjudication,93VA.L.REV.287(2007);FromLangdelltoLawandEconomics,94VA.L.REV.157(2008).ButseeRobertBrandom,AHegelianModelofLegalConceptDetermination(paperpresentedtotheInlandNw.Phil.Conf.,Mar.23,2012);OAKESHOTT,ONHUMANCONDUCT,supranote2,at134‐38.5E.g.IanR.Macneil,Contracts:AdjustmentofLong‐TermEconomicRelationsUnderClassical,Neoclassical,andRelationalContractLaw,72NW.U.L.REV.854(1978).SeeSMITH,supranote3,at8;DORIKIMEL,FROMPROMISETOCONTRACT83(2003)(“Allthatcanbesaidaboutsuchrelationsisthattheyare,indeed,relational,buthardlycontractual.”).

24

precludesanygeneraltheoryofpromisethatencompassesmoral

territorylyingbeyondcontractlawitself.6

Sowhatwarrantistherefortaking“contract”—thegroupofconcepts

lawyersidentifyassuch—tobeourobjectofinquiry?Thisquestioncan

besplitintwo.First,whytakeanylegalconceptstobeanobjectof

inquiry?Second,whytakeagivengroupoflegalconcepts,“contract,”to

settheboundsoftheobjectofinquiry?

Thelegalconceptsthatlawyersemployformanobjectofinquiry

becausetheyconstitutetheexplanationsthatlawyers,includingjudges,

offerfortheiractions.Inparticular,judgesingivingreasonsfortheir

decisionsdevelopanddeploytheseconceptsinordertoexplainthe

recognitionandenforcementoflegalobligations.

Theconceptsthatlawyersdeployinthisrespectcomefromalimited

set.Theycomefromthe“limiteddomainofthelaw.”7Theyinclude,for

example,conceptssuchasmensreaandstrictscrutinyandfairuse,but

notentropyordialecticalmaterialismorNashequilibrium.

Lawyers’deploymentofalimitedsetofconceptsinordertoexplain

theiractionspromptsustoexaminethoseconcepts—asdistinctfrom

othersuponwhichlawyersdonotpurporttorely—inordertosee

whethertheconceptsthatlawyersusemakesense.Inotherwords,itis

becausetheyconstitutelawyers’overtself‐understandingoftheiractions

thatlegalconceptsformanobjectofinquiry.8

Whydoes“contract”asaparticulargroupofconceptswithinthelaw

definetheboundsofourobjectofinquiry?Evenmanyscholarswho

6E.g.KIMEL,id.;SeannaValentineShiffrin,TheDivergenceofContractandPromise,120HARV.L.REV.709(2007).7FrederickSchauer,TheLimitedDomainoftheLaw,90VA.L.REV.1909(2004).SeealsoSMITH,supranote3,at29‐30.Preciselywhichconceptsare“legal,”andwhichnot,isperenniallydebatedbylawyers.Id.8ERNESTJ.WEINRIB,THEIDEAOFPRIVATELAW14‐16(1995).SeealsoN.E.SIMMONDS,THEDECLINEOFJURIDICALREASON1(1984).

25

devotethemselvestotheanalysisoflegalconceptsmistrusteffortsto

understandthelawthroughlegaltaxonomiesorconceptualgroupings.9

Nevertheless,lawyersgenerallyagreethatcertaindoctrinalconcepts

arepartofcontractandthatothersarenot.10Theywouldinclude,for

example,notmensreaorstrictscrutinyorfairuse,butofferand

acceptance,consideration,expectationdamages,andsoon.This

groupingofconceptsisitselfanimportantaspectoflawyers’

explanationsfortheiractions.Inconsideringagivendispute,thefirst

questionalawyermayaskis,“isthereacontracthere?”Dependingon

whethershebelievesthereis,shewillapproachanddecidethedispute

differently.

Sojustas,inordertograpplewithlawyers’self‐understandingof

theiractions,weshouldinquireintolegalratherthannonlegalconcepts,

weshouldacknowledgeratherthanignorelawyers’groupingsoflegal

concepts.Itislawyers’self‐understandingthatpromptsustotakethe

grouping“contractlaw”asinitiallysettingtheboundsofourobjectof

inquiry.

Atthispointsomeobjectionsmightberaisedtothiswork’sfocuson

thecommonlawofcontract.First,lawyersoftentakecontracttobeapart

ofabroaderareaoflaw,privatelaw.Privatelawisinturnconsidereda

partofthelawgenerally.Andlawisinturnoftenconsideredapartof

politicsorethicsasawhole.Doesthisnotmeancontractmustbe

understoodwithinthecontextofthosebroaderdomainsofnormativity?

Theanswerisyes—butnottooquickly.Eventuallywemaysituate

contractwithinprivatelaw,lawgenerally,andpoliticsorethics.Butif

theself‐understandingofcontractlawasadistinctrealmofexplanation

9E.g.,STEPHENWADDAMS,DIMENSIONSOFPRIVATELAW(2003).10SMITH,supranote3,at8‐9.Whichconceptsare“contractual,”andwhichnot,isalsoamatterofperenniallegaldebate.Id.

26

istobeexplained,wemustfirstunderstandcontractasdistinct.The

inquirymustbesequenced.11

Second,whyfocusonthecommonlawofcontract,withoutalso

consideringallofthestatutesandregulationsthataffectcontracts?The

answeristhatmuchlegislationaffectingcontractsisnotconsideredby

lawyerstobepartofcontractlaw.Ifourobjectofinquiryislawyers’self‐

understanding,wecannotassumethatsuchlegislationwillbe

comprehensibleonthesamebasisascontractlaw.Thereareofcourse

exceptions:somestatutesfixorcodifyaspectsofcontractandare

consideredintegraltoit.Legislationconcerningsalesofgoods,for

example,isprobablyofthiskind.Butsuchstatutesareclearly

distinguishablefrom,say,thosethatimposetaxesorenvironmentalor

antitrustprotectionsthataffectcontracts.

Third,thisworkaddressesnotthelawofeveryjurisdictionthathas

contracts,butthecommonlawofEnglandandcountriesdominatedby

hersettlers:theUnitedStates,Canada,Australia,andNewZealand.Again

thislimitationisatleastprovisionallydefensibleonthebasisofthelaw’s

overtself‐understanding.Thesejurisdictionsregularlyusetheolder

Englishlegalauthorities,andalsoeachother’scontemporaryauthorities

(inroughaccordancewithrelativepopulationsize).Thesejurisdictions

thereforeseemtoshareanunderstandingthattheircontractlawis

comprehensibleonacommonbasis,somethingwemightnotexpectof

otherjurisdictions.(Whichisnottodenythepossibilityofcommonalities

in“contractlaw”whereveritappears.)

Insummary:contract,theparticularsetofconceptslawyersidentify

assuch,presentsitselfasanobjectofinquiry—somethingwemayseek

tounderstand—simplybecauseitisanexplanationbylawyersforwhat

theydo.Thatis,becausecontractlawisitselfalreadyanunderstanding.

11PeterBenson,AbstractRightandthePossibilityofaNondistributiveConceptionofContract,10CARDOZOL.REV.1077(1989).Thesequenceisconceptual,nottemporal.

27

2.2 TheInternalApproachtoContract

Ifcontractisanobjectofinquiry—athingonemightseekto

understand—whatwoulditmeantounderstandit?Hereitwillbe

suggestedthatanunderstandingofcontractmustdotwothings.Itmust

explaintheconceptsofcontractlaw,withoutexplainingthemaway.12

2.2.1 Explainingcontract…

First,theunderstandingmustexplaincontractlaw.Otherwise,itwill

utterlyfailtoaddressitsobjectofinquiry—theverythingitseeksto

understand.

Toexplainorunderstandsomethingistoascertainthecausesor

reasonsforit:thecircumstancesthat,ifinstantiated,willeffectit.13This

isfamiliarfrommechanisticexplanationsofthephysicalworld.One

billiardballcrashesintoanother,causingittomove:XcausesY;given

circumstanceX,Ymustfollow.However,neitherthethingweseekto

understandnoritscausesorreasonsneedbephysical.Theymaycome

fromothermodesofunderstanding—thepsychological,economic,or

religious,forexample.

Becausecontractlawisasetofconceptsthatlawyersuse,an

understandingofitmustaccountfor—thatis,ascertainthecausesof—

thoseconcepts.Theunderstandingmustaccountfortheconcepts’

intellectualcontent.Itcannotmerelyaccountforcertaineffectsor

consequencesthattheapplicationoftheconceptsproduces.

Ifthatseemsobvious,itrulesoutatleaststraightforwardversionsofa

veryinfluentialapproachtocontract:explanatoryeconomicanalysis.

ThisisbroughtoutbyanexampleofStephenSmith’s.14Smithobserves

thatlawyersstatethedoctrineofcontractualduressusingconcepts

12TermsadaptedfromKraus,Transparency,supranote4,at349,351.13ARISTOTLE,PHYSICS194b16‐195b30,198a14‐200b10.14SMITH,supranote3,at26.

28

includingconsentandautonomy.Thatbeingso,apurportedaccountof

duressdoctrinethatmerelyshowedthedoctrine’sapplicationtoyield

economicallyefficienteffectswouldutterlyfailtoexplainthedoctrine.It

wouldfailtoexplainwhylawyerstalkaboutconsentorautonomy.(Or,

forthatmatter,whytheytalkabout“duress,”ratherthan,say,“inefficient

influence.”)

Theproblemisbynomeansuniquetoeconomicanalysis.15For

example,anaccountthatexplainedofferandacceptancedoctrineas

merelyameansofmaintainingthehegemonyofsocioeconomicelites

wouldlikewisefail,becauseitwouldnotexplainwhylawyerstalkabout

“offering”and“accepting.”Thatissoevenifthedeploymentofthose

conceptshappenstobeaneffectivewaytomaintainelitehegemony.

Suchaccountsdonotevenpurporttoexplaintheintellectualcontent

oftheconceptsofcontractlaw.Rather,theaccountsaddressonlysome

oftheeffectsofcontractlaw’sapplicationuponotherstatesofaffairs,

suchasefficiencyorhegemony,whichcanbeunderstoodindependently

ofthecontractualconcepts.16Wecan,forexample,grasptheconceptof

efficiency(say,themaximizationofpreferencesatisfaction)andseewhy

thismightbeimportant,beforeweknowanythingaboutcontract.

Conversely,wecanlearnandapplycontractdoctrinewithoutknowing

anythingaboutefficiency.Mostlawyersdo.

Previouslythisworkincludedexplanationsthataddresstheeffectsof

contract’sapplicationuponsomeindependentstateofaffairswithinthe

umbrellaterm“externalaccountsofcontractlaw.”However,itcannow

beseenthatthatisslightlymisleading.Becausetheexplanationsarenot

15Anditisnottothepointherewhetherlawyers’terminologyis“deontic”ratherthan“consequentialist,”or“backward‐looking”ratherthan“forward‐looking.”ContrastKraus,Transparency,supranote4.16Thisformulation(andmanyoftheothervariationsonitthroughoutthiswork)isowedtoMartinStone,LegalPositivismasanIdeaAboutMorality,61U.T.L.J.313(2011);MartinJayStone,PlanningPositivismandPlanningNaturalLaw,25CAN.J.L.&JURIS.219(2012).

29

reallyaccountsofcontractlawatall.Ratherthansuggestingcausesor

reasonsfortheintellectualcontentoftheconceptsofcontract,the

accountsmerelyaddresscertainwaysinwhichtheapplicationofthose

conceptsaffectsotherstatesofaffairs.

Arelatedfeatureofsuchaccountsisworthnoting.Initially,the

accountmightconsiderthatsetofspecific“results”orcaseoutcomesthat

isidentifiedandcharacterizedbythemoreabstractconceptsofcontract

law,whilepurportingtoignoretheintellectualcontentofthemore

abstractcontractualconceptsthemselves.However,itshouldquickly

becomeapparentthattheappropriatecharacterizationofacontractual

result(suchas,“defendantheldliableforbreachofwarranty”)differs

fromthatof,forexample,anefficienteffect(“defendant’sinformation

costsminimized”),orahegemoniceffect(“defendantremainsoblivious

toclassinterests”).Furthermore,itshouldalsoquicklybecomeapparent

thattheidentificationofthemembersoftherelevantdatasetsfor

analysisshoulddiffer.Forexample,thesetof“effectsuponefficiency”is

surelybroader,andthesetof“effectsuponhegemony”bothbroaderand

narrower,thanthesetof“contractualresults.”Whatthisconfirmsisthat

theprofferedaccountshavenointerestincontractlaw,itself,asan

objectofinquiry.Theyseektoexplainsomethingelsealtogether.

Perhaps,inordertoexplaincontractlaw,theexternalaccountsweare

consideringcouldbesupplemented,sothattheydoaddressthe

intellectualcontentoftheconceptsofcontract.Hence,forexample,

economicexplanationsaresometimessupplementedbytheoriesof

evolutionaryselection,whicharedesignedtoexplainhowitcouldbethe

casethattheconceptsofcontractlawhappentoyieldeconomic

efficiency.17Thesetheoriesimagineaprocessthatselectsforthose

conceptswhoseapplicationmostreliablyproducesefficientoutcomes.

(Forinstance,perhapspartiesareincentivizedtore‐litigateinefficient

17Kraus,Transparency,supranote4,at349n.98(citingexamples).

30

rules,sothatlitigationcontinuesuntilthoserulesarereplacedby

efficientones.)Then,itisimagined,theconceptsofcontractlawmust

havebeenselectedbecausetheyproduceefficiencymostreliably—even

morereliablythanadirectapplicationofeconomicconcepts,giventhe

cognitivelimitationsandothervagariesofhumanconcept‐appliers.

Muchcouldbesaidaboutthissupplementalexplanation,butthe

crucialpointhereisthatitstillfailstoexplaintheconceptsofcontract

law.How,wemightask,isaconceptthatisripeforevolutionary

selectiongeneratedinthefirstplace?Whydidthisconceptarise,andnot

someother?Isalawyermeanttoestablishlegalconceptsjustby

adoptingthefirstonesthatpopintoherhead?Ifso,whydoesa

particularconceptfirstpopup,andnotsomeother?Thesupplemented

accountremainsunabletospecifythecausesorreasonsfortheconcepts

ofcontract.Theconceptsthemselvesareapparentlyarbitrary.

2.2.2 …Withoutexplainingitaway

Theforegoingillustrateshowatheorycanfailthefirstrequirement

foranunderstandingofcontractlaw:thatitaccountforthelegal

conceptslawyersuse.Butnowsupposeatheoryalongthelinesofthe

evolutionaryaccountjustdescribeddidprovidefortheinitialgeneration

oftheconceptsofcontract.Perhapsitpostulatesaneurochemicalor

psychologicalprocessamountingtoaconceptgeneratorineachlawyer’s

head,whichisactivatedinappropriatecircumstances.

Thisadditionallysupplementedaccountnowpostulatesanexternal

causeorreason—“external”inthatitcanbegraspedindependentlyof

contractlawitself—fortheconceptsofcontract.Theaccounttherefore

purportstoprovideagenuineexternalexplanationofcontract,as

opposedtomerelyaddressingsomeoftheeffectsofcontract’s

applicationuponanotherstateofaffairs.Nevertheless,theaccount

remainsproblematic.Becauseitexplainstheconceptsofcontractlaw

onlybyexplainingthemaway.

31

Toexplainsomething“away”istoexplainitassomethingotherthan

whatitseemstobe—toproposeadifferentcharacterizationofit.As

whenonetriesto“explainaway”anapparentromanticindiscretionby

redescribingitasaninteractionofadifferentcharacter.Similarly,inthe

contextofcontractlaw,toexplainawaytheconceptsofcontractlawisto

recharacterizethemassomethingotherthanwhattheypurporttobe:

adequateexplanationsforlawyers’actions.

Anattemptedexplainingawayoftheconceptsofcontractlaw,as

somethingotherthanadequateexplanationsforlawyers’actions,occurs

wheneveroneoffersanexternalexplanationforcontract.Thatis,

wheneveritispositedthat,inordertounderstandcontract,wemust

turntocausesorreasonsthatareindependentofthelawofcontract

itself—onesthatlawyersdonotthemselvesinvoke.Becauseifweexplain

whatlawyersaredoingbyturningtoconceptsthattheydonotinvoke,

thenitfollowsthattheconceptslawyersdoinvokedonotactually

explainwhattheyaredoing.Theconceptslawyersinvokearenotan

adequateexplanationfortheiractions.

Totheextentthattheconceptslawyersinvoketoexplainwhatthey

aredoingarenotadequateexplanations,thoseconceptsmustbea

deception.Therearetwopossibleformsthisdeceptioncouldtake:

delusion,orfraud.18Iflawyersdeploytheconceptsofcontractwhile

unawareoftheirinadequacy,theyaredeluded.Iflawyersareawarethat

theconceptsofcontractareinadequate,butneverthelesspersistinusing

them,thentheyareperpetratingafraud.

18Kraussuggeststhattheconceptsofcontractlawmayhaveacquired,bysomeevolutionaryprocess,meaningsdifferenttothoselawyersthinktheyhave,andthatlawyerswouldnotthenbe“dishonestordeluded”inusingtheconcepts,theywouldjust“failtoappreciate”theconcepts’truemeaning.Transparency,supranote3,at301;seealsoid.at353‐55.Butanexpansive“failuretoappreciate”isadelusion.

32

Itmustbeconcededthatthesuggestionthatcontractlawmaybe

explainedawayasadelusionorafraudisnotlogicallyuntenable.Itis

merelyridiculous.

Contractlawwouldbeadelusionif,forexample,theconceptsof

contractwere,unbeknownsttolawyers,generatedbysome

neurochemicalorpsychologicalprocess.(Thatprocessbeingthe

concepts’externalcause.)Thedifficultywiththisformofexplanationis

thatitattemptstoexplainawaytheconceptsofcontractby

recharacterizingthemasmeaninglessdelusions,ratherthanas

meaningfulconcepts.Yetitisobviousthattheconceptsofcontracthave

somemeaning.Wecanseethisbyleafingthroughacontractstextbook,

ordroppinginonalawschoolclass.Whateverelseonemightsayabout

thematerialpresentedthere,itmeanssomething.Itcannot,therefore,be

explainedawayasthemeaninglesseffluxionofsomesubconscious

process.JustasNietzsche’ssyphiliscouldnotexplainawayZarathustra,a

delusioncannotexplainawaycontractlaw.19

Contractlawwouldbeafraudif,forexample,lawyersinventedit

merelytocovertheadvancementoftheirclassinterests.Herelawyers

wouldbeinvokingcertainconceptstoexplaintheiractions,knowingthat

thoseconceptsdonotactuallyprovideanadequateexplanation.(Onthis

viewlawyersthemselves,withtherelevantmotivation,aretheexternal

causesoftheconceptsofcontract.)Apersuasivefraudexplanationwould

explainawaytheconceptsofcontractlawbyrecharacterizingthem,not

ascompletelymeaningless,butasnonethelessnotrationallyendorsable

explanationsforwhatlawyersdo.(Contractlawcannotrationallybe

endorsedifoneunderstandsittobeamereruse.)However,thefraud

formofexplanation,appliedtocontract,issounpersuasiveastobe

scarcelyworthyofridicule.Howhasthefraudbeensoextraordinarily

19Cf.MichaelOakeshott,OnMisunderstandingHumanConduct,4POL.THEORY353,361(1976).SeealsoOAKESHOTT,ONHUMANCONDUCT,supranote2,at23.

33

effective,persistingacrosstheglobeforcenturies?20Who,precisely,are

itsperpetrators?Presumablyoneofthemistheauthorofthis

dissertation.Itisnottheconceptsofcontractbutthesuggestionofa

fraudthatweoughttorejectasrationallyuntenable.

Itisthereforeimplausibletoattempttorecharacterizetheconceptsof

contractasadeception,voicedbylawyersbecausetheyaredeludedor

fraudulent,ratherthansimplytakingthoseconceptsforwhatthey

purporttobe:adequateexplanationsforlawyers’actions.Weshould

pursuethepossibilitythatlawyers’explanationsmakesense.

2.2.3 Theinternalapproach

Sofar,ithasbeensuggestedthattounderstandsomethingisto

ascertainitscauses,andthatanunderstandingofthecausesofcontract

mustsatisfytworequirements.As“contract”isagroupingofconcepts,

theserequirementsapplynotjusttotheconceptsindividuallybutasa

group.First,wemustexplaincontractlaw:wemustspecifythecausesof

theconceptsofcontract—theirintellectualcontent—andnotmerely

describesomeoftheeffectsthattheapplicationofthoseconcepts

produces.Second,wemustnotexplaincontractlawaway:theconcepts

ofcontractmustbeacceptedasadequateexplanationsforwhatlawyers

do,ratherthanbeingrecharacterizedasadeceptionproducedbyan

externalcause.Howcanthesetworequirementsbesatisfied?

Thesecondrequirement,thattheconceptsofcontractremain

adequateexplanations,canbemetonlyifthenewunderstandingof

contractthatthetheoristreaches,ontheonehand,andthelegal

conceptsthatlawyersdeploy,ontheother,arecapableofcoexisting

alongsideeachother.Thenewunderstandingmustbeonethatlawyers

couldappealtoinordertoexplainwhattheyaredoing,evenwhile

20Cf.SMITH,supranote3,at26,28.

34

simultaneouslymaintainingthattheiroriginallegalconceptsremain

explanatorilyadequate.

Anotherwaytoputthisisthatthenewunderstandingmustneither

addtonorsubtractfromtheintellectualcontentofthecontractual

conceptslawyersinvoke.Anyadditionorsubtractionwillshowthose

explanationstobe,tothatextent,inadequate.(Whateverisaddedor

subtractedwillamounttoan“external”causeofthecontractual

concepts.)

Theupshotisthatthenewunderstandingofcontractthatatheorist

reachescanbenothingotherthanarestatementoftheintellectual

contentoftheconceptslawyersuse.

However,thisleadstoanimpasse.Itnowseemsthatournew

understandingwillfailtosatisfythefirstrequirementforanexplanation

ofcontractlaw:thatitaccountfortheconceptsofcontract.Becauseifwe

areconstrainedtorestatingtheintellectualcontentofthecontractual

concepts,itnowseemsthatwecannotdiscoveranycausesorreasonsfor

them.Wecanonlyrepeattheinitialdescriptionoftheconcepts—their

initialidentificationandcharacterization.Andmerelyrepeatingthe

initialdescriptionofourobjectofinquirywillhardlyprovideanew

understandingofit.

Thisproblemhasbeennotedincritiquesofcontemporaryprivatelaw

theory.PeterCanepointsoutthata“[t]heoryobviouslycannotsimply

tracktheobjectofanalysis.”21Hesuggeststhatprivatelawtheoristsmust

thereforeseeksomesortof“optimumbalance,”betweentracking

doctrinallegalconceptsand“depart[ing]toofarfrom[them].”22

21PeterCane,TheAnatomyofPrivateLawTheory,25OXFORDJ.LEGALSTUD.203,217(2005).22Id.

35

Theproblemisnot,however,aconcernparochialtoprivatelaw

theory.Itisaperennialphilosophicalproblemthatarisesforany

understandingofanything.23Anysuggestedsolutionwill,therefore,

inevitablybepartialandimperfect.Still,somesolutionmustbe

suggested.Sohowcouldtheconceptsofcontractberestatedwithout

merelyrepeatingtheinitialdescriptionofthem?

Theansweristhattherestatementcanbemoreabstractandmore

explicit.Theconceptsofcontractcanberestatedmoreabstractlyby

formulatingbroaderideasthatencompassthemorespecificconcepts

lawyersuse.Theconceptscanberestatedmoreexplicitlybyexpressing

whattheyonlyimply.Thatis,byelaboratingtheirmeaning,statingthe

hithertounstatedconsequencesorinferencesthatcanbedrawnfrom

them.Thismayinvolveaprogressiontoahigherlevelofabstraction,but

couldalsoinvolveremainingatthesamelevel,orproceedingtothemore

specific.

Bythismethod,theinternalapproachseekstoreachsatisfactory

explanationsforcontractdoctrine:abstractionsthatshowthelawto

makesense.Inthisrespect,comparethewayinwhichonemightexplain

aperson’sactions,byexplicatingwhattheyaredoingandcharacterizing

itmoreabstractly.Forexample,wemightexplainwhysomeoneis

connectingcertainconstructionmaterialstogetherinacertainway,by

pointingoutthefurtherconnectionsofmaterialsthatthismakespossible

(explication),andbydescribingthetotalsetofconnectionsthatthe

personintendstoproduce—forexample,wemightsaythattheyare

“buildingahouse”(abstraction).

Inthesameway,thisdissertationcontendsthatwecanproceedby

abstractionandexplication,fromthespecificdoctrinesofcontract

23PLATO,MENO80e;ARISTOTLE,POSTERIORANALYTICS70b7.

36

formationandremedies,toa“willtheory”ofcontract,whichunifiesthat

doctrineundertheideaofthemutualchoiceofthepartiescontracting.

Thispresentationoftheinternalapproach,asaprocessof

restatementthroughabstractionandexplication,answersacommon

objectionthathasbeenmademostpointedlybyWilliamLucy.Lucynotes

thatproponentsofinternalapproachestocontractimpugn“external”

theories(especiallyeconomicanalysis)forfailingtorespectthestated

intellectualcontentoftherelevantlegalconcepts.But,Lucypointsout,

theinternaltheoriststhemselvesseemtotreatlegalconceptsasonlya

sortof“surfacefroth,”becausetheirtheoriespurporttotranslatethe

legalconceptsintomoreprofoundtheoreticalterminologythatisvery

differentfromtheterminologythatlawyersuse.24

Thisallegationofhypocrisydirectedattheinternalapproachis

misplaced.Theinternalapproachdoesnotdenythatatheoryofcontract

maytranslatelegalconceptsintodifferentterminology.Onthecontrary:

atranslationintodifferentterminology—moreabstractorexplicit

terminology—isessentialtotheinternalapproach.Therealdifference

betweentheinternalandexternalapproachesisthatonlytheformer

seekstopreservelawyers’conceptsasadequateexplanations,whichcan

coexistalongsidethetheorist’snewunderstandingthatisexpressedin

differentterminology.25

Theinternalapproachalsoallowsustoseewhylawyersmight

continuetousetheconceptsofcontract,evenalongsidethenew

understandingthatatheoristreaches.Thiswillbethecasewherethe

conceptsofcontractareamorepracticalimplementationofthe

24WilliamLucy,PhilosophyandContractLaw,54U.TORONTOL.J.75,78,104‐07(2004).SeealsoSIMMONDS,supranote8,at1(1984).25SimilarlyStephenSmith’ssuggestionthatcontracttheoriesshouldbe“transparent”vis‐à‐visthelegaldoctrineisarguablyproblematic.Smithcontendsthatcontracttheoriesshouldnot“relyonconcepts,language,andreasoningthatareradicallydifferentfromthoseemployedbylegalactorsthemselves.”Supranote3,at26.Thatistrueonlyonastrict,etymologically‐informedinterpretationof“radical.”

37

theoreticalunderstanding—thatis,wherethetheoreticalunderstanding

islesspractical,orlesseasytoapplytoconcretecircumstances,thanthe

legalconceptsthemselves.Thatwillgenerallybetrueifthetheoretical

understandingismoreabstract,deployingideasthatcoverawiderrange

ofparticularsituations;ormoreexplicit,elaboratingimplicationsthat

lawyershavenoneedtobelabor.

Sinceitproceedsbyabstractionandexplicationoftheconceptsof

contractlaw,theinternalapproachmerelyexpoundstheself‐

understandingthatourobjectofinquiry,contract,alreadyembodies.In

thiswaytheinternalapproachrevealswhatitisthatmadecontract

appearinthefirstplaceasadistinctobjectofinquiry.Ratherthan

imposinganexternalunderstandingupontheobject,theinternal

approachletstheobjectitselfdictatehowitistobeunderstood.

Accordingly,thisapproachmaybecharacterizedasakindofself‐

effacement:thesettingasideofanypreconceptionsaboutwhatcontract

lawoughttolooklike,inordertoenterthemodeofunderstandingthat

contractlawitselfsuggests.26

Contrastexternalapproaches,whichseektoexplaincontractlawby

invokingsomeindependentdomainofknowledgesuchaseconomicsor

moralphilosophyorsociology.Insodoing,externalapproachesefface

theself‐understandingthatcontractalreadyembodies,overwritingit

withadifferentunderstanding.Theytherebyprecludeanunderstanding

ofcontractlaw.

Suchapproachesofcourseproliferateincontracttheorytoday,as

evidencedbytheever‐increasingnumberoftheoriesthatpurportto

26Cf.WEINRIB,supranote8,at15;EDWARDCAIRD,HEGEL8‐9(1883).

38

explain“contractas…”someotherthing.27Incontrast,theinternal

approachseekssimplytounderstandcontractascontract.

Inwhatsensedoestheinternalapproach,ofrestatementthrough

abstractionandexplication,satisfythefirstrequirementforan

understandingofcontract:thatweascertain“causes”orreasonsforthe

conceptsofcontractlaw?Theansweristhatthedoctrinalconcepts

lawyersusearecausedbythemoreabstract,explicittheoretical

understandinginthatthedoctrinalconceptsinstantiatethetheoretical

understanding.Thetheoreticalunderstandingisasetofcircumstances

that,wheninstantiated,effectsthelegalconcepts.

Comparethewaythatanabstractchoicetoperformanactionmay

causemorespecificchoicesthatinstantiatetheaction.Forexample,a

choicetobuildahousewouldeffectchoicestobuildwalls,aroof,adoor,

andsoon.Notethatthearticulationofthemoreabstractchoiceneednot

precedethemorespecificones—someonewhochoosestoerectacertain

kindofhousemaybebuildingabungaloweventhoughhedoesnotyet

appreciatethat.

Insummary,theinternalapproachvindicatescontractlawasan

adequateexplanationforlawyers’actionsbyexplainingtheconceptsof

contractlawsolelyintermsofmoreabstractandexplicitformulationsof

theideastheyalreadycontain.

Havingsetoutthegistofthisapproach—inthepartialandimperfect

mannerthatmaybeinevitableforanydiscussionoftheoretical

methodology—itremainstoconsidersomeimportantissuesand

27E.g.,FRIED,CONTRACTASPROMISE,supranote6;AntonyT.Kronman,ContractLawandDistributiveJustice,89YALEL.J.472(1980);DanielMarkovits,ContractandCollaboration,113YALEL.J.1417(2004);BraydenKing&D.GordonSmith,ContractsasOrganizations,51ARIZ.L.REV.1(2009);CurtisBridgeman,ContractsasPlans,2009U.ILL.L.REV.341;AndrewGold,APropertyTheoryofContract,103NW.U.L.REV.1(2009);EthanJ.Lieb,ContractsandFriendships,59EMORYL.J.649(2010).Cf.WEINRIB,supranote8,at17‐18,andSMITH,supranote3,at31‐32,on“Lawand…”scholarship.

39

objections.Thefirstistheissueofhowtheinternalapproachaddresses

legalerror.

2.3 Error

Lawyersarenotperfect.Asaresult,noteveryinstanceofthedeployment

ofacertainconceptbyaparticularlawyerwillamounttoanadequate

explanationfortherelevantlegalaction.Therewillbelegalerrors.

Asnotedpreviously,theconceptsofcontractrangefromthevery

specific,suchasordersinparticularcases,totheveryabstract,suchas

broaddoctrinalconcepts,overarchingprinciples,andsoon.Thespecific

andtheabstractreciprocallydefineeachother:specificresultsare

attributedto,andidentifiedandcharacterizedby,abstractconcepts;

abstractconceptsareshapedandsharpenedbyspecificcaseoutcomes.

Inaddition,conceptsatthesamelevelofabstractionhaveimplications

foreachother.Forexample,thecontentofeachoftheprongsofathree‐

prongtesthasimplicationsfortheothers,becausetheirrespective

contentcannotbecontradictory.

Errorsoccurwhereagivenconceptofcontractlawisincompatible

withotherconcepts,eitheratthesamelevelofabstractionorinthe

levelsaboveorbelowit.Thisincludeswheredifferentlawyershave

differentviewsaboutacertainconceptorgroupofconcepts,sincenotall

ofthoseviewscanbecorrect.28Errorsalsooccurwherethereisan

omission:whensomenecessarycomponentofanadequateexplanation

isneglected.

28ForthisreasonWeinribreferstothelaw’sself‐understanding,ratherthanparticularlawyers’.Supranote8,at15.

40

Anyunderstandingofcontractlawmustaddressallofthesekindsof

error.29Thewaytodothisontheinternalapproachis,inprinciple,

simple.Theinternalapproachitselfbothrevealsandresolveserrors.An

errorisrevealedwheneverthereisaninternalincompatibilityoran

omission:onethatisapparentfromanunderstandingoftherelevant

legalconceptsconsideredtogether.

Anincompatibilityoromissionmustbeconsideredanerrorbecause

theinternalapproachaimstopreservetheconceptsofcontractas

adequateexplanations.Itseekstoreachabstractionsthatshowcontract

lawtomakesense.Andalegalerrornecessarilyproducesafailureof

explanation.Aninternallycontradictoryexplanationisnoexplanationat

all.Anomissionleavestherelevantexplanationincomplete.

Havingrevealedanerror,theinternalapproachalsosuggestshowto

resolveit:bymodifyingtherelevantconceptssothattheyforma

consistentandcompleteexplanation—sothattheymakesense.30

Resolvinganerrorwillofteninvolveproceedingfromrelativelyspecific

incompatibilitiesoromissionstoamoreabstractstandpoint,fromwhich

itbecomesclearhowtheerrorshouldberesolved.31

Thismethodisfamiliarinotherareasofintellectualinquiry.Consider

againtheanalogyofunderstandingaphysicalaction.Watching

somebodytryingtobuildahouse,wemayseethatcertainelementsof

29Hence,asBensonstresses,anylegalconceptcanbeassumedtobevalidonlyprovisionally,pendinganunderstandingoftheentirecomplexofwhichitisapart.PeterBenson,TheIdeaofaPublicBasisofJustificationforContract,33OSGOODEHALLL.J.273,326(1995).30Weinribcallsthis“coherence.”Supranote8,at13.Unfortunatelycriticsoftenmistakecoherenceforamerelyaestheticdesideratumratherthanarationalone.31Cf.JOHNRAWLS,POLITICALLIBERALISM(2005expandeded.)(“Theworkofabstraction,then,isnotgratuitous:notabstractionforabstraction’ssake.Rather,itiswayofcontinuing…discussionwhensharedunderstandingsoflessergeneralityhavebrokendown.”Id.at45‐46.Note,however,thatinitiallyforthetheoristseekingtounderstandtherelevantpractice“noonelevel,saythatofabstractprincipleorthatofparticularjudgmentsinparticularcases,isviewedasfoundational.Theyallmayhaveaninitialcredibility.”Id.at8n.8.)

41

theirbehaviorarepointless,evencounterproductive,withrespectto

theiraim.Thosecomponentsoftheactionarerevealedtobeerroneous

byreferencetothemoreabstractunderstandingofit.Likewise,themore

abstractunderstandingsuggestshowtoresolvetheerror(byactingina

wayconsistentwiththeoverallaimofbuildingahouse).

Ofcoursethismethodisfamiliartolawyers,becauseitistheapproach

oforthodoxcommonlawreasoning,bywhichthelawseeksto“work

itselfpure.”Throughthisprocess,certainlegalreasoningcomestobe

understoodasinconsistentwithotherpartsofthelaw,orasincomplete,

andsoisoverruledorsupplementedbyfurtherreasoning.Theinternal

approachisinthiswaycontinuouswithcommonlawadjudicationand

argument.Itmerelytakesthisprocesstoahigherlevelofabstractionand

explicationthanpracticinglawyersneedordesire.

Thereis,however,anobjectiontothisapproachtolegalerror,which

hasbeenadvancedbyStephenSmith.32Smithobjectsthatatheoristtoo

stronglycommittedtotheinternalapproachwillbeunabletoexplain

legalmistakes.This,Smithclaims,isbecauseastronginternalapproach

assumesthatlawyers’explanationsareadequate.Thereforesuchan

approachhasnowaytoconceiveofanylegalconceptaserroneous.

Consequently,Smithprefersaweakerversionoftheinternalapproach,

whichassumesnotthatlawyers’explanationsareadequate,butthat

theirexplanationsareatleast(a)“sincere,”and(b)inthesame“ball

park”astheadequateexplanationthatthetheoristsupplies—thatis,the

theorist’sreplacementexplanationmustbeonethatlawyers“mighthave

used.”33

However,astronginternalapproach,whileassumingthatthe

conceptsofcontractlawareadequate,remainsabletoaccountfor

mistakes.Astronginternalapproachneednotassumethatevery

32SMITH,supranote3,at29(discussinghis“transparency”requirement). 33Id.(emphasisinoriginal).

42

particularinstanceofthedeploymentofalegalconceptbyalawyeris

alwaysadequate.Rather,itassumesthatcontractlawinitsentiretyisan

adequateexplanation.Contractisadequateglobally,thoughtherewill

alwaysbelocalerrors.

Infact,theveryideaofalegalmistakeconfirmsthenecessityofthe

stronginternalapproach.Unlessatheoristproceedsonthebasisthat

contractisgloballyadequate,shewillbeunabletorevealorresolvelocal

mistakes.A“mistake”canberevealedandresolvedonlyasasortof

fallingshortofsomeintelligibleunderstanding.Wecansaythatthe

archermisseshismarkonlyifweknowwhatthatmarkis.Likewise,we

cansaythatajudgehaserredinaparticularapplicationofcontractlaw

onlyifweunderstandtheconceptsofcontractmorebroadly.(Wemust

understandthe“ballpark,”asitwere.)Andthatbroaderunderstanding

mustcomefroma“strong”internalapproach:fromanapproachthat

assumesthat,ingeneral,lawyers’explanationsarecorrect—andnotjust

sincerelyattemptedclosemisses.Ifcontractlawweremerelya

patchworkofclosemisses,orifthewholeofthelawwereoneclosemiss,

wewouldhavenowaytomakesenseofitinternally.Howcouldwe

ascertainwhatwasbeingmissed,oreventhatsomethingwasbeing

missed?(Norwouldturningtoanexternalstandpointhelp.Onan

externalapproach,nothingalawyerdoescanberevealedasa“miss”ora

“mistake”—afailuretohitthetargetaimedfor.Thelawyerandthe

theoristareeachdirectingtheirattentiontodifferenttargets.)

Furthermore,withthedistinctionbetweenglobalandlocaladequacy

inplace,wecanseethatthe“strong”internalapproachismoreflexible

withrespecttolegalerrorsthanSmith’sproposedweakeralternative.

Thestronginternalapproachcanaddresslocalinstancesof

(a)insincerity,and(b)completelywild,different‐ball‐parkerrors.The

stronginternalapproachalsogivescontenttotheideaofthetheorist

supplyingasubstituteconceptthatthemistakenlawyer“couldplausibly

haveused”:aplausiblesubstituteisanadequateinternalexplanation.

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Theonlythingtheinternalapproachcannotaddressisaglobalerrorthat

pervadescontractlawinitsentirety.Thatis,thekindoferrorthatwould

requireusto“explainaway”contractlawasawholeasadelusion.

2.4 Description,Prescription,andInterpretation

Itmightnowbeobjectedthat,inseekingtoexplaincontractlawwhileat

thesametimerevealingandresolvingerrorswithinit,theinternal

approachmixesdescriptionofthelawasitiswithprescriptionofwhat

thelawoughttobe.34

Asindeeditdoes.Theinternalapproachprovidesasortof

prescriptivedescriptionofcontractlaw.Butitisimportanttoisolatethe

precisesenseinwhichthisistrue.

Theinternalapproachinvolvesnomeredescription,becauseitreveals

andresolveserrorsinthelaw.Itisinthatwayprescriptive.However,the

internalapproachinvolvesnoexternalprescription,wherebya

preconceptionaboutwhatcontractoughttobelikeissourcedfrom

outsideofthelawitselfandimposeduponit.Rather,anyprescription

aboutwhatthelawoughttobeiswhollyinternal:itproceedsfromthe

impetustomakesenseofwhatcontractis.

Inthisrespectagain,themethodoftheinternalapproachis

continuouswiththatofthecommonlaw.Notoriously,commonlawyers

oftenmakepronouncementsthatseemtoconflatewhatthelawiswith

howitoughttobe.Theytalkinasortof“doublelanguage.”35Itisoften

34SomeoftheissuesherearecanvassedinthedebateamongWADDAMS,DIMENSIONS,supranote9,especiallyat21‐22,222‐24;StephenA.Smith,AMapoftheCommonLaw?,40CAN.BUS.L.J.364(2004);StephenWaddams,Response,40CAN.BUS.L.J.396(2004);AllanBeever&CharlesRickett,InterpretiveLegalTheoryandtheAcademicLawyer,68MODERNL.REV.320(2005);SteveHedley,TheShockoftheOld:InterpretivisminObligations,inSTRUCTUREANDJUSTIFICATIONINPRIVATELAW(CharlesRickett&RossGrantham,eds.,2008).35HENRYMAINE,ANCIENTLAW29‐32(1861),citedinSTEPHENWADDAMS,PRINCIPLEANDPOLICYINCONTRACTLAW12‐13(2011).Seealso1WILLIAMBLACKSTONE,COMMENTARIES

44

said,forexample,thatalegaldecision,thoughauthoritative,iserroneous

ordefectivebecauseitdoesnotreflectwhatthelawis.

Withallthisinmind,itcanbeacceptedthattheinternalapproach

involvesasortofprescriptivedescription.Or,wemightprefertosay,the

internalapproachyieldsaninterpretationofthelaw.Thatlabelmust

alsobequalified,however,becausetheinternalapproachrequiresthe

interpretationtoproceedfromawhollyinternalstandpoint.Contrastthe

mostfamouslegalinterpretivistapproach,RonaldDworkin’s.36

Dworkin’sinterpreterseekstopresentthelawinitsbestpossiblelight,

byidentifyingprinciplesthat“fit”thelawandjustifyit.Inthisendeavor

thereisnothingthatpreventstheintepreterobtainingherprinciples

fromexternalsources,suchasideasaboutmoralityingeneral.

Anylanguageusedtocharacterizecontractlawhereon,thoughitmay

literallybeambiguous,shouldbereadinthisspirit:alwaysasaninternal

interpretation—astatementaboutwhatthelawmustbeinordertobe

understood—andneverasanexternalprescriptionorinterpretation,nor

indeedasameredescription.

2.5 ExplanationandJustification

Doestheinternalapproachattemptmerelytoexplaincontractlaw,or

alsotojustifyit?

Itmightbethoughtthatadoptingtheinternalapproachprecludesany

justification.MichaelTrebilcockhasadvancedaversionofthisclaim,

invokingthefamiliarviewthatanexplanationofhowsomethingisONTHELAWSOFENGLAND70(1765)(“ifitbefoundthat[a]formerdecisionismanifestlyabsurdorunjust,itisdeclarednotthatsuchasentencewasbadlaw,butthatitwasnotlaw”),quotedinNat’lWestminsterBankplcv.SpectrumPlusLtd.,[2005]2A.C.680,698(H.L.).SeealsoGreatNorthernRy.Co.v.SunburstOil&RefiningCo.,287U.S.358,365(1932)(Cardozo,J.)(“[T]heancientdogmathatthelawdeclaredbyitscourtshadaPlatonicoridealexistencebeforetheactofdeclaration.”).36LAW’SEMPIRE(1986).

45

cannotestablishhowitoughttobe.37Onthisview,theinternalapproach,

whichpurportstointerprethowcontractlawis,couldneveraddressthe

questionofhowitshouldbe.

Buttheviewthatonecannotderivean“ought”froman“is”hasbeen

deniedintheprecedingsections.Aninternalunderstanding,ofwhatitis

tobeacertainsortofthing,canestablishwhatthethingoughttobelike.

Aninternalinterpretationof“buildingahouse”establishesthatsomeone

buildingahouseoughttocombinecertainmaterialsincertainways;if

theydonottheyaredoingsomethingwrong.

However,thereremainsanotherreasononemightthinkthatthe

internalapproachprecludesajustificationofcontract.Itmightbe

noticedthatthe“ought”statementarrivedatontheinternalapproachis

onlyconditional.Ifoneisbuildingahouse,thenoneoughttodocertain

things.Likewise,ifthereistobecontract,thencertainrequirements

follow.38Butthatleavesopenwhethertheantecedentoftheconditional

issatisfied.Whenleftunsatisfied,noprescriptionfollowswhatsoever.

Andifnoprescriptionsconcerningcontractlawnecessarilyfollow,that

surelyprecludesajustificationofcontract.39

37TrebilcockaccusesPeterBensonof“whatappearstobesomethingofanaturalisticfallacy:bypositivelyobservingcertainfeaturesofexistingcontractlaw,normativeimplicationscanbederivedbyformulatingdetaileddoctrinalrulesthatallegedly‘cohere’withthefundamentalpremisesinsomeinternallyrationalorlogicalframework.”ARejoinder,33OSGOODEHALLL.J.353,371(1995).38Thereisanambiguityinthisquestion,whichwillreappearlateron.(ChapterFive.)Isthequestionwhetherweshouldhaveorposittheinstitutionofcontractlaw,orisitwhetheranyparticularpersonsshouldchoosetoundertakeacontractualobligation.39JohnGardner,WhatisTortLawFor?Part1.ThePlaceofCorrectiveJustice,30L.&PHIL.1,3‐4(2011)suggeststhateveniftheantecedentoftheconditionalisleftunsatisfied,atheoryofprivatelawis“justificatory.”AccordingtoGardner,solongasitformulatestheconditional,atheoryis“justificatory,”becauseitisthen“aboutwhatshouldbedoneandwhy,”i.e.,“explain[s][something]intermsofreasons.”Whetherornotthisisanappropriatemeaningof“justificatory,”clearlyanunsatisfiedconditionaljustificationactuallyjustifiesnothing.Atruejustificationmustbeunconditional.

46

Thesolutiontothisdifficultyistoseethattheantecedentofthe

conditionalcanbesatisfiedontheinternalapproach.Contractlawitself

canensuretheantecedent’ssatisfaction.Wecanseethisintwoways.

First,speakinggloballyaboutcontractasawhole,wecouldsaythat

contract’sactualitysuppliesitsnecessity.Thatis,theconditional“if

contract…”neednotbesatisfiedbecausewethinkthatthereshouldbe

contractlaw,eveninaworldwherenoneexisted.Instead,the

conditionalissatisfiedjustbecausecontractdoesactuallyexistinour

world—becauseitis.

Second,alternatively,wecouldunderstandcontractlawasbroken

downintoacircleofmutuallyentailingelements.Then,somepartsof

contractlawcouldspecifytheparties’obligations(asreflectedin

contractremediesdoctrine);whileotherpartswouldspecifythe

conditionsfortheapplicationofthoseobligations,andestablishwhether

thoseconditionshavebeenmet(ascontractformationdoctrinedoes).

Contractlawwouldthenformasortofclosedcircleofnormative

requirements,eachofwhichfollowsfromanother.Alloftherelevant

conditionalswouldbesatisfiedfromwithincontractitself.40

Evenifthedifficultyoftheunsatisfiedantecedentisavoidedinoneof

theseways,still,itmightbeasked,inwhatsensewouldunderstanding

thisactualityorclosednormativecircleprovideajustificationofit?41It

wouldprovideajustificationinthesensethatwecan“cometosee

[something]asworthwhilethroughacharacterizationofwhatitis.”42

Thisisthesamekindof“justification”thatmightallowustoappreciate

whyfriendship,orhonor,orlove,isvaluable—irrespectiveofany

40SeeErnestJ.Weinrib,Correlativity,Personality,andtheEmergingConsensusonCorrectiveJustice,2THEORETICALINQUIRIESL.107,112,124‐26&n.14,149‐54(2001),discussingMartinStone,OntheIdeaofPrivateLaw,9CAN.J.L.&JURIS.235,263(1996).41SeealsoErnestJ.Weinrib,PunishmentandDisgorgementasContractRemedies,78CHI.‐KENTL.REV.55,59(2003).42Stone,Idea,supranote40,at242.

47

independentlydesirableeffectsthatmightresultfromparticipatingin

thoseformsofinteraction.

Ofcourse,asitislimitedinscopetoaconsiderationoftheconceptsof

contract,theinternalapproachcannotconsidertherelationsbetween

contractandotherthingswemightvalue.Hence,asChapterOnewarned,

thisworkcannotsupplyanultimatejustificationforthevalueoftheidea

ofchoicethat,itisherecontended,underpinscontract.Todosowould

requirebroadeningourobjectofinquiry,toconsiderotherbranchesof

thelaw,andotherdomainsofnormativity,suchasethicsorthenormsof

civilsociety,inanattempttouniteallofthosedomainsundercommon

abstractions.Thatbroaderprojectwasundertakenbyphilosopherssuch

asKantandHegel,whoviewedcontractlawasonemanifestationofa

moregeneralideaofrationalagencythattakesdifferentformsin

differentbranchesoflawandotherdomainsofnormativity.43Itisalso

theprojectthatonewouldhavetoundertakeinordertodecide,for

example,whetherasystemofstatecompensationshouldsupplantsome

orallofcontractlaw,asithassupplantedpartsoftortlawinsome

jurisdictions.Thatisnottheprojecthere.

Finally,notethatanyjustificationofcontractlawontheinternal

approachwillinevitablybeapublicjustification.44Theconceptsof

contractthatlawyersinvoketoexplaintheiractionsarepublicizedin

publiclegalmaterials—treatises,judicialdecisionsandargumentation,

43Onewaytoshowthatcontractlawisnecessarywouldbetodemonstratethatitsrejectionisinsomesenseself‐contradictory.See,e.g.,CHRISTINEM.KORSGAARD,THESOURCESOFNORMATIVITY123(1996);JohnGardner,NearlyNaturalLaw,52AM.J.JURIS.1(2007).Forexample,assumingthatcontractlawembodiesabstractprinciplesofrationalityoragency,anyargumentthatcontractlawshouldberejectedwouldcontradictconceptionsofourselvesthatwepresupposeingeneral(especiallybyengaginginrationaldiscourse).However,thosegeneralpresuppositionsareexternaltocontractlawitself.Stone,Idea,supranote40,at264.44Benson,PublicBasis,supranote29.

48

andsoon.Thejustificationistherefore,inprinciple,accessibletothe

individualstowhomitapplies.45

Indeed,itmusthavebeenthisqualityofcontractlawasapublic

explanationorjustificationthatimplicitlypromptedourinitial

identificationandcharacterizationoftheobjectofinquiry,contractlaw,

as“theconceptsfoundmostreadilyincontractstreatises,whichdescribe

aparticularsetoflegaljudgments,doctrines,rules,andsoon.”

Otherwise,oureffortstounderstandcontractcouldproceedby

considering,forexample,lawyers’personaldiaries,orotherprivate

sourcesofinformation,inadditiontopublicizedlegalmaterials.46

2.6 Noninstrumentalism

Another,connectedissueistherelationshipbetweentheinternal

approachand“noninstrumentalism.”47

Athingisan“instrument”ifitisameanstosomeindependentendor

purpose.Forexample,ahammerisaninstrumentfordrivinginnails.We

canunderstandtheendorpurposeof“drivinginnails”beforeknowing

anythingabouthammers—wecouldunderstanditeveniftheideaofa

hammerhadnotyetoccurredtous,andweusedstonesinstead.

Understandingathinginstrumentallyis,accordingly,totakeanexternal

approachtoit.Thethinginquestionisconceivedintermsofitstendency

toproduceaneffect—theendorpurpose—thatcanbeunderstood

independentlyofthethingitself.

Note,however,thattoconceiveofsomethinginstrumentallyisnot

justtothinkofit“teleologically,”orbyreferencetoitspurpose.Athing

canbeconceivedteleologicallybutnoninstrumentallyifithasanendor

45Id.at305.46SMITH,supranote3,at14.47Cf.WEINRIB,supranote8,at48‐50.

49

purposethatcannotbeunderstoodindependentlyofthethingitself.As,

forexample,ifweunderstood“friendship”astheconductofpersonswho

areaimingtobefriendly.

Contractlaw,consideredasawhole,wouldbeaninstrumentifitwere

conceivedasameansofproducingcertaineffects,suchasefficiencyor

hegemonyorautonomy,thatcanbegraspedwithoutreferenceto

contractlawitself.(Contractmightbeconceivedteleologically,but

noninstrumentally,ifweweretosay,forexample,that“thepurposeof

contractlawistobecontractlaw.”)48

Itwascontendedabovethatthiskindofexternalapproachis

untenableifweseektoexplaincontract,becauseanyexternalapproach

eitherfailstoexplaincontract,byfailingtospecifythecausesofthe

conceptsofcontract,orexplainscontractaway,byrecharacterizingitas

somethingotherthananadequateexplanation.Thus,aninstrumental

conceptionofcontractlawasawholeisprecludedbytheinternal

approach.

However,itislogicallypossiblethatcontractlawitselfcould

internallyincorporateafullspecificationofaninstrument.Thatis,the

conceptsofcontractcouldspecifybothameansandanend,suchthatan

internalapproachwouldthenreveal“contractlaw”tobenotonething

buttwo.Butwhilethispossibilityisnotlogicallyexcluded,certain

obviousfeaturesofthelawimmediatelyruleitout.

Asaninitialmatter,contractasweknowitdoesnotcontainany

statementofanendorgoalorothereffect,towardswhichittends.Of

course,lawyersandtheoristsoftenmakeassertionsaboutthepurposes

ofcontractlaw.49Butnoneofthosecomesclosetocommanding

48Seeid.at5,8.49NathanOman,UnityandPluralisminContractLaw,103MICH.L.REV.1483(2005),contendsthatjudgesuseconsequentialistreasoningincontractcases.Althoughnotstrictlytothepointhere,itisworthnotingthatOman’sthreeexamplesare

50

consensus.Contractstreatisesandbasiclawcoursesdonotpresentany

authoritativestatementofanend,towhichtheother,authoritative

doctrinesthattheyteach(offerandacceptance,consideration,remedies,

andsoon)conduce.Thatiswhatgivesrisetotheincessantdebate

amongtheoristsastowhatthepurposeofcontractlawis,oroughttobe.

Moreover,thestructureofthedoctrinesthatdocomprisecontractlaw

seemtoexcludethepossibilityoftheirbeingdirectedtowardsthe

promotionofanyend.AsPeterBensonpointsout,“[e]venminimal

familiaritywiththebasicdoctrinesofcontractformationanddischarge

suggests”thatcontractcannotbeunderstoodinstrumentally.50Forone

thing,thosedoctrinesexcludeanyscrutinyofthecontentorsubstanceof

contractualbargains.Forexample,offerandacceptancedoctrine

requirestheparties’assent,butaccordsnosignificancetothesubstance

ofwhatisassentedto.51Similarlythedoctrinesthatgoverndischarge,

suchasfrustration,considerdisruptionsoftheparties’purposes,butnot

thesubstanceofsuchpurposesorends.52

Therearealsoconceptualproblemswithaninstrumental

understandingofcontractlaw.Wehaveencounteredsomeofthese

problemsalready,inrejectingexternalapproachestocontract,andthey

willreappearinvariousguisesthroughoutthiswork.(Especiallyin

ChapterFive’sdiscussionofcontractualobligation.)

Ameanstoanendisalwaystosomeextentarbitrary.Why,itmightbe

asked,shouldoneadoptthismeansinparticular,andnotsomeother?

Relatedly,theefficacyofagivenmeansisneverinvariant:eveniftheend

unpersuasive.TridentCtr.v.Conn.Gen.LifeIns.Co.,847F.2d564(9thCir.1988)concernstheparolevidencerule,whichisasnaturallyconsideredanevidentialoradministrativedoctrineasoneofcontractlaw.ItisfarfromclearthatthereasoninginWilliamsv.Walker‐ThomasFurnitureCo.,350F.2d445(D.C.Cir.1965)orHadleyv.Baxendale,9Ex.341(1854)isconsequentialist.50Benson,PublicBasis,supranote29,at307.51Id.52Id.at308.

51

isinvariablydesired,theinstrumentwillnotalwaysproducethedesired

end.(Ahammerwillbetoopowerfulornotpowerfulenoughforsome

kindsofnailing.Welfarewillnotlikelybeincreasedbythecontractsof

deliberatelydestructivepersons.)Thus,therationalemploymentofan

instrumentrequiresthepossibilityofdiscardingormodifyingitasthe

circumstancesdemand.However,asBensonemphasizes,theconceptsof

contracthaveaninvariantorunqualifiedcharacter.53When(say)offer

andacceptancedoctrineapplies,itapplies—thedoctrinecontainsno

discretionaryelement,orevenasortofrule‐governedsafetyvalve,that

wouldallowjudgestoescapeitsapplicationwherethatapplicationdoes

notachievethedesiredeffect.Theabsenceofsuchanoutletmeansthat

contractlaw,ifinstrumental,isinstrumentallyirrational.

Inaddition,instrumentalexplanationleadstoexplanatoryregress.54

Foranygivenend,wecanaskwhythatendistobepursued.Ifthe

purposeofcontractistomaximizeefficiency,whypursuethat?Thesame

goesevenforapparentlyultimategoodssuchaswelfareorhappiness.

Whydoesthelaw,oranyparticularperson,havetopursuethose?At

somepoint,thepursuitofaninstrumentalexplanationwillhavetobecut

off,atanendthatwhosevalueisinsomesenseself‐explanatoryorself‐

evident.Ofcourse,aswehaveseen,thisisalsotrueofanoninstrumental

explanation.Thepointforpresentpurposesismerelythat,sincethey

mustalsoendupatsomethingvaluableinitself,suchaspleasureor

wealth,thosewhopursueinstrumentalapproachescannotcomplainthat

anoninstrumentalunderstandingissomehowobscureorunsatisfying.

Thatcriticismwouldapplywiththesameforcetotheirown

explanations.

Finally,aninstrumentalexplanationofcontractlawwouldshowitto

beilliberal.Suchanexplanationpositsanendthatpersonsmustpursue,

53E.g.,Benson,AbstractRight,supranote11,at1109.54Id.at1114.

52

denyingtheircapacitytochooseandpursuetheirownconceptionsofthe

good.55Butthepolitico‐legalinstitutionsandpracticesofcontemporary

westernnationsassumethatobligationscannotbeimposeduponpeople

withoutsomehowreflectingtheirchoice.(Iftherecannotbeanexplicit

personalchoice,thentheremayatleastbeonemadethrougha

democraticprocess.)Theprospectsforajustificationofcontractlaw,ifit

isunderstoodinstrumentally,thereforeseemverybleak.

2.7 PhilosophyandHistory

Someoftheleadingscholarswhotakeaninternalapproachtoprivate

lawmakeheavyuseofthelegalphilosophiesof,forexample,Kantand

Hegel.56Likewise,thepresentworkcontendsthatsomeoftheideasof

thosephilosophers,andothersinthemodernnaturallawtradition,help

ustounderstandcontract.Isthisnotjusttheimpositionofanexternal

understanding?

Theansweristhattheworkofphilosophersisusefulonlytothe

extentthatitassistsintheinternalapproach:inexplicatingand

abstractingideasthatthelawalreadycontains.57

Itmaybeastonishing,toacontemporaryAmericanorCommonwealth

lawyer,thattheworkofapre‐twentiethcenturyEuropeanphilosopher

couldilluminatethecommonlawofcontractasitstandstoday.This

astonishmentshouldbetemperedwhenitisrecalledthatcontractlaw

hasexisted,invariousforms,formillennia,andhasbeenremarkably

similaracrossEuropeanjurisdictionsformanycenturiesattheleast.The

astonishmentshouldbefurthertemperedwhenitispointedoutthatthe

philosophersinthemodernnaturallawtraditiontooktheinternal

approach:theysoughttoexplainthelawasitisratherthanimposing

55Id.at1109.56SeeBenson,AbstractRight,supranote11;WEINRIB,IDEA,supranote8.57Benson,PublicBasis,supranote29,at321.

53

preconceptionsaboutwhatitoughttobelike.58Butintheendtheproof

thattheworkofthemodernnaturallawtraditionilluminatesour

contractlawtodaycanonlycomefromsubstantiveargumentsabouthow

tounderstandthelaw,asadvancedinthiswork’ssubsequentchapters.

Itmayalsosurprisesomethattheroleoflegalhistory,ontheinternal

approach,isexactlythesameasthatoflegalphilosophy.Legalhistoryis

usefulonlytotheextentitassistsindevelopinganinternal

understanding.Theuseoflegalhistoryisunacceptable—itismerelyan

impositionofexternalpreconceptions—totheextentthathistoryis

deployedtosuggestthatourlegalconceptsareafraudordelusion.As

wouldbethecase,forexample,ifitweresuggestedthatthoseconcepts

arejustthebyproductofthevenalityofjudgesinthepast.59

2.8 QuestionsAboutContractLaw

Havingsetoutthegistoftheinternalapproachtocontractlaw,and

havingconsideredsomeoftheissuesandobjectionsitraises,wecan

nowask:whatarethequestionsthattheinternalapproachprompts

aboutcontract?

Theinternalapproachforestallsmostofthestandardquestionsabout

contractlawthatcontemporarytheoristsseektoanswer.Forexample,

MelvinEisenberg,positioninghimselfsquarelyinthemainstreamof

contemporarycontracttheory,tellsusthat:“Thefirstgreatquestionof

contractlawis…whatkindsofpromisesshouldbeenforced.”60In

response,RandyBarnettsuggeststhatthisapproachoverlooksamore

58MichaelOakeshott,TheConceptofaPhilosophicalJurisprudence(PartII),[1938]POLITICA345,356.59ThispointisdevelopedinN.W.Sage,HegelonLegalHistoryandLegalPhilosophy(Int’lAssoc.ofLegal&SocialPhil.Conf.,Apr.2013).60MelvinAronEisenberg,ThePrinciplesofConsideration,67CORNELLL.REV.640(1982).

54

basicquestion:Shouldanypromisesbeenforced?61Inresponseto

Barnett,wemightnotethathisownquestionpresumesananswertoa

stillmorebasicone,whichwaseffectivelyaskedbyFullerandPerdue:

Whatdoesitmeantoenforceapromise?62

Butallofthesequestions,nomatterhowmuchtheyareunpacked,

implicitlyassumeanexternalapproachtocontractlaw.Theyassumethat

weshouldunderstandcontractastheenforcementofcertainpromises.

Theideaofapromisecanbeunderstoodindependentlyofcontractlaw

itself.Forexample,peopleoftenmakepromisesthatarenotcontracts.

Hencetheneed,whichEisenberg’s“firstgreatquestion”addresses,to

distinguishthosepromisesthatarecontractsfromthosethatarenot.

Moregenerally,theveryideaofaskingwhatundertakings,

transactionsorotherarrangementscontractlawshould“enforce”

presumesanexternalstandpoint.Itassumesthatthereisan

independentlyspecifiableundertaking,transaction,orother

arrangementuponwhichthelawofcontractacts.Thesameistrueofany

approachthataskswhatcontractshould“foster,”“promote,”“facilitate,”

“protect”or“prevent.”

Incontrast,ontheinternalapproach,theonlysimilarconstruction

availablewouldbetosaythatcontractlaw“enforces”contracts.Contract

lawcannotbeunderstood,ontheinternalapproach,asoperatingupon

anythingthatcanbeunderstoodindependentlyofcontractitself.

Thus,thebasicquestionsthattheinternalapproachpromptsarenot

questionsaboutwhatthingscontractlawshouldenforce(etc.).Instead,

theinternalapproachasksonlyhowcontractcanbeunderstood,through

aprocessofabstractionandexplicationoftheconceptsalready

61RandyE.Barnett,Introduction,inPERSPECTIVESONCONTRACTLAW(RandyE.Barnetted.1995)(emphasisadded).62LonL.Fuller&WilliamR.Purdue,Jr.,TheRelianceInterestinContractDamages,Pt.1,46YALEL.J.52,52(1936)

55

containedincontractlaw.Thefirstbasicquestionthattheinternal

approachpromptsaboutcontractisthereforesimply:Whatisacontract?

Butthatquestioncontainsmorethanoneaspect.Toseewhy,consider

theopeningofthethirdAmericaneditionofSirWilliamAnson’s

PrinciplesoftheLawofContract.Thistextbeginswithanextended

discussionofhow“contract”shouldbedefined,culminatinginAnson’s

proposeddefinition:

Definitionofcontract.Andsowearenowinapositiontoattemptadefinitionofcontract,ortheresultoftheconcurrenceofagreementandobligation:andwemaysaythatitisanagreementenforceableatlaw,madebetweentwoormorepersons,bywhichrightsareacquiredbyone…toactsorforbearancesonthepartoftheother….63

ThiseditionofAnson’sPrincipleswaseditedbyArthurCorbin.

Throughout,Corbinsupplements,clarifiesandcriticizesAnson’stextin

extensivefootnotes.CorbinevidentlyfoundAnson’sdefinitionof

“contract”insufficientlyprecise:

Thetermcontracthasbeenusedindifferentlytoreferto…[a]theseriesofoperativeactsbythepartiesresultinginnewlegalrelations;…[b]thelegalrelationsresultingfromtheoperativeacts,consistingofarightorrightsinpersonamandtheircorrespondingduties,accompaniedbycertainpowers,privileges,andimmunities.Thesumoftheselegalrelationsisoftencalled‘obligation.’Thepresenteditorpreferstodefinecontractinsense[b]….64

Anson’sdefinitionofcontractconceivedofcontractastheunionof

twoelements,“theconcurrenceofagreementandobligation.”Corbin

noticedthis,anddecidedthattheterm“contract”isunfortunately

ambiguous.Hesoughttoseparatethetwoaspectscontainedinthatterm,

agreementandobligation,andtosettleupononlyoneofthemastruly

definitiveof“contract.”

63SIRWILLIAMR.ANSON,PRINCIPLESOFTHELAWOFCONTRACT13(ArthurL.Corbined.,3d.Am.ed.1919).64Id.at13n.2.(Corbinalsodistinguishes“contract”inthesenseofaphysicaldocumentorrecord.)SeealsoArthurL.Corbin,OfferandAcceptance,andSomeoftheResultingLegalRelations,26YALEL.J.169(1917).

56

Theinternalapproach,inpromptingthequestion“whatisacontract?”

thereforerequiresustoasknotonebuttwobasicquestions—asAnson

implicitlyassumedandCorbinexplicitlynoticed.Thefirstquestionis:

howdoesacontractcometoexist?Thisisthequestionofacontract’s

formation.Thesecondquestionis:whatisanextantcontractual

obligation,onceithascometoexist?Thisisthequestionofthecontract’s

form.

57

3 FormationI:MutualWillContractsarenotjustimposeduponpartiesbythestate.1Norcana

singlepartycontractwithherself:twodistinctlegalpersonsare

required.2Furthermore,neitheroneofthetwodistinctpersonsmay

imposeacontractontheother.Contractformationrequiresthemutual

assentoftwoparties.3

Thosearefundamentalpremisesofcontractlaw—sofundamental

theyoftenremainunarticulated.Statedatthislevelofgenerality,

however,theyleavemostoftheimportantissuesaboutformation

unanswered.Whatis“assent”?Howdotheassentsoftwocontracting

partiesbecome“mutual”?Whyistheparties’mutualassentnecessaryto

establishacontract,andhowexactlydoesitdoso?

Addressingthosemorespecificissuesyieldsananswertothefirstof

thetwoquestionsaboutcontractlawpromptedbytheinternalapproach:

howisacontractformed?Theanswerisawilltheoryofcontract

formation,inwhichacontractisunderstoodasarisingthroughthesheer

mutualchoiceofthecontractingparties.

Thischapterbeginsbyoutliningakeytheoreticalelementuponwhich

therestoftheworkbuilds:thenatureofthewill,orchoice,incontract

formation(3.1).Thechapterthenaddresseswhatamutualwillorchoice

is,andwhymutualityisnecessaryforcontractformation(3.2).

Insodoingthechapterintroducesanimportantpresuppositionthat

underliescontractlaw,aboutthevalueofchoice,whichisherecalledthe

“fundamentalnormativeprinciple.”Thisprinciplestatesthatnoperson

1Therearestatutoryexceptions,forexampleinlaborandutilitiesregulation.SeefurtherCompulsoryContractsinTheoryandPractice(Symposium),43COLUM.L.REV.567‐749(1943).2Faulknerv.Lowe,(1848)2Ex.595,597(Pollock,C.B.)(onaparty’spurportedcontracttopaymoneytohimself:“Thecovenant,tomymind,issenseless.”).3RESTATEMENT(SECOND)OFCONTRACTS§17(1981)(requirementofmutualassent).

58

may,throughtheirchoice,usurpanotherperson’schoices.Theprinciple

entailsthatcontractsmustbeestablishedmutually,becausethe

unilateralestablishmentofacontractwouldamounttoa“foisting”or

“suborning”oftheotherperson’schoice.

Finallythechapterconsiderstwocommonobjectionstothewill

theoryofformation.First,thatitisincompatiblewiththecommonlaw’s

“objective”approach(3.3).Second,thatitisunderminedbythe

imposition,throughimplicationandincorporation,ofcontractualterms

thatthepartieshavenotspecificallyconsidered—especiallyincontracts

of“adhesion”(alsoknownas“standardform”or“boilerplate”

agreements)(3.4).Onceweunderstandthenatureoftheparties’mutual

choiceincontractformation,nodifficultyofprincipleisposedbythese

objections.

3.1 TheWill

“Behindallformsofcontract,nodoubt,liesthebasicideaofassent.”4An

“assent”isamanifestationofwill.5Incontractlaw,eachparty’s

manifestationofwilliscertifiedbythedoctrinesofcontractformation,

especiallyofferandacceptance.Whatthenisaparty’s“will”asitappears

incontractformation?6

3.1.1 Thewillaschoiceoreffectiveintention

Lawyersandtheoristsdiscussingcontractformationfrequently

invokethenotionofaparty’swill—notalwayswithapproval—butrarely

defineit.Nevertheless,itisclearthataparty’s“will”iscloselyassociated

withtheir“intention.”Indeed,incontractlawthe“willoftheparties”is

oftenusedinterchangeablywith“theparties’intentions.”

4G.C.CHESHIRE&C.H.S.FIFOOT,THELAWOFCONTRACT21(4thed.1956).5BLACK’SLAWDICTIONARY(9thed.2009)(“verbalornonverbalconductreasonablyinterpretedaswillingness”). 6“Manifestation”isconsideredfurtherbelow.

59

Inordertomakesenseofcontractformation,however,eachparty’s

willmustbenotmerelyanintention,butaneffectiveintention.Tosaythe

samething,itmustbeachoice.

Aparty’swillincontractformationcannotbeanas‐yet‐uneffected,or

ineffectual,intention.Ifeachparty’swillamountedtoanas‐yet‐

uneffectedintention—amere“intentionto”achievesomethinginthe

future—thenitwouldbemysteriouswhyacontractshouldeveractually

beformed.Thecontract’sformationwouldremainperpetuallyafuture

goal.Likewise,ifeachparty’swillamountedtoanineffectualintention—

amerewish,whichthepartylackedtheabilitytorealize—thenwewould

beatalosstoexplainhowthewisheverbecamereality.Aparty’swillin

contractformationmustthereforebeaneffectiveintention,orchoice.

Whatmorecanbesaidaboutchosenoreffectivelyintendedconduct,

inordertodistinguishitfrom“un‐chosen”conduct—thatis,thesortof

conductthatdoesnotsufficeforcontractformation?Itisdifficulttosay

more,excepteithernegativelyorschematically.

Thelaw’sapproachtodefiningchoiceincontractformationislargely

negative.Neitherthecourtsnorcommentatorstendtoattemptpositive

definitions,butinsteaddescribeformsofconductthatarenotchosenor

willed.7Indeed,H.L.A.Hartobservedthatthe“will”incontractlawisa

paradigmatic“defeasibleconcept”:onedefinedlargelybyconsideringthe

waysinwhichpurportedinstancesofitfallshort,ratherthanby

specifyingnecessaryandsufficientconditionsforitsapplication.8

Negatively,wecansay,withPeterBenson,thatcertainconductin

contractformationischosensolongasthatconduct“neednotbeviewed

7“Itisdifficulttoidentifyanypositivelyarticulatedrequisitesforvalidconsentinlaw:onecanonlygleanwhattheserequisitesmightbefromvariouslegalstatementsaboutwhatvalidconsentisnot.”RICKBIGWOOD,EXPLOITATIVECONTRACTS88(2003).8H.L.A.Hart,TheAscriptionofResponsibilityandRights,49PROC.ARISTOTELIANSOC’Y171,citedinBIGWOOD,supranote7,at88‐89.

60

asjustthesimplemechanicaleffect”ofsomeexternalcause.9Thatis,

thereisa“choice”solongastheparty’sconductisnoteffectedbyany

whollydeterminingcauseotherthantheirchoiceitself.

Thus,forexample,thereisnochoicebyapartyincontractformation

whereanotherpersonforciblymovestheirhandtosignadocument.10

Norwouldtherebeachoiceiftheparty’srelevantconductweremerely

theeffectofanuncontrollablebodilyprocess,suchasanunexpected

spasm.

ToBenson’snegativeformulationitmustbeaddedthat,evenifa

person’sconductisnotmerelythemechanicaleffectofanexternalcause,

theconductmayneverthelessbeun‐chosenifthepersonis,throughno

faultoftheirown,radicallydeceivedaboutthenatureofwhattheyare

doing.Thiswillbethecase,forexample,whereapartysignsadocument

thathehasbeenledtobelieveisnotacontract,butwhichislateralleged

tobeone.(Herethedefenseofnonestfactumrendersthealleged

contractvoid.)11

Notethatintheseexamplesofun‐chosenconductthereisnocontract

formationbecausethereisnorelevantchoicewhatsoever.Eitherthe

allegedchoiceisnotreallyachoice,becauseitiswhollyproducedbyan

externalcause;orifitisachoice,itisnotarelevantone,becauseitisa

choiceaboutsomethingfundamentallydifferentfromthematteratissue.

Atthesametime,thepresenceofachoice,onthisapproach,can

coexistwiththepresenceofanumberoflesserdefectsthatwemight

9PeterBenson,TheUnityofContractLaw,inTHETHEORYOFCONTRACTLAW:NEWESSAYS141‐42(PeterBensoned.,2001).10Id.at141. 11E.g.,Lewisv.Clay,(1897)67L.J.Q.B.224(signatorytoldhewasmerelywitnessinganother’ssignature,wheninfactendorsingpromissorynotes).ButseeSaundersv.AngliaBuildingSociety,[1971]A.C.1004(H.L.)(suggestingitisanhistoricalaccidentthatnonestfactumrenderscontractvoidratherthanvoidable).Amistakeaboutthecontractor’sidentitymayalsorenderacontractvoidinsomejurisdictions.SeeShogunFinanceLtdv.Hudson,[2004]1A.C.919(H.L.).

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tendtothinkmakeone’sconductnotfullychosen.Thisisillustratedby

thelawofcontractformation,whichignoresmanysuchlesserdefects.

Forexample,thereisachoicethatsufficesforcontractformationevenif

thepartymakingitisunderduress.Again,solongasthepartyisnot

whollydeterminedbyforcesbeyondherchoice,orwhollyunawareof

thenatureofwhatsheisdoing,herconductissufficiently“chosen”to

formacontract.

Ofcourse,lesserdefectsarenoticedbycontractlaw—justnotbythe

lawofcontractformation.12Acontractisformedsolongasthereisoffer

andacceptance,and(atleastinsomecircumstancesandjurisdictions)

considerationandintentiontocreatelegalrelations.Thecontractmay

thenbedefeatedthroughasuccessfulargumentthatitsformationwasin

somesensenotfullychosen.Butsuchanargumentwouldinvokeoneof

the“vitiatingdoctrines”—duress,mistake,undueinfluence,

unconscionability,andsoon.13Subjecttopossibleexceptionsforextreme

cases,thosedoctrinesrenderacontractmerely“voidable”attheoption

oftheinnocentparty.14Thecontractwillbesetasideonlyoncethe

innocentpartychoosestoavoidit.Incontrast,theabsenceofanychoice

whatsoeverincontractformationresultsina“void”contract:nocontract

atall,fromtheoutset.Inaddressingcontractformationdoctrine,

therefore,weconsiderastarkerconceptionofchoicethanwouldappear

werewetoaddresscontractlawinitsentirety.

Whilelawyerstendtodefineaparty’schoiceorwillinformationonly

negatively,itisalsopossibletotenderaminimallypositivedefinitionin

schematicform.ThisdefinitiondrawsonKant’sunderstandingofchoice,

12Benson,Unity,supranote9,at142&n.32;BIGWOOD,supranote7,at86‐92.13Evenformsofincapacitysuchasinfancy,insanity,andintoxicationgenerallyrenderthecontractvoidableratherthanvoid.Theaffectedpartymayaffirmthecontractifsheovercomestherelevantdisability.JOSEPHM.PERILLO,CALAMARIANDPERILLOONCONTRACTS§8.1(5thed.2003).14See,e.g.,ShogunFinance,supranote11.

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whichhedeployedinhiseffortstomakesenseofprivatelaw,including

contract.

Herethefacultyofchoiceisdefinedasaperson’sabilitytobe,by

meansofherconcepts,thecauseoftheobjectsofthoseconcepts.15That

is:apersonhasaconceptofsomethingshewantstoachieve—anendor

purpose—andeffectsit,therebycausingtheconcepttobecomeareality.

Thepersonherself,throughherchoice,isthecauseofherendor

purpose’srealization.Herintentionistherebyeffective;shehaschosen.

3.1.2 “Metaphysicaldifficulties”

Inpartbecausenomoresubstantialpositivecharacterizationofthe

willorchoiceincontractformationisavailable,itmayseemthata

concreteappreciationofiteludesus.Thisopensthewayforthoselegal

theoristswhoconsiderthemselvesparticularlyhard‐headedtodismiss

theideaofthewillincontractingasadeception.Inpartforthisreason,

twentiethcenturyscholarsassociatedwiththeRealisttraditionrejected

thewilltheoryofcontract.MorrisCohen,forexample,famouslyderided

theideaofaperson’swillincontractingasdubiously“metaphysical,”by

whichhemeantunobservableandhencesupernatural:16

Themetaphysicaldifficultiesof[thewilltheory]haveoftenbeenpointedout.Mindsorwillsarenotinthemselvesexistingthingsthatwecanlookatandrecognize.Wearerestrictedinourearthlyexperiencetotheobservationofthechangesoractionsofmoreorlessanimatedbodiesintimeandspace;anddisembodiedmindsorwillsarebeyondthescopeandreachofearthlylaw.Butwhilethisobjectionhasbecomefamiliar,ithasnotbeenveryeffective.Theforceoftheoldideas,embodiedinthetraditionallanguage,hasnotalwaysbeenovercomeevenbythosewholikeLangdellandSalmondprofesstorecognizethefictionalelementinthewilltheory.

15Cf.IMMANUELKANT,THEMETAPHYSICSOFMORALS[6:211‐14](MaryJ.Gregored.&trans.,1996)(1797‐98).16MorrisR.Cohen,TheBasisofContract,46HARV.L.REV.553,575(1933).

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Thereason“thisobjection…hasnotbeenveryeffective,”17itis

submitted,isbecausewillsorchoicesare“existingthingsthatwecan

lookatandrecognize.”

Asaninitialmatter,werecognizesomethingakintoawillwhenever

weobservethe“changes…intimeandspace”undertakenbythemost

familiarkindof“animatedbody”:ananimal.Observingabirdflying

towardsitsnest,oradogwalkingdownthestreetonitswayhome,we

recognizethattheanimal’smovementsaredirectedtowardssomeend,

whichtheanimaliscausingtoberealized.

Moreover,observingthe“action”ofanotherperson,wewithout

hesitation—indeed,beforeweevenhavethechancetoseethepersonas

amere“animatedbody”—recognizethisasintentionalorpurposive.We

understandtheperson’sactionstobeanimatedbyaconceptofanend

thattheyareintentionallyrealizing.

Thisisparticularlyclearwhenweobservepersonseffectingtheir

intentionsinthephysicalworld—walkingdownastreet,tendinga

garden,orbuildingahouse,forexample.Butwecanalsorecognizeother

personseffectingtheirintentionsintheircontrolof“things”thatare

nonphysical(oratleast,whosephysicaldirectionwecannotsee).For

example,wecanobservepersonsintendingmentaleffectssuchas

concentrationordetermination.

Still,itmightbeobjected,thereisadifferencebetweenwillingor

choosinganeffectsuchascrossingthestreetorconcentrating,and

willingacontract.Whenitcomestocontractformation,thewillreally

seemstoeludeourgraspbecauseitisdifficulttoconceiveofanyobject

orstateofaffairsthatthewillcouldconceivablyeffect,oraffect.Wecan

readilyappreciatewhatitisthatapersoncrossingthestreet,or

17Withrespecttocontracttheory(asopposedtolegalpracticeorlayideasaboutcontract),Cohenspoketoosoon.

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concentrating,effects:aphysicalmovement,orthemaintenanceofa

certainmentalstate.Butwithrespecttocontractformation,theanswer

tothequestionofwhattheparties’choiceeffectsoraffectsisfarless

readytohand.Andthisiswhatseemstobeattheheartoftheobjection

thatthewillincontractformation,inparticular,isdubiously

metaphysicalorsupernatural.

Indeed,thisisessentiallythedifficultythatHumeposedfortheories

ofvoluntaryobligation,whichproposethatanobligationmaybe

establishedmerelybyaperson’swillorchoice.Humesuggestedthatthe

supposedoperationofthe“will”inthiscontext“mayevenbecompared

toTRANSUBSTANTIATIONorHOLYORDERS.”18

Humepointedout,first,thatthewillorchoiceofapersonwhois

undertakinganobligationseemstoproduce“[not]theleastchangein

anypartoftheuniverse.”19Thereisnophysicalobjectthatthewillacts

upon,inordertoestablishanobligation.Nordoesthereseemtobeany

otherrelevantobjectorstateofaffairsthataperson’swillincontracting

couldactuponoreffect.Aperson’swillcannot,forexample,somehow

alterthestructureofthemoralfirmament.Individualsdonotgenerally

havethepowertochange,attheirmerewhim,thenormsthatapplyto

them.20

Second,Humerebuttedtheviewthatanactofwillitselfcould

constitutetherelevant“changeintheuniverse”thatgivesrisetoan

obligation.Ifwhatapersonhastodo,tocreateanobligation,istoissue

anactofwillitself,whatwouldbetheobjectofthatactofwill?(Anactof

willmusthavesomeobject.)Presumablyitsobjectcouldonlybethe

creationofanewobligation.However,thecreationofanewobligation,

wearehereassuming,arisesfromtheissuanceofanactofwill.Sothe

18DAVIDHUME,ATREATISEOFHUMANNATUREIII.2.v(1740).19Id.20DanielMarkovits,MakingandKeepingContracts,92VA.L.REV.1325,1367‐68(2006),raisesthispointasanobjectiontothewilltheoryofcontract.

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objectoftheactofwillitselfwouldhavetobetheissuanceofanotheract

ofwill.Butthen,whatistheobjectofthatotheractofwill?Itcouldonly

bethecreationofanewobligation,whichrequiresanactofwill….And

soon.“[T]hewillherehasnoobjecttowhichitcouldtend;butmust

returnuponitselfininfinitum.”21

Versionsofthisdifficultyhavealsobeenencountered,itseemsquite

independently,bycontractsscholars.Themostprominentversionis

whatFrederickPollockcalleda“secretparadox”ofcontractlaw.22The

paradoxismostoftenexpressedasaproblemaboutfindinggood

considerationinfullyexecutorycontracts—thatis,contractsformedby

anexchangeofpromises.ForpartyA’spromisetobindhim,Amust

receivegoodconsiderationfromB.Inafullyexecutorycontract,theonly

possibleconsiderationAreceivesisB’sreturnpromise.ButforB’sreturn

promisetoAtoconstitutegoodconsideration,itmustbebinding.Andfor

B’spromisetoAtobebinding,BmustreceivegoodconsiderationfromA.

Thus,A’spromisemustfirstbebinding.…Andsoon.Thereisareturnin

infinitum,becauseforeachparty’spromisetobind,itmustfirstbind.23

Eachofthesemodelsofcontractformation—Hume’snotionofthe

creationofanobligationthroughan“actofwill,”andthesecretparadox

ofthebindingpromise—isproblematicforessentiallythesamereason.

Eachpositstwonecessaryelementsintheaccountofcontractformation:

ontheonehand,acertainchoice,orsomethingakintochoice,bythe

contractingparty(their“actofwill”or“promise”);ontheother,an

independentobject,stateofaffairs,orreality,thatthechoiceeffectsor

21HUME,supranote18.22FrederickPollock,BookReview,30L.Q.REV.128,129(1914).SeealsoRichardBronaugh,ASecretParadoxoftheCommonLaw,2L.&PHIL.193(1983);BrianCoote,TheEssenceofContract(PartII),1J.CONT.L.183(1991);Benson,Unity,supranote9,at160n.52;PeterBenson,TheIdeaofConsideration,61U.T.L.J.241,260(2011).23Notably,thesamecircularityproblemarisesinthecivillawforthedoctrineofcausa.BrianCoote,TheEssenceofContract(PartI),1J.CONT.L.91,111(1988);ErnestG.Lorenzen,CausaandConsiderationintheLawofContracts,28YALEL.J.621,626(1919).

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affects(an“obligation,”“bindingness”).Theparadox,orreturnin

infinitum,arisesbecausethepresenceofeachofthetwonecessary

elementsisdependentuponthepresenceoftheother.

Wecanalsorestatetheprobleminourterminologyofchoice.To

establishacontract,eachpartymustchoose—thatis,issueaneffective

intention.However,foraparty’sintentiontobeeffective,theremustbea

contract.Otherwise,whatthepartyhasissuedis,atbest,anas‐yet‐

uneffectedintentionto,oranineffectualwish.However,accordingtoour

initialpremise,fortheretobeacontract,eachpartymustissuean

effectiveintention.…Andsoon.Theproblemisthat,foraparty’s

intentiontobeeffective,itmustfirstbeeffective.24

Onesolutiontotheseparadoxeswouldbetosaythatpositivelaw,or

positivemoralitysuchasconvention,“stepsin”toconferuponthe

parties’conductalegaleffectthatitwouldnototherwisehave.The

partieswouldthenmerelyhavetoevinceanintentionto,orwishto,

undertakeapositivelegalobligation;thepositivelawwouldthengive

effecttothatintentionorwish.

Hume’sconventionalistaccountofvoluntaryobligationarguably

involvesasolutionofthisform.Suchasolutionhasalsoappeared,inthe

contextofcontractlaw,inBrianCoote’streatmentofthe“secret

paradox.”AccordingtoCoote,acontractistheparties’“assumption”ofa

legalobligationbythe“meanswhichthelawrecognizesaseffectivefor

thatpurpose.”25Thelawprovidesa“facility”throughwhichcontractual

obligationsmaybeassumed,suchthatifthepartiesconductthemselves

24Thisproblemisnotlimitedtocontractlaw.Itappliestoanyactionwhosecompletiondependsupontheactor’srecognitionofwhattheactionamountsto.Forexample,“makingapromise,signingacontract,givingagift,…gettingmarried.”(AllexamplesofactionsthatHumecontendsare“naturallyunintelligible.”)AntonFord,ActionandGenerality,inESSAYSONANSCOMBE'SINTENTION100(AntonFord,JenniferHornsby&FrederickStoutlandeds.,2011).Indeed,theproblemmayariseforanygenuine“action”(intentionalact)whatsoever.25Coote,supranote22,at195.Cf.H.L.A.HARΤ,ΤΗΕCONCEPTOFLAW27(1961).

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intherightway,alegallycognizedobligationresults.26Onthis

understandingofcontract,Cooteclaims,noparadoxorreturnin

infinitumarises.

EvenifCoote’ssolutionpreventsanyparadox,itisunsatisfactory

becauseitbearsthedefectsofanexternalexplanationofcontract.Asan

initialmatter,itrevealscontractlawtobearbitrary.Why,wemightask,

doesthepositivelawprovideforthisparticularmeansorfacility—the

onespecifiedbycontractformationdoctrine—andnotsomeother?As

farasCoote’stheoryisconcerned,thelawcouldprovideforanymeans

ofcontractformationwhatsoever.27Itcouldprovide,forexample,thata

contractisformedwhentwopersonsperformacertainsetofdance

moves.Moreover,itishighlysuspiciousthatthemeansthelawhappens

tohaverecognizedistheparties’manifestationofapurportedchoiceto

formacontract—thatis,theparties’attempttoachievethemselveswhat

Cootesuggeststhepositivelawmuststepintodoforthem.

Furthermore,asCootenotes,hissolutionisincompleteinacrucial

respect:itdoesnotexplainwhythepositivelawmustprovideafacilityor

meansforindividualstoundertakepositivelegalobligations.28Noreason

whyisapparentfromtheconceptsofcontractlawthemselves(assetout

intherelevantcourtdecisions,treatises,andsoon).Theonlythingthat

judgesandlawyersconsistentlysayinthisrespectisthatthelaw

enforcestheparties’intentions.Anyreasonforthepositivelaw’s

conferralofthepowertocontractmustthereforebeexternaltocontract

lawitself.Thus,thereisaproblemofregresshere,whichmustbe

addressedifafullexplanationofcontractistobesecured.However,that

cannotbeachievedwithincontractitself.Cootehimselfremainsagnostic

26Coote,supranote22,at192.27Id.at195(“Themeansrecognizedaseffectivebythelawcanvaryfromonelegalsystemtoanotherandfromtimetotime.”).28Id.at196(“whyshouldthelawenable…personstotakelegalcontractualobligationsuponthemselves?”).SeealsoNeilMacCormick,VoluntaryObligationsandNormativePowers(PartI),46PROC.ARISTOTELIANSOC’Y(SUPP.VOL.)59,60(1972).

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aboutwhatthelaw’sreasonsforsupplyingthepowertocontractmight

be,suggestingthattheyarenottheprovinceofcontracttheory.29

Theinternalapproachsuggestsadifferentsolution.Contract

formationdoctrine—nottomentiontheintuitive,layunderstandingof

contract—apparentlyallowsforcontractformationsolelythroughthe

parties’choice.Theinternalapproachtakesthisseriously.Itpursuesa

truewilltheory.

Thisrequiresustostoplooking—aswehaveimplicitlybeendoing—

forsomethingbeyondtheparties’choicethatmightexplaincontract

formation,suchasafacilitysuppliedbythepositivelaw,oranythingelse

thattheparties’choiceinformationmightaffectoreffect.InHume’s

terminology:therecanbeno“object”ofthecontractingparty’schoicein

thesenseofa“partoftheuniverse”orrealitythatexistsindependently.

Thereisnothingexternaltotheparties’choice.

Ifanyimplicitlyexternalapproachisrejected,suchthatthe

contractingparty’schoiceinformationmustbeunderstoodaseffecting

nothingbeyondthatchoiceitself,whatdoesthechoiceeffect?(Achoice

musteffectsomething.)

Theanswercanonlybethatthepartymakingachoiceincontract

formationchangesthewaythatsheconceivesoftheworld.Theparty

choosestoadoptadifferentconceptionofreality.Thatisaneffectthatis

internaltothepartyherself.Indeed,solongasitisvoluntary,theeffectis

internaltotheparty’schoice:thereisnoeffectthatcanbedescribed

independentlyofthedescriptionoftheparty’schoice.(Contrast,for

example,someone’swalkingacrossthestreet,theeffectofwhichcanbe

describedwithoutreferringtothewalker’schoice.)Theeffectiswholly

ideal.

29Id.at196.

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Thenotionthatpersonsmaysimplychoosetochangetheir

conceptualizationsoftheworldisnotnecessarilyfamiliar.Tohelp

explicateit,wemightturntoWittgenstein’snotionof“seeingas.”30To

illustratethisnotionheusedthenowwell‐wornexampleofthe“duck‐

rabbit”:anambiguousdrawingthatonecaninterpret,or“seeas,”either

aduckorarabbit.Itispossibletoconceptualizethesamephysical

arrangement,ofmarksonthepage,intwodifferent

ways.Furthermore,onceonelearnstoseeeachofthe

alternatives,onecanchoosewhichtoadopt.

Contractingpartiescouldbedoingsomethingsimilar.Theychoosetosee

thepromiseeashavingtherelevantcontractright.

Duck‐rabbitsarealongwayawayfromcontractformation.Acloser

analogyistherecognitionofastatus.Itisafamiliaraspectoflifethata

person,orsomegroupofpersons,maychoosetorecognizeanother

personashavingacertainstatus.Forexample,theymaychooseto

recognizethatpersonasacolleague,asaleader,orastheholderofa

certainoffice.Whentheydo,thereisnoessentialchangetoanypartof

theuniverse,otherthantothewaythepersonsinvolvedconceiveofthe

world.Theonlychangeistowhatthosepersons“see”oneofthem“as”

beingorhaving.Sometimes,therecognitionofastatusisperhaps

involuntary—as,forexample,whenachildrecognizestheirparent.But

othertimesitfullyvoluntary—forexample,whenaclubunanimously

electsanewpresident.Thevoluntaryorchosenrecognitionofastatusis

analogoustotherecognitionthatoccursincontractformation.(Wemay

move,asitwere,“fromstatustocontract.”)Thecontractingparties

simplychoosetorecognizeoneorbothofthemasbeingorhaving

somethingdifferentfrombefore.

Afinalanalogyisalsoinstructive:oneperson’srecognitionofanother

personasdirectinganobjectofproperty.Weoftenobserveother

302LUDWIGWITTGENSTEIN,PHILOSOPHICALINVESTIGATIONS§xi(2001)(1953).

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personshandlingphysicalobjects—forexample,holdingabook,or

tendingflowersintheirgarden.Herewemoreorlessautomatically

recognizethatthepersonobservedismakingchoicesabouttheobjects

inquestion:theyhaveintentionsaboutwhereandhowtheywantthe

objectstobe,andtheyareeffectingtheirintentionsbycausingthemto

bethatway.Weexpressthisbysayingthatthepersoniscontrollingor

possessesorhastheobject,inacertaincondition.

Now,inthiscontext,wedonotgenerallythinkofourselvesas

choosingtoconceiveoftheproprietorinacertainmanner.Rather,it

seemsasiftheworldappearstoustransparently,alreadyarrangedin

thisfashion.Nevertheless,theconceptualizationissomethingthatwe,as

observer,tosomeextentsupplyourselves.Certainly,theproprietorhas

notforcedustoconceptualizetheminthisway.31Theymaynotevenbe

awarethatweareobservingthem.Contractformation,itissuggested,

involvesaconceptualizationorrecognitionsimilartotherecognitionof

another’shavinganobjectofproperty,albeitonethatismoreexplicitly

voluntary.32

Letuscallthechosenconceptualizationthatapartyeffectsincontract

formationarecognition.33Thatwordispreferableto“conceptualization”

or“conception”becauseitcallstomindthefactthatthe

conceptualizationneednotbeformedoutofwholecloth,asitwere,by

theindividual.Itseemsmoreplausiblethateachindividuallearnscertain

sociallyestablishedtypesofconceptualizations—thateachperson’s

31Hencethereisnounilateraldeterminationbythemofus.SeealsoN.W.Sage,OriginalAcquisitionandUnilateralism:Kant,Hegel,andCorrectiveJustice,25CAN.J.L.&JURIS.119(2012).32Cf.G.W.F.HEGEL,PHILOSOPHYOFRIGHT§71(T.M.Knoxtrans.,1952)(1821).Thiswillbeelaboratedinthediscussionofconsiderationlaterinthiswork.33EchoingHegel’s“anerkennung,”usuallytranslatedas“recognition.”SeeMICHAEL

INWOOD,AHEGELDICTIONARY245‐47(1992).

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thoughts“moveincertaincategories.”34Oneofthosecategoriesisthe

recognitionofacontractright.

Understoodasachosenrecognition,theparties’choiceincontracting

canbeseentobewhollyideal.Thechoiceispurelyconceptual,without

anynonconceptualsubstratethatischangedoraffectedbyit.InKantian

jargon,wemightsaythatachoiceincontractinginvolvesafusionofthe

practicalandtheoreticalfaculties.

Ifaparty’schoiceincontractformationamountstoachosen

recognition,whatexactlyisitthatisrecognized?Thatquestionisthe

topicofChapterFive,whichseekstounderstandthenecessarycontentof

theparties’chosenrecognition—theformofthecontractrightor

obligation—inordertoexplainhowthechoiceincontractformationis

binding.Butatthisstage,bearinginmindthesuggestedanalogiestothe

recognitionofastatusorthepossessionofanobjectofproperty,wecan

say,veryroughly,thateachofthecontractingpartiesrecognizesthe

promiseeashavingthecontractright.

Therecognitionaccountofformationsolvesthelogicalparadox

associatedwiththeideaofawilledorchosenobligation,becauseit

explainshowthecontractingparties’choiceshaveaneffect,without

affectinganythingbeyondthepartiesthemselves.Thereisno

independentobject,stateofaffairs,orrealitythatthechoiceeffectsor

affects,outsideoforbeyondthechoiceitself.35Toestablishacontract,

eachpartymustchoose—thatis,issueaneffectiveintention—andthe

intentioniseffectiveinsofaraseachpartychangesthewayinwhichshe

34MICHAELTHOMPSON,LIFEANDACTION207‐08(2008).35NotethesimilaritiesbetweenthisconclusionaboutcontractingandapossibleresponsetothedifficultythatHumeposedforourunderstandingofphysicalcausation.Humepointedoutthatnoamountofobservationwillestablishthatonebilliardballhittinganothercausestheothertomove—asopposedtothetwoballs’movementscoinciding.Oneresponsetothisdifficultyistoconcludethatcausationmustbeacategoryofconceptualization,whichtheobserverbringstotheobservation,ratherthananobservablerealitythatexistsindependentlyofher.

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conceptualizesacertainaspectoftheworld,suchthatsheseesthe

promiseeashavingthecontractright.Thereisnoviciouscircle.

Inadditiontoavoidingtheparadoxesthatresultfromimplicitly

externalapproachestochoiceincontractformation,therecognition

approachseemsaccurateasamatterofphenomenology.Imagine

yourselfconcludingacontractwithsomeone,lookingthemintheeyeas

youshakehands,knowingthatyouaresealingadealthatwillobligate

youtotheminsomeway.Howwouldyoudescribewhatyouaredoing?

Youarechoosingtodosomething,butwhatisit?Itseemsaccurateto

describeyouasrecognizing,oracknowledging,theotherpersonas

havingtherelevantcontractualrights(whateverthosemaybe).Indeed,

thatwouldbeagoodintuitivedescriptionofwhat“assent”means,inthe

contextofcontractlaw.

Doestherecognitionapproachimpugnawilltheoryofcontract,in

whichcontractformationissaidtoarisesolelythroughthecontracting

parties’choice?Itdoesnot,becauseavoluntaryrecognitionor

conceptualizationisachoice.36Thenotionofrecognitionismerelyaway

ofdescribingtheeffectofthechoicethatoccursincontractformation,so

thatwecanunderstanditasachoice,ratherthandismissingitasa

deception.Wecancontinuetorefertoformationthroughtheparties’

mutualchoice,ratherthanmutualrecognition,assoonaswehave

overcomethisdifficulty.

Notethatontherecognitionapproachtocontractformation,wecan

alsodefinethechoiceincontractformationnegativelyorschematically.

Negatively,aparty’srecognitionischosensolongasitisnotwhollythe

productofsomeexternalcause,andthepartyisnotwhollyunawareof

thenatureofherchoice.Positively,wecanadaptKant’sschematic:each

ofthepartiesis,bymeansofaconcept,thecauseofthatconcept.

36SeefurtherHEGEL,supranote32,§4A.

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3.1.3 Presuppositionsaboutchoice

Whatistherelationshipbetweenthe“effect”ofthecontracting

parties’choicesuggestedhere—arecognitionorconceptualizationof

something—andthe“effect”ofcontractformationtowhichwesaw

Cooteappealinordertoescapethesecretparadox:therecognitionand

enforcementofthatchoicebythepositivelawofthestate?Onthe

accountadvancedsofar,theparties’choiceinformationseemstofloat

freeofanystaterecognitionorenforcement,despitethatbeingan

essentialaspectofcontractlaw.

Thestaterecognitionandenforcementoftheparties’choicein

contractformationcan,however,beexplainedonthebasisofthree

presuppositionsconcerningthevalueandnatureofchoice.

3.1.3.1 The“fundamentalnormativeprinciple”

First,toexplainthestaterecognitionandenforcementofcontracts,it

mustbepresupposedthat,atleastinthiscontext,achoiceissomething

tobevaluedorrespected.Ofcourse,thisisthesignaturepresupposition

ofthewilltheory:thataperson’schoiceis“inherentlyworthyof

respect.”37Moreprecisely,itmustbepresupposedthataperson’schoice

isinherentlyworthyofrespectbyotherchoosingpersons.38Thereisno

normrequiring,forexample,thewindorrain,animals,orverysmall

children,torespectpersons’choices.

Thispresupposition,slightlyreformulated,wemaycallthe

fundamentalnormativeprinciplethatunderliescontractlaw:noperson

may,throughtheirchoice,usurpanother’schoice.39

Asdiscussedinpreviouschapters,thisworkshallnotattemptto

supplyanultimatejustificationforthevalueofchoice—onethatwould37Coote,supranote23,at99.38AsErnestWeinribwouldputit,thenormhasa“correlative”or“bipolar”structure.39Cf.KANT,supranote15,at[6:230‐31].

74

demonstratewhypersonsshouldrespecteachother’schoices.Forone

thing,thatwouldrequireustolookbeyondcontractlaw,relatingits

principlestothoseofotherbranchesofthelawandotherdomainsof

normativity(suchaspersonalmorality,civilsociety,andsoon).Rather,

theworksimplyassumesthatthefundamentalnormativeprincipleisa

basicpresuppositionunderlyingcontractlaw.

3.1.3.2 Remedies

Thesecondassumptionisthatviolationsofthisfundamentalprinciple

canberemedied:theycanbepreventedornegated.Thisworkwillnot

developafulltheoryofhowalegalremedy,afterthefactofawrongful

violation,cannegateawrongalreadydone.Therewillbemuch

discussion,inChapterSix,ofhowtheapparentlyvariousremediesfor

breachofcontractcanbeunderstoodonaunifiedbasis.However,even

therethenaïveviewthatalegalremedycansomehowremedyawrongis

largelyassumed.

3.1.3.3 Coercion

Finallyitisalsoassumedthatpreventionsornegationsofthe

fundamentalnormativeprincipleareappropriatelyremediedthrough

statecoercion.Atheoryofcoercionisalsobeyondthescopeofthiswork.

Itshallheresimplytakenforgrantedthatthereis“noincongruity,buta

specialcongruity”whenthestateoverridesoneperson’schoicetoensure

thattheydonotoverrideanother’s.40

3.1.3.4 Conclusion

Ifthosethreepresuppositionsareinplace,thenthestatecan,by

deployingcoercionifnecessary,preventornegateoneperson’s

purportedinterferencewithachoicethatanotherpersonhasmade—

includingachoicemadeincontractformation.Thus,thestateoughtto

recognizecontractsandremedytheirbreach.Thatshouldsufficefor40H.L.A.Hart,AreThereAnyNaturalRights?,64PHIL.REV.175,178(1965).

75

presentpurposestoexplainthestaterecognitionandenforcementof

contracts.41

Beforemovingon,itisworthnotingthattheoperationofthese

presuppositionsisalmostcertainlynotlimitedtocontractlaw.Theyalso

seemtobeatworkinotherareasofprivatelaw—torts,property,and

unjustenrichment.Whiletheiroperationinthosenoncontractual

contextsshallsometimesbeassumedinthisworkforthepurposesof

exposition,thisisnotintendedtobecrucialtotheargument.The

argumenthereisonlythatcontractinparticularcanbeunderstood,by

adoptingthesepresuppositionswhileelucidatingtheparticularideaof

mutualchoicethatuniquelyexplainscontractualobligation.

3.2 TheMutualWill

Sofarwehavereferredindiscriminatelyto“acontractingparty’schoice”

and“thecontractingparties’choice”information.However,asingle

individual’schoiceisinsufficientforcontractformation,whichrequires

thechoiceoftwoindividualssomehowjoinedtogether:theparties’

assentmustbemutual.Whatdoesthismean,andwhyisitrequired?

3.2.1 Howawillcanbemutual

Tounderstandhowtwowillscanbemutual,wereturntothelawof

offerandacceptance.Treatisesoftensuggestthatthehighlyformalrules

inthisareaoflawhavenointrinsicimportance,andmerelyprovidea

sortofroteframeworkforfindinganagreement,whichcanbedispensed

41Thisunderstandingofthestaterecognitionandenforcementofchoicesincontractformationofcourseleavesunansweredahostoffurtherquestionsthatshallbeaddressedinensuingchapters.Inparticular,itdoesnotexplainwhyacontractbinds—whyapartymaybeheldtotheirchoiceinformation,eveniftheylaterchangetheirmindaboutwhattochoose.

76

withwheneveritseemsunhelpful.42Thatviewmakesthepersistenceof

theformalrulesofofferandacceptance,aswellastheirprominencein

contractstreatisesandintroductorylawschoolcourses,somewhat

surprising.Incontrast,thepersistenceandprominenceoftheofferand

acceptanceframeworkisexplicableifitexposesaconceptualstructure

thatisnecessarytomakesenseofthemutualwillincontractformation.

Thenthefactthatthisconceptualstructureistooformalistictobe

appliedtomanycasesofcontractformation(forinstance,almostany

contractformedthroughprolongednegotiations)innowaydiminishes

itsimportance.

TheSecondRestatementofContractsdefinesan“offer”asa

“manifestationofwillingnesstoenterintoabargainsomadeastojustify

anotherpersoninunderstandingthathisassenttothatbargainisinvited

andwillconcludeit.”43An“acceptance”isa“manifestationofassentto

theterms[oftheoffer]made…inamannerinvitedorrequiredbythe

offer.”44

Theblack‐letterlawthereforeasksustolook,incontractformation,

fortwothings:(1)theofferor’swillingnessastosomeproposal,which

invitestheanticipatedconclusiveeffectof(2)theacceptor’sconcurring

willastothatproposal.Accordingly,thelawrequirestwosortsof

conditionedchoicesorwills.Theremustbeaconditionedinvitingwillon

thepartoftheofferor(“Ichoosethis,ifyouchooseittoo”),anda

conditionedconcludingwillonthepartoftheacceptor(“onthebasisof

yourchoice,Ichoosethistoo”).

42E.g.CHESHIRE&FIFOOT,supranote4,at30(“Theruleswhichthejudgeshaveelaboratedfromthepremiseofofferandacceptanceareneithertherigiddeductionsoflogicnortheinspirationofnaturaljustice.”)43RESTATEMENT(SECOND)§24.Amanifestationofwillingnessthatdoesnotanticipateaconclusionbytheotherparty’sacceptanceisamere“invitationtotreat,”whichcannotgiverisetoacontract.44Id.§50.Ifapurportedacceptanceproposestermsthataremateriallydifferenttothosecontainedintheoffer,itwillamountnottoanacceptancebuttoacounter‐offer.Id.§59;U.C.C.§2‐207;Hydev.Wrench,[1840]3Beav.334.

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Wecannowseethesenseinwhichcontractformationinvolvesa

“mutual”willorthe“joining”oftheparties’wills.Theparties’willsjoinin

thateachparty’schoiceisconditionedonthepresenceoftheother’s.(“I

willifyouwill.”)Thatis,eachparty’sintentioniseffectiveonlyonthe

basisoftheother’scorrespondingintention.Neitherintentioniseffective

alone.45Thepartiesarethejointcauseofwhatiseffected.

Anotherwaytoencapsulatethiswouldbetosaythattheparties’have

reachedanagreement.However,wemustbecarefultorememberthatit

isanimmediatelyeffectiveagreement,notamereas‐yet‐uneffected

agreementtodosomethinginthefuture.

Contractlaw’srequirementthateachparty’sintentionbecome

effectiveonlyonthebasisofanothercorrespondingintentionismade

especiallyclearincasesof“cross‐offers.”Insuchcasestwoidentical

offersofacontractaremade,withouteitherpartyknowingoftheother.

Thetwoofferspasslikeshipsinthenight.Herenocontractisformed.46

Thatisbecauseinacaseofcross‐offerseachpartyissuesasimilar

conditionalintention,butneither’scondition—anacceptance—isever

satisfied,andsoneitherintentioneverbecomeseffective.Neither

amountstoachoice,butremainsatbestanas‐yet‐uneffectedintention

to,oranineffectualwish.

3.2.2 Whyrequireamutualwill?

Whymustthepartieschoosemutuallyinthisway—whyisan

individualchoiceinsufficient?Ifeachparty’schoiceincontractformation

45Cf.J.DavidVelleman,HowtoShareanIntention,inTHEPOSSIBILITYOFPRACTICALREASON(2000).46Tinnv.Hoffman&Co.,[1873]29L.T.271,279(Ex.)(nocontractwhere“[t]hepromiseorofferbeingmadeoneachsideinignoranceofthepromiseoroffermadeontheotherside,neitherofthemcanbeconstruedasanacceptanceoftheother.”)(Blackburn,J.);RESTATEMENT(SECOND)OFCONTRACTS§23(1981).CHESHIRE&FIFOOT.supranote4,at46,expressesperplexityattheseresultssince“eachpartydoesintruthcontemplatelegalrelationsuponanidenticalbasis,andeachispreparedtoofferhisownpromiseasconsideration.”Thisispreciselythepoint:eachpartycontemplatesorispreparedtoundertakearelation,butitneverobtains.

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amountstotheirrecognitionofthepromiseeashavingthecontractright

(assuggestedin§3.1),whynotrespectasingleperson’schoiceto

recognizesomeoneashavingacontractright?

3.2.2.1 Returnofthefundamentalnormativeprinciple

Thisisaversionofaverycommonobjectiontowilltheoriesof

contractlaw.47Awilltheorypresupposesthataperson’schoiceis

inherentlyworthyofrespect.Thatis,itpresupposesthe“fundamental

normativeprinciple.”Therefore,sotheargumentgoes,thelawof

contractoughttorespectindividualchoices,byallowingasingleperson

toformacontractratherthanrequiringtwoindividualstowillmutually.

InthisrespectpromisetheoriesofcontractsuchasCharlesFried’s—

self‐describedasa“willtheory”—bitethebullet,asitwere,suggesting

thatacontractisinessencea“self‐imposed”undertakingbyjustoneof

thecontractingparties,thepromisor.48

However,themutualityrequirementofthewilltheoryisnotan

arbitrarylimitationimposeduponthefundamentalnormativeprinciple

thataperson’schoiceisinherentlyworthyofrespect.Onthecontrary,

theneedformutualityincontractformationisgeneratedbythatvery

principleitself.

Thefundamentalnormativeprinciplecontainsnoconceptual

resourcesonthebasisofwhichtodrawanydistinctionsbetween

choosingpersons.Therefore,insayingthataperson’schoiceis

inherentlyworthyofrespect,italsosaysthateachandeveryperson’s

choicemustberespected.Thereisnoreasontoprioritizeanyone

person’schoiceoveranyother’s.Thus,theprincipleisthatnoperson

mayunilaterallydetermineanyotherperson’schoicesforthem.

47E.g.,JAMESGORDLEY,THEPHILOSOPHICALORIGINSOFMODERNCONTRACTDOCTRINE234(1991).48CHARLESFRIED,CONTRACTASPROMISE(1981).

79

Asshallnowbeexplained,ifasinglepersoncouldformacontracton

theirown,thatwouldallowthemunilaterallytodeterminethechoiceof

anotherperson,violatingthefundamentalnormativeprinciple.

3.2.2.2 Foistingandsuborning

First,ifonepersoncouldconferonherselfacontractrightagainst

anotherperson,justbychoosingtoseeherselfashavingthatright,that

wouldobviouslybeproblematic.Itwouldallowhertosuborntheother

person’schoice:shewouldbeabletodetermineunilaterallywhatrights

theotherpersonmustrecognizeherashaving.

Second,lessobviously,ifonepersoncouldimposeacontractrighton

anotherperson,justbypurportingtorecognizethatpersonashavingthe

right,thatwouldalsoamounttoaunilateraldeterminationoftheother

person’schoice.Itwouldbetofoistthecontractrightuponhim.Itwould

bejustlikeapurportedtransferofanobjectofpropertytosomeonewho

doesnotacceptit,forcingthatpersontorecognizehimselfashavingthe

rightinquestion.49Importantly,thisistrueevenifthecontractual

subject‐matterisunquestionablyabenefittothepromisee,orevenifitis

somethingforwhichthepromiseekeenlywishes,orthatheintendsto

acquire.Ifthepromisee’schoiceistoberespected,onlyanactualchoice

willdo.

Thisshouldsufficeforpresentpurposestoexplainwhyamutualwill

isrequiredincontractformation.Inordertoensurethatallpersons’

choicesarerespected—inordertoavoidaviolationofthefundamental

normativeprinciplethatnopersonmaydetermineanother’schoice—

eachoftwopersonsmustchoosemutually.Thecontractcannotbe

491POTHIER,TRAITEDESOBLIGATIONS¶4(rev.ed.1769).SeealsoB.SharonByrd&JoachimHruschka,Kanton“WhyMustIKeepMyPromise?”,81CHI.‐KENTL.REV.47,60n.52(2006).UnfortunatelyByrdandHruschka’sexampleisapromisetodeliveracobra.Thisisdistractingbecausethecobraissomethingthepromiseepresumablydoesnotwishfor,butthepointhereapplieseveniftheobjectofthecontractrightissomethingthepromiseedoeswishfor.SeealsoARTHURRIPSTEIN,FORCEANDFREEDOM114(2009).

80

establishedthroughafoistingorsuborning.Thus,eachparty’schoice

cannotbeeffectivebyitself,butmustbeconditionedonthepresenceof

anotherperson’scorrespondingchoice.Therequirementofmutualityis

thereforegeneratedbythefundamentalnormativeprinciplethatthewill

theorypresupposes.Thereshall,however,bemuchmoretosayabout

“foisting”and“suborning”insubsequentchapters.

3.2.2.3 Applications

Havingseenwhytheremustbeaprohibitionagainstfoistingor

suborning,wecannowfullyexplainwhyonlythecombinationofanoffer

or“inviting”willandanacceptanceor“conclusory”willsufficesto

establishacontract.

Wesawpreviouslythattwooffersor“inviting”willscannotsufficefor

contractformation,asdemonstratedbycasesof“cross‐offers.”Wecan

nowseewhycontractformationislikewiseunachievablebytwo

purportedacceptancesor“conclusory”wills(neitherofwhichisbased

uponacorresponding“inviting”will).Eachpurportedconclusorywill,if

itsufficedtoestablishacontract,wouldamounttoafoistingor

suborningoftheotherparty’schoice.Eachpurportedconclusorywill,

consideredonitsown,mustthereforebeineffectivetoestablisha

contract.Otherwisetherewouldbeaviolationofthefundamental

normativeprinciplethatnopersoncandetermineanother’schoice.

Itmakesnodifferenceiftwoofthesepurportedconclusorywills,each

purportingtoestablishacontractwiththesameterms,areissuedatthe

sametime.Nowwemerelyhavetwopurportedconclusorywills,neither

ofwhichcanbeeffective.Neitherofthesepurportedwillsisconditioned

upontheother—neitherreferstotheotheratall;rathereachpurportsto

beeffectiveentirelyonitsown.Butonitsown,neithercanbeeffective.

Soitisasiftwodancersindifferentroomseachsimultaneously

purportedtoperformajointtango.Eachtriestodoindependentlywhat

canbeeffectedonlyjointly.

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Afortiori,therecanbenocontractestablishedbyacombinationofan

offerorinvitingwillwithapurportedacceptanceorconclusorywillthat

isnotconditioneduponthatoffer.Thepurportedconclusorywillis

ineffective,sinceitismerelyafoistingorsuborning,andasaresultthe

conditionoftheinvitingwill(anacceptanceorconclusorywill)also

remainsunsatisfied.

Wecannowalsoexplaintherulethatthepartiesmustassentto

contractualtermsthatarenotmateriallydifferent.Iftwoparties

assentedtomateriallydifferentsetsofterms,andtheneitheroneof

thosesetoftermswereenforced,thatwouldamounttoasuborningor

foistingbythepartywhosetermswereenforced.

Bythesametoken,thesometimesdeprecatedcaselawconcerning

offersofrewardsisalsoshowntobecorrect.Thosecasesholdthatif

partyAoffersarewardforcertainconduct,andpartyBperformsthat

conductwithoutintendingtherebytoobtainthereward,nocontractis

formed.50Forexample,

Anofferof£100toanypersonwhoshouldswimahundredyardsintheharbouronthefirstdayoftheyear,wouldbemetbyvoluntarilyperformingthefeatwithreferencetotheoffer,butwouldnot…besatisfiedbyapersonwhowasaccidentallyormaliciouslythrownoverboardonthatdateandswamthedistancesimplytosavehislife,withoutanythoughtoftheoffer.Theofferormightormightnotfeelmorallyimpelledtogivethesuminsuchacase,butwouldbeundernocontractualobligationtodoso.51

ItisdifficulttoseewhatiswrongwithholdingBentitledtothereward

here,unlessonehasthebaragainstfoistingandsuborninginmind.Ifa

contractwereformedinsuchacasetherewouldbeafoistingofthe

rewardupontheofferor,B,becauseB’schoice(toswimacrossthe

harbor)doesnotcorrespondtotherelevantpurportedchoicebyA

(roughly,torecognizethepersonwhoswimsacrosstheharborashaving

50Rv.Clarke(1927)40C.L.R.227.51Id.at235(Isaacs,A.C.J.).

82

therighttothereward).BdoesnotrecognizehimselfashavingwhatA

seekstoconfer.

3.2.3 Successivenessandsimultaneity

Thereisonefinalsetofdifficultiesthatanywilltheoryofcontract

formationmustaddress.Thesedifficultiesarisefromthetwin

requirementsthattheparties’choicesinformationmustbeissuedin

temporalsuccession,butjoinsimultaneously.52

Theparties’choicesincontractformationmustbeissuedintemporal

succession,becausetheacceptanceorconcludingwillmustfollowthe

offerorinvitingwill.Otherwise,theconcludingwillcannotberesponsive

to,andsocannotbeconditionedon,theinvitingwill.

NolessanauthoritythanCorbindisputedtherequirementof

successiveness,suggestingthatacontractcouldbeformedbytwo

contractingpartieswhowillsimultaneously,ifathirdpersonproposed

contractualtermstowhichthepartiesthensimultaneouslyassented.53

However,whileinCorbin’sexamplethetwoparties’intentionsmightbe

directedtowardpreciselythesameterms(thosestipulatedbythethird

party),thepartiescouldnotachievetherequisitecombinationofan

invitingwillandaconclusorywillthatrespondstothatinvitation—

becausethelatterkindofwillcanonlybeissuedaftertheinvitingwill.

Thus,eachoftwosimultaneouslyissuedwillscouldonlybeeitheran

invitingwill(“Iwillifyoudo”),orapurportedconclusorywillthatisnot

basedonanycorrespondinginvitingwill(“Iwillregardlessofwhether

youdo”).Nocombinationofthosetwokindsofwills(twoinvitingwills;

twopurportedconclusorywills;oraninvitingwillplusapurported

conclusorywillnotconditioneduponthatinvitingwill)sufficesfor

contractformation.

52KANT,supranote15,at§19;Benson,Unity,supranote9.53SeeARTHURLINTONCORBIN,CORBINONCONTRACTS:ONEVOLUMEEDITION19(1952);Benson,Unity,supranote9,at139n.28.

83

Althoughtheymustbeissuedintemporalsuccession,inorderto

“join,”theparties’willsmustalsoexistsimultaneously.AsBensonputsit,

thetwowillsmustbe“co‐present.”54Ifaninvitingwillnolongerexists

whenthepurportedconclusorywillisissued,thenthereisnomutual

choice.Thereisonlyanineffectiveinvitingwill,withdrawnandfollowed

byanequallyineffectivepurportedconclusorywill.

Twopartiescanwillsimultaneously,eventhoughtheirwillsare

issuedinsuccession,onlyifaperson’swillcancontinuetoexistafteritis

initiallyissued.Theofferormustissueapersistingwill.Then,thatwill

canbe“joined”bytheotherparty’swillthatisissuedsubsequently.Just

astwopersonscanjoineachotherforawalk,althoughonebegins

walkingearlierthantheother:thesecondpersonbeginsatalaterpoint

onthepathandbeginswalkingassoonasthefirstpersonarrivesthere.

Consequently,theacceptormustbeentitledtoassumethatthe

offeror’sintentionpersistsevenafterthesoundsormovementsthat

declarethatintentionhaveceased.Thisrequirementisrecognizedin

contractdoctrine,whichgivestheoffereea“reasonable”amountoftime

toaccepttheoffer,unlesstheofferisexpresslytime‐limitedoris

withdrawn.55

Inadditiontotherequirementofpersistence,thetwindemandsof

successivenessandsimultaneityimposeanotherrequirementonthe

natureoftheparties’willsincontractformation.Atleastoneofthe

party’swillsinformationmustbeconditionedmerelyontheexistenceof

theother’swill,andnotonreceivingnoticeofit.

Contractdoctrinerequiresthattheacceptorreceivenoticeoftheoffer

beforepurportingtoacceptit,becauseotherwisetheacceptancecould

notbeproperlyconditionedonandconclusivewithrespecttothat

54Id.at140.55RESTATEMENT(SECOND)§41.

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offer.56However,contractdoctrinedoesnotalwaysrequiretheconverse:

theofferorneednotreceivenoticeoftheacceptancefortheretobea

bindingcontract.Mostnotoriously,thisissowherethe“mailbox”or

“postalacceptance”ruleisapplied.Insuchcases,acceptanceoftheoffer,

andhenceabindingcontract,isheldtoariseatthemomenttheacceptor

mailshisacceptance,ratherthanwhenthemailreachestheofferor.

Althoughitisespeciallynotorious,the“mailbox”ruleisonlya

particularlywell‐developedexampleofthegeneralrequirementfor

contractformation,thatoneoftheparty’swillsbeconditionedmerelyon

theexistenceoftheother’scorrespondingwillandnotonreceiving

noticeofit.Thisrequirementholdsevenincaseswherethereisno

especiallydelayedcommunicationbetweentheparties.Evenwheretwo

partiesshakehandsandlookeachotherintheeyesatthemomentof

contractformation,therecouldbenoformationofamutualwill,ifeach

party’swillwereineffectiveuntilthatpartyreceivednoticeoftheother

party’scorrespondingwill.Becausethentherewouldbeonlyanendless

loopofconditionalwillings:PartyAissuesawillconditionalonreceiving

noticeofB’slikewill;BreceivesnoticeofA’sconditionalwill,andissues

herwillconditionalonreceivingnoticethatAstillwills;Areceivesnotice

ofB’sconditionalwill,andagainissuesherownconditionalwill….And

soon,adinfinitum.Wewouldreachanotherparadoxincontract

formation.

Forcontractformationtobepossible,theback‐and‐forthmuststop

somewhere.Itcanstoponlyif,atsomepoint,oneparty’sintentioncanbe

renderedeffectivesolelythroughthewilloftheotherparty.57Thus,one

partymustmaketheirwillconditionalmerelyontheexistenceofthe

other’scorrespondingwill,andnotonreceivingnoticeofthatwill.

56Id.§23.57Cf.RESTATEMENT(SECOND)§24cmt.a.

85

Howisitdeterminedthatoneofthepartieshasissuedawillthatis

appropriatelyconditionedmerelyontheotherparty’swilling,without

receiptofanynotice?Again,itisonlybyinterpretingtheparties’

intentions,asevidencedbytheirmanifestedactsintheparticular

circumstancesofthecase.Thus,forexample,whatappliestoparties

contractingbymailintheearlynineteenthcenturydoesnotnecessarily

applytopartiescontractingbytelexinthelatetwentiethcentury.58

Thus,thepossibilityofcontractformationcanbeseentodependon

anentitlementtoassumethatothers’intentionscanbereasonably

inferredfromtheirmanifestedactsinthecircumstances.Thisiswhat

allowsustounderstandnotonlythataperson’swillpersists,andthat

theyarewillinginthefirstplace,butalsothattheirwillisappropriately

conditionedonlyontheexistenceofanotherwill,andnotonreceiving

noticeofit.

However,holdingapersontowhatmaybereasonablyinferredabout

theirchoicesfromtheirmanifestedacts—the“objective”meaningof

theirconduct—mayconflictwiththatperson’s“subjective”choices.And

then,itmaybeasked,howcanawilltheoryjustifypreferringsomeone’s

objectivewillovertheirsubjectivewill?Commentatorshavedoubted

thatitcan.Thisisanimportantissuetowhichwewillturninthenext

section,discussingthechallengesthatcontract’sso‐calledobjective

approachposesforawilltheory.

Beforemovingon,itremainstonotethattherequirementsthatthe

offeror’swillpersist,andthatoneoftheparties’willsnotbeconditioned

onreceiptofnoticeofother’swill,areperfectlyexplainedinthevery

shortcasereportthatisthelocusclassicusforthemailboxorpostal

acceptancerule:Adamsv.Lindsell.Rejectingtheargumentthatthe

58CompareAdamsv.Lindsell,(1818)1B.&Ald.681,683(K.B.)(contractformeduponmailing,ratherthanreceipt,ofacceptance)withBrinkibonLtd.v.StahagStahl,[1983]2A.C.34(H.L.)(contractformedatreceipt,ratherthansending,ofacceptancebytelex).

86

offerorswerenotbounduntiltheyreceivedamailedacceptance,and

holdingthattheywereinsteadboundwhentheacceptancewasputin

thepost,thecourtreasoned:

“ifthe[offerors]werenotbound…tillthe[acceptors’]answerwasreceived,thenthe[acceptors]oughtnottobeboundtillaftertheyhadreceivedthenotificationthatthe[offerors]hadreceivedtheiranswerandassentedtoit.Andsoitmightgoonadinfinitum.[Instead,theofferors]mustbeconsideredinlawasmaking,duringeveryinstantofthetimetheirletterwastravelling,thesameidenticaloffertothe[acceptors];andthenthecontractiscompletedbyacceptanceofitbythelatter.”59

3.3 ObjectivityandSubjectivity

Perhapsthemostcommonobjectiontoawilltheoryofcontractisthat

thecommonlawtakesan“objective”approachtoformation,ratherthan

respectingtheparties’“subjective”wills.60Surely,theobjectiongoes,a

willtheoryshouldbeconcerned,notwithwhatareasonableperson

mighttakeacontractingpartytochoose,butwithwhattheparty

“actually”chooses?

3.3.1 Externalaccounts

Manycontractsscholarshaveattemptedtoaccountforobjectivityin

formationfromanexternalstandpoint—externaltoboththeparties’

mutualchoiceandthelegaldoctrineitself.Onthisview,theobjectivity

doctrineisalimitationupontheactualchoiceofthecontractingparties.

Itisimposedinordertofurthersocialoreconomicpolicygoalsthatcan

bestatedindependentlyofanyconceptionoftheparties’mutualchoice.

Furthermore,thosegoalscanbestatedindependentlyoftheobjectivity

doctrineitself.

59Adamsv.Lindsell,(1818)1B.&Ald.681,683(K.B.).Cf.R.J.POTHIER,DUCONTRATDUVENTEI.II.III(1762).60E.g.,ROSCOEPOUND,ANINTRODUCTIONTOTHEPHILOSOPHYOFLAW188(1922);Cohen,supranote16,at576‐77;MaxRadin,ContractObligationandtheHumanWill,43COLUM.L.REV.575,584‐85(1943);MelvinA.Eisenberg,TheTheoryofContracts,inTHEUNITYOFCONTRACTLAW212‐13,221(PeterBensoned.,2001);STEPHENWADDAMS,DIMENSIONSOFPRIVATELAW7(2003).

87

Themostcommonversionofthisapproachistheargumentthat,

althoughthechoiceofthepartiesisgenerallysomethingthatthelaw

shouldrespect,theobjectiveapproachisimposedinordertomake

contractingmoresecureorreliable,thuspromotingcommercial

transactions.InthisveinEisenbergclaims:

Thepolicy,knownassecurityoftransactions,isthatinordertopromotecommerce,contractsshouldbereliable.Thatpolicywouldbeunderminedif[aparty’s]unreasonableandundisclosedmeaningcouldprevail.61

Thisformofexplanationsuffersfromthedefectscommontoall

attemptstoexplaincontractlaw’sdoctrinalconceptsbyreferenceto

theirexternaleffects.Suchexplanationsfailtoaccountadequatelyforthe

doctrinalconcepts,portrayingthemasarbitrary.Thus,the“securityof

transactions”explanationfailstoexplainwhy,inordertopursuesecurity

oftransactions,thelawadoptstheobjectivestandardinparticular,

ratherthansomeothermeansthatmightbejustasormoreeffective.

Acceptingarguendothatholdingpartiestoagreementstheydidnot

subjectivelyintendsomehowenhances“security,”thedifficultyisthat,if

securityisimportant,thereareinnumerableothermeanstomake

contractssecure—indeed,tomakethemfarmoresecurethanthe

objectiveapproachcan.Forexample,thelawcouldrequireallcontracts

tobeinwriting;itcouldrequireallwrittencontractstobefiledwiththe

statetopreventthembeinglostorfraudulentlyaltered;itcouldsendall

contract‐breakerstojail.Whypursuesecuritybythe“objective”

approachratherthanbythoseothermeans?62

Thesameobjectionscanberaisedtootherexternalaccountsof

objectivity.Forexample,theviewthatcontractlawmustbeconcernedto

61MelvinA.Eisenberg,TheResponsiveModelofContractLaw,36STAN.L.REV.1107,1119(1984).62Cf.CatherineValcke,Objectivismeetconsensualismedansledroitfrançaisdel'erreurdanslesconventions,2REVUEDELARECHERCHEJURIDIQUE661,662(2005)(notingtheinstabilityofananalogousunderstandinginFrenchlaw).

88

protectparties’reasonablereliance,63or,indeed,thatcontractsare

simplyimposeduponpartiesbythestate,undertheguiseofthe

objectiveapproach,tofurtherstatepolicygoals.64Theprotectionof

reasonablerelianceorthepromotionofotherpolicygoalshasno

necessaryconnectiontotheobjectiveapproachincontractlawin

particular.

Isthere,alternatively,awaytounderstandtheobjectiveapproach

suchthatthedoctrineisnotameanstoanyexternalends,andsuchthat

thedoctrineitselfisnotanexternallimitationupontheparties’choice?

3.3.2 Linguistictheories

Othertheoristshavesuggestedthattheobjectiveapproachincontract

lawreflectsthenatureofhumancommunication.Versionsofthisview

havebeenadvanced,forexample,byArthurRipsteinandBrianLangille,

AllanBeever,andStephenSmith.65Allofthemdrawoninsightsfrom

twentiethcenturyphilosophyoflanguage—inparticular,theworkof

Wittgenstein,DonaldDavidson,H.P.Grice,andHilaryPutnam.

Theessenceofthetheorists’argumentisthatthemeaningofthesigns

humansusetocommunicate—paradigmatically,spokenorwritten

words—isnecessarily“public,”“conventional,”or“institutional.”There

canbenosuchthingasapurely“privatelanguage.”Thisisbecause,in

orderforcommunicationtobepossible,themeaningofacommunicative

signcannotbewhollyuptooneofthecommunicatingpartiestodecide.

Ifitwerewhollyuptooneofthepartiestodecide,atanygivenmoment,

themeaningofthesignssheisusingtocommunicate,thentheother

partywouldhavenobasisuponwhichtoascertainthemeaningofthose

63E.g.RANDYE.BARNETT,CONTRACTS68‐75(2010).64SMITH,supranote64,at271,citingHUGHCOLLINS,THELAWOFCONTRACT206‐07(1997).65BrianLangille&ArthurRipstein,"StrictlySpeaking—ItWentWithoutSaying",2LEGALTHEORY63,69‐81(1996);AllanBeever,Agreements,Mistakes,andContractFormation,20KING'SL.J.21,39(2009);SMITH,supranote64,at272‐73.

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signs.Thebesttheotherpartycoulddowouldbetoguess,atrandom,

whatthesign‐usermighthavemeantbythem.Toavoidthisproblem,

theremustbeasetofrelativelyestablishedcorrespondencesbetween

signsandmeanings,whicharetosomeextentindependentofeitherof

theparties,andknowablebybothofthem.Thenon‐privatemeaningof

thesignsusedincommunicationisconstitutiveofthepossibilityof

interpersonalcommunication.

However,linguistictheoriesaboutwhatisnecessaryfor

communication—nomatterhowaccuratetheymaybe—arenotgood

candidatesforexplainingtheobjectiveapproachtocontractformation.

Thisfortworeasons.

First,contractlawcannotbedirectlyconcernedtoensurethe

possibilityofcommunication(ortopolicethenatureofcommunication,

ortopursueanyothersimilaragenda).Thereis,forexample,no

contractualcauseofactionjustformiscommunication.Nordoescontract

lawrequireanypersontoprovidethemediathatmakecommunication

possible(suchaselectronictransmissionsystems,writingimplements,

orreasonablyquietmeeting‐places).Inanyevent,evenifitsoughtto,

contractlawitselfcouldneitherensurenorforestallthepossibilityof

communication.Contractlawappliestoonlyasmallsubsetofallhuman

communications.

Thisgapbetweenaccountsofthenatureofcommunication,onthe

onehand,andtheobjectiveapproachincontractformation,ontheother,

canalsobeseenthefollowingway.Assumethateverythinginthe

linguistictheoriesdescribedaboveiscorrect:communicationispossible

onlythroughpublicconventions.Still,thequestionarises,inany

particularcontractualdisputewhereeachofthepartiesascribesa

differentmeaningtoaconvention,whoseinterpretationshouldbe

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adopted?OrastherelevanttitleoftheSecondRestatementputsit:

“WhoseMeaningPrevails?”66

Second,thelaw’sobjectiveapproachisnotlimitedto

communications,letalonecontractualcommunications.Theobjective

approachalsoappearsinareasofcontractlawotherthanformation

doctrine.Forexample,tomakeoutthedefenseofduress,theinnocent

partymusthavesuccumbedtoalevelofpressurethatitwouldbe

objectivelyunreasonabletoexpecthertowithstand.Theobjective

approachalsopervadestortlaw.Inbatteryortrespass,forexample,the

defendant’s“subjective”intentionsaregenerallyirrelevant.Similarly,a

nuisanceplaintiffcanclaimonlyforthoseinterferencesthatare

objectivelyunreasonable.Anegligencedefendantisexpectedtoexercise

anobjectivelyreasonabledegreeofforesight.

(Ofcourse,wemaysaythatthepartiesintheseotherlegalcontexts

aremakingchoicesandperformingactionswhose“meaning”mustbe

interpreted,usinganobjectiveapproach.However,inthesecontexts

neitherthepartiesnorthelawareconcernedaboutthecommunication

ofthatmeaningfromonepersontoanotherthroughasign.)

Thereforeitseemsmorepromisingtopursueanunderstandingof

objectivityincontractformationthatseesthisdoctrinenotasafunction

ofthenatureofcommunication,butastheimplicationofamoregeneral

principle.Onthisapproach,communicationthroughlanguageorother

signsisjustonemediuminwhichthelaw’sobjectiveapproachplaysout.

3.3.3 Objectivity

Wehaveapromisingcandidateforamoregeneralprincipleinthe

“fundamentalnormativeprinciple”thatwehaveencounteredpreviously:

66RESTATEMENT(SECOND)OFCONTRACTS§201.

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therequirementthatnoperson,throughtheirchoice,usurpanother’s

choices.67

Afterall,communicatingisjustoneofthewaysthatpersonscaneffect

theirintentionsorchoose,andjustoneofthewaysthatoneperson’s

choicescanaffectotherpersons’.Inthisrespect,communicationis

equivalentto,forexample,aphysicalmedium(suchasair,water,or

earth)thoughwhichpersonsmaylikewiseeffecttheirintentionsand

therebyaffecteachother.

Andindeed,itcanbeseenthatforthelawtotakeanon‐objective

approachwouldviolatethefundamentalnormativeprinciple.Thisis

perhapseasiesttoseeintortlaw.Thesuperlativeexpositionis

ErnestWeinrib’s,inthecontextofnegligenceliability.68Innegligence,

theinquiryinto,forexample,theforeseeabilityoftheplaintiff’sinjuryis

“objective.”Itaskswhateffectsorconsequencesareasonablepersonin

thedefendant’sshoeswouldhaveforeseenaslikelytoresultfromthe

conductthatcausedtheplaintiff’sinjury.Itisgenerallyirrelevantwhat

thedefendanttakesherselftohaveforeseen.Becausethelawconstrues

thedefendant’schoicesinthisway,sheisheldtoanormorstandardof

choosing(thatofthereasonableperson)thatis“objective”inthesense

thatitisindependentofherchoice.Thenormislikewiseindependentof

thechoiceoftheplaintiff.Innegligencelaw,theplaintiff’schoicesdonot

settheboundsofthedefendant’sliabilityfortheconsequencesofher

choices—aswouldbethecase,forexample,ifthedefendantwere

absolutelyliableforanyinfringementupontheplaintiff’spersonor

property,nomatterhowunforeseeablethatinfringement.

Weinribpointsouttheshortcomingsofreplacingthisstandardwith

anynon‐objectiveapproach—thatis,replacingitwithaninquirythat

focusesonthechoiceofonlyoneoftheparties,plaintiffordefendant,to

67Cf.Valcke,supranote62.68ERNESTJ.WEINRIB,THEIDEAOFPRIVATELAW177‐83(1995).

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theexclusionoftheother.Anysuchapproachwouldresultinoneofthe

partiesdeterminingtheother’schoice.

First,iftheinquirylookedonlytothedefendant’schoice,askingwhich

effectssheforesawatthetimeoftheallegedlywrongfulaction,thenthe

plaintiff’schoiceswouldbeentirelybeholdentothedefendant.Noneof

theplaintiff’schoiceswouldeverbeassuredlyeffective.Becauseany

choiceshemadecouldalwayspotentiallybedisruptedbythedefendant,

withimpunity.

Second,conversely,iftheinquirylookedonlytotheplaintiff’schoice,

askingonlywhetheradisruptionofthatchoicewascausedbythe

defendant’sconduct—irrespectiveofwhetherthiswasforeseeable—

thenthedefendant’schoicewouldbeentirelysubjecttothechoiceofthe

plaintiff.Theeffectivenessofthedefendant’schoicescouldneverbe

assured,becausetheywouldalwaysbesubjecttoannulmentbyacourt

attheplaintiff’sbehest,whentheyproducedadisruptionoftheplaintiff’s

choices—evenonethatwascompletelyunforeseeable.

Theonlyalternativetoeachoftheseone‐sidedorunilateral

approachesisfortheretobeasinglenormorstandardofchoicethatis

independentof,andappliesequallyto,eachoftheparties.Innegligence

law,thisstandardofchoosingisthatofthe“ordinaryreasonableperson,”

towhicheachpartycanholdtheotherparty.

Justastheobjectiveapproachisnecessaryintortlawinorderto

avoidaviolationofthefundamentalprinciple,soitisalsoincontract

formation.Onlyheretheinquiryisintotheestablishmentofaright,

ratherthanitsviolation.69Therelevantchoicesarethoseofthe

contractingpartiestoformacontract—thatis,theparties’chosen

recognitionofthepromiseeashavingthecontractright.Thecontract

69Alsoheretheinterpretationofbothparties’choicesisoftenatissue.Butthismaylikewisebethecasein,forexample,acontributorynegligencescenario.

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formationinquirycannotfocusonlyonwhatonepartytakesherselfto

havechosen,becausethatwouldallowthatpartyunilaterallyto

determinewhetherornotacontractexists.Thatpartywouldthenbe

ableunilaterallytodeterminetheeffectivenessoftheotherparty’s

choices.

Finally,itisworthspellingouttheparallelbetweenthis

understandingofobjectivityandthelinguistictheoriesconsidered

earlier.Thereitwasnotedthat,ifitwerewhollyuptooneoftheparties

todecidethemeaningofthesignsusedincommunication,theother

wouldhavenobasisuponwhichtoascertainthemeaningofthose

signs—hecouldonlyguessarbitrarilyattheirmeaning.Toresolvethis

problem,theremustbeasetofestablishedcorrespondencesbetween

signsandmeaningsthatisindependentofeitheroftheparties.Objective

normsofmeaningareconstitutiveofinterpersonalcommunication—

theymakeitpossible.Similarly,ifalegalinquiryfocusedwhollyonthe

choiceofoneofthepartiesinaninteraction,theotherpartywouldhave

noassuredcapacitytochoose.Thebesttheycoulddowouldbetohope

orwishthattheirchoicesnotbearbitrarilydisruptedbytheotherparty.

Toresolvethisproblem,theremustbeanestablishednormofchoosing

thatisindependentofeitheroftheparties.Thenormofchoosingis

constitutiveofeachparty’schoiceinthecontextoftheirinteraction.

Itcanbeseen,therefore,thatthelinguisticaccounthastheright

structure.Iterrsonlyinfocusingonpossibilityornatureof

communication,ratherthanonthepossibilityornatureofchoice,in

interactionsbetweenpersons.

3.3.4 Subjectivity

Now,however,westrikeanotherproblem.Because,despitethe

vindicationofthe“objective”approachjustoffered,nothingcouldbe

clearerthanthatcontractlawdoesnottakeawhollyobjectiveapproach.

Infact,itappearstoprefera“subjective”consensus.

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OneneedonlyglanceattherelevantprovisionoftheRestatement:

§201.WhoseMeaningPrevails

(1)Wherethepartieshaveattachedthesamemeaningtoapromiseoragreementoratermthereof,itisinterpretedinaccordancewiththatmeaning.(2)Wherethepartieshaveattacheddifferentmeaningstoapromiseoragreementoratermthereof,itisinterpretedinaccordancewiththemeaningattachedbyoneofthemifatthetimetheagreementwasmade

(a)thatpartydidnotknowofanydifferentmeaningattachedbytheother,andtheotherknewthemeaningattachedbythefirstparty;or(b)thatpartyhadnoreasontoknowofanydifferentmeaningattachedbytheother,andtheotherhadreasontoknowthemeaningattachedbythefirstparty.

Herethefirststepincontractinterpretationistoascertainwhetherthe

parties’subjectivemeaningsmatch.Onlyiftheydonot,isitpermissible

toturntotheobjectiveapproach.70

Similarly,inEnglishcontractlawasharedsubjectivemeaninghas

priorityoverobjectivemeaning.Thisisapparentfromararecasein

whichapartyhasbeensoboldastoarguethatanobjectivemeaning

shouldprevailoverbothparties’subjectivemeaning:TheHannah

Blumenthal.71Therethequestionwaswhetherthepartiestoadispute

overashipsale,whichwenttoarbitration,hadenteredacontractto

abandonthearbitration.Thepartyarguingforthecontractof

abandonmenthadcontinuedtoconductitself,aftertheallegedcontract

ofabandonment,inawaythatclearlyshoweditdidnotsubjectively

recognizethearbitrationasabandoned.(Forexample,itslawyershad

continuedtoseekoutevidencefromcertainwitnesses.)Nevertheless,

thatpartyargued,areasonablepersonwouldhaveunderstoodthe

70Furtherevidenceoftherelevanceofsubjectivemeaningcomesfromtheuseof“subsequentconduct”or“courseofperformance”evidencetoshedlightontheparties’meaningatthetimeofformation.Subsequentconductevidencecanilluminateonlyoneorbothparties’subjectiveintentions.Itcannottellusanythingabouthowareasonableperson,asopposedtothepartiesthemselves,wouldhaveconstruedtheparties’agreementatthetimeofformation. Likewise,thedoctrineofrectificationallowsanobjectivemeaningtobesupplantedbyasharedsubjectivemeaning.71PaalWilson&Co.v.PartenreedereiHannahBlumenthal,[1983]1A.C.854(H.L.).

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arbitrationtobeabandoned.TheHouseofLordsheldthattobe

irrelevant.Giventheparties’mutualsubjectiveintention,therewasno

contractofabandonment.LordDiplockdescribedthecontrary

suggestionasa“novelheresy.”72

Theresultseemsintuitivelyobvious.73Butgivenallwehavesaid

aboutthemeritsoftheobjectiveapproach,whyshouldtheparties’

“subjective”intentionstrumptheobjectiveconstrual?

Asaninitialmatter,itisworthconsideringthemeaningof“objective”

and“subjective”here.Contractlawyersaregenerallyvagueaboutwhata

subjectivechoiceorintentionis.Butitisoftensuggestedthata

subjectiveapproachtracksaperson’s“actual”or“real”choice,orthat

thischoiceisstoredinsomephysicalorpsychologicalsubstrate

somewhere“inaperson’shead.”74

Thebetterviewisthatboththeobjectiveandsubjectiveapproaches

arestandardsfortheinterpretationofchoices.Todescribesomeconduct

aschosenistointerpretitaseffectedintentionally.Asdiscussedin

ChapterTwo,weunderstandanactionorchoicebyabstractingand

explicatingit,inordertoformulateaninterpretationunderwhichit

makessense.

Thedifferencebetweenthetwoapproachesisthatanobjective

approachappliesastandardofinterpretationthatisindependentofany

individual,whereasasubjectiveapproachappliestheindividual’sown

72Id.at917.SeealsoMactier’sAdmin.v.Frith,6Wend.103(N.Y.1830)(contractformedwhereacceptancewasmailedaftertheexpiryofareasonabletimefollowingtheoffer,butinthepostcrossedaletterfromtheoffereeindicatingtheofferwasstillopen).73SupportersofthisviewincludeEisenberg,ResponsiveModel,supranote60,at1121;DavidMcLauchlan,AContractContradiction,30VICTORIAU.WELLINGTONL.REV.175,176‐79(1999),ObjectivityinContract,24U.QUEENSLANDL.J.479(2005),TheContractthatNeitherPartyIntends,29J.CONT.L.26,32‐34(2012);BARNETT,supranote63.74E.g.BARNETT,id.(“‘Subjective’referstowhatisinaperson’shead.”)

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standardofinterpretation:whattheindividualtakesherselftohave

chosen—theinterpretationthatsheendorses.

Thereisthereforenoreasontoregardasubjectivelyinterpreted

choiceasanymore“actual”or“real”thananobjectivelyconstrued

choice.Inthisrespect,itisnotablethatasubjectiveinterpretationof

one’schoicesisnotalwaysconstantorinfallibleevenfromitsown

standpoint—aspsychologistssometimesliketoshowbyconvincingtheir

patientstoreinterprettheirownpastconduct.Indeed,weoften

understandthechoiceswearemakingonlyinretrospect.Norisa

subjectivechoiceorintentionitselftobelocatedinanyphysicalor

psychologicalsubstrate—inanythingorpartoftheworldthatis

independentoftheperson’sownrecognitionoftheirintention.75A

subjectivechoice,likeanobjectivechoice,isessentiallyconceptualor

ideal.

Ifthesubjectiveapproachisnomoreactualorrealthananobjective

approach,thatseemstomakethelaw’spreferenceforasubjective

consensusstillmorepeculiar.Howarewetounderstandit?

Theanswerliesinunderstandingwhattheobjectiveapproachis.Itis

anorm,fortheinterpretationofchoices,thatisindependentofeitherof

theparties.Thisnormisconstitutiveof—itisnecessarytoensurethe

possibilityof—eachparty’schoice.However,thenormisnecessary,in

thisrespect,onlyinacertaincontext:thecontextofanapparentclashor

incompatibilitybetweentwopersons’subjectivechoices.76

75Cf.Velleman,supranote45,at37(“Thereareofcoursementalintentions,butperhapstherecanalsobeoralorwrittenintentions—justastherearenotonlymentalbutalsooralorwrittenassertions.”).76Hegelmightsaythat,onthe“subjective”approachtheparties’“arbitrary”willsareinaccord.Hereitisalreadyexplicitthateachparty’schoiceisconstituted(madepossible)onlybytheotherparty’slikechoice.(Sotheanalysiswouldfallundertheheadingof“Contract.”).)Butwhatisonlyimplicitonthesubjectiveapproach,andwhichthenbecomesexplicitonthe“objective”approach,isthateachparty’schoice

97

Wherethereisanapparentclashbetweentherespectivechoicesof

twopersons,AandB,thenonlytotheextentthatA’schoicecanbe

vindicatedattheexpenseofB’schoice,bydenyingthevalidityofB’s

choiceandaffirmingA’s,isA’schoicereallyachoiceatall.Inthecontext

ofaclashbetweentwopersons’attemptstoeffecttheirintentions,A’s

intentioncanbeeffectiveonlytotheextentthatB’sisnot.Andviceversa.

Someobjectivestandardmustbeinvokedinordertoarbitratetheclash.

However,thisreasoningappliesonlyinthecontextofanapparent

clashbetweentwoparties’choices.Itappliesonlywhereoneparty’s

choicehasprimafaciebeendisruptedbythatofanotherperson.Itdoes

notapplywherebothparties’subjectivechoicesarefullycompatible.

Wherebothparties’subjectivechoicesarefullycompatible,thereisno

needtofindsomewaytovindicateoneofthosechoicesattheexpenseof

theother,inordertoensurethepossibilityofeachparty’schoice.Each

party’schoicehasalreadyoccurredunproblematicallywithoutthe

interventionofanyobjectivestandard.

Insummary:thefundamentalnormativeprinciplerequiresthatno

personmay,throughtheirchoice,usurpanotherperson’schoice.That

principlerequiresthattherebeanobjectivenormofchoosing,towhich

eachpersoncanholdeachotherperson.However,theobjectivenorm,

likethefundamentalnormativeprinciple,appliesonlyinthecontextof

anapparentclashofchoices.Thereforeithasnopurchasewherethereis

noapparentclashbetweentwochoices—wheretheparties’subjective

choicesareinaccord.

isconstituted(madepossible)onlybytheotherparty’sreasonablechoice.(Thisfallsundertheheadingof“Wrong.”)Supranote32,at§§75,81‐82.

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3.4 IncorporationandImplication

Thereisonefinalchallengetotheideaofthepartiesformingacontract

throughtheirmutualwill.Ittakestwoforms.First,itmightbeasked,

howisitconsistentwithrespectfortheparties’mutualwillforcourtsto

incorporatecontractualterms,suchasthetermscontainedinalengthy

writtencontract,thatoneorbothofthepartiesmayneverhave

specificallyconsidered?Second,howisitappropriateforcourtstoimply

termsthatthepartiesdonotexplicitlystateincontractformation?

3.4.1 Incorporation

Torespondtothesechallenges,thefirstpointtonoteisthatthe

contentofaperson’swillorintentionneednotconsistonlyof

particulars.Rather,thecontentoftheintentioncanbeaconceptofan

endthatthepersonaimstorealize.77Aconceptisageneralideathat

encompassesmanyparticulars.Thus,apersoncanintendparticulars

thatfallwithinthescopeoftherelevantconcept,eventhoughshehas

neveradvertedtothem.

LonFullermadethispointinthecontextofstatutoryinterpretation.

Hegavetheexampleofalegislatorwhobans“dangerousweapons,”but

neverconsidersthespecificpossibilitythattechnologicaldevelopment

willallowfortheproductionofafuturisticraygun.Surely,Fullerpoints

out,thebanneverthelessappliestoraygunsthataresubsequently

invented,becausetheyareaninstanceoftheconcept,“dangerous

weapons,”thatthelegislatorintentionallyinvokedinpromulgatingthe

ban:78

77Cf.LangilleandRipstein,supranote65.78L.L.Fuller,AmericanLegalRealism,82U.PA.L.REV.429,446(1934),reprintedinTHEMORALITYOFLAW82‐84(1964).SeealsoJimEvans,QuestioningtheDogmasofRealism,[2001]N.Z.L.REV.145,150‐51.

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Perhaps[apersonwhocontendsthatthelegislatordidnotintendtoincludetheraygun]hasinmindthefactthatitwouldbeimpossibleforthelegislatorto“visualize”thenon‐existentobjectwhenheenactedhisstatute.Butisaman’sintentcoextensivewiththementalimageswhichaccompanyit?Woulditbeimpossibleforalegislatortoprohibitthesaleofstockinanycompanyorganizedtomanufactureaperpetualmotionmachineunlesshecouldvisualizethemachine?Inthecaseofour“dangerousweapon”statutewouldtheaccidentthattherepoppedintothemindofthelegislatorthepictureofaColtrevolvermeanthathisintentexcludedSmith&Wessonrevolvers?Noonewouldcontendthat.Weshouldhavetosay,heintendedtheclass“revolvers.”Butifhecanintendtheclass“revolvers,”whynottheclass“dangerousweapons”?Thefallacyunderlying[the]wholediscussionistheassumptionthatthinkingmustbedirectedtowardsparticular“things,”whenasamatteroffact,itmaybe,andgenerallyis,directedtowardsclassesoruniversals.

Similarly,when,forexample,someonecontractstobuyabook,they

neednotconsideralltheparticularpagesofthebook.Rather,thebuyer

needonlyhavearelativelygeneralideaofabookwithcertain

characteristics(acertainauthorandtitle,binding,condition,andsoon).

Numerousparticularinstancesofbooksfallwithinthatconcept,evenif

thosebookscontainpagesthatthebuyercouldnothaveimagined.

Onceitisrecognizedthatbyintendingaconceptapersoncanintend

particularstowhichtheyneverturntheirmind,understandingthe

incorporationofcontractualtermsissimple.Apartycanintendtoadopt

thetermscontainedinadocument,eventhoughshedoesnotknow

exactlywhattermsthedocumentcontains.Shecandothisbyintending

toadopt“thetermscontainedinthedocument,”whateverthosehappen

tobe.79

Althoughtheincorporationoftermsthereforeposesnoconceptual

difficultiesforawilltheory,manycontractlawyersneverthelessworry

aboutholdingapartytocontractualtermstheyhavenotspecifically

considered.Thisisparticularlytrueincasesofcontractsof“adhesion”:

contractswherethepartiesassenttoasetoftermswithoutnegotiating

79BARNETT,supranote63,at112‐14.

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theminterpartes.80Thereare,itissuggested,twogoodreasonsforthis

residualconcern.

3.4.1.1 Theneedforareasonableinterpretationoftheterm‐ taker’sassent

ThefirstwecanseebyconsideringMargaretRadin’srecentobjection

toonline“boilerplate”contracts.Radinproposesthatconsent‐based

theoriesofcontractformationareoutdated,becausecontractual

“[c]onsentisfictionalwhenalmostallofusclickonscreenboxes

affirmingthatwehavereadandunderstoodthingswehavenotreadand

wouldnotunderstandifwedid.”81AccordingtoRadin,then,thenotion

thataconsumerconsentstotheboilerplateinanonlinecontractis

clearlysomesortofdeception.

Itisindeedentirelyunrealtoregardapartywhohasclickedan

onscreenboxtohavereadandunderstoodallofthetermsintheonline

contract.Almostnobodyreadsthelengthysetsoftermscontainedin

suchcontracts,especiallythosedisplayedonelectronicscreens.

However,theupshotisnotthatthewilltheoryisinadequate—that

theparty’swillinenteringsuchacontractisadeception.Thatwouldbe

thecaseifthepartyconcernedwereboundbyallthetermsinthe

onscreenbox.Sincethepartydoesnotreallymeanwhattheboxsays,we

wouldhavetolooktoexternalreasons—reasonsotherthantheparty’s

80Arelatednotionisthe“boilerplate”or“standardform”contractualterm.However,suchtermsarealsoafeatureofnegotiatedcontracts.As,forexample,inanytransactionbetweensophisticatedcommercialpartiesinwhichtheparties’lawyerstaketermswholesalefromtransactionprecedents.Cf.MelvinA.Eisenberg(draftChapterFourofaforthcomingbook).81MargaretJaneRadin,BoilerplateToday:TheRiseofModularityandtheWaningofConsent,inBOILERPLATE:THEFOUNDATIONOFMARKETCONTRACTS196(OmriBen‐Shahared.2007).

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choice—forenforcingtheterms.Hencetheproliferationofcommentary

notingtheeconomicefficienciesofboilerplate.82

Buttheproperconclusiontodrawhereisthatthepartyisnotbound

bythelanguageoftheonscreenbox,becauseitisobviousthathedidnot

meanwhattheboxsays.Thisisjustamatterofcontractual

interpretation,employingtheobjectivestandard.Byclickingthebox—

eventhoughitmaysay“Ihavereadandunderstoodalloftheterms

herein,”thepartycannotreasonablybeunderstoodtoconveythathehas

readandunderstoodallthetermscontainedintheonlinedocument.

Becauseeverybodyknowsthatnobodyreadsthelengthysetsofterms

containedinsuchcontracts,andanystatementtothecontraryis

therefore“fictional.”

Whatdoesapersonmean,onareasonableinterpretation,whenthey

clickanonlineboxstatingthattheyhaveread,understood,andaccepted

thetermsofalengthycontractualdocument?Theymeantodojustwhat

courtsandcommentatorsrecognizedthemtobedoing,wellbeforethe

adventofonlinecontracting.Theyareassentingtoanynotunreasonable

termsintheform.Llewellyncapturedthisideasuccinctlywhenhestated

thatapersonsigningontoastandardform:gives“blanketassent…to

anynotunreasonableorindecenttermsthesellermayhaveonhisform

....”83Anyotherapproachwouldbeabsurd—wewouldhavetoaccept,for

example,thatapersonisboundbyanyterminaformhesigns,nomatter

howirrelevanttothetransactionorhowonerousthetermis.84

Thisapproachmustapplyinanycontractofadhesion,becausewhere

thereisnonegotiationofthecontractualterms,thereisnoreasonforthe

82SuchasthebenefitsofstandardformstocomplexorganizationsdiscussedinToddRakoff,ContractsofAdhesion:AnEssayinReconstruction,96HARV.L.REV.1174(1983).83KARLN.LLEWELLYN,THECOMMONLAWTRADITION370(1960)(emphasisadded);seealsoBix,supranote99,at20‐21. Ofcoursetheparolevidencerulemaycauseevidentialproblemsinthisrespect.84Parkerv.SouthEasternRailwayCompany428(Bramwell,L.J.)

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term‐givertobelievethattheterm‐takerhasassentedtounreasonable

termsinthecontract.(Afortioriwheretheterm‐takerreceivesthe

writtentermsonlyafterassentingtothem.)85Therefore,ontheobjective

approach,thetermscannotbeincorporatedintothecontracttothe

extentoftheirunreasonableness.

Thisisalreadyrecognizedbythelaw.IntheinfluentialTildenRent‐a‐

Carv.Clendenning,forexample,theOntarioCourtofAppealheldthat,

wheretheproposerofastandard‐formrentalcaragreementhadno

reasontobelieveapartywasassentingtoanunexpectedlyonerousterm,

therewasnocontractualassent—eventhoughthecontractstatedthathe

had“readandreceived”allthetermscontainedtherein.86

Althoughsomecourtshavenodoubtbeeninsufficientlyflexible,

Americanlawevinceseffectivelythesameapproach.TheSecond

Restatementisexemplary.Inastandardizedcontractwhereaparty“has

reasontobelievethatthepartymanifestingsuchassentwouldnotdoso

ifheknewthatthewritingcontainedaparticularterm,thetermisnot

partoftheagreement.”87

Ofcourse,muchmoreremainstobedonetodelineatethe

circumstancesinwhichatermcanberegardedasunreasonableandso

notproperlyincorporatedintothecontract.88Butthebasicframeworkof

theanalysisisclear.Itisexactlythepositionthattheordinarylogicof

contractformation—basedonthemutualwillofthecontracting

parties—requires.85Asinthe“shrink‐wrap”cases,suchasProCD,Inc.v.Zeidenberg,86F.3d1447(7thCir.1996);Hillv.Gateway2000,Inc.,105F.3d1147(7thCir.1997).SeeBARNETT,supranote63,at118‐21.86(1978)83DLR(3d)400,408‐09.ContrastL'Estrangev.F.Graucob,Ltd.,[1934]2K.B.394,403.87Section211.Somejurisdictionsusethedoctrineofunconscionability,avitiatingdoctrine.E.g.A.&M.Producev.F.M.C.Corp.,186Cal.Rptr.114(Cal.Ct.App.1982);Combv.Paypal,218F.Supp.2d1165,1172‐73(N.D.Cal.2002).Onthisseeinfranote91.88InthisrespectthemostmethodicalanalysisisPeterBenson’s.StandardFormContracts(draftpaperonfilewithauthor).

103

3.4.1.2 Theneedtopreventadvantage‐taking

Thesecondconcernaboutcontractsofadhesionisnotedby

FriedrichKesslerinawell‐knownarticle:89

Standardcontractsaretypicallyusedbyenterpriseswithstrongbargainingpower.Theweakerparty,inneedofthegoodsorservices,isfrequentlynotinapositiontoshoparoundforbetterterms,eitherbecausetheauthorofthestandardcontracthasamonopoly(naturalorartificial)orbecauseallcompetitorsusethesameclauses.Hiscontractualintentionisbutasubjectionmoreorlessvoluntarytotermsdictatedbythestrongerparty,termswhoseconsequencesareoftenunderstoodonlyinavagueway,ifatall.

Thereisarealconcernhere,butitmusttakeintoaccountthe

distinctionbetweencontractformationandthevitiatingdoctrines.

Aparty’ssigningontoboilerplateterms,solongastheyareaware

thatthatiswhattheyaredoing,isfully“voluntary”inthesenseof

“chosen”or“effectivelyintended,”aswehavebeenusingithereto

understandcontractformation.

Nevertheless,thereremainpotentialproblemstobeaddressedbythe

vitiatingdoctrines.90Forexample,theremaybespecialconcernsabout

unconscionabilitywherethereissomeadvantage‐takingbyapartywith

monopolypower.(Comparetheinabilitytochargemorethanreasonable

rateforrescuesinmaritimesalvagelaw.)

Howisthisconsistentwiththewilltheory?Toanswerthatquestion

wewouldneedtodevelopatheoryofthevitiatingdoctrines.Sufficeitto

sayherethatitseemsplausiblethatifamonopolistusesitsmarket

powerinordertoobtainacontractualtermthatwouldnothavebeen

agreedtoabsentthatpower,themonopolistseemstobecapitalizingona

defectintheotherparty’schoice,whichcouldberegardedasawrongful

89 Friedrich Kessler, Contracts of Adhesion—Some Thoughts About Freedom ofContract,43COLUM.L.REV.629,632(1943)(emphasisadded).90Onunconscionabilityastransactionaladvantage‐taking,seeRICKBIGWOOD,EXPLOITATIVECONTRACTS(2004).

104

violationofthefundamentalnormativeprinciplethatnopersonmay

usurpanother’schoices.

Thelackofnegotiationinacontractofadhesionthereforeplaystwo

separateroles.Itgoesbothtothereasonablenessofthebeliefthatthe

term‐takerhasassentedtoaparticularterm,andtothepossibilityof

wrongfuladvantage‐takingamountingtoanusurpationbyonepartyof

another’schoice.91

3.4.2 Implication

Whatabouttheimplicationofcontractualtermsthattheparties

themselveshavenotexplicitlystated?92

Thesortsofcasesinwhichimplicationsmaybefoundareprobably

unlimitedandimpossibletocategorizeneatly.93However,thereisa

commonthreadinthephraseologythatcourtsdeployinordertoexplain

whenanimplicationisproper.Courtssay,forexample,that“whereit

appearsthatbothpartieshaveagreedthatsomethingshallbedone…

eachagreestodoallthatisnecessarytobedoneonhispartforthe

carryingoutofthatthing”;94thatthecontractmustbegiven“such

efficacyasbothpartiesmusthaveintendedthatatalleventsitshould

have,”95orthatthematterimpliedis“asthenatureofthecontractitself

implicitlyrequires.”96

Whatallofthissuggestsisthatanimpliedtermisanimplicationor

inferencefromtheconceptsthatthepartieshaveexplicitlyinvoked.The

91Hencesomecourtsusethedoctrineofunconscionabilitytoaddressconcernsaboutcontractsofadhesion.Seesupranote87.92Often,implicationmergeswithinterpretation,becausewhenapersoninvokessomeconcept,thescopeoftheconceptisshapedbythecontextinwhichitisinvoked.E.g.Pellyv.RoyalExchangeAssurance,(1757)1Burr.341;97E.R.342(LordMansfield)(“voyage”includedstorageofship’stackleonlandduringcallatportduringvoyage).93Cf.S.M.WADDAMS,THELAWOFCONTRACTS¶146(5thed.2005).94Mackayv.Dick,(1881)6App.Cas.251,263(LordBlackburn).95TheMoorcock(1889)14P.D.64(LordBowen).96LiverpoolCityCouncilv.Irwin,[1977]A.C.239,254(LordWilberforce).

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needtoadoptsuchimplicationsorinferencesisnotuniquetocontract

law.Itisafeatureoftheuseofconceptsgenerally.Implicationsarepart

ofaconcept’smeaning.

Aswehaveseen,invokingaconceptinvolvespickingoutaclassof

particularsthatfallunderit,althoughthosemaynothavebeen

specificallyadvertedto.Nowwemustalsonoticethattheinvocationofa

conceptalsohasnecessarypresuppositionsandentailments,though

thosemaynothavebeenspecificallyadvertedtoeither.97Thepotential

implicationsofagivenconceptareinfiniteandcouldneverbe

specificallyadvertedtoinadvance,justastheparticularsthatfallwithin

agivenconceptcannotbe.

Taketheconceptof“myfriend’suncles.”Usedinaparticularcontext,

thisconceptpicksoutaclassofparticularindividualsthatfallunderit,

thoughsomeorallofthoseindividualsmaynothavebeenspecifically

imaginedbytheconcept‐user.Moreover,theconceptalsohasinherent

presuppositions.Itsusepresupposes,forexample,thatthereisan

individual,myfriend,whohasmorethanoneuncle.Furthermore,the

concepthascertainentailments:foranyindividualitappliesto,thatthat

individualmustbe“male,”relatedtomyfriend,andsoon.

Thesameistrueofconceptsinvokedbycontractingparties.Consider

mypromisetomowyourlawnonSaturday.Thispresupposesthatyou

havealawn.ItentailsthatIwillhaveoracquirethemeanstomowit,

thatIwillbeintravellingdistancefromyourlawnthatday,andsoon.

Likewise,thesaleofanairplaneticketmustentail,forexample,thaton

thedayoftheflighttheairlinewillfueltheplane,thatthepassengerwill

beallowedtodisembarkonarrival,andsoon.Similarly,thesaleofa

97ROBERTBRANDOM,REASONINPHILOSOPHY:ANIMATINGIDEAS(2009).

106

goodorcertainlaborandmaterialsimplies(absentanysuggestiontothe

contrary)thatwhatissoldisfitforitsintendedpurpose.98

Notethatonewayofunderstandingtheseimplicationsisasthe

consequencesofthecontractthatthepartieswould,ifan“officious

bystander”hadinquiredatthetimeofformation,havereasonably

acceptedtheyintended.However,thisdoesnotmeanthattheparties’

intentionwithregardtotheimpliedtermismerely“hypothetical.”99

Ratherthehypotheticalisawayofgettingatwhatthepartiesactually

intended,becausetheyinvokedcertainconcepts,whichnecessarily

presupposeandentailothers.

98See,e.g.,SaleofGoodsAct§14(1893)(U.K.);HelicopterSalesv.RotorWork(1974)132C.L.R.1.99Cf.BrianH.Bix,Contracts,inTHEETHICSOFCONSENT:THEORYANDPRACTICE261(AlanWertheimer&FranklinG.Millereds.,2009).

107

4 FormationII:Transfer?

Sofarithasbeensuggestedthatcontractformationcanbeunderstoodas

arisingthroughthesheermutualchoiceofthecontractingparties.That

mutualchoiceamountstotheparties’recognitionofthepromiseeas

havingthecontractright.

However,thereisacloselyrelated,rivalexplanationforhowa

mutuallywilledtransactionestablishesacontractualright.Thisisthe

transfertheoryofcontract.Onthetransfertheory,contractisconceived

asakintoatransferofproperty,inwhichtwopartiesagreetoconvey

somethingorobjectfromoneofthemtotheother.Thecontractrightis

thereforeestablishednot,asonthewilltheory,justbecausetheparties

mutuallychooseforthepromiseetohaveit.Thecontractrightis

establishedbecausethepartiesmutuallychoosetoconveyitfromoneof

themtotheother.

VersionsofthetransfermodeldatebackatleasttoGrotius,whowas

echoedinthisrespectbyPufendorf.1Thenotionofatransferwasalso

deployed,withvaryingdegreesofemphasis,bytheirsuccessorsinthe

modernnaturalrighttradition,notablyKantandHegel.2Recently,the

transfertheoryhasbeenrevivedincontractsscholarshipinthecommon

lawworld,mostmethodicallybyPeterBenson.3

AsBensonexplains,atransfersharesseveralessentialfeatureswitha

contract.Isolatingthosefeaturesimprovesourunderstandingofthe

1HUGOGROTIUS,DEJUREBELLIACPACISLIBRITRESII.XI.IV(FrancisW.Kelseytrans.,1925);SAMUELPUFENDORF,ONTHELAWOFNATUREANDNATIONSIII.V.VII(C.H.Oldfather&W.A.Oldfathertrans.,1934).2IMMANUELKANT,THEMETAPHYSICSOFMORALS§18(MaryJ.Gregored.&trans.,1996)(1797‐98);G.W.F.HEGEL,ELEMENTSOFTHEPHILOSOPHYOFRIGHT(H.B.Nisbettrans.,1991)§40(1821).3SeeespeciallyPeterBenson,TheUnityofContractLaw,inTHETHEORYOFCONTRACTLAW:NEWESSAYS(PeterBensoned.,2001);PeterBenson,ContractasaTransferofOwnership,48WM.&MARYL.REV.1673(2007).

108

latterinstitution.However,theseessentialfeatures,itshallbesuggested

here,canalsobeaccountedforbyawilltheory.Moreover,thereare

essentialfeaturesoftransferthatarenotessentialtocontract.Thereis

thereforereasontomovefromthetransfertheorytothewilltheory,

whichretainsthefeaturesofthetransfermodelthatarevaluablewhile

discardingthosethatareproblematic.

Accordinglythewilltheoryshouldbetaken,notasopposedtothe

transfertheory,butasanattemptedrefinementofit.4Indeed,the

articulationofatransfertheoryisanindispensablestageinthe

understandingofcontract.Withoutit,certainaspectsofcontractlaw

wouldgounnoticedormisunderstood.Theinvocationofthenotionof

transferbyallofthegreatphilosophersofthemodernnaturalright

traditionsuggestsasmuch.Thewilltheoryseekstoretaintheessential

insightsofthattraditionwhilediscardingpartsofitthatareonly

accidentalvis‐à‐viscontract.

4.1 ValuableFeaturesofTransfer

AsBensonnotes,“Noonedoubtsthatpersonscanacquire…fromeach

other”bymeansofapresentphysicaltransfer.5Insuchatransfer,a

physicalthingispassed,perhapsliterally,fromatransferortoa

transferee,whofromthatmomentonhasthethingasherown.6Akey

differencebetweenatransferofaphysicalthingandacontract,of

course,isthatwhatapartyacquiresbyacontractisnotnecessarilya

physicalthing,butratherarighttothepromised“performance,”which

maybeaconceptualobject(suchasanintellectualpropertyright),anact

orservice,orastateofaffairs,forexample.7Bearingthatdifferencein

mind,themodelofthetransferofapresentphysicalthingmay

4Cf.G.W.F.HEGEL,PHENOMENOLOGYOFSPIRIT§2(A.V.Millertrans.,1971)(1807).5Benson,Unity,supranote3,at128.6Id.at127‐28.7SeefurtherChapter5,infra.

109

neverthelessilluminatethenatureofcontractbyisolatingthefeatures

thatthetwoformsofacquisitionshare.

AsBensonexplains,theexplanatorypowerofthetransfertheoryof

contractflowsfromthefactthatatransfer,likeacontract,isa

transactionalorderivativeacquisition.Theacquisitionisachievedonly

withtheparticipationofanotherpersoninadditiontotheacquirer.8The

acquirerdoesnotappropriatetherelevantrightunilaterally.Contrastan

originalacquisition(of,forexample,anunownedproductofnature),

whichdoesnotrequireanyotherperson’sparticipation.Inanoriginal

acquisitiontheacquirerappropriatesathingjustbyunilaterallytaking

controlofit.9

Onevaluablefeatureofatransfermodelofcontract,Bensonpoints

out,isthatitenablesustounderstandhowacontractcouldimmediately

establish,atthemomentofformation,arightinthehandsofthe

promisee.10Inatransfer,fromthemomentofthetransferonwardsthe

transfereehasthethingtransferred.Fromthenon,anyinterferenceby

thetransferorwiththatthingwillbeawrongagainstthetransfereeto

whomitbelongs.Thetransfereecanaskacourttoundosuchawrong,

forexamplethroughanawardofspecificrelieforcompensatory

damages.

Likewise,acontractualpromiseemustacquirearighttoperformance

immediatelyatformationinordertoexplaincontractremediesdoctrine,

whichrecognizesarighttoperformance,reflectedintheavailabilityof

specificperformanceandexpectationdamages,fromtheverypointof

formation.Ifthepromiseewerenotregardedasimmediatelyacquiringa

righttoperformance,contractlaw’sprotectionofthepromisee’sinterest

inperformancefromthemomentofformationwouldbemysterious.

8Benson,Unity,supranote3,at128,129.9Piersonv.Post,3Cai.175(N.Y.1805).10Benson,Unity,supranote3,at119‐20,127‐28.

110

Whyshouldthelawconferthisapparentbenefitonapromisee,rather

than,forexample,merelyredressingwhateverdetrimentthepromisee

mayhavesufferedbyrelyingonthecontract?11

Thetransfermodelofcontracthasotherimportantfeaturesthat

Bensonidentifies.Inatransfer,therelevantrightmustbeestablished

bilaterally:throughatransactionbetweentwoparties,eachundertaking

purposiveacts(inourterminology,“choices”)ofappropriatingand

relinquishing,whicharerelatedtoeachother.12Finally,thetransfer

modelsuggeststhattheparties’actsofrelinquishmentandacquisition

mustbebothsimultaneousandsuccessive.Thoseactsmustbe

simultaneousbecausetherecanbeno“gap”ormomentwhenthething

transferredisnotcontrolledbyeitheroftheparties.13Theymustbe

successivebecausethetransfereecannotpurporttotakethethingfrom

thetransferorbeforethetransferorhasrelinquishedit.14

Thesefeaturesareofcoursefamiliar,becauseitwassuggestedin

ChapterThreethatthewilltheoryalsodemandsthem.Theyarefeatures

ofthenecessarystructureofamutualwillincontractformation.Inorder

toachievethisstructure,eachparty’swillmustbeissuedsuccessivelybut

thetwowillsmustjoinsimultaneously.Andthemutualwillamountsto

theparties’recognitionthatthepromiseehassomething,arecognition

thatiseffectiveimmediately.Itisaneffectivechoice,notamere

ineffectualwishorintentionto.Inthesamewaythatthechosen

recognitionofastatuscanbeimmediatelyeffective.

11Cf.L.L.Fuller&WilliamR.Perdue,Jr.,TheRelianceInterestinContractDamages:1,46YALEL.J.52(1936).12Benson,Unity,supranote3,at128‐29.13Id.at129‐30(“theobjectoftransfercannotceasetobethefirstparty’swithoutalreadybelongingtothesecond”;“thesecondpartymustappropriatetheobjectintheconditionofbeingownedbythefirstparty”).14Id.at129(“Tobecompatiblewiththerightsofownershipofthefirstparty,theseconddecisionmustcomeafterandmustbeinresponsetothedecisiontoalienate.Onlyinthiswaycanthesecondpartyacknowledgeandrespectthefirst’sinitialrightofpropertyinthething.”),130(“needfortemporallysuccessiveassents”).

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Thewilltheoryandthetransfertheorythereforeseemtostandon

equalfootingwithregardtothefeaturesoftransactionalacquisitionthat

Bensonidentifies.However,thereisanimportantdifferencebetween

thetwotheories.Althoughboththewilltheoryandthetransfertheory

canaccountfortheessentialfeaturesoftransactionalacquisition,each

demandsthosefeaturesforsubtlydifferentreasons.

Thetransfermodelassumesthatthepartiesundertakea

“transactional”acquisitioninthesensethatoneofthemacquires

somethingdirectly“from”theother.15Theveryideaofatransfer

involvesthemovementofsomethingfromtransferortotransferee.The

transferorhasthethingpriortoitsconveyance;itisthenconveyed,

retainingitsidentityintheprocess;finally,thetransfereehasthething

followingtheconveyance.

Thisstructureofatransfer,asatransactionalacquisitionfromone

persontoanother,informsthewaythatthetransfertheorycomprehends

thefeaturesofimmediacy,simultaneityandsuccessiveness,and

bilaterality.Asshallbeelaboratedinamoment,thosefeaturesare

demanded,onthetransfertheory,fortworeasons.First,becausethere

canbenogapbetweenthetransferor’shavingthethingandthe

transferee’shavingit.Second,becauseofthefundamentalprinciplethat

nopersonmayunilaterallydetermineanother’schoice.Thisentailsboth

(a)thatthetransferorcannotfoistthethingtransferredonanunwilling

transferee,and(b)thatthetransfereecannottakeathingfroman

unwillingtransferor,whileitbelongstothelatter.

Letuselaboratethesepoints.Immediacyandsimultaneityare

required,onthetransfertheory,becausethetransferee’shavingmust

coincidewiththetransferor’shaving,sothatthereisnogapinbetween

thesetwostatesofaffairs.Yetsuccessivenessisalsorequired,onthe

15Id.at128‐29.

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transfertheory,becauseonepersoncannottakesomethingthatalready

belongstoanother.16Relatedly,onthetransfertheorybilateralityis

requiredinorderforthetransactiontooccurwithouteitherafoistingor

ataking.Thetransfereemustchoosetoacquiretheobject,becausethe

transferorcannotfoistituponher.Thetransferormustchooseto

relinquishtheobject,becausethetransfereecannotunilaterallytake

somethingthatalreadybelongstoanother.

Contrastthewilltheoryofcontract.Onthistheory,contractisalso

conceivedasa“transactional”acquisition:onethatrequiresthe

participationoftwopersons.However,itisnotatransactional

acquisitioninthesamesenseasthetransfertheory.Becausethe

promisee’srightisnotacquiredfromthepromisor,inthesenseofbeing

somethingthatthepromisorinitiallyhas,whichisthensubtractedfrom

herholdings,andpassedovertothepromisee,whothenhasit.Rather,

thepromisee’srightisacquiredtransactionallyonlyinthesensethatitis

throughtheparties’mutualchoiceorrecognitionofitthattherightis

established.Throughtheirmutualchoice,therightisrecognizedas

existinginthepromisee’shands.Itneednothavecomefromanywhere

priortothis.

Accordingly,thewilltheorycanaccepttheessentialfeaturesof

transactionalacquisitionbycontractthatBensonidentifies,while

denyingthatcontractmustbeconceivedasatransfer.

Inhisdevelopmentofthetransferidea,Bensonreasonsthat,because

acontractmustinvolveanimmediateacquisitionofanentitlementby

thepromiseethroughatransactioninwhichthepromisoralso

participates,contractmustbeconceivedasan“acquisition”inthesense

ofaconveyancefrompromisortopromisee—i.e.,atransfer:

16Id.at129‐30.

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[Ifthepromiseeimmediatelyacquiresarighttothecontractualperformance],thenextquestionishowheorshecanacquireit.Tobegin,itisclearwherewemustlocatethesourceofthisentitlement:Itmustbeinthecontractitself,effectedbycontractformation.Contractformation,therefore,mustitselfconstituteamodeofacquisition;itmustgivethepromiseetherequisiteentitlement.Morespecifically,atandthroughformation,thepromiseemustacquirethisentitlementfromthepromisorwithhisorherconsent.…Contract,then,mustbeintelligibleasatransferofownershipfromonepartytotheother.17

Thewilltheorydeniesthisreasoning,becauseitpresumesadifferent

conceptionofatransactionalacquisition:anacquisitionnotfrom,but

through.Thus,onthewilltheory,Benson’sreasoningwouldbeamended

tostate,“atandthroughformation,thepromisemustacquirethe

entitlementthroughthepromisor’schosenrecognitionofit.”Contract

canthenstillbeunderstoodasatransactionalacquisition(asa

derivative,ratherthananoriginal,acquisition)butitisnotunderstood

asatransfer.

Relatedly,onthewilltheory,theessentialfeaturesoftransactional

acquisitionthatBensonidentifiesarerequiredforsubtlydifferent

reasons.First,onthewilltheorythereisnoconcernaboutavoidinga

gap.Thatconcernarisesonthetransfertheorybecauseofthedistinction

betweentwophasesoftheacquisition,thetransferor’sinitialhaving,and

thetransferee’ssubsequenthaving.Ifthetwophasesaredistinct,there

couldbeagapinbetweenthem.Hencethetransfertheoryismuch

exercisedtoexplainhowthetwodistinctphasescanbeinsomesense

simultaneous.Thatleadstoaclash,however,withthecontrary

requirementthatthetwophasesbesuccessive.Thetransferee’shaving

mustsucceedthetransferor’sbecauseotherwise,thetransferorwillbe

takingtheobjectoftransferbeforethetransfereegivesitup.

Onthewilltheory,incontrast,thereisnopossibilityofagap,because

thereisnodistinctionbetweentwophases.Thereisjustasinglemoment

ofmutualchoice,wheretheparties’willsjoin.Moreover,onthewill

17Unity,supranote3,at128.(emphasisadded).

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theory,aswehaveseen,thereisnotensionbetweenthesimultaneityof

theparties’mutualwill,andthesuccessivenessoftheissuanceofthe

individualwillsthatcombinetocreateit.(Justasthereisnorealtension

intheideaoftwopersonsjoiningeachotherforawalkalthoughthey

startatdifferenttimes.)Contrastthetransfertheory,onwhich,atbest,

significantfurtherworkmustbedonetoovercometheapparentparadox

thatthetransferee’sacquisitioncancomeneitherbeforenorafterthe

transferor’srelinquishment.18

Thisleadstotheseconddifferencebetweenthetransferandthewill

theory,concerningtheoperationofthefundamentalprinciplethatno

personmaydetermineanother’schoice.Thewilltheory,likethetransfer

theory,isconcernedthatthecontractnotamountto(a)afoistingofa

rightbythepromisoronthepromisee.Thereforethepromisee’schoice

isrequired.Butontheotherhandthewilltheory,unlikethetransfer

theory,isnotitselfconcernedwiththepromisee(b)takingsomething

fromthepromisorthatcurrentlybelongstothelatter,subtractingitfrom

thepromisor’sstockofassets.Rather,thewilltheoryisconcernedthat

thepromiseenotsubornthepromisor’schoiceinthecontractformation

itself.Thatis,thewilltheoryrecognizesthattheunilateralestablishment

ofacontractbythepurportedpromiseewoulditselfinvolvethe

determinationofthepromisor’schoice—asuborning—irrespectiveof

whethertherightestablishedbythecontractissomethingthatinany

sensebelongedtothepromisorpriortothepurportedcontract.

Suborningiswrongfulirrespectiveofwhetherthereisanytaking.

Insummary,itcanbeseenthatalthoughthetransferandwilltheories

necessitatesimilarfeaturesoftransactionalacquisition,theyhavea

subtlydifferentbasis,resultingfromthedifferentstructureof18Bensonfindstheserequirementssatisfied“formally”byofferandacceptance,but“substantively”onlybythedoctrineofconsideration.Id.at144‐49,152,173‐74.KANT,supranote2,at[6:272‐74],notoriouslycomparesatransfertoastonethrownonaparabolicpath,attheapexofwhichthestoneisregardedasbothrisingandfalling.

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transactionalacquisitionthateachtheoryassumes:a“from‐to”

acquisitioncomprisingatleasttwophases,onthetransfertheory,andas

a“through”acquisitionwithjustone,onthewilltheory.

Thetransfermodelissopowerfulinpartbecauseitsupplies

apparentlyvisibleortangibleembodimentsofthekeyfeaturesofa

transaction.Wecanimaginetwopartiesstandingneartoeachother,one

ofwhominitiallygripsasmallphysicalobject,beforephysicallypassing

ittotheotherparty,whothengripsitherself.Heretheimmediacyofthe

transferappearsvisiblebecausewecanseethatthetransfereenowgrips

thephysicalobjectinherhands.Likewise,thebilateralityofthe

transactionisevident,becausetherearetwoparties;eachofwhommust

act,bypassingandtaking;eachofthoseactsisnotindependentbut

directlyconnectedtotheother.Thetransaction’ssimultaneityisvividly

imagedbecausethereisamoment,asthepartiespassthethingfromone

totheother,whenbothgripitatthesametime.Yetthereisalsoavisible

temporalsuccession,becausethethingisinitiallywithoneoftheparties

andwiththeother.

Obviously,however,thephysicalpresencesandmovementsimagined

orvisibleinsuchascenedonotthemselvesexplainthelegal

effectivenessofatransfer.19Physicalmovementscannotthemselves

sufficetoestablishavalidtransferunlesstheparties’willsareinaccord.

Forexample,thehandingofanobjectbyonepartytotheothertransfers

ownershiponlyifthepartiesmutuallyunderstandthattobewhatis

intended,andnotif,say,thepartyreceivingthethingismerely

inspectingit.Conversely,theparties’mutualwillcanitselfachievealegal

transfer,asbetweentheparties,withoutanyphysicalmovementsof

19Benson,Unity,supranote3,at128(“Amerelyphysicaltransfercannotassuchproduceanyjuridicaleffects.”).SeealsoARTHURRIPSTEIN,FORCEANDFREEDOM112(2009).HelgeDedekpresentstheunexplainedshiftfromphysicalmovementstonormativeeffectsintransfertheoriesastheproblemof“subreption,”alongstandingconcerninthenaturalrighttradition.AParticleofFreedom:TheKantianTheoryofTransferbyContractandNaturalLawThought,25CAN.J.L.&JURIS.313(2012).

116

things.Forexample,ownershipofaphysicalthingmaypassasbetween

twopartiesevenifthroughoutthetransactionthethingsitsuntouched

byeitherofthem.20

Thus,anunderstandingofthelegaleffectivenessofatransfermust

deriveitspowernotfromphysicalmovementsofthings,butfromthe

transactionalstructurecomprisedoftheparties’willsorchoices.This

sectionhassoughttolaybarethedifferenttransactionalstructuresthat

thetransferandwilltheoriesrespectivelyembody,sinceitisuponthis

thatthetheoriesmuststandorfall.

Noneofthisyetimpugnsthetransfertheoryasanexplanationof

contractlaw.However,thetransactionalstructureunderlyingthe

transfermodel,whichwehavesoughttoreveal,doesprovetobe

problematic,becauseitturnsoutthatitsdistinctivefeaturesarenot

sharedbymanykindsofcontract.

4.2 ProblematicFeaturesofTransfer

Certainessentialelementsofthestructureofatransfer—a

transactionalacquisition“from‐to”—arenotpresent,andhavenoanalog,

inatleastsomecontracts.Mostobviously,thisisthecaseincontractsfor

services.Inasuchacontractitseemstobeimpossibletolocate(1)an

initialholdingonthepartofthetransferororpromisor,which(2)retains

itsidentitywhilebeingtransferredfromhertotheotherparty,suchthat

whatisreceivedcanbesaidtobethesameaswhatwastransferred.21

20Hereweareconsideringthetransferofachattel,whichisaddressedbyvariouslegalregimes.Forsalesofchattels,seeSaleofGoodsAct§§16‐18(1893)(U.K.),andequivalentprovisionsadoptedthroughoutCanadaandAustralia,andinNewZealand;U.C.C.§2‐401,providingthat“property”passeswhenthepartiessointend.21Thefinalphaseofatransfer,(3)thepromisor’spost‐contractholding,couldalsobeproblematized.ButinordertodosowewouldfirsthavetocompletethediscussionofcontractualobligationinChapterFive.

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4.2.1 Thepre‐contractholding

Atleastinthecaseofacontractforservices,thereseemstobeno

holdingthatthepromisorinitiallyhasthatisthentransferred.

Thecriticismoftransfertheoryasrequiringsomesortofpre‐transfer

holding,orpre‐contractright,inthehandsofthecontractualpromisor

hasbeenleveledincontemporaryscholarship,mostprominentlyby

StephenSmith.22However,asHelgeDedekhasoutlined,thesearchfora

holdingthatistransferredinacontractforservicesisaperennialissue

fortransfertheories.23ThisissuewasaddressedbyGrotiuswhenhe

introducedthetransfertheoryofcontracttomodernity.

Grotiusdividedlegallybindingcontractsintocontracts“togive”and

contracts“todo.”Accordingtohim,contracts“togive”transfera“thing”

thatthepromisorholds.Butwhatdoesapromisorinitiallyhold,and

thenalienate,inacontract“todo,”oracontractforservices?Grotius’s

answeristhatinsuchacontractweinitiallyholdandthentransfera

“particleofourliberty.”24Subsequently,Pufendorfadoptedsimilar

language,contendingthatapromise“todo”somethingisanalienationof

“acertainparticleofourliberty…sothatinwhatwewereablebeforeto

do,oromittodo,ortohandleatourdiscretion,wemustnowfollowthe

directionsofourpromise.”25

Morerecently,bothproponentsanddetractorsofthetransfertheory

havetakenessentiallythesameline.Theyclaimthatwhatthepromisor

holdsandtransfers,atleastinacontractforservices,mustbeakindof

libertyorpoweroverherfutureactions.26

22STEPHENA.SMITH,CONTRACTTHEORY101(2004).23Dedek,ParticleofFreedom,supranote19.24Id.at325n.64,quotingDEJUREBELLIACPACISII.XI.IV.25Id.at327,quotingONTHELAWOFNATUREANDNATIONSIII.V.7. 26SMITH,supranote22,at101(criticizingthisapproach);RIPSTEIN,supranote19,at116(skepticalofit);AndrewGold,APropertyTheoryofContract,103NW.U.L.REV.1,50‐53(2009);AndrewBotterell,ContractualPerformance,CorrectiveJustice,and

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However,thereareanumberofdifficultieswiththisview.First,it

impliesthatcontractingpartieshave,priortothecontract,asortofpool

ofholdingscomprisingtheirpotentialactionsandchoices—actionsthey

havenotyetundertaken,andchoicestheyhavenotyetmade.

ThisfittedwellwiththebroaderlegaltheoriesofGrotiusand

Pufendorf,becausetheyviewedallpersonsashavingsuchapotestas

overtheirpotentialactions,asasortofbasicnaturalright.27Incontrast,

itseemedtocausemoretroubleforlatertheorists.Fichtedescribedthe

“object”ofacontract,somewhatawkwardly,asany“thing”thatthe

partiesmightpotentiallyclashover.Thisincludedsomethingalready

ownedorpossessedbyoneoftheparties,butalsosomethingthat

neithercurrentlyownorpossess,butthattheymightconceivably

disputeinfuture.28Indeed,theobjectofacontract,Fichtenoted,maybe

somethingthattheparties“maynothaveevenknownaboutbefore...or

…aboutwhich[theyhad]notyetmadeanydecisions.”29Subsequently,

KantandHegel,whileutilizingtheconceptoftransferasanexplanatory

device,arevagueaboutthenatureofthepromisor’srelevantpre‐

contractholdings.Kant’sdiscussionofcontract,thoughitreliesheavily

ontheideaoftransfer,andrepeatedlyaddresseswhatitisthatthe

promiseeacquiresbyacontract,doesnotexplicitlyaddresswhatform

thismighttakepriortothecontractasaholdingonthepartofthe

promisor.30Similarly,Hegelreferstocontractastransfer,anddescribes

DisgorgementforBreachofContract,16LEGALTHEORY135,148(2010);Dedek,supranote19,at17‐18.27Dedek,supranote19.28J.G.FICHTE,FOUNDATIONSOFNATURALRIGHT§17(MichaelBaurtrans.,2000)(1796‐97).Fichtedoesspeakofthecontractingparty“giv[ing]somethingup,”hedoesnotappeartoconceiveofthisbeingconveyedtotheotherpartyasinatransfer.29Id.30KANT,supranote2,at§§18‐21.

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whatthepromiseeacquiresas“property,”butdoesnotaddresshowthis

propertyexistsinthepromisor’shandspriortocontracting.31

Thedifficultywiththeconceptionofthepre‐contractualholdingasa

potentialaction,powerorlibertyisthatsuchaholdingisunrecognized

byprivatelawinanyothercontext.Persons’potentialactionsorchoices

arenotprotectedbyprivatelaw.Thepotentialactorhasatmostthe

potentialtohavealegallyrecognizedaction,ifandwhensheactuallyso

actsinthefuture.Forexample,youhavenolegalclaimtothemovements

yourbodycouldpotentiallymake,totheplacesyourbodycould

potentiallybein,ortothespacesorobjectsyoumightpotentially

control.32Otherpersons,nottomentionnaturalobstaclesoryourown

internalfailings,maypreventthosepotentialmovements,occupythose

spaces,orcontrolthoseobjects,beforeyouevergetthere.Thatgivesrise

tonolegalcauseofaction.Fortheretobeaclaimtoaspaceorobjectthat

isprotectedbyprivatelaw,youmustfirstarriveintheplaceortakethe

objectinquestion:youmustsubjecttherelevantspaceorobjecttoyour

actualactionorchoice.33

Second,thepowerorlibertythatthepromisorissaidtohavepriorto

contractingisunlikeanyotherlegallyrecognizedholdinginthatitis

completelyunparticularized.Priortocontracting,thepromisor’salleged

libertyorpowerisgeneraloruniversal:thelibertytoperform(rightful)

actions,whateverthoseactionsmaybe.Thespecificactionthatwillend

upasthesubject‐matterofacontractrightneednotbepickedoutor

specifiedinanyway—eitherbythelaworthroughanyone’sadvertence

31HEGEL,supranote2,at§40(b)(“thetransferenceofproperty”)(“dasÜbergehendesEigentums”).Butseeid.§43Rn.16.32Piersonv.Post,3Cai.175(N.Y.Sup.Ct.1805).33Strictlyspeaking,itmustbethecasethattheplaintiffwouldactuallybecontrollingthedomaininquestionbutforthedefendant’susurpationofheraction. Notealsothatthisrequirementofactualcontrolisthebasisforthefoundationaldistinctionbetweenmisfeasanceandnonfeasance,withoutwhichasystemofprivaterightwouldcollapseintoincoherence.SeePeterBenson,MisfeasanceasanOrganizingNormativeIdeainPrivateLaw,60U.TORONTOL.J.731(2010).

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orintention.Itisbecauseofthepeculiargeneralityoftheallegedpre‐

contractpowerorlibertythattransfertheoristsoftendescribethe

contractualtransferasa“carvingout”a“portion”ofthepromisor’s

libertyorpowertoact(orsomesimilarmetaphor).Contrastthe

generalityofthislibertyorpowerwiththeotherholdingsofindividuals

thatarerecognizedinprivatelaw,whicharealwaysentitlementsto

particularactions,spacesorobjects(physicalorconceptual).

Third,notethatthosewhoadvocatetheexistenceofthissupposed

pre‐contractualholdingonthepartofthepromisorwouldpresumably

havetoacceptthatthereisanequivalentpre‐propertyholdingthat

prefiguresanoriginalacquisitionofproperty.Inacontractforservices

thepromisorissaidtohold,priortothecontractual“transfer,”ageneral

potentialforaction.Similarly,priortotheoriginalacquisitionofan

unownedphysicalthing,itcanbesaidtheacquirerhasageneral

potentialtocontrolthings.Butwewouldsurelybeuncomfortablesaying

theacquirerhassomething,priortoanoriginalacquisition,thathethen

somehowactsuponinordertocreateapropertyright.Rather,wewould

bemoreinclinedtosaythat,beforeanoriginalacquisition,theacquirer

hasnoentitlementwithrespecttotheunacquiredthing.Or,forthat

matter,withrespecttoanyoftheotherunacquiredthingsintheworld

thathecouldpotentiallyacquire.

Fourth,itisworthaskingwhatwouldconstituteevidenceofthe

allegedpre‐contractholdingthatprefiguresatransferinacontractfor

services.Surely,theremustbesomeconfirmationoftheexistenceofthis

holdingthatisindependentofourtheoryofcontractastransfer.

Otherwise,thepre‐contractholdingismerelyatheoreticalpostulatethat

shouldbedisposedofassoonasthereisanyacceptablealternative

theory.Occam’srazorwoulddemandthatwefindsomealternative

theorythatdispenseswithit.

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Now,itmightbethoughtthattheexistenceofrestraintson

alienability—forexample,theprohibitionofslaverycontracts—provides

independentevidenceofthekindweareseeking.34However,whilethe

existenceofrestraintsonalienabilitymightbeconsistentwiththe

transfertheory,itcouldalsobeexplainedonthewilltheory.Awill

theorycouldexplaintheseonthebasisthatthereissomething

problematicabouttheinvalidcontractitself,oraboutthepromisor’s

acquisition.Atheoryofinalienabilityneednotproceedonthebasisthat

therearesomesortsofpre‐contractholdingthatcannotbe“givenup”by

apurportedpromisee.

4.2.2 Transformationinconveyance

Afurtherobjectiontothetransfertheoryconcernsthecoherenceof

thenotionthatthepre‐contractholdingisconveyedormovedfromone

partytotheother,whileretainingitsidentity—suchthatwecan

understandtheretobeoneandthesamethingpersistingthroughoutthe

transfer.Theproblemisthatintheprocessofcontracting,atleastina

contractforservices,theholdingthatthepromisorissaidtohave

initiallyseemstobetransformedwhileitisbeingconveyedtothe

promisee.

First,whatthepromiseeacquiresfromthepromisorisnolonger

general,butparticular:therighttosomespecifiedactiononthepartof

thepromisor.

Second,whatthepromiseeacquiresisnolongeramerepotentiality,

butanactualityandnecessity.Thatistosay,therelevantactionisno

longeroptionalforthepromisor;instead,intheeyesofthelawthe

promiseeisviewedasalready“having”theperformanceofthataction.

34RandyBarnetthassuggestedthisorallyindefendingthetransfertheory.

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Or,putinHohfeldianterms,whilethepromisorissaidinitiallytohavea

libertytoact,whatthepromiseeacquiresisaclaim‐righttotheaction.35

Inbothoftheserespects,then,thesupposedpre‐existingholding

mustbequalitativelytransformedintheprocessoftransfer.Itisasifa

transferorpurportedtoconveyacollectionofmiscellaneous

constructionmaterials,but,intheprocessofdelivery,theseobjects

miraculouslytransformedthemselvesintoacompletedhouse.36

4.2.3 Otherkindsofcontract

Althoughthecontractforservicesisperhapsthemostintuitive

example,theseproblemsapplytomanyotherkindsofcontract.For

example,acontractforthesaleofanyphysicalobjectthatdoesnotyet

35SMITH,supranote22,at101‐02.36Nocontemporarytransfertheoryavoidsthetransformationproblem.Dedekcontendsthereisa“transferofa…power‐right—potestasoverone’sactions,”which“createsaclaim‐right…onthepartofthepromisee”to“demandthattheactionbeperformed.”Supranote19,at328‐29.Butherewhatis“created”isnotwhatis“transferred.”

Botterellclaimsthatthepromisorinitiallyhasthepowertolimitherlibertytoact,andthatthepromiseeacquiresalimitationonthatliberty.Supranote26,at148.Herethesamequalitativetransformationremains,onlywithanadditionallayerofabstraction:therelevantholdingsaredescribednotaslibertiesorpowers,butaslimitationsuponthose.

StillfurtherabstractedisthesuggestionofDavidOwens,DoesaPromiseTransferaRight?(paperpresentedtothePhilosophicalFoundationsofContractLawConference,U.C.L.2013),thatapromisorhasapowertodeterminewhetherhewouldbewrongingthepromiseebybehavinginaparticularway,whichhethentransferstothepromisee.However,ifwhatthepromiseeacquiresisthepowertodeterminewhetherthepromisorwouldbewrongingherbybehavinginaparticularway,thenwhatthepromisormustreallyhave,priortothetransfer,isthepowertodeterminewhetherthepromisorhasthepowertodeterminewhetherthepromisorwouldwrongthepromiseebybehavinginaparticularway.Again,then,theremustbeatransformationinthetransfer.

Gold,supranote26,at50‐53,arguesthattheobjectionstotransferincontractsforservicesprovetoomuch,becauseevenrightstophysicalthingsaretransformedintheprocessoftheirtransfer.Forexample,thetransferofaphysicalthinggivesthetransfereetherightthatthetransferornottrespassonthething,arightwhichthetransferordidnotpreviouslyholdagainstherself.However,thisexampledependsonGold’scharacterizationoftherightsinvolved.Wecouldavoidthedifficultyheposesjustbysayingthatarighttoathingentailstherightthatothersnottrespassonit.Inanyevent,evenifitweresuccessful,itisGold’sargumentthatwouldprovetoomuch.Becauseitwouldprovethateventheconveyanceofaphysicalthingisnotreallyexplainedbyatransfermodel.

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existorisnotyetavailable(suchasachemicalcompoundnotyet

synthesized,orapieceofmeteoritethatmayormaynotfalltotheearth

tomorrow).

Likewisetheproblemsariseforcontractstosupplyaconceptual

objectorstateofaffairsthatdoesnotyetobtain,suchasacontractto

establishanewbusinessentity,tosubdivideaproperty,ortocreatea

newemploymentposition.

Allthesameproblemsalsoariseforanynegativecovenant—a

promisenottoperformsomeact,suchasA’spromisenottoentersome

spacethatheisotherwiseatlibertytoenter.(Thiswouldinclude

contractsconcerningcommonorjointpropertythatthepartiesown

togetherpriortothecontract.)

4.2.4 Conclusion

Theobjectionstothetransfertheoryallpointtowardsthesame

conclusion.Atleastinthecaseofacontractforservices,thesupposed

holdingonthepartofthecontractualpromisorhasbeeninventedin

ordertoassimilatecontracttothemodelofatransfer.Beginningfrom

theactualcontractrightthatthepromiseeacquires(totheperformance

ofsomeaction)weseekthatiteminthehandsofthepromisor.Butin

manycontractsitisnowheretobefound.Thebestwecando,then,isto

conceiveofthepromisorashavingasortofgeneralcapacityor

potentiality.Butthenitisnotthatthatthepromiseeacquiresbythe

contract.Sothepre‐existingholdingmusthaveasortofslicecarvedout

ofit,whichisthentransformed,explicitlyorbysomesleightofhand,in

its“transfer.”

Confirmationofthiscomesfromthefactthatitisjustasplausibleto

representthetransferofaholdinginacontractforservicesoccurringin

theoppositedirection,frompromiseetopromisor.Herethepromisee’s

proto‐contractholdingisapre‐existinggeneralpotentialdisabilityto

determinethepromisor’sactions.Inthetransfer,someofthisis“carved

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out”andpassedtothepromisor—thoughofcourse,throughthetransfer,

itisqualitativelytransformed,sothatitreappearsonthepromisor’sside

asaspecificactualdutytoperformcertainactions.

Itshouldalsobeapparentthatthegeneral,potentialpre‐contract

holdingsthatarepostulatedinordertoconformtothetransfertheory

arereallyjustabstractedrearticulationsofnormativeprinciplesthat

applythroughoutprivatelaw.Inourterminology,wecansaythatthe

descriptionofthepre‐contractholdingthatatransfertheoristproposes

merelyrearticulatesthefundamentalnormativeprinciplethatnoperson

mayusurpanother’schoices.Thatprinciplecanberearticulatedby

sayingthateverypersonhasasortofgeneralpotentialorlibertytoact,

solongastheactiondoesnotinterferewithothers.(Theprinciplecould

also,ofcourse,berearticulatedinthelanguageofpowersand

disabilities.)Thatrearticulationprovidesfodderforthetransfertheory

becauseitiswhatmakesitpossibletosaythatthereissomeholdingthat

eachtransferorhaspriortocontracting.

Theconclusionthatacontractneedinvolvenotransferalsoexplains

whylaternaturalrighttheorists,whileutilizingtheconceptoftransferas

anexplanatorydevice,seemnottohavebeenseriouslyinterestedin

explicatingthenotionofapre‐contractholdingonthepartofthe

promisorthatistransferred.

4.3 Creation?

Onetraditionalreasoninfavorofthetransfertheoryisthe

unattractivenessofthealternative.Theorthodoxalternativeisusually

portrayedasthepromisee’srightbeingcreatedbythecontract—brought

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intobeingbythepartieswherebeforetherewasnothing.37Theneedfor

theimaginedholdingdisappearshere.

Withoutmore,however,thisviewisalsoproblematic.Itisnotreally

anexplanationfortheestablishmentofthecontractright.Howcanitbe

saidthattherewasnothingbeforethecontract,andthensomething?Ex

nihilonihilfit.Theassertionofcreationoutofnothingmerelyforecloses

furtherexplanation.

Nordofamiliarclosevariationsonthisassertionalterthis—for

exampletheideathatindividualshavea“normativepower”tochange

theirobligations,38orapowertochangetheir“normativesituation.”39

Whydotheyhavesuchapower,andwheredidtheygetit?The

postulationofsuchanormativeapowersuffersfromthesamedefects

thatwesaw,inChapterThree,afflictCoote’spostulationofafacilityof

contractualassumptionprovidedbythepositivelaw.Theassumption

thatthereissuchapowermightsufficeforapositivisttheoryofthelaw,

butitwillnotdoifweseektounderstandthelaw.

Forthesereasons,themostthatcanbesaidaboutthecreation

approachisthatitseemsunsatisfactory.

4.4 Recognition

Ifthepromisee’scontractrightisneithertransferred,norcreatedex

nihilo,howcoulditbeestablished?Theansweristhatthecontractright

canbeunderstoodasconstitutedbytheparties’recognitionor

37RIPSTEIN,supranote19,at116:“Perhapsthereisawaytoanalyze[acontractforservices]asatransferofpartofmyfuturefreedomtoyou.Thereisnoneedtodoso,however,becausetheanalyticalandnormativeworkisdonethroughourunitedwill:wecreatearightonyourpartandthecorrelativeobligationonmine.”SeealsoDedek,supranote19;SMITH,supranote22,at102.38E.g.NeilMacCormick&JosephRaz,VoluntaryObligationsandNormativePowers,46PROC.ARISTOTELIANSOC’Y(SUPP.VOL.)59(1972).39RIPSTEIN,supranote19,at123.

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conceptualizationofit.Thepartieschoosetoconceiveofthepromisee

(to“seeheras”)havingthecontractright.

Somethingsimilarhappenswheneverapersonorgroupchoosesto

recognizesomeonesomepersonashavingacertainstatus.Thereneed

beno“transfer”ofthestatus.Thecurrentholderofthestatusmaybethe

firstpersonevertoholdit.Nor,however,isthestatusinexplicably

conjuredoutofavoid.Rather,wecanunderstandittobeconstitutedby

therelevantpersons’recognitionofit.

Therecognitionapproachexplainstheestablishmentofaright,inthe

handsofthepromisee,thatatnopointexistedinthehandsofthe

promisor.Thepartiescansimplyrecognizethepromiseeashaving

somethingthatdidnotexistotherwise.Thisallowsonetoexplainallof

thekindsofcontractwithwhichatransfertheoryhasdifficulty.For

example,twopartiescanrecognizethepromiseeashavingsomefuture

actionofthepromisor’s,evenifithadneverpreviouslyoccurredto

anyonethatthepromisormightperformthatact.Thereisnoneedto

conceiveofthisasacarvingoutandconveyance(withanaccompanying

qualitativetransformation)ofageneralpotentialforactionthatthe

promisorholdspriortothetransfer.

Thisalsoexplainswhyitistempting,thoughpotentiallymisleading,to

seetheestablishmentofthecontractrightasasortofcreationexnihilo.

Followingtheparties’recognitionofthecontract,whateverwasthecase

concerningtheparties’rightspriortoorindependentlyofthecontractis,

uponcontracting,renderedeffectivelyirrelevant.(Atleastasbetween

theparties,totheextentthecontractaddressesthesamesubject‐

matter.)Thatisbecausetheconceptionoftheparties’rightsthatthe

partieschoosetoadoptisself‐contained,orcompleteinitself.40It

40OnthisunderstandingofconceptualizationseeR.LanierAnderson,TheWolffianParadigmandItsDiscontents:Kant’sContainmentDefinitionofAnalyticityinHistoricalContext,87ARCHIVFÜRGESCHICHTEDERPHILOSOPHIE22(2005).

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thereforesupersedesanyconceptionoftheirrightsthatthepartiesmight

havehadpreviously.Herewemightrecalltheshiftbetweentwo

different“aspects”ofapicturecapableoftwointerpretations,suchas

Wittgenstein’s“duck‐rabbit.”41

Thenewconceptionshouldnotbeviewedasacreationofsomething

“from”or“outof”apre‐existingnothingness.Whenweshiftbetween

eachofthetwoaspectsofthepicture,thenewaspectuponwhichwe

focuscompletelysupersedestheother;thetransitiontoitorwhat

existedbeforehandbecomesirrelevant.

Theproblemwiththe“creationist”viewoftheestablishmentofthe

contractrightisthatitentailsanimplicitreferencebacktoapre‐contract

situation(of“nothingness”)thatis,whilethecontractisonfootandto

theextentofitscoverage,irrelevant.

Inthisrespect,compareaproblemthatafflictssocialcontracttheories

inpoliticalphilosophy.Thesetheoriesfacetheproblemofexplaining

howtherelevantpartiesinasocietycanresolveissuesabouthowto

organizetheirsocietybyenteringintoacontract.Theparties’doingso

seemstoassumethatthepowertobindoneselfbyacontractexisted,

priortothesocialcontractthatconstitutesthesociety.Some

commentatorsconclude,fromthislineofreasoning,thattheremustbe

certainfundamentalrightsorpowersthatexistpriortothesocial

contract,inthestateofnature,suchasthepowertoenterintoacontract,

whichmakethesocialcontractitselfpossible.42

Therecognitionview,incontrast,viewsthereferencebacktosome

stateofaffairspriortothecontractas,inprinciple,whollyirrelevantto

theunderstandingofit.Allthatmattersisthatthepartieshavearranged

theirwillsinsuchawayastoeffectthemutualrecognitionofsomething,

41SeeChapterThree.42SeeAllanBeever,OurMostFundamentalRights,inRIGHTSANDPRIVATELAW(AndrewRobertson&DonalNolaneds.,2011).

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now.Whatevermutualrecognitionnowobtainsiscompleteand

sufficientinitself.Itdoesnotmatterwhatanyonehadordidpreviously.

Finally,notethatthemovefromtransfertorecognitionthathasbeen

advocatedinthischapterisinsomewaysthemirrorimageofthe

resolutionofChapterThree’sresponsetoHume.ChapterThreerejected

Hume’simplicitassumptionthattheparties’willincontractformation

mustaffectsomeobjectorstateofaffairslyingbeyondit—something

externaltotheparties’choiceitself.Rather,theparties’choiceis

effectiveinitself,amountingtoarecognitionofthepromiseeashaving

thecontractright,withoutaffectinganythingoutsideofit.Similarly,we

havenowrejectedanyattempttolookbeyondoroutsideoftheparties’

mutualchoice,toconsiderapre‐contractualstateofaffairs,“holding,”

“thing”or“object”thatisconceivableindependentlyofthatmutual

choice.Wehaveheldontotheideathatacontractisformedjustthrough

theparties’mutualchoice.Thisclearsthewayforapurewilltheoryof

contract.

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5 FormI:ObligationThepreviouschaptersaddressedthefirstbasicquestionaboutcontract

promptedbytheinternalapproach,thequestionofacontract’s

formation.Itwasconcludedthatacontractisestablishedthroughthe

contractingparties’sheermutualchoice,whicheffectstheirrecognition

ofthepromiseeashavingsomething.That“something”wasprovisionally

characterizedasthepromisee’shavingthecontractright.

Thischapterconsidersthesecondofthetwobasicquestionsthatthe

internalapproachtocontractprompts,abouttheformofanextant

contract.Thechapterseekstodescribewhatitmeansforthepromiseeto

haveacontractright—thatis,toascertainexactlywhatthepromiseeis

recognizedashavingatformation,andthatshecontinuestohaveuntil

thecontract’sdischarge.1

Whilethequestionofcontractformationisafamiliartopicinboth

contractdoctrineandtheory,thequestionabouttheformofanextant

contractismoreobscure.Noparticularcontractualdoctrineisexplicitly

devotedtoit.Nevertheless,addressingthisquestioniscriticalto

understandingcontractlaw.Withoutaddressingitsatisfactorily,no

theoryofcontractevengetsofftheground,conceptuallyspeaking.

Therearetwowaystoseewhythisisso.Therelevantissuescanbe

couchedinthelanguageofrights,orinthelanguageofobligation.2First,

understandingwhatacontractualpromiseeacquiresbyacontractis

indispensableforexplaininghowshecouldhavearighttothecontract’s

performance.AsFullerandPerduenoticed,unlessweregardthe

contractualpromiseeasacquiringarighttoperformanceitbecomes

1Cf.SIRWILLIAMR.ANSON,PRINCIPLESOFTHELAWOFCONTRACT322(ArthurL.Corbined.,3d.Am.ed.1919)(definingthe“operationofcontract”astheperiodsubsequenttoformationbutpriortodischarge).2TheterminologypreferredbyAnsonandCorbinrespectively,asdiscussedattheendofChapterTwo.

130

mysteriouswhy,intheeventofanactualorthreatenedbreach,acourt

wouldawardthepromiseespecificperformanceoritsequivalentin

damages.3Ifthepromiseehadnorighttoperformance,itwouldmake

moresense,forexample,justtocompensateherforanyharmsufferedin

relianceonthecontract.

Itmightbetemptingthentoconcludethatthecontractualpromisee

acquiresa“righttoperformance”atformation,andleaveitatthat.

However,asarguedbelow,itturnsoutthatthisapproachrenders

inexplicablecorecontractualdoctrinesconcerningliabilityandprivity.

Evenbeforewereachthosepoints,itisapparentthatthenotionofa

“righttoperformance,”withoutfurtherexplanation,isopaque.Merely

statingthatthepromiseeacquiresarighttoperformancemightsuffice

forapositivisttheoryofcontractlaw.Itcannotsufficeifouraimisto

understandthelaw—toascertainthereasonsthatnecessitateit.Whatis

thisthing,a“right”toperformance?

Thesecondwaytomotivatethequestionofthecontract’sformisto

noticetheinadequacyoftheaccountofcontractformation,describedin

thepreviouschapters,basedontheparties’mutualchoice.Thereitwas

concededthatthemutualchoiceaccountofcontractformationis

insufficienttoexplaincontract,becausetwopersonscanmakea

commonplacesortofmutualchoice—amereagreement—without

establishinganycontractualobligation.AsHumeputit,“Twomen,who

pulltheoarsofaboat,doitbyagreementorconvention,tho’theyhave

nevergivenpromisestoeachother.”4Therowersagreeormutually

choosetorowtogether,buttheyarenotobligatedtodoso.Eachcan

changehismindandstoprowingatanymoment.How,then,dowe

explainthefactthatcontractingpartiesbecomeboundtoeachother—

3L.L.Fuller&WilliamR.Perdue,Jr.,TheRelianceInterestinContractDamages:1,46YALEL.J.52(1936).ContractualremediesarediscussedfurtherinChapterSix.4DAVIDHUME,ATREATISEOFHUMANNATURE§3.2.2(1739‐40).SeealsoDanielMarkovits,ContractandCollaboration,113YALEL.J.1417,1459(2004).

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subjecttoacontinuingobligation?Whatsetscontractapartfromother

mutualchoicesormereagreements?

Itmightbethoughtthatacontractualobligationarisesjustbecause

theindividualpromisorhaschosentoundertakethatobligation.Onthis

view,contractualobligationsaredistinguishedfrom,forexample,

tortiousobligations,inthatonlytheformerarisebecauseofthe

promisor’schoicetoassumethem.

However,thisviewleadstoaseriousdifficulty.Themerefactofa

promisor’sinitialchoicetoassumeanobligationcannotexplainwhyshe

continuestobeboundbyit.Iftheinitialobligationarisesbecausewe

respectthepromisor’schoicetobebound,weshouldsurelyalsorespect

anysubsequentchoiceofherstoresile.

Thisdifficultyhasprovedintractablefortheoriesofvoluntary

obligation.Indeed,itissuchasignificantissueforsuchtheoriesthatit

hasbeencalled“the”problemofvoluntaryobligation:howcanaparty

establishanobligationbyamerechoicetodoso?

Theneedtoexplaincontractualobligationmightseemtopose

especiallyinsuperabledifficultiesforawilltheoryofcontract.Onatrue

willtheory,theideaofmutualchoicealoneexplainscontractlaw.That

ideamustthereforeexplainnotonlytheprocessofcontractformation,

butalsotheformoftheextantcontractualobligationorright.

Consequently,wearriveatanimpasse.Becauseifweareconfinedto

explainingcontractlawbasedsolelyuponanideaofmutualchoice,it

appearsthatwehavenowheretoturntodistinguishcontractsfrom

other,non‐bindingmutualchoices.

Theonlysolution,onthewilltheory,istounderstandcontractual

obligationtobedistinctivebecausethecontractingparties’mutual

choicetakesaparticularstructureorarrangement.Wemustlookforthe

particularpermutationoftwopersons’mutualchoicethatisuniqueto

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contractlaw.Discoveringtheparticularpermutationofmutualchoice

thatconstitutestheformofanextantcontractisthetaskofthischapter.

Thechapterbeginsbyconsideringwhy“theproblem”ofvoluntary

obligation—howapersoncanbindthemselvesbytheirmerechoice—is

sointractable.Itseekstodiagnosethesourceoftheproblemfromthe

standpointoftheideaofchoiceitself(5.1).Itissuggestedthatdifficulties

inunderstandingvoluntaryobligationarisebecausetheoristsare

perpetuallytemptedtoseekthesourceofobligationineither,orboth,of

twoplaces.First,inthepromisor’smereindividualchoicetobebound.

Second,insomestateofaffairsorvaluethatliesbeyondindividual

choice.Anyaccountthattakeseitherofthesetwoapproachesisdoomed.

Thisisillustratedbyconsideringjustafewofthemanyprominent

accountsofcontractualobligationthatseektotieittosomenotionof

partychoice(5.2).Suchaccountsvacillatebetweenthe“mereindividual

choice”and“beyondchoice”approaches,encounteringallofthe

difficultiesofeach.

Thechapterproceedstoproposeasolutiontotheproblemof

voluntaryobligationinthecontextofcontractlaw(5.3).Insodoing,the

chapteraddressesanumberofrelatedaspectsofcontractdoctrine,such

asthedistinctionbetweencontractandlicense,theruleofstrictliability

forbreach,andtortiousinterferencewithcontract.

Theproposedsolutionhastwostages.First,itissuggested,itmustbe

thecasethat,fromthemomentofformation,thecontractual

performanceissubjecttothepromisee’sexclusivechoice.Inthisrespect,a

contractualobligationisjustlikeapropertyright,whichinvolvessome

objectofpropertybeingsubjecttotheproprietor’sexclusivechoice.

Second,however,thisunderstandingmustbequalifiedinonecrucial

respect.Thequalificationisrequiredinordertoaccountforthe

limitationthatacontractdoesnotholdagainsttheworld,butisan

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obligationthatlinksaparticularpromiseetoaparticularpromisor,who

isstrictlyliabletoensurethecontract’sperformance.

Toaccountforthisfeatureofcontractlaw,thecontractualpromisee

mustberegardedashavingsubjecttoherchoice,notthecontractual

performanceorobjectofthecontractitself,butthepromisor’schoiceas

tothecontractualperformance.

Insummary,then:acontractualobligationexistswherethe

promisor’schoiceastothecontractualperformanceissubjecttothe

promisee’schoice.Inthissomewhatbaroqueformulation,wereachthe

particularpermutationofmutualchoicethatconstitutestheformofan

extantcontract.Itcanbeexpressedmoresimply,withsomeriskof

misleading,bysayingthatinacontractthepromiseehasthepromisor’s

performance.

Thechapterconcludesbylinkingthisdescriptionofthecontract’s

formtotheaccount,advancedinthelastchapter,ofitsformation(5.4).

Thisyieldsafullstatementofthewilltheoryofcontract.

5.1 Diagnosis

Theissueofhowpartiestoavoluntarytransactioncanestablisha

continuingobligation—howoneorbothofthemcanbecomebound—is

crucialtoatheoryofcontractlaw.Butitisperhapsmoreoftendiscussed

inadifferent,thoughcloselyrelatedfield:themoralphilosophyof

voluntaryobligation—whichisusuallytakentoencompassnotonly

contracts,butalsopromises,agreements,oathsandotherundertakings.

Inthatfield,theissueissoprominentthatithasbeencalledtheproblem

ofvoluntaryobligation.5Itseemstopresentanintractablechallengeto

5HanochSheinman,Introduction,inPROMISESANDOBLIGATIONS5(HanochSheinmaned.2012);DavidOwens,TheProblemwithPromising,inthesamevolume.Seealso

134

anytheorythatrecognizestheroleofpartychoiceinestablishingcertain

kindsofrightsandduties.

However,whenoneturnstoformulationsof“the”problemitbecomes

apparentthatitisnotsomuchasingleproblemasawebofconnected

difficulties.6Take,forexample,arecentdescriptionbyJodyKraus.He

characterizestheproblemasoneofhowindividualscan“havethe

normativepowertocreatemoralresponsibilities…bysimply

communicatinganintentiontoundertakesuchresponsibility.”7Thisis

problematic,accordingtoKraus,becausealthoughitmaybedesirablefor

personstobeabletocreatemoralresponsibilitiesbycommunicating

theirintentiontodoso,“fromthefactthatitwouldbedesirableif

somethingweretrue,itcertainlydoesnotfollowasageneralmatterthat

itistrue.”8

Fromsuchdescriptionsitisevidentthat“the”problemisacomplexof

relatedbutdistinctissues.Wearepromptedtoconsider,forexample,the

natureofnormativepowers,moralresponsibilities,theroleof

communication,theroleofintention,theproblemsinherentinderiving

an“is”froman“ought,”andsoon.

Hereitshallbesuggestedthatthedifficultytheoristshavein

understandingvoluntaryobligationcanbeappreciated,andthecontours

ofasolutionglimpsed,iftheproblemisviewedfromoneparticular

vantagepoint:thatoftheideaofchoice.Thisapproachrevealsthat

theoriesofvoluntaryobligation—thatis,theoriesthatseekto

understandobligationasarisingfromchoice—arelikelytofallintoone

oftwotrapsthatmakeanunderstandingofobligationimpossible.They

IanAyres&GregoryKlass,INSINCEREPROMISES:THELAWOFMISREPRESENTEDINTENT2(2005)(notingthatphilosophersfindthisproblem“endlesslyfascinating”).6Owens,supranote5,alsosuggeststhis,althoughheattemptstoarriveataunitaryfundamentalstatementoftheproblem.7JodyS.Kraus,PersonalSovereigntyandNormativePowerSkepticism,109COLUM.L.REV.SIDEBAR126,127(2009).8Id.at132‐33.

135

mayviewtheobligationaseitheramatterof“mereindividualchoice,”or

alternatively,aslying“beyond”thechoiceoftheindividual.9

5.1.1 Mereindividualchoice

Thesimplestwaytoconnectavoluntaryobligationtothechoiceofthe

partiesinvolvedistoconceiveoftheobligationasarisingthroughwhat

wemaycall“mereindividualchoice.”Thisisthestraightforwardidea

thatanindividualcanincuranobligationbecauseshechoosestodoso.

Thisapproachisthestartingpointformanyexplanationsof

contractualobligationthatlinkittonotionssuchaswill,consent,or

intention.Itisalsoattheheartofmanyaccountsthatareinterestednot

intheactofchoiceincontractingitself,butwithsomeotherstateof

affairsorvaluethatiscloselyassociatedwithandaffectedbychoices

madeincontracting.Forexample,autonomytheories,whichseekto

maximizetherangeofpotentialchoicesthatpersonshaveavailable,or

economicefficiencytheoriesthatseektomaximizepreference

satisfaction.Thesetheoriesoftenassumethatacontractualobligation

arisesbecausetheobligedpartychoosesit.

However,the“mereindividualchoice”approachleadstoanobvious

difficulty:thepartyundertakinganobligationmaychangehermind.Just

asshechoosestoincurtheobligation,shemaysubsequentlychooseto

resile.Andifthesourceofthecontractualobligationismereindividual

choice,thereisnoreasontopreferoneofthosechoicesovertheother.

ThisproblemhasbeenrelentlesslypursuedintheworkofPeter

Benson,whodeploysittocriticizeavarietyofcontracttheoriesthat

assume,withoutestablishing,thattherelevant“baseline”for

understandingcontractisatthepointwhenapartychoosestoincuran

9Noteverydifficultyanaccountofcontractualobligationfacesisconsideredhere.Anotherprominent,relatedoneistheparadoxorcircularityproblemaddressedinChapterThree.

136

obligation,ratherthanwhenshesubsequentlychoosestoresile.10Unless

atheoryofcontractcanexplainwhythebaselineissetbytheformer

ratherthanthelatterchoice,Bensonpointsout,thetheoryultimately

explainsnothing.

Theunderlyingproblemisthatamereindividualchoiceisalways

arbitrary.Itisutterlydependentuponwhattheindividualinquestion

happenstochoose.Thereisnocauseorreasonthatcannecessitatethe

individualchoosingonethingratherthananother.Indeed,asdiscussed

inChapterThree,thisispartofthedefinitionofachoice:itisnot

necessitatedbyanyexternalreasonorcause—thatis,anythingoutside

ofthechoiceitself.Accordingly,achoiceisalwaysinherentlychangeable.

Itisathingwritinwater.Itcannot,therefore,itselfbeasourceof

obligation.Obligationrequiresthatsomethingbenormative—necessarily

thecase.Theremustbeareasonorcauseforitthatholds

unconditionally.

Insteadofthenotionthatanymereindividualchoicecommands

respect,whatatheoryofobligationrequiresisareasonnottorespect

thechoiceofapromisor,subsequenttocontractformation,toresile.It

requiresareasontorejectthesubsequentchoiceandsetthebaselineat

theearlierchoice.

5.1.2 Beyondchoice

Thesearchforsuchareasonleadsustothesecondapproachto

understandingcontractualobligation.Thisapproachseekstolocatethe

sourceoftheobligationbeyondthechoiceoftheindividualpromisoror

obligor.Acauseorreasonfortheobligationissourced,notinthe

promisor’schoice,butexternally.Acrudeexampleofthisapproach

10SeeespeciallyPeterBenson,AbstractRightandthePossibilityofaNondistributiveConceptionofContract:HegelandContemporaryContractTheory,10CARDOZOL.REV.1077(1989);PeterBenson,TheIdeaofaPublicBasisofJustificationForContract,33OSGOODEHALLL.J.273(1995)

137

wouldbetheviewthatcontractsbindbecauseGodornaturehasdecreed

thattheyshould.

Theideathatobligationis“beyond”choiceneednot,however,bethe

resultofsuchacrudeapproach.Onecommonroutetothisconclusionis

throughtheassumptionthatweencounteredinChapterThree,thata

genuineobligationornormcannotmerelybewilledintoexistenceatthe

whimofanyindividualperson.Onthisview,itisnotuptoindividualsto

changethenormsthatapplytothem.(Nordoesitmakeanydifferenceif

twoindividualsactinconcert.)Genuinenormativityorobligationmust

beexternalto—notupto—theindividual.Aswehaveseen,itispartlyon

thisbasisthatHumecomparedpromisingtotransubstantiation:“oneof

themostmysteriousandincomprehensibleoperationsthatcanpossibly

beimagined…whereacertainformofwords,alongwithacertain

intention,changesentirelythenatureofanexternalobject….”11Here

Humeimpliesthatnormsorobligationsarepartsoftheuniversethatare

beyondthemerechoiceofanyindividual.

Ifthesourceofobligationisbeyondanyindividualperson’schoice,

thenanindividual’spurportedchoicetochangetheirobligationsisnot

reallyachoice.Itisatbestanineffectualwish,oranas‐yet‐uneffected

intentiontochangeone’sobligations.Andmerelywishingordesiringor

intendingthatsomethingbethecasecannotmakeitso.AswesawKraus

putitabove,fromthefactthatitwouldbedesirableifsomethingwere

true,itdoesnotfollowthatitistrue.12OrasBenthamnoted,inanother

context:“areasonforwishingthatacertainrightwereestablished,isnot

thatright—wantisnotsupply—hungerisnotbread.”13

11TREATISEOFHUMANNATUREIII.2.v(1740)(emphasisadded).12SeeKraus,NormativePowerSkepticism,supranote7;PeterBenson,ContractasaTransferofOwnership,48WM.&MARYL.REV.1673,1687(2007).13AnarchicalFallacies,in2WORKSOFJEREMYBENTHAM501(JohnBowringed.1839).Cf.thediscussionofMichaelTrebilcock’sobjectiontotheinternalapproachinChapterTwo.

138

Thetheoristholdingtothe“beyondchoice”assumptionmust

thereforedismisstheappearanceofchoiceincontractformationasa

deception.Theobligationisreallyimposedfromwithout,triggered

perhapsbysomerelevantconductoftheparties,butnottrulychosenby

them.Thedifficultywiththisapproachisthatitisofcoursehardto

reconcilewiththeordinaryunderstandingoflawyers,nottomention

laypeople,thatcontractsareformedthroughthechoiceoftheparties.By

thesametoken,itleavescontractinexplicableontheinternalapproach

tocontractlaw.

The“beyondchoice”approachalsofacesanotherproblem:whatwe

maycallilliberalism.Thedoctrineofliberalism,asreflectedinthe

politico‐legalinstitutionsandpracticesofcontemporarywesternnations,

assumesthatobligationscannotbeimposeduponpeoplewithout

somehowreflectingtheirchoice.Iftherecannotbeanactualchoiceby

eachindividual,thentheremustatleastbeonemadethrougha

democraticprocessthattakeseachperson’schoiceintoaccount.

Contractlawisnotmadedemocratically.Therefore,ifcontractual

obligationcannotbeunderstoodasarisingthroughtheactualchoiceof

thosesubjecttoit—ifitisjustimposedforsomeexternalmoralor

prudentialreason—thentheprospectsforajustificationofitcompatible

withliberalismarebleak.

5.1.3 Conventionalism

Thecontinuedimpetustoexplaincontractualobligation,while

avoidingtheproblemscausedbythe“mereindividualchoice”or“beyond

choice”approaches,leadstoanothertheoreticaltactic:whatwemaycall

the“two‐level”approachtounderstandingvoluntaryobligation.This

kindofapproachseekstoavoidtheproblemswehavesofar

encounteredbyaddinganotherlayertothetheoreticalexplanation.

However,itturnsoutthatthedifficultieswehaveconsideredsofarare

nottherebyescaped.Indeed,theyareonlycompounded.Forthe

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difficultiesthatthesingle‐levelaccountsfacearenowencounteredat

eachoftwolevelsofexplanation.

Thefirstversionofatwo‐levelapproachiswhatwemaycallthe

conventionapproach.Thisassumesthatcontractingisafacilityor

institution,createdbypositivelaworcustom,towhichthecontracting

partiescan“signon,”bycommunicatingtheirchoicetodoso,inorderto

createabindingobligation.OneexampleofsuchanapproachisBrian

Coote’stheoryofcontract,whichattemptstoevadethe“secretparadox”

ofcontractlawbypositingafacilityprovidedbythelawthatindividuals

caninvokeinordertoassumealegallyenforceableobligation.

Insteadofstraightforwardlyexplainingcontractualobligationby

referencetoacontractingparty’smereindividualchoice,theconvention

approachimaginestwochoices.Thereisabackground,collectivechoice

topositorinstitutethefacilityofcontracting.Thenthereisaforeground

choicebyacontractingpartytoincuranobligation,ortoperform

conductthatincursanobligation.

Aconventionapproachthereforeseemstoachieveahappy

compromise:itretainsaroleforindividualchoiceincontractformation,

whileatthesametimeplacingthesourceoftheobligationtosomeextent

beyondindividualchoice,inthepriorcollectivedecisiontoestablishthe

facilityorinstitutionofcontract.

However,theconventionapproachmerelycompoundsthedifficulties

wehavealreadyencounteredbyreproducingthemateachofitstwo

levels—thelevelsofthebackgroundandforegroundchoices

respectively.First,thebackgroundchoicetoestablishtheconventionor

institutionfacesavariationontheproblemofarbitrarinessfacedby

“mereindividualchoice”approaches.Wemightcallthistheproblemof

thearbitrarinessof“merecollectivechoice.”Theproblemisthatthe

conventionalistapproachmakestheinstitutionofcontractcontingent

uponthechoicesthatthecollectivehappenstomakeaboutwhat

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facilitiesorinstitutionstoestablish.Theinstitutionofcontractwillbe

establishedonlyifthecollectivehappenstochoosethat.However,it

seemsunacceptabletoregardcontractascontingentinthisway,upon

theviewsthatpeopleinagivensocietyhappentohaveatanygiventime.

Surely,asCharlesFriedhasnoted,contractmustbeshowntobeinsome

sensenecessary,independentofthe“fashionorfavor”conferredonitby

particularpeoplesandepochs.14

Ontheotherhand,thebackgroundchoicealsofacesvariationsonthe

problemsencounteredby“beyondchoice”approaches.Onemightput

theseasfollows.Foronething,itjustdoesnotseemtobeuptoany

person,oranygroupofpersons,tochangethebasicnormsof

interpersonalobligationthatapplyinasociety.Surelytheestablishingof

thenormsofasophisticatedandvenerableinstitutionsuchascontractis

beyondthechoiceofanygroupthatwecanplausiblyisolate.Afterall,

whocouldhavemadethedecisionthatweshouldhavecontractlawin

thefirstplace?Whencouldtheyhavedoneso?Theinstitutionseemsto

prevailuniversallyinawaythatmakesitimplausiblethatanylegislator,

orgroupoflegislators,everpositedit.Thus,thenotionofacollective

choicetoinstitutecontractbeginstolooklikeadeception.

Ifitissuggestedthatthebackgroundchoiceevolvedovertimeasa

customorpractice,collectivechoiceseemstobeabandonedasa

justificationforthebackgrounddecision.Webecomeunabletolocate

anyactualdecisionbyatleastthemajorityofpersonsinasocietyto

institutecontractlaw,anditisthendifficulttoseehowitsinstitution

couldbecompatiblewithliberalism.

Second,theconventionapproachalsostrikesdifficultiesregardingthe

foregroundchoicebytheindividualcontracting.Isparticipationinthe

facilityorinstitutionofcontractinguptotheindividual,ornot?Ifitisa

14See,e.g.,CHARLESFRIED,CONTRACTASPROMISE2(1981).

141

matterofmereindividualchoicewhetheroneparticipatesinthe

institution,thentheindividualshouldalwaysbeabletooptoutofit,and

wearethenleftunabletoexplainobligation.Theindividualcanalways

decidetoleavetheinstitutionorabandonthefacilityorpractice.What

theindividualchoosesinthisrespectisarbitrary.Ontheotherhand,ifit

isnotuptotheindividualwhethertojoinintheinstitution—ifthisisa

matterbeyondindividualchoice—wereturntotheproblemsofthe

beyondchoiceapproach.Howcanweexplaintheindividual’sapparent

actofchoiceasanythingotherthanadeception?Also,whyshouldany

particularindividualhavetoparticipateinthisconventionorinstitution?

Forcingsomeonetodosoisilliberal.15

5.1.4 Instrumentalism

Theotherversionofatwo‐levelapproachisinstrumentalism.16

Whereastheconventionapproachseekstoexplainobligationby

imaginingnotonebuttwochoices,instrumentalismseekstodosoby

positingnotonebuttworeasonsorcausesthatareexternaltoindividual

choice.Forexample,itmightbethattheexistenceofcontractual

obligationsincertaincircumstancesconducestowardseconomic

efficiency.

Aninstrumentalistexplanationcombinesthenotionofanendtobe

pursued,withthatofameanstobeadoptedinordertoreachtheend.

Anypurportedlychosenobligationisthusconceived,notassourcedfrom

thefactofacontractingparty’schoice,butfromsomeextrinsicallygiven

end,towardswhichtheexistenceoftheobligationconduces.

15Thestandardresponseisthattheremustbea“principleoffairness”thatpreventspersonsfree‐ridingbytakingthebenefitsofaninstitutionwithoutalsobearingitscosts.H.L.A.Hart,AreThereAnyNaturalRights?,64PHIL.REV.175,185(1955);JohnRawls,LegalObligationandtheDutyofFairPlay,LawandPhilosophy:ASymposium(S.Hooked.,1964).Forpowerfulobjectionstosuchaccounts,seeARTHURRIPSTEIN,FORCEANDFREEDOM185ff(2009).16E.g.Owens,supranote5;seealsoKraus,supranote7.

142

Again,however,ratherthanavoidingthedifficultiesofasingle‐level

approach,thetwo‐levelinstrumentalistaccountonlycompoundsthem,

reproducingthedifficultiesatboththeleveloftheendandthelevelof

themeans.

First,astothemeans.Herethereisanothervariationonthe“mere

individualchoice”orarbitrarinessproblem.Instrumentalapproachesfail

toexplainwhythisparticularmeans,contractualobligation,isadopted,

andnotsomeotherthatmightbejustas,ormore,effectivetoachievethe

desiredend.Contractualobligationislefttothatextentunexplained.By

thesametoken,contractualobligationisrenderedcontingent.Any

meansonemightadoptinordertoachieveagivenendisalways

conditional.17Foranygivenend,sometimesthatendwillnotinfactbe

furtheredbytheexistenceofacontractualobligation.(Indeed,

sometimesacontractualobligationwillnotfurtheranyapparentendor

value,atall.)18Inthatcase,onaninstrumentalistapproach,allreasonto

respectthecontractualobligationfallsaway.However,contractual

obligationasweknowitisnotlikethis:theobligationisnotcontingent

ontheachievementofcertainends,disappearingwheneveritfailsasan

instrumentfortheirproduction.Rather,theobligationisunconditional—

itisnecessary,ornormative.19

Thereisalso,atthemeansleveloftheexplanation,avariationonthe

“beyondchoice”problems.Thisisthatthechoosingindividualhasthe

meansshemustuse—legalobligation—dictatedtoher,evenifsheno

longerwantstousethatmeans.Sheseemsnowtohavenorelevant

choiceastothemeans,andsoherapparentchoicetoestablishan

obligationmustbeadeception.Furthermore,liberalismsurelyrequires

17SeeespeciallyBenson,AbstractRight,supranote10,at1095‐1116.18Owens,supranote5.19Thestandardresponsetothisproblemistoinvokearule‐basedformofinstrumentalism.E.g.JohnRawls,TwoConceptsofRules,64PHIL.REV.3(1955).

143

thatonebefreetochoosewhatmeansonetakesupinordertopursue

one’sends.20

Secondly,instrumentalistexplanationsalsofacedifficultiesatthelevel

oftheend.Herethevariationonthe“mereindividualchoice”or

arbitrarinessproblemistheproblemofregress.21AswesawinChapter

Two,foranygivenend,wecanaskwhythatendistobepursued.Ifthe

purposeofcontractualobligationistomaximizeefficiency,whypursue

that?Thesamegoesevenforapparentlyultimategoodssuchaswelfare

orhappiness.Whydoesthelaw,oranyparticularperson,havetopursue

those?Thus,atsomepoint,thepursuitofaninstrumentalexplanation

willlikelyhavetobecutoff,atanendthatwhosevalueisinsomesense

self‐explanatoryorself‐evident.Butthenitseemstobearbitrary—at

bestamatterof“mere”choiceorpositingbysomepersonorgroup.

Finally,attheleveloftheend,therearealsoobviousversionsofthe

“beyondchoice”problem.Iftheendisnotchosenbytheindividual,we

areunabletoaccountfortheapparentroleofchoiceasanythingother

thanadeception.Moreover,westrikeattheheartofliberalism.In

Rawlsianjargon,aninstrumentalistapproachwoulddenypersons’

capacitytopursuetheirown“conceptionsofthegood.”22

5.1.5 Conclusion

Thesecomplicationsthrownupbythe“mereindividualchoice”and

“beyondindividualchoice”approachesthereforeseemtoprecludea

straightforwardunderstandingofcontractualobligation.Wemightsay,

ofthesingle‐levelapproaches,thatthereiseitherchoicewithoutreason

(mereindividualchoice),orreasonwithoutchoice(beyondchoice).Or

thatthereiseitheractualitywithoutnecessity(achoicethatcannotbe

normative),ornecessitywithoutactuality(normativitywithoutchoice).

20Cf.Kraus,PersonalSovereignty,supranote7.21E.g.Benson,AbstractRight,supranote10,at1114.22Id.at1109.

144

Theseproblemsareonlycompoundedwhenadditionallevelsof

explanationareadded.

Yetthereisalsoanotherdifficulty,notyetconsidered,thatboththe

“mereindividualchoice”and“beyondchoice”approachesface.The

furtherdifficultyisthattheseapproachesarenonrelational.Theydonot

purporttoexplainwhyanyobligationthatthepromisororobligor

assumesisowedto,andenforceableby,onepersoninparticular:the

promisee.23Ifthesourceofcontractualobligationisrespectformere

individualchoice,orsomenormorvalue“beyond”individualchoice,why

isthepromisee,andonlythepromisee,entitledtoenforcethecontract?24

Atthispoint,itisalsoworthnotinghowthestructureoftheproblem

ofcontractualobligation,thuspresented,hasanalogsinotherareasof

legalandnormativetheory.Considertheorizingaboutcommonlaw

adjudication.25Thereisaperennialtensionbetweentwokindsof

theories.Ontheonehand,theoriesthatregardlawasmerelymadeby

judges—asthejudges’“mereindividualchoice,”dependingperhapson

whattheyhadforbreakfast.Ontheotherhand,theoriesthatregardlaw

assimplyfoundbyjudges—as“beyondtheindividualchoice”ofthe

judge,becausethejudgeappliessomeextantruleornormthatisgivento

herindependentlyofherchoice.

Itseemslikelythatasolutiontotheseproblemsmustfindamiddle

ground,allowingaroleforindividualchoicebutatthesametimeseeing

thatchoiceasresponsibletosomethingindependentoforexternaltothe

individual.Thus,forexample,judgesmustinsomesensemakelaw,but

theydonotjustmakeitupoutofwholecloth.Theythemselveschoose

23Benson,AbstractRight,supranote10,at1115‐16.24Anotherquestion,identifiedbyBenson,PublicBasis,supranote10,iswhytheobligationshouldbeenforceablebycoercion.Asexplainedpreviously,thisworkassumesthatanusurpationofchoiceiscoercible.25SeeRobertBrandom,AHegelianModelofLegalConceptDetermination:TheNormativeFineStructureoftheJudges’ChainNovel(addresstotheInlandNorthwestPhilosophyConference,Moscow,Idaho,3/19/12).

145

thelaw,butindoingsotheyareresponsibletolegalauthoritiesthatare

externaltothem.

Thus,thesolutiontoourproblemseemslikelytoinvolvesomesortof

relation,ofauthorityandresponsibility,betweenthechoosingindividual

andanindependentsourceofnormativity.

Insum:thebasicproblemofcontractualobligationthathasbeenset

uphereisasfollows.Contractualobligationcannotbeamatterofmere

individualchoice,butnorcanitbeentirelybeyondindividualchoice.

Connectedwiththis,therealsoremainstherequirementthatthe

obligationbeexplainedinarelationalway,sothatitisthepromiseewho

hasthepowertoenforcethecontractrightagainstthepromisor,and

nobodyelse.Itappearsthatanyanswertotheproblemofcontractual

obligationmustaddresstheseconcernstogether.

5.2 Illustrations

Beforeproceedingtotheproposedsolutionoftheproblemofvoluntary

obligation,letusconsidersomeillustrationsofthisproblemin

prominenttheoriesofcontractualobligationthatlinkthistonotionsof

partychoice(orsomethingcloselyakintochoice).

5.2.1 JodyKraus’s“personalsovereignty”account

JodyKraushasrecentlyadvanceda“personalsovereignty”accountof

self‐imposedobligations,includingcontract.AccordingtoKraus,

“personalsovereignty...recognizesthefundamentalrightofindividuals

notonlytochoosetheirsystemofendsbutalsotochoosehowtopursue

thoseends.”26

26JodyS.Kraus,TheCorrespondenceofContractandPromise,109COLUM.L.REV.1603,1609(2009).SeealsoKraus,NormativePowerSkepticism,supranote7,at127.

146

Atleastinitially,Kraus’spersonalsovereigntyaccountavoidsthe

“beyondchoice”approachanditsassociateddifficulties.27Accordingto

Kraus,personalsovereigntyisafundamentalprinciplethatrequiresthe

recognitionofindividuals’choicestoassumeobligations.28Thisisthe

solebasisforcontractualobligation.Thus,everythingturnsonthechoice

oftheindividual.

However,Krausthereforeadoptsa“mereindividualchoice”account

ofcontractualobligation.29Suchanaccountimmediatelyrunsintothe

problemofthearbitrarinessofmereindividualchoice.Apromisormay

changehermindaboutherendsandhowtopursuethem.Theprinciple

ofpersonalsovereignty,“thefundamentalrightofindividualstochoose”

theirendsandmeans,itselfprovidesnoreasonwhatsoevertopreferthe

promisor’sinitialchoicetobeobligedoverhersubsequentchoiceto

resile.

Awareofthisproblem,Krausproceedstoamplifyhisaccountof

obligation.However,indoingsohevacillatesbetween“mereindividual

choice”and“instrumentalist”accountsofobligation—neitherofwhich

cansucceed.

Aswehaveseen,Krausinitiallysuggeststhathisaccountis

noninstrumentalist:contractualobligationisexplained“notonthe

consequentialistgroundthatitpromotessomeothermoralvalue,”but

justonthebasisthatitinstantiatespersonalsovereignty.30Butoncethe

inadequacyofthisaccountbecomesclear,Krausshiftstowards

27Asheputsit,theneedto“promise‐breakingnecessarilyunderminessomeindependenthumaninterestorvalue.”(Thatis,independentofthechoiceor(communicated)intentiontoundertaketheobligation.)Kraus,NormativePowerSkepticism,supranote7,at130(emphasisadded).28Id.at134.29Hisglossisthatindividualsarefreetochoosetheirmeansaswellastheirends.ItisunclearwhetherKrauswouldfavorcontractualobligationinacasewherethecontractitselfwasregardedastheend,andnotameanstoanyfurtherend.However,thisisnotimportantforpresentpurposes.30Id.at133;seealsoid.at131.

147

explanationsforobligationthatare,despitehisdisavowals,instrumental

incharacter.

Forexample:

[Contracting]constitutesaparticularlyvaluablemeansforpursuingends....[I]fmoralityitselfcanprovideindividualsavaluablemeansofpursuingtheirendssimplybyrecognizingtheindividualmoralpowertoundertakeself‐imposedmoralresponsibilities,amoraltheorycommittedtopersonalsovereigntyasafundamentalmoralvaluewouldhavenogroundsforrefusingtorecognizesuchapower.

Thisisclearlyaninstrumentalistformofexplanationofobligation,

albeitonewheretherelevantendsareleftunspecified.Contractual

obligationisameans,indeedanespeciallyvaluableone,forpursuing

whateverendsindividualsmightwanttopursue.

Krausalsoslipsintoaninstrumentalexplanationforcontractual

obligationwhenhesuggeststhat“[t]heabilitytoundertakeself‐imposed

moralobligationsenhancespersonalsovereigntybyaffordingindividuals

morecontroloverthenormsthatapplytothem”;andindeedthat

personalsovereigntyensuresthatindividualshave“maximum

permissiblecontrol”overthenormsapplyingtothem.31Here“personal

sovereignty”isconceivedasanendthatisspecifiableindependentlyofa

means,“self‐imposedmoralobligation,”whichincreasesormaximizes

theamountof“personalsovereignty”intheworld.

OnthisapproachKraus’saccountsuffersfromallthedefectsofany

instrumentalaccountsofobligation.Asaninitialmatter,itisnotclear

thatthenotionofmaximumindividualchoiceisevenintelligible.32Ifitis,

however,itmustmeansomethinglikeeachindividualhavingthe

greatestnumber,orvariety,ofdistinguishablechoicespossible.Butthen

31Id.at132,134.Indeed,thisseemstoberequiredbyKraus’sultimateformulationoftheproblemofself‐imposedobligation,whichhecharacterizesastheneedtoshowthat“promise‐breakingnecessarilyunderminessomeindependenthumaninterestorvalue.”Id.at130(emphasisadded).32Benson,AbstractRight,supranote10,at1105‐07.

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itbecomesclearthattheadoptionofcontractualobligationasameans

conducivetowardsthisendisarbitrary.Whythismeansinparticular,

andnotsomeother?Bythesametoken,theimpositionofcontractual

obligationdoesnotnecessarilyincreasethescopeofindividuals’

potentialchoices.Anysuchtendencyholdsatmostasageneralrule.We

caneasilyimagineabreachofcontractthatincreasesthechoices

availabletobothparties.Inaddition,theendKraussuggests,maximum

potentialchoice,issubjecttotheregressobjection.Whyshouldwe

pursuethisend?

Finally,atboththelevelofthemeansandtheend,Kraus’sobjection

strikestheproblemofilliberalism.Requiringeachindividualtopursuea

givenendusingaparticularmeans,eveniftheendismaximizingthe

overallrangeofchoiceforallpersons,isilliberal.33

5.2.2 CharlesFried,autonomy,andconvention

MorethantwodecadesbeforeKraus’swork,versionsofthesame

problemsinunderstandingcontractualobligationaroseinCharles

Fried’sContractasPromise.34

Fried’stheoryofcontractisfoundeduponacommitmentto

autonomy.35However,histheoryisnotastraightforward,“mere

individualchoice”approach.Instead,headvancesatwo‐level,convention

explanation.Atthebackgroundlevel,Friedseekstoexplainthe

institutionofaconventionofpromisingthatallowspersonstobind

themselvesvoluntarily.Attheforegroundlevel,Friedseekstoexplain

whyanindividualcan,consistentlywiththeirautonomy,beboundbythe

rulesoftheconventionwhentheymakeapromise.

33Id.34Supranote14.ThefollowingcloselyfollowsBenson’sinterpretationandcriticismsofFried.See,e.g.,AbstractRight,supranote10.35FRIED,supranote14,at7‐8.

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Fried’saccountstrikesalloftheproblemsoftheconventionapproach

thatwehavepreviouslyidentified.First,considerthebackgroundlevel.

Theexistenceofaconventionofpromisingrequiresexplanation.

Otherwisethepositingoftheconventionismerelyanarbitrarychoiceby

thecollective.

Fried’sresponseisthattheinstitutionoftheconventionmustbe

explainedonaninstrumentalbasis.HereFried,likeKraus,invokesa

conceptionofmaximumoverallautonomy.AccordingtoFried,an

institutionofpromisingallowsindividualsingeneraltopursueagreater

rangeofends.Althoughbeingboundtoacontractdecreasestheobliged

individual’soptionsataparticularpointintime,generallyspeakingthe

existenceofthepracticeincreaseseachperson’sautonomy.36Theupshot

ofthisexplanation,ofcourse,isthatFried’sexplanationsuffersfromall

theproblemsofKraus’sinstrumentalistaccountthatwehavenoted.

Second,letusturntotheforegroundlevelofindividualchoice.In

seekingtoexplainhowabindingobligationcanbeconsistentwiththe

promisor’sautonomy,Friedstrikestheproblemofthearbitrarinessof

mereindividualchoice.37

Friedrespondstothisproblembyarguingthatrespectforindividual

choicerequiresustoholdanindividualtoanearlierchoicethatshe

subsequentlyregrets,inordertotreattheindividualasaselfwhois

“extendedintime,sothattorespectthosedeterminationsoftheselfisto

respecttheirpersistenceovertime.”38However,thisargumentfails.As

Bensonexplains,ifFriedisstillseriouslyconcernedtorespectindividual

choice,theideaofaselfpersistingacrosstimeaddsnothing:

Respectforaselfthatisextendedintimedoesnotrequirethatweholdapersontotheparticular[choice]whichledhimorhertopromise.AsFriedacknowledgesinconnectionwiththeformofWillwhichIcalled

36Benson,AbstractRight,supranote10,at1095‐1116.37FRIED,supranote14,at20.38Id.

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"mereintention,"itisperfectlyconsistentwithautonomythatonebeentitledtochangeone'smind—evenaboutanintentionnottochangeit....holdingtheselftoaparticularcontentofchoice...istoequatetheselfwithamerelyparticularandthuscontingentdeterminationofthewill.Itdeniestheself'sessentialmoralcapacitytoformandtoreviseaconceptionofgoodandisthereforeincompatiblewithrespectforautonomy.39

Alternatively,ifFriedprioritizesthevalueofself‐persistenceacross

timeoverthevalueofchoice,heisplacingthesourceofcontractual

obligation“beyondchoice”andsoabandoninganyaccountbasedon

autonomy.Andthenhewouldalsostrikealloftheproblemsfacedbyany

“beyondchoice”account.

5.2.3 MosesMendelssohn’s“rightofdeciding”

AroundtwocenturiesbeforeFried’sbook,versionsofthesame

problemsinunderstandingcontractualobligationareevidentinan

exchangeonthesubjectbetweenKantandhiscontemporaryMoses

Mendelssohn.InhisdiscussionofcontractintheMetaphysicsofMorals,

Kantsimultaneouslyaffirmshisownaccountandcriticizesthe

“painstakingbutalwaysfutileefforts”byMendelssohn(andotherswith

similaragendas)toprovethepossibilityofcontractualobligation:

Thequestion[posedis],whyoughtItokeepmypromise?forthatIoughttokeepiteveryonereadilygrasps.Butitisabsolutelyimpossibletofurnishaproofofthiscategoricalimperative,justasitisimpossibleforageometertoprovebymeansofinferencesbasedonreasonalonethatinordertomakeatrianglehemusttakethreelines(ananalyticproposition),twoofwhichtogethermustbegreaterthanthethird(asyntheticproposition,butbothpropositionsareapriori).ThatIoughttokeepmypromiseisapostulateofpurereason(pureasabstractingfromallsensibleconditionsofspaceandtimeinwhatconcernstheconceptofright).Thetheorythatitispossibletoabstractfromthoseconditionswithoutgivinguppossessionofthepromiseisitselfthedeductionoftheconceptofacquisitionbycontract,justaswasthe

39Benson,AbstractRight,supranote10,at1116.ContrastRebeccaHollander‐Blumoff,LawandtheStableSelf,54ST.LOUISU.L.J.1173,1177(2012)(“Contractlaw,forinstance,ispredicateduponthestablepreferencesofindividuals.”),citingROBERTCOOTER&THOMASULEN,LAW&ECONOMICS219(4thed.2004).

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caseintheprecedingSectionforthetheoryofacquisitionofexternalthingsbytakingcontrolofthem.40

KantthusberatesMendelssohnfordiscussing,inthecontextof

contractlaw,“[t]hequestion...whyoughtItokeepmypromise?”Inour

terms,whydoesacontractbindthepromisor?

KantdoesnotdescribeexactlywhatMendelssohn’s“futileefforts”

amountedto.ButMendelssohnaddressedthequestionatissue—inhis

words,why“acontractmustbekept,”orwhythepromiseehasa

“compulsoryduty”tokeepthepromise—inapassageofhisJerusalem.41

ThereMendelssohn’sanswerrestsontheideathatpersonshavea

basicnaturalright,“therightofdeciding”whattodowithwhatbelongs

tothem.Thatbasicrightofdecidingisinturnjustifiedasawaytoasa

waytoattainfelicity.42AndaccordingtoMendelssohn,apersonmustbe

abletotransferirrevocablythis“righttodecide,”toanotherperson,

becauseotherwiseshewouldnotreallythe“rightofdeciding.”Really

havingarightofdecidingmustmeanbeingabletogiveupthatrightto

another.43

BynowitshouldbeclearthatMendelssohnisalsostymiedbythe

problemofthearbitrarinessofmereindividualchoice.Whydoes“really

40IMMANUELKANT,THEMETAPHYSICSOFMORALS[6:273](MaryJ.Gregored.&trans.,1996)(1797‐98).41ΜΟSESMENDELSSOHN,JERUSALEM55&n.(AllanArkushtrans.,1983)(1783).ContrastHelgeDedek,DutiesofLoveandSelf‐Perfection:MosesMendelssohn’sTheoryofContract,32OXFORDJ.LEGALSTUD.713,734‐35(2012),whoreadsKantascriticizingMendelssohnfornotaddressingtheproblemthataneffectivetransfermustavoidany“gap”betweenthetransferor’srelinquishmentandthetransferee’sacquisition.(AproblemdiscussedinChapterFourofthiswork.)DedekclaimsthatKant’scriticismisthat,inthisrespect,“Mendelssohn’stheorysimplydidnotaddressthequestionthatKantidentifiedascrucialandsetouttoanswer.”Id.However,KantseemstobecriticizingMendelssohn,notforsomethingMendelssohndoesnotsay,butforsomethinghedoessay.(His“futileefforts...toproduceaproof...”)AndKantspecificallyberatesMendelssohnfordiscussing“[t]hequestion...whyoughtItokeepmypromise?”,aquestionthatMendelssohndiscussesinthepassagecitedabove.42MENDELSSOHN,supranote41,at54. 43ThisideaoftransferringtherightofdecidingisalsosubjecttotheobjectionstotransfertheoriesoutlinedinChapterFour.

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havingtherightofdeciding”meanthatyoumustbeboundbyadecision

togiveupthatright—asopposedtobeingabletoclawitbackeven

thoughyouandanotherpersonbothbelievethatyouhavegivenitupto

them?Whyrespecttheearlierindividualchoiceratherthanthelater

one?Inordertoexplaincontractualobligation,weneedtoexplainwhy

thepromisor,subsequenttocontractformation,isinsomerespect

deprivedoftherightofdeciding.

Moreover,asBensonpointsout,anyefforttobolsterMendelsohn’s

argumentinvariablyleadsto“effortstodiscoversomeother,

instrumentalbasistojustifytheobligationincontract,”effortsthat“are

doomed”:

“Beinganunconditionalpracticallaw,[contractual]obligationexpressesacategoricalimperative.Thejustificationofthiscategoricalimperativecannot,however,besoughtinsomethingotherthantheobligationitselfsuchassomefurtherpurposeorvalue.Forthenitwouldnotbeunconditionalbutwouldbecontingentuponthevalidityofthatexternalpurpose.Itsjustificationmustthereforebefoundinthenatureoftheobligationitself.”44

IfonetriestoaskMendelssohn'squestion,“whymustthepromisor

keephispromise,”onewillendup—asMendelssohndid—turningto

instrumentalconsiderationssuchastheattainmentoffelicity.Thatwill

leadtoalltheproblemsofinstrumentalexplanationthatwehavealready

encountered.

Kant,incontrast,rejectstheappropriatenessofevenaskingthe

questionof“whyoughtItokeepmypromise?”ForKant,allonecansay,

andalloneneedtosayinordertounderstandcontractualobligation,is

thatitispossibleforthepromisortoacquirethesubject‐matterofthe

contract,inabstractionfromspaceandtime.

Kant’scriticismofMendelssohnherepointsustowardthesolutionto

theproblemofcontractualobligation,towhichwecannowturn.44PeterBenson,ExternalFreedomAccordingtoKant,87COLUM.L.REV.559,565(1987).

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5.3 Solution

Thestructureoftheproblemisasfollows.Contractualobligation

(1)cannotbeamatterofmereindividualchoice,but(2)norcanitbe

beyondindividualchoice;furthermore(3)itmustbeconceived

relationally,sothatitisthepromiseewhoholdsthecontractright

againstthepromisor,andnobodyelse.WehavealsoseenKant’s

suggestionthattheonlywaytoexplaincontractualobligationisto

understandthepromisorasacquiringthecontractualperformance(in

abstractionfromspaceandtime).

Indiagnosingtheprobleminthisway,wenowhavetheoutlineofa

solution.Herethatsolutionshallbeapproachedintwostages.

5.3.1 Thepromisee’sexclusivechoice…

Thefirststageistounderstandacontract,notasthemereindividual

choiceofthepromisortoundertakeanobligation,butasarelation

betweentwoindividuals’choices:thepromisor’schoiceandthe

promisee’schoice.

Onthisview,contractualobligationexistsbecausethecontractual

performanceissubjectedtothepromisee’sexclusivechoice.Thatinturn

explainsthepromisor’sobligation,becausethepromisorisobligedto

exercisehischoiceinawaythatrespectsthepromisee’schoice.Because

nolessisdemandedbythefundamentalnormativeprinciplethatno

personmaydetermineanother’schoice.

Thepromisoristhen“bound”torespectthepromisee’scontractright

forthesamereasonthatanyindividualis“bound”torespectother

persons’choicesabouttheirbodyorobjectsofproperty.Accordingtothe

fundamentalnormativeprinciple,eachpersonmustrespecteachother

person’schoices.

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Thus,contractualobligationarisesinpartthroughthepromisor’s

“mere”individualchoice.Butthatchoice,inconjunctionwiththe

promisee’s,establishessomething“beyond”thepromisor’sindividual

choice:thepromisee’sexclusivechoice.Therefore,unlikethe“mere

individualchoice”and“beyondchoice”accounts,whichinvolveeither

choicewithoutreasonorreasonwithoutchoice,onthisapproachthereis

bothchoiceandreason.Thereasonbindingthepromisoristhepresence

ofthepromisee’schoice.

Theargumentforthisapproachshallbepursuedintwoseparate

ways.First,throughanaprioridiscussionusingtheconceptsofchoice,

“foisting,”and“suborning”developedinChapterThree.Second,through

adiscussionofthedoctrinaldistinctionbetweencontractandlicense.

5.3.1.1 Foistingandsuborning

InChapterThree,weconsideredwhytwowills,ratherthanone,are

requiredinordertoformacontract.Ifeachparty’s“will”incontract

formationamounts,assuggestedthere,justtotheirrecognitionofthe

promiseeashavingthecontractright,whymusttwowillsjointoeffect

thatrecognition?Whycouldasinglepersonnotjustchoosetoconceive

ofherself,oranotherperson,ashavingsomeright,therebyestablishing

thatright.Theanswercamefromthefundamentalnormativeprinciple

thatnopersoncanunilaterallydetermineanother’schoice.

First,ifonepersonwereabletoconferonherselfacontractright

againstanotherperson,justbytakingherselftohavetheright,that

wouldamounttohersuborningoftheotherperson’schoice.

Second,lessobviously,ifonepersoncouldconferacontractrighton

anotherperson,justbypurportingtorecognizethatotherpersonas

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havingit,thatwouldalsoamounttoaunilateraldeterminationofthe

otherperson’schoice.Itwouldbetofoistthecontractrightuponthem.45

Toavoidtheseproblems,bothparties—thepromiseewhoacquires

thecontractrightandthepromisoragainstwhomitisheld—mustjointly

recognizetheestablishmentoftherightincontractformation.

However,moremustnowbesaidaboutfoistingandsuborning,for

thefollowingreason.Itcanbegrantedthatacontractrightcannotbe

foisteduponanunwilling“promisee.”Still,whatif,subsequenttothe

promisor’sdeclarationofanintentiontoconferarightonthepromisee,

whichthepromiseedoesnotaccept,thepromiseechangeshermindand

seekstoholdthepromisortohisintentiontoconfertheright?Whynot

saythatthepromisorisboundbyhisearlierintention,solongasthe

promiseelaterdecidestoholdhimtoit?46

Thereasonisthatthiswouldviolatethefundamentalnormative

principlethatnopersonmayusurpanother’schoice.Ifthepromisor’s

currentchoiceisnotthesameashisearlierintentiontobebound(which

wecanassume,otherwisenoconflictbetweenthepartieswouldarisefor

resolution),theninholdingthepromisortohispriorintentionthe

promiseeisinterferingwiththepromisor’scurrentchoice.Thepromisee

issuborningthepromisor’scurrentchoiceinordertoestablisha

contractright.47

Now,however,itmayseempuzzlinghowtherecouldeverbea

contractualobligation,consistentwiththefundamentalnormative

45AsnotedinChapterThree,thisistrueevenifthecontractualsubject‐matterisindubitablyabenefittothepromisee.46SeeJAMESGORDLEY,THEPHILOSOPHICALORIGINSOFMODERNCONTRACTDOCTRINE234(1993);B.SharonByrd&JoachimHruschka,Kanton“WhyMustIKeepMyPromise?”,81CHI.‐KENTL.REV.47,60n.52(2006).47Whilethispointsufficesforpresentpurposes,itmaybeobjectedthatsomecommonlawtransactions(suchasgifts,deeds,andtrusts)mayinfactbebindingfromthemomentofthepromisor’sdeclarationofanintentiontobebound,withoutanyacceptancebythepromisee.ThosetypesoftransactionshallbeconsideredinChapterSeven,inthediscussionofconsideration.

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principle.Anon‐unilateralpromisor,whojoinswiththepromiseeina

mutuallywilledrecognitionofacontractright,may,subsequentto

contractformation,changehismindandwishtorenege.Why,inthis

situation,isthepromiseewhoseekstoenforcethepriormutualchoice

notlikewiseinterferingwiththepromisor’scurrentchoice?Weseemto

haveourselvesrunintotheproblemofthearbitrarinessofchoicethat

afflictsallaccountsofcontractualobligationbasedonmereindividual

choice.

Inordertoavoidthisproblem,ashintedearlier,weneedareasonnot

toregardthepromisor’scurrentchoiceascommandingrespect.The

promiseemustbeabletosaythatthepromisor’scurrentchoicetoresile,

unlikehispriorchoicetoformthecontract,issomehowinvalid.

Howcouldthepromiseeestablishthat?Onthewilltheory,which

presupposesthataperson’schoiceisinherentlyworthyofrespect,the

onlyreasonnottorespectaperson’schoiceisifthatchoiceisitselfan

interferencewithanother’schoice—andthusinconsistentwiththe

fundamentalnormativeprinciple.

Thus,forcontractualobligationtobeexplicable,thepromisor’s

currentchoicenottoperformmustconstituteaninterferencewiththe

promisee’schoice.Forthattobethecase,itmustbethatfromthe

momentofformationthecontractualperformanceissubjecttothe

exclusivechoiceofthepromisee.Tosaythesamething,thepromisee’s

choiceastotheperformancemustnotbeinanywaysubjecttoor

dependentuponfurtherchoicesbythepromisor.

Thus,whenwespeakofthepromisee“havingthecontractright”from

themomentofformation,orofthepartiesrecognizingthepromisee“as

havingthecontractright,”whatmustbemeantisthefollowing.The

contractualperformanceis,asbetweentheparties,subjecttothe

exclusivechoiceofthepromiseealone.

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Putanotherway,atformationthepartiesmustchoosetorecognize

thatthecontractualperformancebelongstothepromiseeasifitwere

herproperty.48(Recalltheanalogytotherecognitionofapropertyright

suggestedinChapterThree.)

Onthisanalysis,theperennialquestionofwhyacontract“binds”the

promisorturnsouttobeessentiallythesamequestionaswhyaproperty

right“binds”otherpersons.Thepromisor’schangeofmind,subsequent

toformation,issimplyapurportedactofchoicewithrespecttoanobject

thatshehasnopowertoaffect—becauseitissubjecttotheexclusive

choiceofanotherperson.Thechoicetorenegeisthennotonly

ineffective,itiswrongful,becauseitpurportstousurpwhatbelongsto

thepromiseealone.

5.3.1.2 Contractversuslicense

Thesameconclusioncanbereachedbyunderstandingthelegal

distinctionbetween,ontheonehand,abindingcontract,andonthe

other,arevocableconsentorlicense.

Revocableconsentsorlicenses,alsoknownas“bare”or“mere”

licenses,oftenappearintortorpropertylaw.Yourtouchingofmybody

orpresenceonmyproperty,withoutmyconsent,isgenerallyawrong

(suchasatrespass).However,ifIdoconsent,thereisnolongeranylegal

wrong.Notably,myconsenthereisrevocable.Itisvalidonlyforthe

present.Icanchangemymindatanytime—Iamnotboundinanyway.If

Idochangemymind,fromthatpointonyourcontinuedtouchingor

presenceisonceagainatrespass.49Todistinguishthisrevocableconsent

48ThispointismostclearlyandsystematicallydevelopedinthescholarshipofPeterBenson.49Ofcourse,ifyouareonmypropertywhenIchangemymindyoumusthaveareasonabletimetoleave.Myconsenttoyourbeingthereisbynecessaryimplicationalsoaconsenttoyourbeingthereuntilyoucanphysicallygetawayfromthere.(SeethediscussionofimplicationinChapterThree.)

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fromcontract,letuscallita“license.”(Althoughthattermisofcourse

notsolimitedinprofessionallegalusage.)

Whatisthedifferencebetweenlicenseandcontract?ArthurRipstein

suggeststhatthereisnone:theestablishmentofalicense,justlikea

contract,occurswhentwopartiesjointheirwills,therebyestablishinga

rightinthelicenseeorpromisee.50Themutualwillingofthelicensegives

thelicenseearighttoperformtheactionthatwasotherwise

impermissible;correlatively,thelicensoracquiresadutynottoobjectto

thataction.Ripsteinsuggeststhatthefactthatalicenseisrevocabledoes

notdistinguishitfromacontract;thisjustresultsfromadifferencein

“theexpressorimpliedtermsunderwhichthepartiesunitedtheir

wills.”51

Thisviewisproblematic.Asaninitialmatter,courtstreatthe

differencebetweencontractandlicenseasasignificantone,whichgives

risetoimportantlegalconsequences.Licensesaretraditionallyregarded

asamatterofpropertyortortlaw,havingdifferentconsequencesto

contracts.

Indeed,recentlythedistinctionbetweencontractandlicensehas

becomecrucialtodisputesover“creativecommons”licensesofsoftware,

becausesoftwareownersareentitledtodifferentremediesdependingon

whethertheirclaimsarecontractual,orinsteadbasedonthedefendant’s

exceedingthescopeofalicense,whichgivesrisetoaclaimfor

intellectualpropertyinfringement,suchasacopyrightclaim.52

Furthermore,whileacontractisestablishedthroughtwoparties’

mutualchoice(inofferingandaccepting,eitherthroughwordsor

conduct),alicense—contrarytoRipstein’sassumption—neednotbe.It

maybepromulgatedbyalicensorbyunilaterallyissuingcertainwords

50ARTHURRIPSTEIN,FORCEANDFREEDOM117‐18&n.9(2009).51Id.at118n.9.52See,e.g.,Jacobsenv.Katzer,535F.3d1373(Fed.Cir.2008).

159

orperformingcertainconduct—independentlyofanyotherparty’s

“acceptance”ofthelicense.(Norneedtherebeanyconsideration

provided.)Thus,thereisanimportantdifferenceinthemodeof

formationofacontractasopposedtoalicense.Thisdifferencewould

appeartobeinexplicableifthetwodoctrinesareconflated.

Finally,whereasacontractconfersabindingorcontinuingrightor

obligationonthepromisee,apurelicenseconfersnosuchthingonthe

licenseeatall.Anon‐exclusivelicensedoesnotconferownershipof

anythingonthelicensee.53Any“right”or“obligation”isalwaysfully

revocableatthewillofthelicensor.Thus,Ripstein’ssuggestionthata

licenseeacquiresa“right”toperformanactionthatisotherwise

impermissible(withthelicensorincurringacorrelative“duty”notto

object)turnsonasomewhatpeculiarunderstandingofwhata“right”

maybe.

IsthereanalternativetoRipstein’sview?Tobegin,notethat

Ripstein’sviewthatalicensecreatesarightinthelicenseeisnot

necessarytoexplainingthelicensee’slackofliabilityforperforming

whatwouldotherwisebeanunlawfulaction.Itmightbethoughtthat,ifa

licenseehasno“right”againstthelicensortoperformtheactionin

question,shemustremainliabletothelicensorforitsperformance.But

thatisnotso.Thelicensee’slackofliability,ifshedoesperformthe

actionwhilethelicenseisoutstanding,canbeexplained,notonthebasis

thatthelicensorhasa“right”toperformthataction,butonthebasisthat

theactionperformedisnotinconsistentwiththelicensor’schoicesabout

herownrights.Thelicensor’schoices,asevidencedinthepromulgation

ofthelicense,areconsistentwiththelicensee’sactions.Therefore,the

licensee’sactiondoesnotviolatethefundamentalnormativeprinciple

thatonepersonmaynotdetermineanother’schoice.Onthisalternative

53E.g.MacLeanAssoc.v.Wm.M.Mercer‐Meidinger‐Hansen,Inc.,952F.2d769(3dCir.1991).

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view,theabsenceofanyviolationofthelicensor’schoiceistherefore

attributablemerelytotheconsistencyofeachparty’sindependentchoice

withtheother’s.Thepromulgationofthelicensemerelyindicatesthe

natureandscopeofthelicensor’sindependentchoicesaboutwhatis

hers—abouthowtoexerciseherrights.Thelicenseecanthen,

independently,makeachoicethataffectswhatbelongstothelicensor

withoutdisruptingthelicensor’schoice.

Theviewthattheoperationofalicenseinvolvesmerelyconsistent

independentchoicesbyeachofthetwopartiesexplainswhycourtstreat

licenseandcontractdifferently.Thegrantofalicenseisadecisionbythe

licensoraboutwhatdowithwhatalreadybelongstoher—howto

exerciseherownrights—andisthereforetheprovinceofpropertylaw

ratherthancontractlaw.

Onthisviewacontract,ratherthanalicense,isrequiredonlyifthe

partiesseektogivethepromiseesomethingirrevocably—toestablisha

bindingrightorobligation.Acontractualpromisorisnotfreetorevoke

hisobligationunderacontract.(Althoughthecontractualpromiseemay

alwayschoosetowaivethepromisor’sobligation.)54Inordertoestablish

anirrevocableobligation,thecontractualperformancemustbesubjected

totheexclusiveorindependentchoiceofthepromiseealone.

Thisiswhycontractformationmustoccurmutuallyratherthan,likea

license,unilaterally.Foracontract,thepromiseemustchoosethatthe

contractualperformanceissubjecttoherexclusivechoice.Otherwise

therewillbeafoistingofthecontractrightuponher.55Whereasfora

license,onlythelicensorandnotthelicenseeneedmakeachoice,about

54E.g.,Steelev.Serepisos,[2007]1N.Z.L.R.1(N.Z.S.C.).55Cf.RIPSTEIN,supranote50,at113‐14.

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whattodowithherrights;thus,alicensecanbeestablished

unilaterally.56

5.3.2 …astothepromisor’schoice

Sofarithasbeensuggestedthat,inordertoexplaincontractual

obligationandtodistinguishitfromarevocablelicense,thepromisee

mustbeunderstoodtohave,fromthemomentofformation,the

contractualperformancesubjecttoherchoiceinthesamewaythata

proprietorhasanobjectofpropertysubjecttohischoice.

However,thisanalysisleadstoanotherdifficulty,whichshallforceus

toaddacrucialtwisttotheformulationofwhatthepromiseehas

followingcontractformation.Thisisthesecondofthetwostagesofthe

explanationoftheformofacontractualobligation.

Essentiallytheproblemisthis:onwhatbasisdoesthelawdistinguish

thepromisorfromeveryotherpersonintheworldwithrespectto

liabilityarisingoutofthecontract?Thisproblemmanifestsitselfina

numberofways,inthedoctrinesofprivity,strictliability,andthirdparty

liabilityfortortiousinterference,andtheconnectionsbetweenthose

doctrines.Thus,thereareanumberofdifferentwaysinwhichto

articulatetheproblem.

First,onewaytoseetheproblemissimplytonoticethatwehave

beensaying,upuntilnow,thatthepromiseeacquiresanexclusivechoice,

“asbetweenthecontractingparties,”tothecontractualperformance.But

howcanthislimitation“asbetweenthecontractingparties”be

explained,giventheunderstandingofthecontractrightthatwehave

56Finally,itisworthnotingthatRipstein’sapproachisapparentlyunabletoexplainwhyitisonlyacontractualpromisee,andnotthepromisor,whohasthesolerighttoenforcethecontract.OnRipstein’sapproach,contractissimplyamatterofthepartiesjoiningtheirwillstoestablisharight.Thatdoesnotallowonetodifferentiatebetweenthepartiestothecontractinordertoexplainwhyonlyoneofthemcanenforcetheright.Incontrast,the“exclusivechoice”approachcanexplainthis.

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nowreached?Thislimitationisinnowaybuiltintoourdescriptionofthe

contractright,anymorethanitisbuiltintothedescriptionofaproperty

right.

Second,relatedly,inboththecommonandcivillaw,oratleastinlegal

scholarshipinthesesystems,thereisalongstandingdistinctionbetween

twodifferentsortsofentitlements.Inremrights,oftenequatedwith

propertyrights,arerightsthathold“againsttheworld.”Theybindevery

personintheworld,oratleasteverypersontowhomtheyare

objectivelymanifest,inexactlythesameway.Contrastaninpersonam

contractualobligation.Thisassumesaspecialconnectionorbind

betweentwoparticularpersons.(Asisoftennoted,thisideaofaspecial

connectionbetweentwopersonsseemstobepresumedintheLatin

etymologyoftheword“obligation”—fromob‐ligare,tobindorlink

together.)What,then,isthebasisforlawyers’traditionaldistinction

betweenthesetwokindsofentitlement?Theinternalapproachdemands

thatwefindone.

Third,thereistheissueofthirdpartyliabilityforinducingbreachof

contract.Athirdpartywillbeliableforintentionally(orperhaps

negligently)causingabreachofcontracttooccur.57Tobeliableforan

intentionalornegligentinterference,thethirdpartymustinsomesense

directherselftowardsunderminingacontractualobligation.This

requirementseems,accordingly,todifferfromtherequirementsfor

liabilityinthepropertytorts,wheretheequivalentofathirdperson—

anyperson—canbeliablewithoutintendingornegligentlyfailingtotake

accountoftheproprietor’spropertyright.Thus,thereisadifferencein

thisrespectbetweentheprotectionoftheproprietor’sexclusivechoice

inpropertylawandtheprotectionofthepromisee’sexclusivechoiceby

thetortofinterferencewithcontract.Howdoweexplainthis?

57PeterBenson,MisfeasanceasanOrganizingNormativeIdeainPrivateLaw,60U.TORONTOL.J.731,741‐42(2010).AsBensonnotes,thedistinctionislinkedtothedistinctionbetweenperseliabilityandliabilityrequiringproofofdamage.

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Fourth,whileliabilityforthirdpartiesincontractismoredifficultto

establishthanliabilityforbreachofpropertyrights,theoppositeistrue

withrespecttooneparticularpartyinthecontractualcontext:the

promisor.Acontractualpromisoriseven“morestrictly”liablethanany

personwhomaybeliableforbreachofpropertyrights.Subjectalwaysto

theparties’agreementotherwise(ina“reasonableefforts”clauseorthe

like),inabreachofcontractcasethereisneveranyneedtoestablish

“negligence”orotherfaultonthepartofthepromisor.Liabilityisalways

strict.Thepromisor’sknowledge,intention,orforesight,subjectiveor

objective,isalwaysirrelevant.Contrastbreachofpropertyrights,where

liabilityissometimes“strict,”butsometimesrequiresaninquiryinto

whethertherewasnegligence.

Itseems,therefore,thatwemaybeabletomakesomeprogress

towardselucidatingthenatureofcontractualliabilityifweunderstand

thebasisforthedistinctionbetween“strictliability”and“negligence.”

ThesuperlativetreatmentofthisissueisPeterBenson’s.Itisbest

explainedbyfocusingonthedistinctionincasesdealingwithalleged

breachesofpropertyrights.58

Bensonpointsoutthatinacaseofnegligence,thereexistsapossible

characterizationofthedefendant’srelevantchoices,suchthatthe

interferencewiththeplaintiff’sentitlementthathappenedtoeventuate,

inthecircumstancesofthecase,wasnotreallythedefendant’schoice.In

anegligencecaseitisatleastpossibletoconcludethatthedefendantwas

justmakinghisownindependentchoice:onethatwasnotmeanttoaffect

theplaintiffatall.Itisarguablethatthedefendantwasjustchoosinghow

toactintheworldwithoutreferencetotheplaintiff(forexample,with

regardtounownedspacesandobjects),despitethefactthat,duetosome

misfortune,thischoiceendeduphavingconsequencesfortheplaintiff.

58Id.at774.

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Forexample,inatypicalautomobileaccidentcase,thepartiesdispute

whetherthedefendant’shittingtheplaintiff’scarwasreasonably

foreseeable.Ifthecollisionwasnotreasonablyforeseeable,thenit

cannotreasonablybeattributedtothedefendant’schoice.Rather,the

defendantmustbeunderstoodasmakinghisownindependentchoices

aboutwhattodointheworld,whichonlybysomeunforeseeablestroke

ofmisfortune(oneexternaltothedefendant’schoice)happenedto

produceaninterferencewiththeplaintiff’schoices.Thewholedisputein

anegligencecase,therefore,canbecharacterizedasoneaboutwhether

thedefendantwasorwasnotmakinghisownindependentchoices—

choicesthatwouldnot(everythinggoingtoplan)affecttheplaintiffatall.

Contrasttrespass,forwhichliabilityis“strict.”(Despitethefactthat

trespassissometimescalled,confusingly,an“intentionaltort.”)Here

thereissimplynoroomfordebateaboutwhetherthedefendantwas

makinganindependentchoice—onethatwould,allgoingtoplan,not

affecttheplaintiffatall.Thedefendant’srelevantchoiceisnecessarily

incompatiblewiththeplaintiff’sentitlements.Thereisnootherpossible

waytoconstruethematter.

Take,forexample,atypicalcaseoftrespasstoland.Hereitis

sufficientthatthedefendantintentionallyenteredontotheareaofland

inquestion.59Ifthatisso,thedefendant’schoicemustbecharacterized

assomethinglike,“beingonareaoflandX.”Thatchoiceisnecessarily

incompatiblewiththeplaintiff’srelevantchoiceaboutherland—

somethinglike,thechoicethat“nobodyelsebeonareaoflandX.”Thus,

thereisnoplausiblecharacterizationofthedefendant’schoicesuchthat

59Itisirrelevantwhetherthedefendantknows,orcouldreasonablybeexpectedtoknow,thatthelandwasthepropertyofanotherperson.E.g.RESTATEMENT(SECOND)OFTORTS§164.

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itisjustanindependentchoiceofhisown,whichhappenedtoaffectthe

plaintiffonlyduetosomeextrinsicmisfortune.60

Nowletusreturntobreachofcontract.Hereliabilityisstrict(subject

totheparties’agreementotherwise).Wecanunderstandwhythismight

besobydrawingananalogytointerferenceswithproperty,andtothe

distinctionbetweennegligenceandtrespass.Itwouldmakesensefor

liabilityforbreachofcontracttobestrictifthepromisor’srelevant

choice,inbreachingacontract,isnecessarilyincompatiblewiththe

promisee’schoice.Thatis,ifthereisnoplausiblecharacterizationofthe

promisee’sbreachingconductuponwhichitisjustthepromisor’s

independentchoiceaboutwhattodointheworld.

Importantly,however,asnotedpreviously,contractualliabilityisina

sensemuchmoredraconianthanliabilityforbreachofpropertyrights.

Because(subjectalwaystotheparties’agreementtothecontrary)there

isneveranypossibilityof“negligence.”Liabilityisalwaysstrict,like

trespass.Thismeansthatthepromisee’scontractrightmustbesuchthat

thereisneveranyplausiblecharacterizationofthepromisor’s

nonperformingconductuponwhichthatconductjustamountstothe

promisor’sindependentchoiceaboutwhattodointheworld.

Itisperhapsdifficultfortrainedlawyerstoappreciatehowstrange

thisis.Imaginethatapromisor,immediatelyaftercontracting,isthrough

nofaultofherownstruckbylightning,erasinghermemory.Shethen

travelstotheothersideoftheworld,toaremoteareaofasparsely

populatedcountry,whereshelivesalone,heractionsapparently

60Itmightbeasked,ifbreachofcontractisliketrespass,whyisadisgorgementremedynotalwaysinprincipleavailable,asinthecaseofatrespasstoland?ThisisexplainedinChapterSix.Theansweristhattrespassliabilitymerelyestablishesadirectincompatibilityoridentitybetweensomeconductofthedefendant’sandtheplaintiff’sright,whereasfordisgorgement,theremustbeanidentityorcoincidencebetweentheprofit‐makingconductofthedefendant’sandtheplaintiff’sright.Becauseofvariationsinthescopeofcontactrights,itisoftenpossibletosaythatthecontractualdefendant’sprofit‐makinghascausedsome“breachingconduct”(i.e.nonperformance)butthattheprofit‐makingisnotitself“breachingconduct.”

166

affectingnobody.Shethendevoteseveryinstantofherattentionand

efforttogatheringandconsumingfood.Allherchoicesareapparently

aboutthat.Still,contractlawproceedsonthebasisthatitisimpossibleto

characterizewhatsheisdoingasjustherownindependentchoice.

Contrastliabilityforbreachofapropertyright,whereitisalways

possibleforthedefendanttodistanceherself(literallyorfiguratively)

fromtheplaintiffsuchthatherconductmayberegardedasherown

independentchoicethatgivesrisetoliabilityonlyinnegligence,orno

liabilityatall.

Sohowcancontractbeexplained,suchthatnoeffectcausedbythe

promisorthatturnsouttobeincompatiblewiththepromisee’schoice,

nomatterhowunforeseeable,canpossiblybecharacterizedasthe

promisor’sindependentchoiceforwhichsheisnotliable?Notethat,as

theaboveexamplesuggested,thebasisforthisaspectofcontractlaw

cannotbeanycontinuingconnectionbetweenthepromisorand

promiseethatisspecifiedthroughparticularfeaturesofthepromisor,

suchashermemory,thatmightbethoughttoconnectherinparticularto

thepasteventofcontractformation.Evenif,forexample,thepromisor

hascompletelyforgottentheeventofcontractformation,throughno

faultofherown,shemaystillbeliablefornonperformance.

Theabsenceofanycontinuingconnectionofthiskindbetweenthe

partiesmightseemtoimplythat,withrespecttoabreachofcontract,the

promisorissimilarlysituatedtoeveryotherpersonintheworld.

However,weknowthatintheeyesofthelawsheisnot.Sheistheonly

personwhoisstrictlyliablefornonperformanceofthecontract.

Theonlysolutiontothisproblem,itissubmitted,isthatthepromisee

musthave,subjecttoherexclusivechoice,thepromisor’schoice.The

promisorcanbesingledout,fromamongstalltheworld,onlybecause

shehas,incontractformation,subjectedtoherchoicetothepromisee’s.

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Thisisthepermutationofmutualchoicethatconstitutestheformofthe

extantcontractright.

Thepromisoristhenuniquelyidentifiedasliablefornonperformance

notbecauseofanycontinuingconnection,suchasamemory,tothe

historicaleventofcontractformation.Thathistoricaleventisrelevant

onlyinaderivativeway.Itexplainswhythepromiseecanreasonably

takeherselftohavethepromisor’schoiceastoperformance,now—at

thetimeofperformanceornonperformance.

Thissolutionprovidesabasisfortheuniquestrictnessofliabilityfor

breachofcontract—inwhicheverynonperformanceislikeatrespass.If

thepromiseehasthepromisor’schoice,thennochoicebythepromisor

thatisnot“thechoicetoperform”canberegardedasjustthepromisor’s

independentchoiceaboutwhattodointheworld.Everychoicebythe

promisorthatisnotthechoicetoperformisnecessarilyincompatible

withthepromisee’sright:therightoverthepromisor’schoiceto

perform.

Thestructureofthisanalysiscanbestatedsemi‐formallyasfollows:

Followingcontractformation,promiseehas“x.”

Solvefor“x,”suchthatthepromisor’schoicethatachieves

anythingotherthan“x”(a,b,c,etc.)isnecessarilyincompatible

withpromisee’shaving“x.”

Theanswercanonlybethat“x”=thepromisor’schoiceastox.

Thepromisorisalwaysacting(oromittingtoact)throughhischoice.

Thepromiseehasthepromisor’schoiceasto“x.”Thereforeanychoiceof

thepromisee’sotherthan“x”willbedirectlyincompatiblewithwhatthe

promisorhas.

Itisasifthepromisor’schoiceisaplotoflandthatthepromisee

owns.Thenwhatcanthepromisordobutwalkuponit?Sothepromisor

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mustwalkinexactlythewaythatthepromiseedemands,otherwisehe

willviolatethepromisee’srights.

Importantly,contrasttheviewthatthepromiseehas,following

contractformation,theperformanceconsideredasakindofobject,one

thatsubsistsindependentlyofthepromisor’schoice.Thatis,ratherthan

havingthepromisor’schoiceasto“y,”thepromiseesimplyhas“y.”Now

itcannotbesaidthatanythingthepromisorchoosesotherthan“y”is

necessarilyincompatiblewith“y.”Thepromisorcouldconceivablymake

anindependentchoice—onethatinvolvesnoincompatibilitywith“y”—

bychoosing“a,”b,”“c,”etc.Theonlychoiceofpromisor’sthatwouldbe

necessarilyincompatiblewithplaintiff’swouldbeachoicethatisbest

interpretedasachoiceof“not‐y.”

Ofcourse,thatisjusthowliabilityworksoutsideofcontractlaw,such

asinthecontextofallegedviolationsofpropertyrights.Thedefendant’s

choicetoundertaketheconductthatgivesrisetotheviolationofright

“y”mustbereasonablyconstruableasachoiceof“not‐y.”Thatisclearif

thedefendantfullyintendstointerferewiththeplaintiff’sproperty.It

canalsobeestablishedif“not‐y”isareasonablyforeseeableconsequence

ofthedefendant’sconduct.

Thus,whatthepromisee“has”—whatissubjecttoherchoice—

followingcontractformationmustbe,notthecontractualperformancein

thesenseoftheobjectofthecontract,butthepromisor’schoiceasto

performance.

5.4 Conclusion:FormandFormation

Iftheargumentoftheprecedingchapterssucceeds,thecoreofthe

commonlawofcontract—theformationandformofacontractual

obligation—canbeunderstoodentirelythroughtheideaofthemutual

choiceofthecontractingparties.Indeed,theprecedingchaptershave

beennothingotherthanasustainedefforttoholdontothatidea,

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resistingtheconstanttemptationtoletgoofitthatispresentatevery

turninthepursuitofatheoryofcontract.Ithasbeensuggestedthatallof

themajordifficultiesinformulatingawilltheoryofcontractresultfrom

beingdrawnawayfromtheideaofmutualchoice,ratherthanaccepting

itasexplanatorilysufficientinitself.

Theproductofthiseffortisatruewilltheoryofcontract.Thiscanbe

statedentirelythroughtheconceptofchoice.Thereisacontractwhere:

twopersonsmutuallychoosethatoneofthemchoosestheother’schoice

astoperformance.Or,inalessconvolutedformulation:twopersons

recognizethatoneofthemhastheother’schoicetoperform.(Where

“recognition”and“having”areexercisesofchoice.)

Althoughwehavetreatedtheformationandformofacontract

separately,theycouldequallybedepictedasasinglepermutationof

mutualchoice.Thepromisorchoosesaperformanceand,atthesame

time,thathischoiceinthisrespectissubjecttothepromisee’s.61The

promiseechoosestohaveaperformancethroughthepromisor’schoice.

Thevariousformulationsofthewilltheoryofferedhereare

concededlypeculiar.Thatisnotentirelyabadthing.Onceonestartsto

thinkseriouslyaboutcontract,itispeculiar.(Humefoundit“naturally

unintelligible.”)Theusualresponse,intoday’scontracttheory,isto

proceedbyanalogyorreduction:toattempttounderstandcontract“as”

somethingelse—aspromise,astransfer,etc.;ortofocusontheeffects

thatcontracthasuponotherstatesofaffairs,suchasefficiency,reliance,

orautonomy.Butcontract,asitappearstousfromthecommonlaw,isa

uniquephenomenon.Thereforeitshouldnotbesurprisingifwecannot

61Cf.G.W.F.HEGEL,PHILOSOPHYOFRIGHT§72(T.M.Knoxtrans.,1952)(1821)(“ContractistheprocessinwhichthereisrevealedandmediatedthecontradictionthatIamandremaintheindependentownerofsomethingfromwhichIexcludethewillofanotheronlyinsofarasinidentifyingmywillwiththewillofanotherIceasetobeanowner.”)(emphasisadded).

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explainthisphenomenonbyanalogyorreductiontosomethingmore

firmlygrasped,butonlyonthebasisofauniqueabstraction.

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6 FormII:PerformanceChapterFiveconcludedthatacontractualobligationorcontractright

existswherethepromiseehasthepromisor’schoiceastoperformance.

Theanalysisfocusedonthepermutationofmutualchoicethat

constitutesthecontractright’sform.Itwaseffectivelyassumed,without

argument,thattheobjectoftheparties’mutualchoice—whatacontract

rightisarightto—isthecontractual“performance.”Thatassumption

mayseemstraightforward.However,inthetheoryofcontractlaw,itis

not.Inparticular,therearetwoimportantcurrentsincontracttheory

thatposechallengesforthisassumption.

Thechapterbeginsbysettingoutsomeofthebasesinlegaldoctrine

forthecommonsenseassumptionthattheobjectofacontractrightis

justthecontractual“performance”(6.1).Thechapterthenconsidersthe

firstofthetwomainchallengestothisview(6.2).Twentiethcentury

contracttheorists,ledbyFullerandPerdue,disputedtheassumption

thatacontractalwaysconfersarighttotheagreedperformance.They

suggestedthatacontractmightconferarighttosomethingelse,suchas

arighttorelyonthecontract,ortoreceiverestitutionintheeventofa

breach.Iftheirargumentswerepersuasive,thepictureofcontractlaw

outlinedsofarwouldatleasthavetobecomplicated.However,this

chapterrejectsthesuggestionthatacontracteverconfersarightto

somethingotherthanperformance,reaffirmingthesimplepicture

previouslyestablishedinthiswork.

Asecond,moresubtlechallengecomesfromcontemporarycontract

theoristsinfluencedbyKantandHegel(6.3).Theyhavesuggestedthatit

isinsufficienttoregardacontractasjustconferringarighttosome

“performance.”Theobjectofthecontractright,theyclaim,requires

furthercharacterization.ErnestWeinrib,drawinguponKant’saccountof

privatelaw,hassuggestedthatacontractrightmustbecharacterizedas

arighttoan“act,”ratherthanarighttoa“thing.”Hearguesthatthis

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characterizationentailsthatdisgorgementdamages—damagesmeasured

bytheprofitacontract‐breakermakesfrombreach—cannotbeavailable

forbreachofcontract.Incontrast,PeterBensoncontendsthatthe

availabilityofdisgorgementdamagesisunaffectedbytherival

characterizationsofthecontractualperformance.Further,heargues,

drawinguponHegel,thatacontractrightmustbearighttoathing.

Thischapterconcludes,onslightlydifferentgroundstoBenson,that

thecharacterizationofthecontract’sobjectasanactorthingdoesnot

determinetheavailabilityofdisgorgement.Finally,thechapteralso

suggeststhatnofurthercharacterizationoftheobjectofacontractright

isnecessaryorhelpful:theobjectofacontractisjustwhatever

“performance”thepartieschoose(6.4).

6.1 ThePerformanceorExpectationInterest

Thenotionthattheobjectofacontractisthepromised“performance”is

confirmedbyfundamentalpremisesofcontractdoctrine.

Whatisacquiredbyacontractisoftencalledthe“performance

interest”or“expectationinterest.”“Interest”isanunfortunateterm.1In

contractlaw,thepromisee’s“interest”inperformanceisalegalright,

sincethepromiseehasaclaimtoperformancethatcannotberevokedby

othersandthatisenforceablethroughstatecoercion.Whereastheterm

“interest,”initsordinarymeaning,includesnotonlylegalrightsbutalso

anyadvantageorobjectofattention.2Itisonlyinthesenseofarightthat

1DanielFriedmannnotesthattheterm“expectation”isalsounfortunate,becauseitalsosuggestsamereprospectratherthanalegalright.DanielFriedmann,ThePerformanceInterestinContractDamages,111L.Q.REV.628,634‐35(1995).2Thetermisthenfurtherassociatedwithinterestgroupsandpoliticalinterests.ToddD.Rakoff,FullerandPerdue’sTheRelianceInterestasaWorkofLegalScholarship,1991WIS.L.REV.203,216‐18.SeealsoErnestJ.Weinrib,RightandAdvantageinPrivateLaw,10CARDOZOL.REV.1283,1284(1989).“Interest”wasprobablyborrowedbyFullerandPerduefromthecivillaw.SeeFriedmann,supranote1,at632‐33.

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thepromiseehasagainstthepromisorthataperformanceorexpectation

“interest”necessarilyaccompaniesacontract.

Howdoweknowthatwhatapromiseeacquiresbyacontractisa

righttothepromisedperformance?Onoccasion,whenpressedtodefine

“contract,”courtssayso.“Whatisacontract?[Atransactioninwhich]

eachreciprocallyacquiresarighttowhateverispromisedbytheother.”3

Thatacontractconfersarighttoperformanceisalsoimplicitinthe

fundamentalrulesofperformanceandbreach.Apromisor’scontract

obligationisfulfilledanddischargedwhenthepromiseisfully

performed.4Apromisor’scontractobligationisbreachedwhenthe

promiseisnotperformed.5Thus,thepromisorhasadutytoperform,and

thepromiseehasacorrespondingrighttoperformance.

Thatacontractisarighttoperformanceisalsopresupposedbythe

standardremediesforthreatenedoractualcontractualbreaches.The

remedyofspecificperformancerequiresthepromisortoperform.

“Expectation”damages,accordingtothecanonicalformulationofBaron

ParkeinRobinsonv.Harman,ensurethatthepromisee“is,sofaras

moneycandoit…placedinthesameposition…asifthecontracthad

beenperformed.”6

6.1.1 Rights,Wrongs,andRemedies

Atthispoint,however,wemustaddressageneralissueconcerning

therighttoperformanceanditsvindicationthroughcontractual

remedies.RecentlyStephenSmithhasarguedthatdamagesawardsfor

3DartmouthCollegev.Woodward,17U.S.(4Wheat.)518,656(1819).4RESTATEMENT(SECOND)OFCONTRACTS§235(1)(“Fullperformanceofadutyunderacontractdischargestheduty.”).5Id.§235(2)(“Whenperformanceofadutyunderacontractisdueanynon‐performanceisabreach.”).6(1848)154Eng.Rep.363,365,1Exch.850,855(K.B.).SeealsoBenjaminv.Hilliard,64U.S.(23How.)149,167(1859);RESTATEMENT(SECOND)OFCONTRACTS§347cmt.a.Possibleconceptualdifferencesbetweenspecificperformanceandexpectationdamagesareconsideredbelow.(6.2.4)

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breachofcontractmustbeunderstoodasaddressingnotrights,but

wrongs—violationsofrights.7Smithcontraststhisunderstandingtothe

viewthatdamagesaimmerelytoreinstate,sofarasmoneycandoit,the

pre‐existingcontractrightthatthepromiseehadpriortothebreach.

Themerereinstatementview,Smithpersuasivelyargues,isunableto

explainanumberoffeaturesofthelawofcontractualdamages.For

example,damagesforconsequentialloss—lossthatiscausedbyabreach

ofcontract,butwhichwouldnotitselfamounttoabreach—cannotbe

explainedasmerelyreinstatingarightthatexistedpriortothebreach.

Similarly,thatapartyreceivingamonetaryawardneednotspendthe

moneyonpurchasingsubstituteperformanceshowsthatthelawisnot

concernedmerelytoreinstatethepre‐existingrighttoperformance.8

Ratherthanmerelyreinstatingrights,contractualremediesmustbe

concernedtoredresswrongs.

Whileafulltheoryofremediesisbeyondthescopeofthiswork,

Smith’sunderstandingiscompatiblewiththeviewsadvancedhere.The

chainofreasoningthatthisworktakestoexplaincontractualremediesis

asfollows.(1)Wherethereisacontract,thepromiseehasthepromisor’s

choiceastoperformance;thatis,thepromisor’schoiceasto

performanceissubjecttothepromisee’sexclusivechoice.(2)Byfailing

toperform,thepromiseeinterfereswiththepromisee’sexclusivechoice.

Thatisaviolationofthefundamentalnormativeprinciplethatnoperson

maydetermineanother’schoice.Itisawrong.(3)Suchaviolationor

wrongcanbenegatedbytheawardofalegalremedy(whichis,if

necessary,coerciblebythestate).(4)Thenegationofthewrongis

achieved,inaloss‐basedremedyforbreachofcontract,byrequiringthe

7StephenA.Smith,BreachofContract:OneRemedyorTwo?(draftpaperpresentedatthePhilosophicalFoundationsofContractLawconference,U.C.L.2013).SeealsoStephenA.Smith,Duties,Liabilities,andDamages,125HARV.L.REV.1727(2012);StephenA.Smith,WhyCourtsMakeOrders(andWhatThisTellsUsaboutDamages),65CURRENTL.PROBS.51(2011).8Smith,OneRemedyorTwo?,id.at7‐11.

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promisortoplacethepromiseeinthepositionshewouldhavebeenin

hadthewrongneveroccurred.9

HenceBaronParke’sstatementthatthepromiseemustbe“placedin

thesameposition…asifthecontracthadbeenperformed.”Notethat,

priortothebreach,thepromiseehasnorighttobeinthisgeneral

“position,”orstateoftheworld.Priortothebreachshehasonlyaright

tothecontract’sperformance.

Thepromiseeisneverthelessputinthatposition,followingabreach,

becausedoingsonegatesthepromisee’swrongfulchoiceoractioninits

entirety.Thatwrongfulchoiceincludesboththedeprivationofthe

promisee’spre‐existingrighttoperformanceandtheproductionof

certainotherforeseeablenegativeconsequencesforthepromisee.Thus,

thedamagesremedydoesnotmerelyreinstatearightasitexistedprior

tothewrong,itnegatesthewrongitself.10

6.2 RelianceandRestitution

Thepointthatacontractconfersarighttoperformancemightbetoo

obvioustotroublewith,wereitnotforthecontributionsoftwentieth

centurycontracttheory.11Thesignalachievementofthiswasanattack

ontheexclusivityandeventheprimacyoftherighttoperformance—

aka.the“expectationinterest”—incontractlaw.FullerandPerdue

famouslycontendedthattherearecontractualinterests,reflectedinthe

9Gain‐basedremediesareconsideredbelow(6.3).10Cf.G.W.F.HEGEL,THEPHILOSOPHYOFRIGHT§§82,98(1821)(legalremedyasthenegationofthenegationofright,whichrequiresannulmentofthewronginsofarasitisproductiveofdamage).Smithdistinguishesdamagesawardsfrominspecieorders,suggestingthatthelattermerelyconfirmexistingrights,bypreventingwrongsthatcanstillbeavoided.OneRemedyorTwo?,supranote7.However,itisconceivablethataninspecieordercouldnegateawrongthathasalreadyoccurred.Considerordersinintellectualpropertycasesrequiringdefendantstodestroyoffendingarticlesortonotifycustomersofinfringement.11Cf.PeterBenson,ContractasaTransferofOwnership,48WM.&MARYL.REV.1673,1674(2007).

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remediescourtsgrant,otherthan“expectation”:the“reliance”and

“restitution”interests.12FullerandPerdueevensuggestedthatthese

otherinterestsaremoreimportanttocontractthan“expectation.”

Atiyah,HorwitzandGilmore,amongothers,builtuponthisclaim,

arguingthatacontractdoesnotconferadistinctkindofrightuniquely

associatedwiththeperformanceinterest.Rather,contractlawprotects

(orhasprotectedinthepast)anumberofintereststhatoverlapwith

thoseprotectedbyotherareasoflaw,suchastorts.13Forexample,intort

law,reliancedamagesareawardedfordeceitornegligentmisstatement,

andrestitutionforconversion.

Thisstrandofcontracttheorychallengesthesimpleviewthatthe

objectofthecontractrightisperformance.If,asisundeniable,courts

awardnotjustspecificperformanceandexpectationdamages,butalso

relianceandrestitutiondamages,itseemstofollowthattheexpectation

interestisnottheonlycontractualinterest.Acontractmustalsoentailan

interestinrestitutionorreliance.

Defendersofcontractastherighttoperformancehaveattemptedto

addressthischallenge.DanielFriedmannpointsoutthattherelianceand

restitutioninterestssimplydonotsquarewithwhatpeopletake

themselvestobedoingwhentheycontract.AccordingtoFriedmann,

partiescontractinordertoobtainperformance,notinordertoobtain

therighttorelyreasonably,ortoreceiverestitution.14

However,alegaldoctrinemayinitiallyseemcounterintuitive,

especiallytononlawyers,butmakesenseonfurtherscrutiny.Moreover,

Friedmann’sresponsemakesnoattempttoexplainwhatcourtsdo.He

doesnotexplainwhycourtshavethoughtitappropriatetoaward12L.L.Fuller&WilliamR.Perdue,Jr.,TheRelianceInterestinContractDamages:1,46YALEL.J.52(1936).ThisapproachisnowreflectedintheRESTATEMENT(SECOND)OFCONTRACTS§344.13GRANTGILMORE,DEATHOFCONTRACT(1974);MortonJ.Horwitz,TheHistoricalFoundationsofModernContractLaw,87HARV.L.REV.917(1974);PatrickAtiyah,Contracts,PromisesandtheLawofObligations,94L.Q.REV.193(1978).14Friedman,supranote1,at629,632.

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relianceandrestitutiondamagesinthecontextofbreachesofcontract.

Theinternalapproachdemandsanexplanation.

CharlesFriedsuggeststhat,giventheavailabilityofrelianceand

restitutionremediesinareasoflawotherthancontract(suchastort

law),thoseremediesandtheirassociatedinterestscannotbeconsidered

definitiveof“contract.”Thecontractrightcanbeisolatedasdistinctive

onlyifitisassociatedwiththeperformanceinterestinparticular.15

Ofcoursewecannotbrushasidetherelianceandrestitutioninterests

thiseasilyifweareseekingtoestablishwhetherthecontractrightis

trulydistinctive.Inordertodothat,weneedtoestablishwhetherthere

isaprincipledbasisuponwhichthecontractrightcanbefully

differentiatedfromotherkindsofright.16

Whentheyarescrutinizedmoreclosely,however,therelianceand

restitutioninterestsindeedfallawayasalternativestotheperformance

interestincontractlaw.Thisisbecause,asshallbesuggestedbelow,

restitutionarydamagesarenotaremedyforbreachofcontract.Onthe

contrary,theyareawardedonlyintheabsenceofacontractual

obligation.Reliancedamages,ontheotherhand,areawardedforbreach

ofcontract—theyassumetheexistenceofacontractualobligation.

However,attentiontothatverypointrevealsreliancedamagesfor

breachofcontracttobemerelyaformofexpectationdamages.

6.2.1 Restitution

Restitutioninthecontractualcontextrestorestooneoftheparties

somebenefitthatshehasconferredontheother.17Butwhilerestitution

isclearlyavailableinthecontextofabreachofcontract—“ina15CHARLESFRIED,CONTRACTASPROMISE21‐27(1981).16Forhisownpurposes,Friedfindsitsufficienttoshowthattheperformanceinterestis“anormalandnatural”featureofcontractlaw.Id.at21.17RESTATEMENT(SECOND)OFCONTRACTS§§344(c),370.Thisdefinitionexcludes“disgorgement”awards,whichrestoretothepromiseeabenefitthatwaswrongfullyobtainedbythepromisor,butthatwasnotconferredonthepromisorbythepromisee.SeealsoFuller&Perdue,supranote12,at54‐55.Disgorgementisdiscussedfurtherbelow.

178

contractualsetting”18—therestitutionaryinterestisnotanincidentof

thecontractright.

Performance‐orientedremedies,suchasspecificperformanceor

expectationdamages,areawardedinacontractualsettingbecauseofa

breachofanexistingcontractualobligation.Incontrast,restitutionisnot

awardedinthissettingbecauseoftheexistenceofacontractobligation

thathasbeenbreached.Thereasonforarestitutionaward,inthecontext

ofabreachofcontractaselsewhere,isthatthedefendanthasreceiveda

benefititwouldbeunjustforhimtoretain.19Onesituationinwhich

benefitsmustbereturnediswhereacontractualobligationpursuantto

whichtheywereconferrednolongerexists,sothattheputativebasisfor

theconferralhasdisappeared,andthereisthereforenojustbasisforthe

promiseetoretainthebenefit.20Thisexplanationturnsnotonthe

continuedexistenceofanapplicablecontractright,butontheabsenceof

sucharight.

Thisisparticularlyclearwhererestitutionisawardedafterthe

contracthasbeenfrustrated,21orwhereitisillegal.22Herenocontract

exists,sothereasonforgrantingrestitutioncannotbeacontractright.

Indeed,courtshavetraditionallyinsistedthatthecontractmustbe

fullyextinguishedbeforerestitutionisavailable.Apartycannotclaim

restitutionmerelybecausetherehasbeenabreachofcontract.Rather,

beforerestitutioncanbeavailable,thecontractmusthavebeen

rescinded(or“canceled,“discharged,”etc.),ortheremustatleasthave

beenthesortofsignificantbreach,repudiationor“totalfailureof

18StephenWaddams,ContractandUnjustEnrichment:CompetingCategoriesorComplementaryConcepts?,inSTRUCTUREANDJUSTIFICATIONINPRIVATELAW168(CharlesRickett&RossGranthameds.,2008).19RESTATEMENT(FIRST)OFRESTITUTION§1(1937).20FibrosaSpolkaAkcyjnav.FairbairnLawsonCombeBarbour,Ltd.,[1943]1A.C.32,46‐47(H.L.).SeealsoPETERBIRKS,UNJUSTENRICHMENT121‐25(2ded.2005).21Fibrosa,supranote20;LionelSmith,DisgorgementoftheProfitsofBreachofContract,24CAN.BUS.L.J.121,121(1994);22RESTATEMENT(THIRD)OFRESTITUTION§32(2011).

179

consideration”thatwouldentitleoneofthepartiestocancelthe

contract,orwhichwouldpreventtheenforcementofthecontract.23As

Holmesputit,somewhatdramatically,“Rescission,oravoidance

properlysocalled,annihilatesthecontract,andputsthepartiesinthe

samepositionasifthecontracthadneverexisted.”24

Inothercases,theparties’contractasawholemaynotbeentirely

extinguished,buttherelevantcontractobligation—theonepursuantto

whichthebenefitwasconferred—hasdisappeared.25Alternatively,the

parties’contractmayneverhaveincludedanobligationthatmandated

theconferralofthebenefitinthefirstplace.26Thenonexistenceofan

applicablecontractobligationmeansthattheexistenceofsuchan

obligationcannotbethereasonforrestitution.

Thereasonforrestitutioninthecontractualcontextcannot,therefore,

bethatacontractexiststhathasbeenbreached—becausetherelevant

contractobligationnolongerexistsatall.27Indeedtheabsenceofan

applicablecontractrightispreciselywhatallowsustodescribethe

defendant’sretentionofthebenefitashavingnojustbasis,andtherefore

23E.g.Restatement(Third)ofRestitution§§36,37(2011).24Ballouv.Billings,136Mass.307,309(1884)(Holmes,J.)(emphasisadded).SeealsoRichardW.Brooks&AlexanderStremitzer,RemediesOnandOffContract,120YALEL.J.690,692(2011);FRIED,supranote15,at26(thecontract“dropsout”).25Roxboroughv.RothmansofPallMallAustralia(2001)208C.L.R.516.SeealsoWaddams,supranote18,at170‐72(collectingstatementstotheeffectthattherelevantcontractobligationmustceasetooperateinorderforrestitutiontobeavailable).26Forexample,whereaninsurermistakenlymakesapayoutnotrequiredbytheinsurancecontract.NorwichFireInsurancev.WilliamPriceLtd.,[1934]A.C.455(P.C.).27PeterJaffeycontendsthatthe“failureofbasis”theory“seemstomeanthattherehasbeenadeparturefromthe[contractual]basisonwhichthepartiesagreedtoproceed”andso“itseemsevidentthatthisisinessenceacontractualbasisforaclaim.”DamagesandtheProtectionofContractualReliance,inCONTRACTDAMAGES158(DjakhongirSaidov&RalphCunningtoneds.,2008)(emphasisadded).However,a“failureofbasis”cannotbeequatedwithamerebreachofcontractora“departurefrom”acontractinthatsense.Rather,failureofbasisrequiresthecompleteabsenceofarelevantcontractualobligation.

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tograntrestitution.Restitutionisnot,therefore,anincidentofthe

contractright.28

FullerandPerduewereawareofthisstraightforwardexplanationfor

restitutionawardsinthecontextofcontractualbreach.However,for

themitwassimplyirrelevant.Theycontendedthatitis“quiteimmaterial

howthesuit…beclassified,whetherascontractualorquasi‐contractual

[i.e.,restitutionary],whetherasasuittoenforcethecontractorasasuit

baseduponarescissionofthecontract.”29ForFullerandPerdue,such

distinctions“relatetothesuperstructureofthelaw,nottothebasic

policies”underlyingit,withwhichtheyareconcerned.30Theyassume

thatthedoctrinalbasisforthecourtorderisanuninteresting

epiphenomenon,atleastascomparedtosomemorefundamentalpolicy

basis.

ButwecanrejectthatassumptionforthesamereasonthatFullerand

Perduerejectthe“superstructure”metaphorinarelatedcontext.They

opposeasimplisticeconomicapproachthatwouldseecontractlawasa

mereideologicalepiphenomenonsuperveningoneconomicforces.31

Theydosobecausetheyrecognizethatthelawitselfmayhave

independentnormativeforceandembodyreasonsthatarenotreducible

toeconomics.32WecanrejectFullerandPerdue’sequallysimplisticview

thatdoctrinaldistinctions—i.e.,legalreasoning—aboutcontract

remediesmustbeanepiphenomenonsuperveningonindependent

policyconsiderations.Perhapsthelawofcontracthasitsowndistinctset

28TheRESTATEMENT(THIRD)OFRESTITUTION§38(2011)alsorecognizesaso‐called“restitutionary”remedyformaterialbreachorrepudiation,whererecoveryiscappedbythecontractprice.Seealsoid.cmt.e,discussingBoomerv.Muir,24P.2d570(Cal.Ct.App.1933)andrelatedauthorities.Forthereasonsdiscussedinthetreatmentofreliancedamagesbelow,thisremedymustbeaformofexpectationdamages,reflectingtheperformanceinterest.(AsreflectedinthetitleofSection38,“Performance‐BasedDamages.”)29Fuller&Perdue,supranote12,at54,72.30Id.31Id.at63(rejectingtheideathat“thelaw(meresuperstructureandideology)reflectsinertlytheconditionsofeconomiclife”).32Id.

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ofreasonsthatisnotreducibletootherpolicyconcerns.Perhaps,asthe

internalapproachendeavorstoshow,itconstitutesanadequate

explanation.Wewillneverknowunlessweconsiderthedoctrinalor

legalreasonsontheirownterms.

6.2.2 Reliance

Attacksontheperformanceinteresthavetendedtofocuslesson

restitutionthanon“reliancedamages”:reimbursementforexpenditures

relatedtothecontractthathavebeenwasted.33

Oneresponsetotheproblemofreliancedamageswouldbetotake

StewartMacaulay’spointthattheyareonlyveryrarelyawarded,34

togetherwithHolmes’dictumthatitishardlyadvisabletoshapegeneral

theoryfromtheexception.35Butawardsknownas“reliancedamages”for

breachofcontract,whilerare,seemtobefirmlyestablished.Thisistrue

notonlyinthecommonlaw,butalsoinciviliansystems.36

Unlikerestitution,reliancedamagesareawardedinordertoremedya

breachofcontract—thatis,becauseofthecontinuingexistenceofa

contractrightthathasbeenbreached—andsotheycannotbeexplained

asembodyinganinterestthatisnoncontractual.Instead,thesolutionis

toseethatreliancedamagesaremerelyasubspeciesofexpectation

damages.37

Toseethis,noticethatthewayreliancedamagesforbreachof

contractareconventionallydescribedisfundamentallymisleading.The

33RESTATEMENT(SECOND)OFCONTRACTS§344cmt.a.Cf.FRIED,supranote15,at22‐23.34StewartR.Macaulay,TheRelianceInterestandtheWorldOutsidetheLawSchools’Doors,1991WIS.L.REV.247.35O.W.Holmes,ThePathoftheLaw,10HARV.L.REV.457,462(1897).36RESTATEMENT(SECOND)OFCONTRACTS§§344(b),349;AngliaTelevisionv.Reed,[1972]1Q.B.60;McRaev.CommonwealthDisposalsCommission(1951)84C.L.R.377;BürgerlichesGesetzbuch[BGB][CivilCode]Jan.2.,2002[Bundesgesetzblatt][BGBl]I42,§284;seeBASILS.MARKESINIS,HANNESUNBERATH&ANGUSJOHNSTON,THEGERMANLAWOFCONTRACT460‐64(2ded.2006).37PeterBensonalsosuggeststhissolution.TheExpectationandRelianceInterestsinContractTheory,inISSUESINLEGALSCHOLARSHIPn.62&accompanyingtext(J.Gordleyed.,2001).

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SecondRestatementisexemplary.Itdefinesreliancedamagesasthose

reflectingthepromisee’sinterest

inbeingreimbursedforlosscausedbyrelianceonthecontractbybeingputinasgoodapositionashewouldhavebeeninhadthecontractnotbeenmade.38

Thisdescriptionismisleadingintwoways.First,apromiseeisnever

“reimbursedforlosscausedbyrelianceon[a]contract.”Thattwoparties

havecontracted,andthepromiseehaswastedexpenditurethrough

reliance,initselfgivesrisetonoclaimforreliancedamages.Aclaim

arisesonlyoutofrelianceonacontractthathasbeenbreached,i.e.,not

performed.39Moreover,itisthenonperformancethatmustbethecause

ofthepromisee’sloss,nottherelianceitself.Therewillbenodamagesif

thepromisorcanshowthat,hadthecontractbeenperformed,the

promiseewouldhavesufferedanequalorgreaterloss.Thisissometimes

describedastherulethat“expectationlimitsreliance.”40Itisnot,in

contrast,opentothepromisortoescapedamagesbyshowingthat,had

thepromiseenotreliedonthecontract,shewouldhavesufferedanequal

orgreaterloss.Likewise,“proximatecause”orremotenessistiedtothe

promisor’snonperformance,nottothepromisee’sreliance:itmustbe

thatthepromisee’slosswasintheactualorreasonablecontemplationof

thepartiesaslikelytoresult“ifthecontractwasbroken.”41The

proximatecauseinquiryisnotjustwhetherthepromisee’slosswasin

theactualorreasonablecontemplationofthepartiesaslikelytoresult“if

thepromiseereliedonthecontract.”

38RESTATEMENT(SECOND)OFCONTRACTS§344(b).39See,e.g.,id.at§235(nonperformanceisbreach),§346(1)(damagesareavailabletoremedybreach).40RESTATEMENT(SECOND)OFCONTRACTS§349;L.Albert&Sonv.ArmstrongRubber,178F.2d182(2d.Cir.1949);BowlayLoggingv.DomtarLtd.,135D.L.R.(3d)179(B.C.C.A.1978);C.&P.Haulagev.Middleton,[1983]1W.L.R.1461,1467‐69(C.A.);OmakMaritimev.MamolaChallengerShipping,[2011]2All.E.R.(Comm.)155(Q.B.).SeealsoFuller&Perdue,supranote12,at79.41AngliaTelevision,supranote36,at64.

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Thus,theRestatementprovisionshouldrefer,nottothepromisee’s

interest“inbeingreimbursedforlosscausedbyrelianceonthecontract,”

buttothepromisee’sinterest“inbeingreimbursedforloss(foreseeably)

causedbybreachofthecontract.”Butofcourse,suchaprovisionwould

besuperfluous.Thatinterestisalreadyrepresentedbythestandard

“expectation”measureofdamages,includingconsequentialdamages,as

setoutinHadleyv.Baxendale.42Thus,theexpectationorperformance

interestalreadyencompassestheso‐called“relianceinterest”incontract

law.

Second,theRestatementprovisionisalsomisleadingbecauseitstates

thatthepromiseeiscompensated“bybeingputinthesamepositionas

hewouldhavebeeninhadthecontractnotbeenmade.”But,since

“expectationlimitsreliance,”theextentofthepromisee’srestorationis

boundedbythepositionhewouldhavebeeninhadthecontractbeen

madeandperformed.

Moreover,theleadingcasesofso‐calledreliancedamagesmakeclear

thattherelianceawarddoesnotaimtoplacethepromiseeinaposition

asifthecontracthadnotbeenmade,butratherinapositionasifthe

contracthadbeenmadeandperformed.InSecurityStove&

Manufacturingv.AmericanRailwayExpress,43thepromisorrailwayfailed

totransportthepromisee’smodelstovefromKansasCitytoAtlanticCity

intimeforanindustryconvention.Thepromisee’slostprofitswere

speculative—itwasnotplanningtosellthatparticularstove,butmerely

tointerestapotentialbuyerofthemodel.TheSupremeCourtofMissouri

heldthatthepromiseecouldrecoverreliancedamages,includingnot

onlypost‐contractexpensessuchasthecostsofitsemployees’travelto

AtlanticCity,butalsoaconferenceboothrentalfeethattheplaintiffhad

paidbeforeenteringthestovetransportationcontract.

42Restatement(Second)ofContracts§§344(a),347;Hadleyv.Baxendale,(1854)9Ex.341,156E.R.145.4351S.W.2d572(Mo.1932).

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InAngliaTelevisionv.Reed,44thepromiseeproductioncompany

contractedwithMr.Reedtoplaytheleadinafilmitwasmaking.But

Reedrenegedclosetothetimeforthescheduledproduction,andthe

producerscouldnotfindasubstitute.Itwasunclearhowsuccessfulthe

filmwouldhavebeen.Butitwasclearthatthecompany’sexpenditureon

theproduction,bothbeforeandafteritscontractwithReed,hadbeen

wasted.Thecompanyobtaineddamagesforallofit.

Ifthecourtsinthesecaseshadbeentryingtoplacethepromiseesin

thepositionstheywouldhavebeeninhadtherelevantcontractsnot

beenmade,therecouldbenojustificationforreimbursingpre‐contract

expenditure.45Instead,thecourtswouldhavehadtobasethedamages

awarduponanestimateofhowmuchprofitthepromiseeswouldhave

made,hadtheyrejectedthepromisors’offers,andcontractedwithother

parties,ornotcontractedatall.

Thedecisionstoreimbursepre‐contractexpenditureandignorethe

counterfactual“asifthecontracthadnotbeenmade”areutterly

mysterious—unlessthecourtsinthesecaseswereseekingtoputthe

promiseesinthepositionstheywouldhavebeeninhadtheircontracts

beenmadeandperformed.Butagain,ofcourse,thatistheapproachof

thestandardexpectationmeasure.Reliancedamagesmustbemerelya

formofexpectationdamages.

Itisunsurprising,therefore,thatso‐calledreliancedamageswere

awardedwellbeforethe“relianceinterest”wasinventedbyFullerand

Perdue.Courtsawarded“reliance”damagesbyapplyingordinary

expectationdamagesprinciples.46

Thewidespreadconfusionaboutreliancedamages,whichleadsthem

tobeseenassomethingdifferentfromexpectationdamages,arises

44Supranote36.45Benson,supranote37.46See,e.g.,SecurityStove,supranote43;McRaev.CommonwealthDisposals,supranote36,at413,citing,interalia,Pollockv.Mackenzie(1866)1Q.S.C.R.156.

185

becauseinreliancecasescourtsdonotfactorinthepromisee’sexpected

profitintothedamagescalculation.Butthisisnotbecausecourtstake

thatinformationtobeirrelevant.Onthecontrary,since“expectation

limitsreliance,”itisalwaysopentothepromisortoprovethatthe

promiseewouldhavemadealossonthecontracthaditbeenperformed.

Ifthepromisorcanmakethatshowing,onlynominaldamagesare

available.47Rather,courtsdonotfactorafigureforthepromisee’s

expectedprofitsimplybecausethatfigureisunavailable.Ahallmarkof

reliancecasessuchasSecurityStoveandAngliaTelevisionisthatthe

promisee’sprofitsarespeculative.48Intheabsenceofanabilityto

ascertainthepromisee’sprofits,thecourtsfocusonwhatis

ascertainable,thepromisee’swastedexpenditure.49Reliancedamages,

then,aremerelyonewayofgettingattheexpectationorperformance

interest,givenacertainproblemofproof.50

Thatleavestheperformanceinterestastheonlytruecontractual

interest.51Wereturntothesimpleviewofcontractasjusttherightto

performance.52

6.2.3 Underlyinginterests?

Thereisonefinalargumentagainsttheexclusivityoftherightto

performance.Ithasbeensuggestedthat,eventhoughtheperformanceor

47Seesupranote40.48SeealsoRESTATEMENT(SECOND)OFCONTRACTS§349cmt.a.49SeeAngliaTelevision,supranote36,at64(“thedefendanthavingmadehiscontractandbrokenit,itdoesnotlieinhismouthtosayheisnotliable,whenitwasbecauseofhisbreachthattheexpenditurehasbeenwasted”).50Somecommentatorshavecharacterizedthisapproachasapresumptionthatthepromiseewouldhaveatleastbrokenevenonthecontract.MichaelB.Kelly,ThePhantomRelianceInterestinContractDamages,1992WIS.L.REV.1755,1758.Thissolutionisunsatisfactory,astheexperienceofGermanlawshows,becauseitisatbestfictionalwhenappliedtocontractsfromwhichthepromiseeneverintendedtoprofit.SeeREINHARDZIMMERMAN,THENEWGERMANLAWOFOBLIGATIONS61‐62(2005).51Cf.Friedmann.supranote1,at628(“theonepurecontractualinterest”).52Nodiscussionofreliancedamagescanignoretheactionforpromissoryestoppel,whichiscloselyassociatedwiththerelianceinterestandmayberegardedascontractual.However,discussionofthatdoctrineshallbepostponeduntilChapterSeven.

186

expectationinterestisapparentlyprotectedbytherulesofcontractlaw,

thatdoesnotnecessarilytellsuswhatunderlyingrightorinterestthelaw

mightbetryingtoprotect.

Thereareanumberofvariationsonthisargument.Thefirstisthe

well‐knownclaimbyFullerandPerduethattheperformanceor

expectationinterestisaproxyfortherelianceinterest.53Fullerand

Perdueconcedethatthelawappearstoprotecttheexpectationinterest

whenitawardsexpectationdamages,butarguethatitisreallytryingto

protectreliance.Itisjustthat,duetoadministrativedifficulties,aimingat

expectationhappenstobethebestwaytohituponreliance.

Anothervariationisthe“pluralist”approach,reflectedforexamplein

theworkofStephenWaddams.Waddamscontendsthatacontractright

doesnotembodyanysingleinterest.54Evenifacontractentailsonlythe

righttoperformance,inenforcingperformance,thelawmayalsobe

concernedtopreventwastedrelianceorunjustenrichment—whichmay

alsoresultfromthefailuretoperform.

Athirdvariationisthemodern“dualist”approachtoprivatelaw

remedies.Dualistsclaim,inessence,thatthereisnodeterminate

connectionbetweenrightsandremedies.55Inawardingaremedy,they

claim,thecourtisnotnecessarilyrecognizingandenforcingarightthat

existedpreviously.Thecourtmaybeundertakingacreativeact:deciding

whatoughttobedonenow.Thus,therecognitionofagivenrightdoes

notestablishwhatremedyshouldbeawarded.Conversely,wecannot

ascertainthenatureofaright(or“interest”)merelybyexaminingthe

remedyawardeduponitsviolation.Soanawardofspecificperformance

orexpectationdamagesmightnotreflectthenatureofthecontractright

thatpartieshavepriortolitigation.

53Fuller&Perdue,supranote12.54E.g.,STEPHENWADDAMS,DIMENSIONSOFPRIVATELAWchs.4,6,8(2003).55SeeErnestJ.Weinrib,TwoConceptionsofRemedies,inJUSTIFYINGPRIVATELAWREMEDIES23(CharlesE.F.Ricketted.,2008).

187

Noneofthosepossibilitiescanberuledout.Itcouldbethattheright

toperformanceisacovertproxyforsomeotherinterest,thatitis

motivatedbymanyoverlappinginterests,orindeedthattheawardofa

performance‐orientedremedydoesnotimplyarighttoperformanceat

all.Butthosepossibilitiesareruledoutbytheinternalapproachto

contractlaw,whichtakestheconceptsthatlawyersinvoketobe

adequateexplanationsfortheiractions.

Wearethusleftwithasingleanswertothequestionoftheobjectofa

contractright:thepromisedperformance.

6.3 Disgorgement,Acts,andThings

Wecannowturntothesecondchallengetothesimplepictureofa

contractrightasarighttoperformance.Thischallengearisesfroman

arcaneintramuraldisputeaboutthenatureoftheobjectofacontract

right.Thedisputeisconnectedtotheissueofhowtounderstand

disgorgementdamagesforbreachofcontract:damagesmeasuredbythe

promisor’sprofitfrombreach.Todayitisclearthatcommonlawcourts

willsometimesawarddisgorgementinthecontextofabreachof

contract.However,preciselywhenthisisappropriate,andwhy,remain

controversial.

ThechallengeinitiallyaroseinanarticleofErnestWeinrib’s.Drawing

uponKant,Weinribarguedthatacontractrightmustbearighttoanact

ofperformance,neverarighttoathingpromised.56Eveninacontractfor

thetransferofaphysicalarticle,thecontractualrighttoperformance

mustbeconceivedasarighttothepromisor’sactofdeliveryofthe

article,andnotasaright(againstthepromisor)tothearticleitself.

Weinribalsocontendedthat,oncethenatureofcontractualperformance

56ErnestJ.Weinrib,PunishmentandDisgorgementasContractRemedies,78Chi.‐KentL.Rev.55(2003),appearingwithslightrevisionsinERNESTJ.WEINRIB,CORRECTIVEJUSTICEch.5(2012).

188

isproperlyunderstoodinthisway,itbecomesapparentthat

disgorgementdamagescannotbeavailableforbreachofcontract.

Inresponse,PeterBensonhasarguedthattheavailabilityof

disgorgementisunaffectedbywhetheronecharacterizesthecontract

rightasarighttoanactortoathing.57Bensonalsosuggests,drawing

uponHegel,thatthereareotherreasonstoconceiveofthecontractright

asarighttoathing—eveninacontractforservices.Inacontractforan

operasinger’srecital,forexample,thepromiseeshouldberegardedas

acquiring,notarighttocertainactsorchoicesbythesinger,butaright

toarecitalhavingcertaincharacteristics,conceivedasakindofthing.

Hereitwillbesuggestedthatthecharacterizationofthecontractual

performanceasanactorasathingmakesnodifferencetothe

disgorgementanalysis.InthisrespecttheworkconcurswithBenson,

albeitondifferentgrounds.58Inasubsequentsection(6.4),itwillbe

furthersuggestedthattherearenoothergroundsforregardingthe

contractualperformanceaseitheranactorathing.Theperformanceis

justwhateverthepartieschoose.

Thepresentsectionsetsoutananalysisofdisgorgementdamagesthat

doesnotturnuponhowoneconceivesofthenatureoftheobjectofa

contractright—uponwhetheritisa“thing”oran“act”(or,forthat

matter,whethertherightisproprietaryor“quasi‐proprietary”in

character,etc.).59Rather,itisarguedhere,theproblemofcontractual

disgorgementisonlyalogicalproblem.Andalthoughithasnotyetbeen

fullyapprehended,theresolutionofthislogicalproblemisalready

evidentinthecaselaw.

57PeterBenson,DisgorgementforBreachofContractandCorrectiveJustice,inUNDERSTANDINGUNJUSTENRICHMENT(JasonW.Neyers,MitchellMcInnes&StephenG.A.Piteleds.,2004).58SeeWeinrib’sresponsetoBenson’sobjections,CORRECTIVEJUSTICE,supranote56,at164‐65,andthepointsmadeinfraatnotes85,96,106.59E.g.DanielFriedmann,RestitutionofBenefitsObtainedThroughtheAppropriationofPropertyortheCommissionofaWrong,80COLUML.REV.504(1980).

189

Theavailabilityofdisgorgementdependsuponwhatisherecalledthe

“logicalscope”ofacontractright.Thelogicalscopeofacontractright

variesindependentlyofwhethertherightistoanactortoathing.The

logicalscopeoftherightdeterminestheavailabilityofdisgorgement

becauseitaffectswhetheritispossibletosaythatthepromisee’sright

andthepromisor’srelevantprofit‐making“coincide,”suchthatthe

promisor’sprofit‐makingisitselfabreachofthepromisee’srights,and

thereforeitselfwrongful.Onlyifthepromisor’sprofit‐makingisitself

wrongfulcanthepromiseeobtaindisgorgementoftheprofitsproduced

thereby.

6.3.1 Thestructureofthedisgorgementanalysis: therequirementof“coincidence”

Ithelpstobeginfromapointthatisfairlysettledbeforeturningtothe

puzzleofcontractualdisgorgementitself.Onestartingpointistheaward

ofdisgorgementinpropertyortortlaw.Consideratrespassor

conversionwithrespecttoaparticularcorporealthing,suchasagoodor

land.Ifadefendantwrongfullydealswithaparticularcorporealthing

belongingtotheplaintiff,theplaintiffmayobtaindisgorgementofprofits

producedbythedefendant’swrongfuldealing.Thereasoninginthistype

ofcaseyieldsaframeworkfortheanalysisofdisgorgementgenerally.

Takethe“KentuckyCaves”case.60Therethedefendantprofitedby

showingtouriststhroughacave.Thecave’sentranceandalargepartof

itsinteriorwasownedbythedefendant,butotherpartsoftheinterior

wereownedbytheplaintiff.TheKentuckyCourtofAppealsorderedthe

defendanttodisgorge“theprofitswhichmightfairlybesaidtoarise

directlyfromtheuseof[theplaintiff’s]segmentofthecave.”61Bythe

sametoken,totheextentthedefendant’sprofitswereattributableto

60Edwardsv.Lee’sAdmin.,96S.W.2d1028(Ky.1936). 61Id.at1033.

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toursofcave“scenesorobjects”thatwerenotwithintheplaintiff’scave

segment,theplaintiffhadnoclaimtothoseprofits.62

Thissuggestsageneralstructurefortheanalysisofdisgorgement.The

analysisrequirestwodescriptions.First,adescriptionoftheplaintiff’s

relevantrightsagainstthedefendant.Second,adescriptionofthe

defendant’sallegedlywrongfulprofit‐making.Fordisgorgementtobe

appropriate,thetwodescriptionsmustcoincide:onlytotheextentthat

thedefendant’sprofit‐makingisitselfcontrarytotheplaintiff’srightscan

theplaintiffhaveanyclaimtotheprofitsproducedthereby.63Tothe

extentthedefendant’sprofit‐makingisnotitselfcontrarytothe

plaintiff’srights,theplaintiffhasnoclaimtotheprofits.Becauseinthat

situation,thedefendant’sprofit‐makingisjustherownindependent

choiceoraction,astowhichtheplaintiffhasnoentitlement.

Notethatthisrequirementof“coincidence”demandsnotjustthatthe

defendant’sprofit‐makingisabut‐forcauseofabreachoftheplaintiff’s

rights,butthatthedefendant’sprofit‐makingisitselfcontrarytothe

plaintiff’srights.IntheKentuckyCavescase,thedefendant’sprofitable

useofitsownsegmentofthecavemusthavebeenabut‐forcauseofits

profitingfromtheuseoftheplaintiff’ssegmentofthecave—giventhat

theentrancetothecavewasonthedefendant’sland.Nevertheless,tothe

62Id.63ContrastWeinrib’saccount.Heisconcernedtoestablishan“identity”between(1)theplaintiff’srights,and(2)whatthedefendantwrongfully“alienates”tosomethirdparty.CORRECTIVEJUSTICE,supranote56.Whereasouranalysisconcernsthecoincidenceofthe(1)plaintiff’srights,and(2)thedefendant’sprofit‐making.Whatathirdpartymaydoorhaveis,initself,ofnomoment.Relatedly,here“coincidence”ispreferredto“identity”because,incontrasttoWeinrib,whoseekstoaligntwopositivedescriptions,weseektoalignapositiveandanegativedescription((1)arightand(2)awrong,i.e.,thenegationofaright).Itwouldbeawkwardtosaythatthereisan“identity”betweenthepositiveandanegativeelementshere.)

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extentthatanyprofitsarosefromthedefendant’suseofitsowncave,the

plaintiffhadnoclaimtothem.64

Thismakessense.Evenifitisabut‐forcauseofabreachofthe

plaintiff’srights,theKentuckydefendant’sprofitingfromtheuseofits

owncaveis,initself,justthedefendant’sownindependentchoiceor

action,overwhichtheplaintiffhasnoentitlement.

Ofcourse,inthissituationtheplaintiffcanlegitimatelycomplainthat

theprofit‐makingactionproducedaninterferencewiththeplaintiff’s

ownentitlements.However,theappropriateremedyforthatinterference

isfortheplaintifftobeplacedinthesamepositionasiftheinterference

hadneverhappened.By,forexample,anawardofloss‐baseddamages

(includingdamagesforconsequentialloss).

Incontrast,inordertoreceivethedefendant’sprofitsasaremedy,the

plaintiffmustbeabletosaythatthedefendant’sprofit‐makingnotonly

causedawrongfulinterferencewiththeplaintiff’sentitlements,butwas

itselfwrongful.Then,anappropriateremedyistoallowtheplaintiffto

“ratify”theprofit‐makingactionasifitwereherown.Insteadofbeing

placedinthesamepositionasifthewrongfulactionneverhappened,the

plaintiffisplacedinthepositionasiftheactionhappenedbutwerenot

wrongful,becauseitistreatedastheplaintiff’sownaction.Incontrast,if

theplaintiffpurportedtoratifyanactionofthedefendant’sthatwasnot

itselfwrongful,theplaintiffwouldbeusurpingthedefendant’s

independentactionsorchoices—therebyviolatingthefundamental

normativeprinciplethatnopersonmayusurpanother’schoice.Thisis

whydisgorgementrequires“coincidence.”

Thecoincidencerequirementalsoexplainsdisgorgementforbreachof

contract.Inacontractualdisgorgementcase,twodescriptionsare

64Inthisrespectnotethecourt’sinsistencethat,tobesubjecttodisgorgement,thedefendant’sprofitmustarise“directly”fromabreachoftheplaintiff’srights.Supranote60,at1033.

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required:oftheplaintiff’srelevantcontractrights,ontheonehand,and

ofthedefendant’sprofit‐makingdealingsontheother.Onlytotheextent

thatthetwodescriptionscoincide,suchthatthedefendant’sprofit‐

makingdealingisitselfcontrarytotheplaintiff’srights,isdisgorgement

available.

Thereisacatch.Sinceaplaintiff’scontractrightsdependonthe

contractingparties’agreement,therightswillvaryinallsortsofrespects

fromcasetocase,requiringdifferentdescriptionsofwhatbelongstothe

plaintiffunderthecontract.Thisaffectstheavailabilityofdisgorgement,

becauseitaffectswhetheritispossibletosaythatthedefendant’sprofit‐

makingdealingandtheplaintiff’srightscoincide.

6.3.2 Differentkindsofcontractrights

Inordertoseethis,letusfirstconsidersomeintuitivewaysof

describingdifferentsortscontractrights.Herewetakenoaprioristance

onwhetherthesedescriptionsarelegitimate.Theirlegitimacywill

subsequentlybeconfirmedbytheirroleinafullaccountofthecaselaw

oncontractualdisgorgement.

First,acontractrightmaybearighttoathing(ormultiplethings).

The“thing”heremaybeeithercorporealorincorporeal.Anditmaybe

eitheraparticularthing,oratypeofthing.Second,whatapromisee

acquiresbyacontractmaybearight,nottoathing,buttoanact.

Anexampleofacontractforaparticularcorporealthingisthetransfer

ofaspecifiedgood.Ifapersonagreestotransferaparticularguitar—that

onesittinginthecorneroftheroomoverthere—wemightthinkofthe

contractrighttherebycreatedasarighttothatparticularguitar.This

mayalsobethecaseinacontractthatconcerns,forexample,aparticular

plotofland,oraparticularsegmentofacave.Hereaparticularcorporeal

entityisuniquelydesignatedastheobjectofthecontractright.

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Anothersortofcontractrightisarighttoaparticularincorporeal

thing.Forexample,inacontractforthetransferofspecificsharesina

corporation,wemightcharacterizethecontractualsubject‐matterinthis

way.(Particularsharesmaybedesignatedby,forexample,referenceto

certificatesthatevidencethem.)65

Atthispointitisworthmentioninganimportantqualificationabout

rightstothings.Arighttoathingmayormaynotholdtoutcourt:the

plaintiffright‐holdermayhaverightsagainstthedefendantwithrespect

tosomesortsofdealingswiththething,butnotothers.Contracting

partiescanofcourseagreethatanydealingwhatsoeverwithacertain

thingis,asbetweentheparties,theexclusiverightofoneofthem.More

often,however,theydonot.Forexample,followingentryintoacontract

forthetransferofathing,thetransferorusuallyremainsentitledto

performcertaindealingswithrespecttothething(forexample,to

maintainit,ormoveitaboutpendingdelivery),andthetransferee

remainsprohibitedfromcertaindealings(suchasstealingoffwiththe

thingbeforetheappointedtimefordelivery).

Notethatthisqualificationalsoappearsoutsideofthecontractual

context.Imagine,forexample,thattheKentuckyCavesplaintiff’srights

overitssegmentofthecavewerequalifiedbycertaineasementsinfavor

ofthedefendant.Thenthedefendantwouldbefreetoconductcertain

dealingswiththeplaintiff’ssegment(say,passingthroughittoaccessa

watersupply),butnotothers(suchassnappingofftheplaintiff’s

stalactites).

Theupshotisthatalthoughaplaintiff’sright“toathing”inprivatelaw

isoftenthoughtofasarighttobarthedefendantfromanydealingswith

thethinginquestion,thescopeofthedealingsthattheplaintiffistruly

65Seefurthernote77,infra.

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entitledtopreventmaybemorelimited.66Withthatqualificationin

mind,letusreturntothedescriptionsofdifferentsortsofcontractrights.

Acontractmayalternativelyconcernnotanyparticularthing

(corporealorincorporeal),butratheratypeofthing.Takethepurchase

ofaguitar(thetypeofinstrument)meetingcertainspecifications(such

ashavingabluebodyandmetalstrings).Orconsiderthepurchaseofa

quantityofsharesmeetingcertainspecifications.(Inacorporationthat

makesguitars,withacertainmarketcapitalization,etc.)Inthesecases,

therearepotentiallymanyinstancesofthingsthatcouldmeetthe

relevantspecifications,andsofulfillthecontractualobligation.The

promisee’srightisthereforebestdescribedasarighttoaninstance—or

multipleinstances,orallinstances—ofatypeofthing.

Thenagain,sometimesthenotionofathing—whetheraparticular

thing,oratypeofthing—doesnotseemappropriateatall.Forexample,

whensomeoneagreestoperformaservice,wetendtothinkoftheobject

ofthecontractasanactmeetingcertainspecifications.Thus,ina

contractforanoperarecital,wemightsaythatthepromiseehasaright

tothepromisor’sactofsingingtunesinacertainmanner.Usually,there

willbemanypotentialinstancesofactsthatcouldfulfillthecontractual

specifications,andsothepromisee’scontractrightwillbetoaninstance

ofatypeofact.

66Partlyforthisreason,itisregularlyobjectedthatthereisnoright“toathing”assuch—anyso‐calledright“toathing”isreallyarightthatpersonsrefrainfromdealingswiththething.See,e.g.,WesleyNewcombHohfeld,FundamentalLegalConceptionsasAppliedinJudicialReasoning,26YALEL.J.710(1917);HansKelsen,ThePureTheoryofLaw50L.Q.REV.474,494(1934);RESTATEMENTOFPROPERTY,IntroductoryNote(1950).Nostandneedbetakenonthisissuehere.Asweshallsee,itdoesnotultimatelymatterwhetheragivenrightischaracterizedasaright“toathing,”orasarightovercertain“dealingswithrespecttothething.”

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6.3.3 Contractualdisgorgement:things

Nowthatwehaveintroducedthesedifferentdescriptionsofpossible

contractrights,letusseehowthedisgorgementanalysisplaysoutfor

eachofthem.

Theaimoftheanalysisistoexplaincaseswhereadisgorgement

remedy—thestrippingofthedefendant’sprofits—isawardedfora

breachofcertainrightsoftheplaintiff’sthatexistbecauseofa

contractualagreement.Insuchcases,thecauseofactioninvokedorthe

remedyawardedmaybearavarietyofdifferentlabels—itmaybecalled

equitableratherthanlegal,itmaybetermedproprietary,tortious,

restitutionary,orsomecombinationthereof,oritmaybesaidtoinvolve

aconstructivetrust,oranagencyrelationship,andsoon.Theanalysis

hererangesfreelyacrossallofthosevariouslabels,becausesodoesthe

logicofthedisgorgementremedyforbreachofcontractualrights.

6.3.3.1 Particularthings

Acontractmayprovidethat,asbetweentheparties,aparticularthing

iswithintheexclusiverighttheplaintiff—suchthattheplaintiffhasa

rightthatthedefendantnotdealwiththatparticularthingintheway

thatthedefendantdoes.67Wherethatisthecase,profitmaterializing

fromthedefendant’sdealingwiththethingissubjecttodisgorgement.In

otherwords,withrespecttodisgorgement,acontractrighttoa

particularthingisjustliketherighttoaparticularthinginatrespass

casesuchasKentuckyCaves.

Thisisapparent,firstofall,inthemainbranchesofthelawthat

concerncontractsforcorporealthings:thelawofrealestateconveyance

andthesaleofgoods.Vendorsandpurchasersofrealestatetypically

agreeonthesaleandpurchaseofaparticularplotofland.(Notjust

67Thelatterqualificationisimportantbecausearighttoathingmayormaynothold“toutcourt,”asdiscussedin6.3.2.

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“someland”meetingcertainspecifications.)Whentheydo,aconstructive

trustarisesoverthatlandinfavorofthepurchaser.Andthatmeansthat

if,forexample,thevendorgazumpsthepurchaser—sellsthelandtoa

thirdpartyforahigherprice—thepurchasercanobtaindisgorgementof

theprofitsfromthatsale.

Thus,inTimkov.UsefulHomes,apurchaserofaplotoflandinNew

Jerseyrecoveredthevendor’sprofitsfromgazumping—eventhoughthe

vendorhadsubsequentlyreacquiredtherelevantplotofland,and

offeredtoconveyittothepurchaser.68Thepurchaserwasentitledto

claimtheprofits,ratherthanaccepttheconveyance.Thevendor’sprofits

arosethroughadealingwithaparticularthing—sellingtheplotofland—

thatwasthepurchaser’sexclusiveright,andsoanyprofitsobtained

therebyweresubjecttodisgorgement.

Asaleofgoodsisoftenmorecomplex,becausewhileacontractfor

goodsmayrelatetoaparticulargood(ormultiplesuchgoods),itwill

ofteninsteadcallforaninstance(orinstances)ofatypeofgood

describedbyspecification.Thelawofsalehasdevelopedsophisticated

rulestoestablishwhethertheparties’contractissufficientlydetermined

towardsaparticulargoodsuchthatthatcorporealthingcanbesaidto

belongtothebuyer.Thelodestoneoftheinquiryistheintentionofthe

parties:whethertheyhavedecided—eitherthroughtheoriginal

agreementorsubsequentconductevincingtheirmutualintention—that

thecontractrightisdeterminedtowardssomeparticularcorporeal

68Timkov.UsefulHomes,168A.824(N.J.Ch.1933).SeealsoLakev.Bayliss,[1974]1W.L.R.1073(Ch.);BunnyIndus.Ltd.v.FSW.Enters.Pty.Ltd.,[1982]Qd.R.712(QSC).SeealsoWebbv.Dipenta,[1925]S.C.R.565(theoryofcy‐prèsspecificperformance),discussedinfranote86andaccompanyingtext.Thisresultalsoobtainsincertainagencycontracts:whereapromisorcontractstoacquireaspecificplotoflandforthepromisee,butinsteadpurportstoacquireitforhimselfanddealwithitasifitwerehisown,hewillbeheldliableasconstructivetrustee.See,e.g.,Krzyskov.Gaudynski,242N.W.186(Wis.1932);cf.infranote87.

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thing.69Thebuyer’scontractrightmaythenbedescribedasaright,as

betweentheparties,tothatparticularthing.

Oncethecontractforthesaleofgoodsissufficientlydetermined

towardsaparticularcorporealthing,thebuyercansuetheseller,inthe

proprietarytorts,ifthesellerfailstodeliverthatthingorpurportstosell

ittoathirdparty.70Anditseemsthatinsuchanactionthesellerwillbe

entitledtoadisgorgementremedy.71

Furthermore,inthissituationdisgorgementonthebasisofunjust

enrichmenthasbeenawardedinthemuch‐discussedAdrasBuilding

Materialv.HarlowandJones.72Adras,anIsraelicompany,boughtseveral

thousandtonsofsteelfromtheGermansupplierHarlow.Harlow

suppliedmostoftheorder,butdefaultedonjustunder2,000tons.Since

themarketpriceforsteelhadspikedwiththeYomKippurWar,Harlow

soldinsteadtoathirdparty.73Notably,thesteelthatwouldcomplete

Adras’sorderhadarrivedfromPolandatHarlow’spremisesinHamburg.

HarlowhadintendedforthatsteeltofulfillAdras’sorder,andhadeven

suggestedtoAdrasthatthepartiestreatthatsteelasalreadydeliveredto

69SeeSaleofGoodsAct§§16‐18(1893)(1979)(U.K.),andequivalentprovisionsadoptedthroughoutCanadaandAustralia,andinNewZealand;U.C.C.§2‐401.Recentamendmentsrecognizeanintermediatecategorybetweenparticulargoodsandinstancesofatypeofgood:goods“ex‐bulk,”i.e.,therighttosomeproportionofaspecifiedlarger“bulk”ofgoods.See,e.g.,SaleofGoodsAct§§20A,20B(1979)(asamended1995).Whilenotaddressedhere,itseemsthatthedisgorgementanalysisinsuchacaseshoulddependonwhetheronecanestablishacoincidencebetweenthedefendant’sdealingandtheproportionofthebulkbelongingtotheplaintiff.70See,e.g.,Chineryv.Viall,(1860)5H.&N.288,57E.R.1192(conversion);U.C.C.§2‐716(rightofreplevin).71UndertheruleinLaminev.Dorrell,(1705)2Ld.Ray1216.SeethedictainBiggerstaffv.Rowatt'sWharfLtd.,[1896]2Ch93,103;PeterWatts,RemediesforBreachofContract:SpecificPerformanceandRestitution—aComment,inFAILUREOFCONTRACTS(FrancisD.Roseed.,1997).Notethattoawarddisgorgementinsalescasescourtsmayhavetonavigatethesemi‐codifiedremedialschemesofapplicablelegislation.SeeSaleofGoodsAct(U.K.)§§51‐54,61(2);U.C.C.§§1‐103,2‐711‐16.72[1988]IsrSC42(1)221,translatedin3RESTITUTIONL.REV.235(1995).73ItisunclearwhetherHarlowsoldtothethirdpartythefullremainderoftheAdrassteel,orratherasignificantportionofit.Compareid.at239(SLevin,J.,notingsaleof1,762tons)withid.at249(BenPorath,V.‐P.,1,975tons).

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AdrasinHamburg,ratherthanawaitingitsarrivalinIsrael.74Thiscould

arguablybetakentoshowthatthepartieshadearmarkedthatparticular

steelasduetoAdrasunderthecontract.75AmajorityoftheIsraeli

SupremeCourtheldthatHarlowshoulddisgorgetheprofititmadeby

sellingthesteeltothethirdparty.Theminoritydissentedbecause,inter

alia,itthoughtthatthepartieshadnotirrevocablyappropriatedany

particularsteeltothecontract.76Thus,thecontroversyoverthe

availabilityofdisgorgementinthiscasecanbeunderstoodasturningon

whethertheplaintiff’scontractrightwassufficientlydetermined

towardsaparticularthing:thesteelHarlowsoldtothethirdparty.

Whataboutacontractforaparticularthingthatisincorporeal?Here

disgorgementmayalsobeavailable.Forexample,uponacontractforthe

transferofparticularsharesinacorporation,thepromisormaybesaid

toholdthoseparticularshares“onconstructivetrust”forthepromisee.

TheHouseofLordsfoundaconstructivetrustinthissituationinChinnv.

Collins,rejectingthedefendant’scontentionthatthecontractrelated

“merelytothepurchaseofthespecifiednumberofsharesandnottoany

particularshares,”andfindingthatthereshouldbeatrustoverthe

particularsharesagreedupon.77Oncethesharesareheldonconstructive

trust,theniftheconstructivetrusteeprofitsbydealingwiththose

particularsharesinawaythatheisnotentitledtodo,thepromiseewill

beabletoobtaindisgorgementoftheprofitsproducedbythatdealing.78

Withrespecttodisgorgement,then,acontractforaparticular

incorporealthingisjustlikeacontractforaparticularcorporealthing,

74Id.at253‐54(BenPorath,V.‐P.).75Seeid.at276‐77(Bach,J.).JusticeBaraksuggeststhatdisgorgementisavailableevenwherethecontractisnotparticularized.Seeid.at267.76SeethejudgmentsofBenPorathV.‐P.andDLevin,J.(ThesejudgesalsothoughtthatAdrashadterminatedthecontract,precludingdisgorgement.)77[1981]A.C.533,548(H.L.)(emphasisadded).ThecomplexitiesofthisareaoflawarediscussedinWATERS’LAWOFTRUSTSINCANADA527‐28(DonovanW.M.Waters,MarkR.Gillen,&LionelD.Smitheds.,3ded.2005). 78See,e.g.,RESTATEMENT(THIRD)OFRESTITUTION§55(2011)(constructivetrusteeentitledtotrustee’sprofitsfrommisuseoftrustsubject‐matter).

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andbotharejustliketherighttoaparticularcorporealthingrecognized

intrespass—asintheKentuckyCavescase.Thereisontheonehanda

descriptionoftheplaintiffs’relevantrights:arighttoexcludethe

defendantfrom(certaindealingswith)aparticularthing.Ontheother

hand,thereisadescriptionofthedefendant’sprofit‐makingdealing.If

thedefendanthasobtainedaprofitbywrongfullydealingwiththe

particularthinginquestion,thedefendant’sprofit‐makingdealingand

theplaintiff’srightscoincide:theprofit‐makingdealingisitselfcontrary

totheplaintiff’srights.Thus,thedefendant’sprofitsaresubjectto

disgorgement.

6.3.3.2 TypeofThing

Where,however,acontractconcernsnotaparticularthing,butrather

anunspecifiedinstanceormultiplesuchinstancesofatypeofthing

(corporealorincorporeal),thedisgorgementanalysisisdifferent.

AcmeMillsv.Johnsonillustratestheissuehere.InApril1909,Johnson

contractedtosellAcme“2,000bushelsNo.2[grade]merchantable

wheat”for$1.03perbushel.79InmidJuly,however,Johnsonagreedto

sellhiswheattoathirdparty,LibertyMills,at$1.16perbushel;andso

uponharvestinghiswheatattheendofJuly,Johnsonfailedtodeliverany

toAcme.ThecourtheldthatAcmecouldnotobtaindisgorgementofthe

13‐centperbushelprofitthatJohnsonmadefromhissaletoLiberty.

Whyshouldthatbethecase?Notably,thecourtpointedoutthat

Johnson“wasnotrequiredbyhiscontracttodeliverto[theplaintiff]any

particularwheat.Hadhedelivered[any]wheatoflikequantityand

quality,hewouldhavecompliedwiththecontract.”80Acme’sright

concernedonlysomeinstancesofatypeofthing,bushelsofNo.2grade

wheat,andnotanyoftheparticularwheatbushelsJohnsonsoldtothe

thirdparty,LibertyMills.ThereforeJohnson’ssaletoLibertywasnota79AcmeMills&ElevatorCo.v.Johnson,133S.W.784(Ky.1911). 80Id.at785‐86.

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dealingthatwasitselfcontrarytoanyrightsofAcme’s.AndsinceAcme

hadnorightoverJohnson’sdealingwithLiberty,itcouldhavenoclaim

totheprofitproducedthereby.81Inotherwords,disgorgementwas

unavailablebecausetherewasnocoincidencebetweentheplaintiff’s

rightsandthedefendant’sprofit‐makingdealing.

AsameraOilv.SeaOilandGeneralmakesthesamepointwithrespect

toinstancesofatypeofincorporealthing.Thereitwasclaimedthatthe

promisorhadbreachedhiscontractualobligationtoreturn125,000

sharesinAsamera,whichhehadinsteaddisposedtootherpersons.82

TheSupremeCourtofCanadaassumedthatdisgorgementwasnot

available.83Notably,thecourthadconsideredatlengthwhetherthe

promisorwasobligedtoreturnanyparticular125,000shares“inspecie,”

andhadconcludedthattherewasnosuchobligation:thereturnofany

Asamerashareswoulddo,solongastheywere125,000innumber.84

Giventhatunderstandingofthecontract,itcouldnotbeestablishedthat

profitrealizedbythepromisorondealingswithsomeAsamerashares

resultedfromdealingswithsomething(orsetofthings)withinthe

rightsofthepromisee.

Thiscontrastbetweenarighttoaparticularthing,where

disgorgementisoftenavailable,andarightmerelytoaninstanceofa

typeofthing,whereitisnot,hasledsomescholarssuchasPeterBenson

tosuggestthatsomethingaboutthe“particularity”or“uniqueness”or

81Indeed,thisisthejustthereasoningoftheAdrasdissent,whichthoughtthatdisgorgementwasunavailablesinceAdrashadarightmerelytosomesteel,nottothesteelHarlowsold.82AsameraOilCorp.v.SeaOil&Gen.Corp,[1979]1S.C.R.633,642.83Id.at672‐73.84Id.at642‐44.Thecourtquestionedwhetheritispossibletoisolateaparticularshareofacorporation,asdistinctfromalltheothersharesofthesameclass.Id.at643.Butseesupranote77.

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“specificity”or“fine‐grained”‐nessofacontractrightmakes

disgorgementpossible.85

However,whataboutacontract,notjustforoneorsomeinstancesof

atypeofthing,butforallinstancesofit?Herewhatthepromisee

acquiresisnoteasilyconceivedasparticular,specific,orunique.Yet

breachofsuchacontractshouldlogicallygiverisetodisgorgement

damages:ifthepromisordealswithoneinstanceofatypeofthing,when

everyinstanceofthattypebelongstothepromisee,thenthepromisor

necessarilyprofitsthroughadealingthatiswithintheexclusiverightof

thepromisee.

Andindeedthisisthelaw.InWebbv.Dipenta,acontractgavethe

promiseetherightsto“whateverinterest[thepromisor]mayhavein”an

estateinNovaScotia,theMonasteryofPetitClairveaux.Butinsteadof

conveyinghispart‐interestintheestatetothepromisee,thepromisor

soldittoabonafidethirdparty.TheSupremeCourtofCanadaawarded

disgorgementofthepromisor’sprofits.86Thisresultisexplicableonthe

basisthat,sincethepromiseehadarighttotheentiretyofwhatever

interestthepromisorheldinthemonastery,anydealingbythe

defendantwithanyinterestinthemonasterywasnecessarilycontraryto

thepromisee’srights.Theprofitsfromthatdealingweretherefore

subjecttodisgorgement.

Thesameanalysisappliesincertainagencycontracts.Wheretwo

partiesagreethatthepromisoragentwillobtainanyorallinstancesofa

typeofthingforthepromiseeprincipal,andtheagentpurportsto

acquireaninstanceforhimself,anyprofitsobtainedtherebywillbeheld

onconstructivetrustfortheprincipal.Forexample,theRestatementof

85SeeespeciallyBenson,Disgorgement,supranote57,at326‐30(JasonW.Neyers,MitchellMcInnes&StephenG.A.Piteleds.,2004);AndrewBotterell,ContractualPerformance,CorrectiveJustice,andDisgorgementforBreachofContract,16LEGALTHEORY135,149‐54(2010).86[1925]S.C.R.565.

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AgencyfurnishesBerensonv.Nirenstein:whereapromisoragreedto

acquireallofthesharesinacompanyforthepromisee,butinstead

purportedtoacquiresomesharesforhimself,heheldthosesharesand

theirproceedsontrustforthepromisee.87

Infact,acontracttoacquireallthingsofagiventypeisconceptually

equivalenttoacertainkindofexpressdisgorgementclause,inwhichthe

promisoragreestoacquireallinstancesofacertaintypeofthingor

opportunityonly“fortheaccountof”thepromisee.Forexample,inReid‐

Newfoundlandv.Anglo‐AmericanTelegraphthepromisor,whohadaccess

toatransatlantictelegraphwire,agreed“nottopassortransmitany

commercialmessagesoverthesaidspecialwireexceptforthebenefit

andaccountof”thepromisee.88Thepromisorwasheldliableasatrustee

tothepromisorfortheprofitsitmadebywiringcommercialmessages.

Accordingly,particularityisnotnecessaryfordisgorgement.

Disgorgementmayalternativelybeavailablewherethesubject‐matterof

theplaintiff’srightisdescribedbyreferencetoatypeofthing,but

extendsoverallinstancesofthattype.Callthiskindofrightexhaustive.

6.3.4 Coincidenceandthe“logicalscope”ofthecontract right

Disgorgementmaythereforebeavailablewhereacontractrightis

eitherparticularorexhaustive.Thisisbecauseinsuchcasesitispossible

toestablishthatthetwocrucialelementsofthedisgorgementinquiry—

theplaintiff’sright,ontheonehand,andthedefendant’sprofit‐making,

ontheother—coincide.Incontrast,wheretheplaintiff’srightisneither

particularnorexhaustive—suchaswheretheplaintiff’srightconcerns

87RESTATEMENT(THIRD)OFAGENCY§3.08;Berensonv.Nirenstein,93N.E.2d610(Mass.1950).SeealsoWarmanInt’lv.Dwyer(1995)182C.L.R.544(defendantliabletoaccountforprofitmadethroughacquiringbusinessforhimselfinviolationofobligationtodosoforemployer).88[1912]A.C.555(P.C.)(appealtakenfromCanada).Ofcourse,thiscontractcouldbecharacterizedasarighttoanact,ratherthanathing.Itdoesnotultimatelymatter,asdiscussedbelow.

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onlyoneorsomeinstancesofatypeofthing—itcannotbeestablished

thatthedefendant’sprofit‐makingcoincideswiththeplaintiff’srights.

Therethedefendantcanalwaysmaintainthatherprofitarosemerely

fromindependentchoicesoractionsofherown,overwhichtheplaintiff

hasnorights,andthereforethattheplaintiffhasnoclaimtotheprofits

producedthereby.

Thevariantdescriptionsofcontractrightsas“particular,”

“exhaustive,”or“neither,”whichaffectwhetherwecansaythatthe

plaintiff’srightandthedefendant’sprofit‐makingdealingcoincide,

reflectvariationsinwhatwemaycallthelogicalscopeofcontract

rights.89Considertheclassiclogicalsyllogism:“Allmenaremortal;

Socratesisaman;thereforeSocratesismortal.”Inorderforthe

conclusionofthesyllogismtofollowfromitstwopremises,thepremises

musthaveasharedmiddleterm—here“men”/”man.”Or,inour

terminology,themiddletermsofthepremisesmust“coincide.”Andthat

co‐incidencecanoccuronlyifatleastoneofthetermsisparticularor

exhaustive.90Forexample,thepurportedsyllogism,“Somemenare

mortal;Socratesisaman;thereforeSocratesismortal”doesnotyielda

validconclusion.(Thislogicalpointcanalsobemadeintheterminology

ofmodernlogic,byinvokingthe“type/token”distinction91or

quantificationtheory.92)

89Cf.ARISTOTLE,DEINTERPRETATIONE§7,inCOMPLETEWORKS(JonathanBarnesed.1991).90Forpresentpurposesitisunnecessarytoconsiderwhether“particularity”and“exhaustiveness”asweareusingthemareultimatelyreducibletoeachother.Philosophersoflogichavedebatedtheequivalentissueintheirfield.See,e.g.,IMMANUELKANT,CRITIQUEOFPUREREASONA71/B96ff(PaulGuyer&AllenW.Wooded.&trans.,1998).91CharlesS.Peirce,ProlegomenatoanApologyforPragmaticism,16MONIST492,505‐06(1906).Foraluciddiscussionofthetype/tokendistinctionintheintellectualpropertycontext,seeLauraBiron,TwoChallengestotheIdeaofIntellectualProperty,93MONIST382(2010).92GottlobFrege,Begriffsschrift,inFROMFREGETOGÖDEL:ASOURCEBOOKONMATHEMATICALLOGIC(JeanvanHeijenoorted.,1967)(1879);CharlesS.Peirce,Onthe

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Thevariationinthelogicalscopeofthecontractrightiswhatmakes

contractualdisgorgement“devilishlydifficult,”incontrastto

disgorgementinotherareasoflaw.93Intrespassorconversion,

disgorgementisawardedunproblematically,becausetherightin

questionisusuallyparticular,astherightistetheredtoaparticular

corporeality(suchasaplotofland).Itwillthereforebeeasytoestablish

whetherthedefendant’swrongfulprofit‐makingdealingisadealingwith

thatparticularthingoftheplaintiff’s.Rightsconcerningtypesofthingare

alsooftenlessproblematicoutsideofcontractlaw,becausetheyare

oftenexhaustive:apatent,forexample,confersarightoverevery

instanceoftheinvention;hencedisgorgementislogicallyunproblematic

therealso.94Thisisincontrasttothesituationincontract,wherethe

partiescandescribeanyrighttheychoose.Thus,thelogicalscopeofthe

rightvaries.95Acontractmaydescribethepromisee’srightbyreference

toaparticularcorporealthing(thisguitar)ortoaparticularincorporeal

thing(certainshares);orbyreferencetoagenerictypeofthing

(corporealorincorporeal),inwhichcasetherightmaybedefinedeither

exhaustively(allguitars,allshares),ornonexhaustively(oneorsome

guitarsorshares).Andallthisbeforewegettocontractsforacts.96

AlgebraofLogic:AContributiontothePhilosophyofNotation,7AM.J.MATHEMATICS180(1885).93AndrewBurrows,NoRestitutionaryDamagesforBreachofContract,[1993]LLOYD’SMAR.&COM.L.Q.453;Attorney‐Generalv.Blake,infranote103,at278.94DisgorgementforpatentinfringementhasbeenabolishedbystatuteintheU.S.SeeAroMfg.Co.v.ConvertibleTopReplacementCo.(“AroII”),377U.S.476,505‐07(1964)(PatentActamendmentof1946“eliminatestherecoveryofprofitsassuch”).Andofcourse,somepatentrightsmaybebetterdescribedasrightsoveractsratherthanthings—butthisdoesnotultimatelymatter.95Putanotherway,thedescriptionofthecontractrightispotentialsourceoftype/tokenambiguities.Seesupraat90.96Notethattheanalysisherethereforediffersfromthe“exclusiveentitlement”theory,mostthoroughlydevelopedbySirkoHarder,whichholdsthatdisgorgementisavailablewheneverthedefendantdealswithsomething“withintheexclusiveentitlement”oftheplaintiff.SIRKOHARDER,MEASURINGDAMAGESINTHELAWOFOBLIGATIONS:THESEARCHFORHARMONISEDPRINCIPLESch.13(2010);cf.Friedmann,Restitution,supranote59,at510‐51;Weinrib,supranote59;Benson,supranote57.Grantedthatinagivencasetheplaintiff’sentitlementisexclusive(indeed,itcanbearguedthatallprivatelawentitlementsare“exclusive”);thequestionstillarises

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6.3.5 Contractualdisgorgement:acts

Sometimesapromisee’srightseemsmoreaptlycharacterized,notas

arighttoathing,butasarighttoanact.Insuchacase,itwillbe

necessarytoestablishwhetherthedefendant’sprofit‐makingandthe

plaintiff’srighttoan“act”coincide,orwhether,conversely,the

defendant’sprofit‐makingdealingismerelyanindependentchoiceoract

ofhisownastowhichthepromiseehasnoentitlement.

Hereitisusefultodistinguishwhatisoftencalleda“positive

covenant”froma“negativecovenant”ofanact.97Certainscholarshave

noticedthatcourtsseemtotreatthesetwosortsofcontractdifferentlyin

disgorgementcases,buthavebeenpuzzledastowhythatshouldbeso.98

Thereasonisthevariationinthesekindsofrights’logicalscope.99

6.3.5.1 NegativeCovenant

Ina“negativecovenant,”thepromisorcontractsnottodosomeact.In

suchcases,courtshaveawardeddisgorgementwhenthepromisor

profitsbyperformingtheprohibitedact.

InCincinnatiSiemens‐LungrenGasIlluminating,apromisoragreed

thatitwouldnotsellgaslampsincertaincountiesinOhio.100Inbreachof

thatnegativecovenant,thepromisorsoldninelampsinthosecounties.

TheU.S.SupremeCourtrejectedthepromisee’sargumentthatitwas

whetherthereisacoincidencebetweenthatentitlementandthedefendant’sprofit‐making,whichisaffectedbythelogicalscopeoftheplaintiff’sexclusiveentitlement.Andseefurtherinfranote106.97SeeBLACK’SLAWDICTIONARY(9thed.2009)(defininga“covenant”as“[a]formalagreementorpromise,usuallyinacontractordeed,todoornotdoaparticularact”).98ANDREWBURROWS,REMEDIESFORTORTSANDBREACHOFCONTRACT400(3ded.2004);KATYBARNETT,ACCOUNTINGFORPROFITFORBREACHOFCONTRACT134(2012).99Thus,thetruthinWeinrib’sclaimthattherecanbenodisgorgementincasesofrightstoacts,seesupranote59,flowsnot,ashesuggests,fromthenatureofrightstoacts,butfromthelogicalscopeofsomerightstoacts.Relatedly,anyrighttoan“act”canberedescribedastoa“thing,”andviceversa,withoutaffectingdisgorgement.100CincinnatiSiemens‐LungrenGasIlluminatingCo.v.WesternSiemens‐LungrenCo.,152U.S.200(1894).

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entitledtoloss‐baseddamagesintheamountthepromiseecouldhave

madebysellingtheninelampsitself.Thatlosswastoospeculative.

Instead,thecourtheld,thepromiseewasentitledtodisgorgementofthe

profitsthatthepromisormadefromitswrongfulsales.

TwoEnglishcasesinvolvingresalepricemaintenanceagreements

reachedthesameresult.InEssoPetroleumv.NiadLimited,thedefendant

retailerbreachedanagreementwiththeplaintiffmotorfuelwholesaler

nottoresellfuelatanypricesotherthanthosesetbytheplaintiff.101The

defendanthadtodisgorgetheprofitsitmadefromsellingatotherprices.

InBritishMotorTradeAssociationv.Gilbert,GilbertboughtaJaguar

motorandpromisednottoresellitfortwoyears.102Inbreachofthat

provision,Gilbertsoldthecartoathirdparty.Theassociationobtained

disgorgementofthedifferencebetweenthemarketpriceofthecarand

thepriceatwhichithadtherighttorepurchase.

Twowell‐known“spy”casesillustratethesameprinciple.Inboth

Sneppv.UnitedStatesandAttorney‐Generalv.Blake,secretservice

employeesbreachedtheircontractsnottodiscloseinformationabout

theiremployment.103TheU.S.SupremeCourtandtheHouseofLords

awardedtheirrespectivegovernmentsdisgorgementoftheprofitsthe

employeesmadeinbreachofthoseobligations.104

Onefinalcaseisworthmentioning.PeterBirksarguedthata

landmarkofthecommonlaw,Mosesv.Macferlan,awardeddisgorgement

forbreachofanegativecovenant.105MosesindorsedtoMacferlansome

promissorynotes,whichhadbeenmadeouttoMosesbyoneJacob.

101[2001]AllE.R.(D.)324.102[1951]2AllE.R.641.103444U.S.507(1980);[2001]1A.C.268(H.L.).104ButseethedictainBlake,thatthepropositionthatdisgorgementshouldbeavailable“wherethedefendanthasobtainedhisprofitbydoingtheverythinghepromisednottodo”is“toowidetoassist.”Id.at286.105PETERBIRKS,INTRODUCTIONTOTHELAWOFRESTITUTION335‐36(1985);PETERBIRKS,UNJUSTENRICHMENT13‐14(2ded.2005);Mosesv.Macferlan,(1760)2Burr.1005,97E.R.676.

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MosesandMacferlanagreedinaseparatewritingthatMacferlanwould

notpursuerecoveryonthenotesagainstMoses(onlyagainstJacob).But

MacferlanrenegedandsuedMosesonthenotesinChancery,whichheld

Mosesliable,apparentlyonthebasisofastrictrulethataseparate

writingwasnodefensetoliabilityonindorsednotes.Inresponse,Moses

suedMacferlaninKing’sBenchformoneyhadandreceived.ThereLord

MansfieldheldMacferlanliabletosurrenderthemoneyhehadobtained

fromMosesthroughtheChanceryjudgment.AsBirkspointedout,since

thenoteindorsementwasenforcedbyChancery,whoseorderhad

preclusiveeffect,theonlytenablebasisforLordMansfield’srefund

wouldbetoregardtheseparatewritingasanegativepromise(nottosue

ontheindorsednote),andMacferlan’ssuccessfulclaimasonefor

disgorgementoftheprofitsMosesobtainedthroughbreachofthat

contract.

Whywouldthecourtsawarddisgorgementforbreachofanegative

covenant?Anactdescribedinacontractisgenerallyatype:adescription

ofbehaviormeetingcertainspecifications,ofwhichtherewillpotentially

bemanyinstances.However,inthecaseofa“negative”promiseofanact,

thepromisee’srightis“exhaustive”withrespecttoallinstancesofthe

typeofactatissue.Thepromiseehastherightthatthepromisornot

performanyinstanceoftheact.Thus,whenthepromisorperformsany

instanceoftheact,itisclearthatthatisanactordealingthatcoincides

withthepromisee’scontractrights.Thereisnoroomforthepromisorto

maintainthathisprofitarosefrommerelyfromanindependentactofhis

ownwithrespecttowhichthepromiseehasnoentitlement.106

106The“exclusiveentitlement”theory,seesupranote96,cannotexplainnegativecovenantcases.Thus,HarderrejectsEssoPetroleum,seeid.at243‐44,andcanenvisagedisgorgementincasesofcontractsconcerningactsonlybyimaginingathing‐likeentitlementcomprisingthedefendant’s“laborpower.”Id.at235‐37.Incontrast,the“coincidence”formulation—therequirementthatthedefendant’sprofit‐makingdealingbeitselfcontrarytotheplaintiff’srights—avoidsthesedifficulties,byshowingthatdisgorgementdoesnotrequireanycharacterizationoftherelevantrightasarighttoathing.

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Inthisrespect,anegativecovenantisjustliketheexhaustiveright

overatypeofthing,forwhichdisgorgementwasawardedinWebbv.

Dipenta(theNovaScotianmonasterycase)andBerensonv.Nirenstein

(theagent’spurchaseofsharesforhimself).107Indeed,manynegative

covenantsofactscouldberedescribedasexhaustiveorparticularrights

overthings;andviceversa.Forexample,CincinnatiSiemens‐LungrenGas

couldbethoughtofasinvolvingrightswithrespecttocertainlamps

(ratherthantothesaleofsuchlamps);108conversely,theKentuckyCaves

casecouldbeconceivedasanegativecovenantoveractswithrespectto

therelevantcavesegment.Theresultintermsofdisgorgementwouldbe

thesame.Thus,itdoesnotultimatelymatterwhatthetruenatureor

characterofacontractrightis,onlythatanydescriptionoftheright

adequatelycapturesitslogicalscope.

6.3.5.2 PositiveCovenant

TheScottishcaseofTeacherv.Calderinvolvedatypical“positive”

promiseofanact.Thepromisorcontractedtoinvest£15,000inthe

plaintiff’stimberbusiness.109Instead,heinvestedthesameamountina

distillery.Thepromiseewasunabletorecovertheprofitsthatthe

promisormadefromthedistilleryinvestment.Thatmakessense,

becausethepromiseewasentitledonlytohavethepromisorinvest

£15,000inthetimberbusiness,andhadnoentitlementoverthe

Botterellexplainscontractualdisgorgement(atleastforrightsthataresufficiently“specific”or“fine‐grained”)bysuggestingthatthedefendant’sprimarypromisetoperformmaygiverisetoanimplicit,subsidiarynegativepromise,nottodoanything“incompatible”withperformance.Supranote76,at149‐54.Thedeviceoftheimpliednegativepromise,sinceitharnessestheexhaustivenessofanegativedescription,thereforeallowsBotterellinaroundaboutwaytoapproachthecorrectanalysis.Onlytoapproachit,however,becauseprofit‐makingthatismerelyabut‐forcauseofbreachis“incompatible”withperformancebutdoesnotgiverisetodisgorgement,asexplainedabove.107Seenotes86‐87,supra.108InCincinnatiSiemens,supranote100,thepartiesinfactcreatedbothkindsofrightsimultaneously:thecontractdescribedthepromiseeasacquiringtherightthatthedefendantnotselllampsinthosecounties,andalsotheexclusiverighttoacertainthingoropportunity,thesaleoflampsincertaincounties.109[1899]A.C.451(H.L.).

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promisor’sinvestmentofthatsuminadistillery.Thelatteractwasnot

itselfcontrarytotherightofthepromisee.Thus,eventhoughthe

promisorprofitedbyperforminganactverysimilartotheoneowedthe

promisee,andeventhoughthatprofit‐makingactmayhavebeenabut‐

forcauseofabreachofcontract,thepromiseehadnoclaimtotheprofit.

Thisillustratesakeyfeatureofmost“positive”promisesofacts.The

promiseeacquiresonlyaninstanceofatypeofact.Hencenothingfalls

withintherightofthepromiseexceptasingleinstanceorperformanceof

thattypeofact.Thepromiseeisnotentitledtoany“particular”

performanceoftheact,nordoesshehaveanexhaustiveentitlementover

allinstancesofatypeofact.Soevenifthepromisorprofitsby

performinganactthatlooksidenticaltotheactowedthepromisee,the

profitcannotbesaidtoresultfromanactthatisitselfcontrarytothe

promisee’sright.

Inthisrespect,a“positive”promiseofanactisjustlikearighttoan

unspecifiedinstanceofatypeofthing,asinAcmeMills(thewheatcase):

giventhenonparticularityandnonexhaustivenessoftheplaintiff’sright,

itisimpossibletoestablishthatthedefendant’sprofit‐makingdealing

coincideswiththerightoftheplaintiff.Again,itdoesnotmatterwhether

therightischaracterizedastoanactortoathing,solongasitslogical

scopeisadequatelycaptured.Likewise,wherethereisapositivepromise

ofanact,thepromisorcandoalmostanything,andprofitthereby,while

maintainingthathisprofitarosenotfromanyactthatwasitselfcontrary

tothepromisee’sright,butfromanactofhisownoverwhichthe

promiseehasnoentitlement.110

110Almostanything:insomecases,itmaybepossibletoestablishthecoincidenceofthepromisor’sprofit‐makingandthepromisee’sright,evenwherethelatterisneitherparticularnorexhaustive,ifthepromisorintendstoprofitthroughanactofnonperformanceitself.Thiscouldexplainthedivergentresultsinthe“skimpedperformance”cases.CompareSamson&Samsonv.Proctor,[1975]1N.Z.L.R.655,656(H.C.),andCastillev.3‐DChems.,520So.2d1005(La.Ct.App.1983),withCityofNewOrleansv.Firemen’sCharitableAssoc.,9So.486(La.1891).

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6.3.6 Conclusion

Thus,thecharacterizationofthecontractualperformanceasan“act”

or“thing”doesnotaffecttheavailabilityofdisgorgement.Anyrighttoan

actcanberecharacterizedasarighttoathing,andviceversa,without

affectingthedisgorgementanalysis.Theavailabilityofdisgorgement

turnsontheabilitytoestablishcoincidence,whichisaffectedbythe

logicalscopeofthecontractright,whichisinturnindependentof

whetherthecontractualperformanceisarightorathing.The

disgorgementissuesuppliesnoreasontocharacterizeacontractual

performanceaseitheranactorathing.

6.4 Performance,Kant,andHegel

Arethereanyotherreasonstothinkoftheobjectofacontractrightas

eitheranactorathing?Resolvingthisquestiondispositivelyisprobably

impossible,sinceitwouldinvolveprovinganegative.However,inclosing

thischapterattemptstorebutsomeotherargumentsforcharacterizing

thecontractualperformanceaseitheranactorthing.

Attheoutsetitisworthnotingthatthisdiscussionrequiresustopay

anunusualamountofattentiontotheprepositionsusedtodescribethe

contractright.Becauseherewestrikeaversionofwhatmightbecalled

“theprepositionprobleminprivatelaw.”Thisproblemariseswhenone

triestodescribearight’scontent,object,orsubject‐matter.Howshould

onedescribe,forexample,abasicpropertyrightastoacorporealthing?

Privatelawyerstendtodescribeitvariouslyasaright“to,”“over,”or“in”

thething,ajusadremorjusinrem.Thereisnosingle,clearlypreferable

prepositionthatcapturestherelationbetweenthe“right”andthe

“thing.”111Yetthesedifferentdescriptionsmayconcealsubtledifferences

intheunderstandingoftheright.

111Thisrelatestotherecurrentobjectionthatthenotionofarighttoathingismisguided.SeeHohfeldetal.,supranote66.

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6.4.1 Kant

FirstletusturntoKant’saccountofprivatelaw.ForKant,inprivate

law,“Allthatisinquestionis…whethertheactionofonecanbeunited

withthefreedomoftheotherinaccordancewithauniversallaw.”112

PrivatelawinstantiateswhatKantcallsthe“universallawofright”:“so

actexternallythatthefreeuseofyourchoicecancoexistwiththe

freedomofeveryoneinaccordancewithauniversallaw.”113Kant’s

universallawofright,itshouldbeapparent,isjustour“fundamental

normativeprinciple”:nopersonmay,throughtheirchoice,usurp

another’s.

Giventhisfundamentalprinciple,thereareforpresentpurposestwo

relevantwaysthatapersoncanestablisharight.114Apersoncan

establisharight,astoanythingthatisnotanotherperson’schoice,

unilaterally—justbytakingcontrolofthatthing,asinanoriginal

acquisitionofproperty.115Incontrast,apersoncanacquireastoanother

person’schoiceonlybilaterally,ormutually:theotherpersonmust

participateintheright’sestablishment,byalsochoosingit.116Otherwise

therewouldbea“foisting”or“suborning,”violatingthefundamental

normativeprinciple.Thekindofrightthatisestablishedonlywith

anotherperson’schoiceisacontractright.

Thus,thefundamentalnormativeprinciplesetsupadivisionof

privatelawrights,andaccordinglyimposesaconceptualconstrainton

thenatureofacontractright.Acontractrightis,bydefinition,aright

whoseestablishmentimplicatesanotherperson’schoice.Itcantherefore

legitimatelybeestablishedonlywithorthroughthatperson’schoice.

Theseaspectsofthecontractrightaretwosidesofthesamecoin.

112 IMMANUELKANT,THEMETAPHYSICSOFMORALS[6:230](MaryJ.Gregored.&trans.,1996)(1797‐98).113Id.114HereweomitKant’sdiscussionofthe“righttoapersonakintoarighttoathing”(“dinglich‐persönlichesRecht”).Seeid.at[6:260].115See,e.g.,id.at[6:258‐60].116Id.at[6:271].

212

Now,itmightbethoughtthatallofthisrequiresustoconceiveofthe

objectofthepromisee’scontractright,i.e.,thecontractualperformance,

orwhattherightistoorover,asthepromisor’schoiceoraction.The

reasoningherewouldbethat,becauseacontractrightcanbeestablished

onlythroughorwiththechoiceofanotherperson,theobjectofthe

right—whatitistoorover—mustbethatotherperson’schoiceoraction.

However,thatdoesnotfollow.Justbecauseasecondperson’schoice

isrequiredtoestablisharightdoesnotmeanthattherightthereby

establishedmustbearightto,orover,thesecondperson’schoice.Asan

analogy,justbecauseyouneedanairplanetoreachyourintended

destinationdoesnotmeanthatyourdestinationisanairplane.

Thus,theassumptionthatacontractrightmustbeestablishedonly

throughthepromisor’schoicedoesnotimplythatthepromisor’schoice

mustbetheobjectofthepromisee’scontractright,orwhatthecontract

rightistoorover.Rather,thatassumptionimpliesnothingotherthan

whatitexplicitlystates:thatthepromisor’schoicemustbewhataright

totheobjectofthecontractisestablishedthrough.

Thereforethefactthatacontractmustbeestablishedmutuallydoes

notrequireustocharacterizethecontractualperformanceasachoiceor

act.Rather,itrequirestoustocharacterizetheformofthecontractright

asinvolvingthepromisor’schoice,assetoutinChapterFive.The

promiseemusthavethepromisor’schoiceastotheperformance;thatis

tosay,shemusthavetheperformancethroughthepromisor’schoice.

Toputthepointanotherway,thepromisor’schoicemustbethe

“matter”117ofthecontractrightnotinthesenseofits“subject‐matter,”

butratherinthehylomorphicsenseofanunderlying“material”through

oroutofwhichtherightisformed.Justas,forexample,alumpofbronze

istheunderlyingmaterialthroughwhichastatueiscreated,thoughthe

117Compareid.at§10(“DieMaterie(demObjekte)”).

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resultingcreationisnotalumpofbronze,butastatue—whateverthe

sculptorintendstocreateandthatthebronzewillyield.

Indeedtheveryword“performance”suggeststhatthepromisor’s

choiceshouldplaythisroleinourunderstandingofacontractright.A

contractrightinvolvesthepromisor’schoiceisasortofthrough‐forming.

Thepromisor’sperformanceorchoiceherecanbeastoanything:asto

anact,athing(physicalorconceptual),astateoftheworld,andsoon.

Thereneedbenolimitationontheobjectofthecontractright;itcanbe

whatever“performance”thepartiesmutuallychoose.

6.4.2 Hegel

NowletusconsideranaspectofHegel’saccountofcontract.Heclaims

thatthecontractrightmustbearighttoa“thing”becausetherightmust

beoneoversomethingthatcanbealienatedbyachoosingperson:“[A]

rightarisingfromacontractisneverarightoveraperson,butonlya

rightoversomethingexternaltoapersonorsomethingwhichhecan

alienate,alwaysarightoverathing.”118Onecannotalienate,forexample,

allofone’stimeorlabor,asthatisnotsomethingthatcanbeexternalto

one’schoosingself—itisthechoosingselfinitsentirety.

However,thisdoesnotmeanthattheobjectofacontractrightcannot

beanactorachoice.Itjustmeansthatanyactorchoicethatformsthe

objectofacontractrightmustbealienable.Ifitis,itwillberegardedasa

“thing”byHegel’sdefinition(i.e.,whatevercanbemadeexternaltoone’s

choice).Butwecouldalsocontinuetoconceiveofwhatisalienatedas

justanexternalizedactorchoice—thatis,anactorchoicethatthe

promisorcancoherentlyrecognizeanotherperson,thepromisee,as

having.Putanotherway,wecantakeHegel’spointwithouttyingittohis

definitionalorconceptualfiatrequiringthedeploymentoftheterm

“thing”;wecouldequallyreferto,forexample,“what‐is‐alienable”or

“what‐can‐be‐external‐to‐choice.”

118HEGEL,supranote10,at§40R.Seealsoid.at§43R,66‐67.

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6.4.2 Conclusion

Althoughitcannotbedispositve,thisreasoningsuggeststhatthereis

noneedtocharacterizetheobjectofacontractrightasanythingother

than“performance.”Thus,wecanmaintainourformulationofthe

contractrightasthepromisor’shavingthepromisee’schoiceasto

performance.Or,since“performance”itselfimpliesanexerciseofchoice

ora“through‐forming”bytheperformingparty,wecansaysimplythat,

incontracting,thepartiesrecognizethatthepromiseehasthepromisor’s

performance.(Where“recognition,”“having,”and“performance”are

choices.)

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7 ConsiderationPerhapsthemostprominentfeatureofthecommonlawofcontractisthe

doctrineofconsideration.1Thisdoctrineisalsothegreatestobstacletoa

purewilltheoryofcontractlaw.Suchatheorycontendsthatcontractual

obligationcanbeunderstoodsolelythroughtheideaoftheparties’

mutualwill.Yetthedoctrineofconsiderationrequiresthattheparties

deploytheirwillsinsuchawayastoeffectanexchange.

Theaimofthischapteristoreconcilethewilltheorywiththedoctrine

ofconsideration.Insodoing,thechapterattemptstosatisfythetwin

demandsthatoughttobemadeofanyaccountofthedoctrine.First,to

explainwhyconsiderationissuchacentralandenduringpartofthe

commonlawofcontract.Second,toshowwhythedoctrineis

neverthelessinherentlyproblematicandultimatelyuntenable.

Anytheorythatfailedtoshowconsiderationtobeproblematicwould

beunfaithfultothecommonlaw’sexperienceofthedoctrine.

Throughoutthehistoryofthecommonlaw,therehavebeenrecurrent

attemptstoabolishtherequirementofconsideration,inwholeorinpart.

Thesecallsforabolitioncontinueunabatedtoday.Theyarisebecause

lawyersrecognizethatinsomecasestherulesofconsiderationseemto

servenorealpurpose,andeventoproduceclearinjustice.Forthesame

reasons,thisareaofcontractlawhas,throughoutitshistory,been

markedbyjudicialevasionandsleightofhand.Thedoctrinehasalso

becomeriddledwithexceptions.Finally,itisnoteworthythatthe

doctrineisexpressedquitedifferentlyinAmericanandEnglishlaw,and

thatitis,atleastinanythingcloselyresemblingitscommonlawform,

nonexistentincivilianjurisdictions.Forallthesereasons,anytheorythat

1ThischapterdrawsonmyLL.M.Thesis,CorrectiveJusticeandtheProblemofConsideration(N.Y.U.SchoolofLaw,2007),andthecommentsofmysupervisor,ProfessorLiamMurphy.

216

purportedtoexplainthedoctrineofconsiderationasunproblematically

correctwouldbehighlysuspicious.

Atthesametime,notheoryofconsiderationcanmerelyshowittobe

problematic.Thedoctrinecomprisesarguablythemostlongstandingand

intenselydevelopedsetofrulesinthecommonlawofcontract.2The

doctrinehassurvived,ifnotentirelyunscathed,therecurrentattempts

toabolishit.Ithassurvivednotwithstandinglawyers’recognitionthatit

sometimesyieldsinjustice,anddespitethefrequentjudicialevasions,the

creationofinnumerableexceptions,andthecivilianinfluencesopposed

toit.Inlightofallthis,anytheorythatshowedthedoctrinetohaveno

redeemingqualitieswouldbeimplausible.

Thischapterbeginsthedevelopmentofanaccountofconsideration

bystatingthedoctrineinitsmodernform,intheUnitedStatesand

Englandrespectively(7.1).Itthennotessomeofthemanywaysinwhich

thedoctrinehas,overthecourseofitslonghistory,beensubjectedto

attemptsatabolishment,evasions,andexceptions(7.2).

Nextthechapterconsiderssomecluesfromthehistoryandcontextof

thedoctrineofconsiderationthatpointtowardsawaytounderstandit

(7.3).Thechapteralsoevaluatesscholarlyattemptstoexplain

considerationbytheoristswhoseviewsofcontractlawhavesome

affinitywiththewilltheorydevelopedinthiswork(7.4).

Withthisgroundworkcomplete,thechapterpresentsanaccountof

thedoctrineconsideration(7.5).Onthisaccount,thedoctrinerepresents

anattempttoensurethatacontractualobligationhastherequisiteform:

theformofthecontractrightwehaveencounteredinpreviouschapters.

Thecontractualpromiseemusthavethepromisor’schoiceasto

performance.

2PeterBenson,TheIdeaofConsideration,61U.T.L.J.241,242(2011).

217

Thedoctrineofconsideration’sattempttosecuretherequisiteform

foracontractualobligationisnot,however,entirelysuccessful.The

doctrine,ontheonehand,andtherequisiteformofacontractright,on

theother,areimperfectlyaligned.Itcanthereforebeseenbothwhythe

doctrineofconsiderationisvaluable,andwhyitisunstable.

Finallythechapterconsidersanotherbasisofliabilityassociatedwith

contractthatisnotconditionalupontheprovisionofconsideration:

reliance‐basedliabilityor“estoppel”(7.6).Courtshavesometimesused

estoppeldoctrinestoavoidtheinjusticescausedbythedoctrineof

consideration.Usingestoppel,courtshaverecognizedtheestablishment

ofacontractualobligation—i.e.,arighttoperformance,orexpectation

interest—eventhoughconsiderationisabsent.However,courtshave

alsorecognizedanotherformofreliance‐basedliabilitythatisdistinct

fromcontract:atort‐likecauseofactionthatdoesnotprovidearightto

performance,butonlyareliance‐basedremedy.

7.1 TheModernDoctrine

InthelawoftheUnitedStates,andofEnglandandtheCommonwealth,

respectively,thedoctrineofconsiderationtendstobeformulatedwith

slightbutineluctabledifferences.

AttheheartofmodernAmericandoctrineisthe“bargaintheory”of

consideration.ThistheoryisgenerallyattributedtoHolmes,whosaidof

consideration:“Therootofthematteristherelationofreciprocal

conventionalinducement,eachfortheother,betweenconsiderationand

promise.”3

Thestructureofconsiderationonthebargaintheory—“reciprocal

conventionalinducement”—isnowcodifiedintheSecondRestatement.

Itprovides,inessence,thatPartyAmustprovideaperformanceor

3O.W.HOLMES,JR.,THECOMMONLAW230(M.DeWolfeHoweed.,1968)(1881).SeealsoWisconsinv.MichiganRwy,191U.S.379,386(1903).

218

promisethatisgivenbyher,andsoughtbypartyB,inexchangeforparty

B’sperformanceorpromise.(Andviceversa.)4

Notably,atleastaccordingtotheRestatement,eachparty’sprovision

ofaperformanceorpromisemustbecapableofgenuinelyinducingthe

otherparty’spromiseorperformance.Apurelynominalconsideration,

whichcouldnotbethesourceofanygenuineinducement,willbe

regardedasa“sham,”insufficienttogroundacontract.5(Although

arguablytheruleagainstshamconsiderationismorehonoredinthe

breach.)6

Englishlawissometimesdepictedasalsofollowingthebargain

theoryorsomethingveryclosetoit.7However,itismoreoften

understoodasoperatingontheslightlydifferent“benefitordetriment”

theory,whichpredatesthebargaintheory.Onthisapproach,

“consideration”isanybenefitordetrimentsuppliedinreturnforthe

promise.AsitwasputintheleadingcaseofThomasv.Thomas:

Considerationmeanssomethingwhichisofvalueintheeyeofthelaw,movingfromtheplaintiff:itmaybesomebenefittotheplaintiff,orsomedetrimenttothedefendant;butatalleventsitmustbemovingfromtheplaintiff.8

The“somethingofvalue”“mayconsistinsomeright,interest,profit,or

benefitaccruingtooneparty,orsomeforbearance,detriment,lossor

responsibility,given,suffered,orundertakenbytheother.”9

Thesomethingofvaluemust“movefrom”theplaintiffinthatitmust,

asPeterBensonhasnoted,originatewiththepromiseeratherthanthe

promisor.Thepromisee’sactmustbeone“thatisnotsimplyreducibleto

4RESTATEMENT(SECOND)OFCONTRACTS§79(1979).5Id.at§79cmt.d,§75illustration5.SeealsoSAMUELWILLISTON&RICHARDA.LORD,ATREATISEONTHELAWOFCONTRACTS§§5.14,5.17(4thed.1993). 6SeeDanielMarkovits,ContractandCollaboration,113YALEL.J.1417,1478(2004).7SeeSIRFREDERICKPOLLOCK,PRINCIPLESOFCONTRACT133(13thed.1950),citedinStephenA.Smith,PromisesofGifts:England,inTHEENFORCEABILITYOFPROMISESINEUROPEANCONTRACTLAW53,56(JamesGordleyed.,2001).8Thomasv.Thomas,(1842)2Q.B.851,859.9Curriev.Misa,(1875)L.R.10Exch.153,162.

219

anaspect,condition,oreffectofthe[promisor’s]promise.”10So,for

example,afeelingof“piousrespect”forthepromisor,orareactionof

naturalaffectionproducedbythemakingofthepromise,doesnotsuffice

forconsideration.11

EnglishandAmericanlawclearlydivergeinthat,intheformer,

considerationneednotamounttoagenuineinducement.Englishlaw

longagosettledonthe“peppercorn”rule:amerepeppercornmaysuffice

forconsideration.Asafamousearlycaseputit,“whenathingistobe

donebytheplaintiffbeiteversosmall,thisissufficientconsiderationto

groundanaction.”12Thepeppercornruleremainsgoodlaw,eventhough

judgeshaverecognizedthatitsometimesproducesludicrousresults.13

Insummary:theconsiderationdoctrinerequiressomethingtobedone

bythepromiseeforthepromisor’spromiseorperformance.That

somethingmustbedonebythepromisee:itmust“movefrom”her(on

thebenefit‐detrimenttheory),ormovefromherandcausethepromise

(onthebargaintheory).(Onthebargaintheorythe“somethingdone”by

thepromiseemustbecapableofgenuinelyinducingthepromise;onthe

benefit‐detrimenttheoryitneednotbe.)

7.2 ACheckeredHistory

Inawayunparalleledbyanyotherdoctrineofcontractlaw,

considerationhasthroughoutitshistorybeendeeplycontroversial.

Therehavebeenrepeatedattemptstoabolishthedoctrine,constant

judicialeffortstoevadeitsstrictapplication,andthecreationofanever‐

increasingnumberofexceptions.

10Benson,supranote2,at250.11Thomasv.Thomas,supranote8,at859;Benson,supranote2,at250.12Sturlynv.Albany,(1587)Cro.Eliz.I67,78Eng.Rep.327. 13Chappell&Co.v.NestleCo.,[1960]A.C.87;StephenA.Smith,PromisesofGifts:England,inJAMESGORDLEY,THEENFORCEABILITYOFPROMISESINEUROPEANCONTRACTLAW53,56(2001);CoulderyvBartrum,(1881)19Ch.D.394,400.

220

Fromapurelyhistoricalperspective,ithasbeendoubtedwhether

speculationaboutanhistorical“origin”ofthedoctrineofconsideration—

inthesenseofagrowthoutofsomepreviousdoctrineordoctrines—will

everprovefruitful.14Competingaccountsoftheearlyhistoryof

considerationabound.15Itseemsthatthedoctrine’sbeginningslie

somewhereinthemurkyperiodaroundthesixteenthcenturywhen

contractualassumpsitwasstrugglingtoemergefromthedelictual

conceptionofassumpsit,amidstotherrelatedformsofactionsuchas

covenantanddebt.16

Inanyevent,almostassoonasthedoctrinesolidifiedintosomething

approachingitsmodernform,itwassubjectedtoaseriesofjudicial

attacks.Thestoryhasbeentoldoften.17TheKing’sBench,through

LordMansfieldandotherjudges,famouslyattemptedtoabolishor

significantlyreducethescopeoftherequirementofconsiderationina

numberofcasesdatingfromthemid‐eighteenthcenturythroughtothe

earlynineteenth.

Thus,inPillansv.VanMierop,LordMansfieldsuggestedthat

considerationisamereformalitythatisunnecessarywhereacontractis

inwriting,atleastincommercialcasesamongmerchants.18Thiswas

quicklyrejectedasunprecedented.19

14JACKBEATSON,ANSON’SLAWOFCONTRACT16(28thed.2002).15SeeWarrenSwain,TheChangingNatureoftheDoctrineofConsideration,1750‐1850,26J.LEGALHIST.48n.7(2005).16SAMUELWILLISTON&RICHARDA.LORD,ATREATISEONTHELAWOFCONTRACTS§7:1(4thed.1993).S.J.STOLJAR,AHISTORYOFCONTRACTATCOMMONLAW29(1975)speculatesthat,hadcontractlawevolvedoutofcovenantratherthanassumpsit,thecommonlawwouldhaveendedupwithoutarequirementofconsideration.17E.g.LordWright,OughttheDoctrineofConsiderationtoBeAbolishedFromtheCommonLaw?,49HARV.L.REV.1225(1936).ButseeSwain,supranote15(suggestingthatthechallengestothedoctrineintheeighteenthcenturyhavebeenexaggeratedandthoseinthenineteenthunderemphasized).183Burr.1663,1669(1765).19E.g.Rannv.Hughes,4Bro.P.C.27(1778).

221

Subsequently,incasessuchasTruemanv.Fenton,20Hawkesv.

Saunders,21andLeev.Muggeridge,22judgessuggestedthatthefulfillment

ofamoralobligationcouldconstitutesufficientconsideration.Takento

itsextreme,thisapproachwouldmeanthat,ifanygoodreasonfora

promisecouldbefound,therewouldbenoneedforanexchange.The

ideathatmoralobligationcouldsufficeforconsiderationpersisteduntil

fairlylateinthehistoryofthedoctrine’sdevelopment—itwas“not

decisivelyrejecteduntilthe1840s,”inthecaseofEastwoodv.Kenyon.23

Oppositiontothedoctrineofconsiderationcontinued.Bythelate

1820sjudgeshadalreadybegunthepracticeof“inventing”

consideration,bytakingaverybroadviewofwhatcouldconstitutea

benefittothepromisororadetrimenttothepromisee.24Courtswould

find,forexample,thataratherdubiousforbearancesufficedfor

consideration,suchasthegivingupofavoidguarantee.25Another

strikingexampleofapparentinventionofconsiderationisBainbridgev.

Furmston:whereonepartyconsentedtotheotherweighingtwoofhis

boilers,LordDenmanfoundthatthepromisetoreturntheboilerswas

goodconsideration.26

Theinventionofconsiderationisfamiliartomodernlawyers.For

example,aseriesofcreativeopinionsbyJudgeCardozohavebecome

staplesoftheintroductoryAmericancontractscourse.InDeCiccov.

Schweizer,thejudgerecognizedthatthedoctrineofconsiderationmay

202Cowp.544,548,98Eng.Rep.1232(1777).211Cowp.289,294,98Eng.Rep.1091(1782)perBullerJ:“thetrueruleis,thatwhereveradefendantisunderamoralobligation,orliableinconscienceandequitytopay,thatisasufficientconsideration.”225Taunt36,47,128Eng.Rep.599(1813)perGibbsJ:“Itcannot,Ithink,bedisputednow,thatwhereverthereisamoralobligationtopayadebt,orperformaduty,apromisetoperformthatduty,orpaythatdebt,willbesupportedbythepreviousmoralobligation.”2311A.D.&E.438,3P.&D.276,113Eng.Rep.482(1840).24Swain,supranote15at59‐60.25Haighv.Brooks,(1839)10Ad.&E309,113Eng.Rep.119,citedinSwain,supranote15at60.26Bainbridgev.Firmstone,(1838)8Ad.&E743,112Eng.Rep.1019,citedinSwain,supranote15at60.

222

besubjectedtosome“strain[]”inordertoupholdcontractsofmarriage

settlements.27InWoodv.Lucy,LadyDuff‐Gordon,hesavedanexclusive

licenseagreementfromfailingforlackofconsiderationbyreadinginan

impliedtermrequiringtheplaintifftousereasonableeffortstopromote

productslicensed.28IntheAlleghenyCollegecase,acharitabledonor’s

promiseofadonationwasheldtohavebeengivenforconsideration

becausethecollegewouldmemorializethegiftinthedonor’sname.29All

theseresultsweresubsequentlycodified—eitherintheRestatement,

whichstatesthatnoinducementisrequiredtomakeacharitable

subscriptionormarriagesettlementbinding,orintheUniform

CommercialCode,whichimpliesbesteffortsclausesintoexclusive

agencyagreements.30

Judicialinventivenessaroundthedoctrineofconsiderationcontinues

unabatedtoday.HenceStephenSmith,writingtheEnglishlawentryina

comparativetreatiseontheenforceabilityofgratuitouspromises,feels

obligedtowarnofthedivergencebetweentheblack‐letterlawand

practicallegalresultsinthisarea:

“Scepticismabouttherelevanceof‘lawinthebooks’isofcoursefoundineveryareaoflaw,andinalllegalsystems,butwithinthecommonlawscepticismabouttheconsiderationruleisaparticularlystrongexampleofthisattitude.Itseemsclearthatatleastsomescepticismaboutthestrictnesswithwhichtheconsiderationruleisappliedbythecourtsiswarranted…[although]itisdifficulttosayhowmuch….”31

Meanwhile,expresslyarticulateddoubtsaboutthemeritsofthe

doctrinehavecontinued.32In1936anEnglishLawLordwouldadvocate

abandoningthedoctrineofconsiderationinthepagesoftheHarvard

27221N.Y.431,439(1917).28118N.E.214(N.Y.1917).29159N.E.173(N.Y.1927).However,somehavecontendedthatCardozoJ’sreasoninghasbeenunfairlycharacterizedinthisway:CurtisBridgeman,AlleghenyCollegeRevisited:Cardozo,ConsiderationandFormalisminContext,39U.C.DAVISL.REV.149(2005).30Restatement§90(2)(inducementnotrequiredforcharitablesubscriptionormarriagesettlement);UCC2‐306(2).31Smith,supranote13,at52.32E.g.DunlopPneumaticTyrev.Selfridge&Co.,[1915]A.C.847,885(U.K.H.L.)(LordDunedin).

223

LawReview.33ThefollowingyeartheEnglishLawReviewCommittee

notedthatmanyofitsmemberswishedtoabolishtherequirementof

consideration“rootandbranch,”andthattheCommitteehadinstead

proposedpiecemealreform,onlybecausethedoctrinewassodeeply

embeddedinthelawthatanyproposaltoabolishitwouldprovoke

“suspicionandhostility.”34Legaltheorists,especiallythosewitha

philosophicalbent,havebeenalmostuniformlyhostiletothedoctrine.35

Aftersomedecadesof“inertiaandresignation,”36thedoctrineof

considerationhasrecentlyreturnedtothelimelightinthe

Commonwealth,withcourtssignificantlydilutingitincasesallowingthe

enforceabilityofcontractualmodificationsorvariationswithoutany

considerationotherthana“practicalbenefit”tothepartiesresulting

fromthemodification.37Americancourtshavebeendoingthesamefor

muchlonger:they“havelongbeenpreparedtoupholdcontract

variationsevenintheabsenceoffreshconsideration”solongastheyare

notextortedorcoerced.38

Theexceptionforcontractualmodificationsisjustoneofthemany

exceptionstothedoctrine.Anonexhaustivelistincludesthefollowing

situationsinwhichatleastsomecommonlawjurisdictionswillnot

33LordWright,OughttheDoctrineofConsiderationtoBeAbolishedFromtheCommonLaw?,49HARV.L.REV.1225(1936).34EnglishLawRevisionCommittee,TheStatuteofFraudsandtheDoctrineofConsideration,publishedin15CAN.BARREV.585,600(1937).35E.g.PatrickS.Atiyah,Consideration:ARestatement,inESSAYSONCONTRACT(1986);CHARLESFRIED,CONTRACTASPROMISE35(1981);T.M.Scanlon,PromisesandContracts,inTHETHEORYOFCONTRACTLAW:NEWESSAYS(PeterBensoned.,2001).36A.G.Chloros,TheDoctrineofConsiderationandtheReformoftheLawofContract,17INT’L&COMP.L.Q.137,137(1968).37WilliamsvRoffeyBros&Nicholls(Contractors)Ltd[1991]1Q.B.1;MindyChen‐Wishart,Consideration:PracticalBenefitandtheEmperor’sNewClothes,inGOODFAITHANDFAULTINCONTRACTLAW(JackBeatson&DanielFriedmanneds.,1995);MusumecivWinadellPtyLtd(1994)34N.S.W.L.R.723;AntonsTrawlingCo.Ltdv.Smith[2003]2N.Z.L.R.23at[86]‐[93].38RICKBIGWOOD,EXPLOITATIVECONTRACTS331(2003),citingAngelv.Murray,322A.2d.630,636(1974);RESTATEMENT(SECOND)OFCONTRACTS§89.SeealsoU.C.C.§2‐209;AlaskaPackersAss’nv.Domenico,117F.99,102(9thCir.1902).

224

requireconsideration(insomecasesonlysolongasthepromiseisin

writing):

modificationsorvariations39

guarantees40

options41

stipulationsinlegalproceedings42

promisetopayadebt43

waiverofacondition44

promisetoperformdespitethenon‐occurrenceofacondition

orvoidabilityoftheobligation45

promiseforabenefitalreadyreceived(“pastconsideration”)46

assignments47

rewardsforreturnofproperty48

billsofexchangeorpromissorynotes49

Somejurisdictionshavedoneawaywithconsiderationinamore

comprehensivefashion.Forexample,thestateofPennsylvaniahas

adoptedtheUniformWrittenObligationsAct,whichprovidesthatno

considerationisrequiredsolongasthepromiseisinasignedwriting

thatcontainsanexpressstatementthatthesignerintendstobelegally

bound.50

39U.C.C.§2A‐208(1);U.C.C.§2‐209(1);RESTATEMENT(SECOND)OFCONTRACTS§89.40Id.at§88.41Id.at§87;U.C.C.§2‐205(“firmoffers”).42RESTATEMENT(SECOND)OFCONTRACTS§94.43Id.at§§82‐83 44LordWright,supranote33,at1249,citingRESTATEMENT(FIRST)OFCONTRACTS§88.45RESTATEMENT(SECOND)OFCONTRACTS§84‐85.46Id.at§86.47E.g.NewYorkStateGeneralObligationsLaw§5‐1107.48E.g.id.at§5‐1113.49TheearlydevelopmentofthelawonthisissueisdiscussedinSwain,supranote15,at49‐51.50UniformWrittenObligationsAct,Pa.Stat.Ann.tit.33,§6(West1997),discussedinRANDYE.BARNETT,CONTRACTS163(2010).

225

Finally,nodiscussionofthedoctrineofconsiderationwouldbe

completewithoutmentionofthedoctrineofpromissoryestoppel.51

Somecourts,particularlyintheUnitedStates,havebeenwillingtogrant

anexpectationremedyforpromisesthathavebeenreliedupon,

irrespectiveofconsideration,effectivelycircumventingthedoctrinein

thosecases.Wewillconsiderthisareaoflawinmoredetailbelow(6.6).

Inaddition,asweshallalsoseeshortly,therehasneverbeenany

requirementforconsiderationwhereapromiseismadeinadeed,and

therearealsonumerousotherwaystoachieveanirrevocabletransferof

propertywithouttheprovisionofconsideration,suchasthroughthe

deliveryofagift,orthecreationofabailmentortrust.

Givenalloftheseexceptions,andtheenthusiasticjudicial

inventivenessinthisareaofcontractlaw,itwouldseemthattodayvery

fewseriouslyintendedtransactionsshouldfailmerelyforwantof

consideration.

7.3 TheSearchforaReasonforContractualObligation

Theexceptionstoandattacksonthedoctrineofconsiderationsuggest

thatitcannotbeexplainedasanunproblematicfeatureofthecommon

lawofcontract.Atthesametime,italsosuggeststhatthedoctrinemust

surelybeaddressingsomeimportantconcerninthelawofcontract.

Otherwise,thedoctrinewouldnothavesurvivedforsolong.Andindeed,

somecluesastothenatureoftheconcernthatconsiderationaddresses

areevidentfromthehistoryandcontextofthedoctrine.

7.3.1 Considerationasreasonorcause

Thefirstcluecomesfromtheverymeaningoftheword

“consideration.”Inrequiringa“consideration”torenderapromise

51RESTATEMENT(SECOND)OFCONTRACTS§90.

226

enforceable,courtsarelookingforsomereasonorcauseforthe

establishmentofacontractualobligation.

Ithasbeensuggestedthat,intheearlyhistoryofthedoctrine,

“consideration”didnothaveatechnicalmeaning,butmerelyreferredto

thereasonthat“movedormotivated”thepromisor.52Courtswantedto

knowwhytheallegedobligationwastakenon,andtreatedsomesortsof

reasonsasacceptable,andothers(suchasadesiretobecharitable,ora

pastpayment)asunacceptable.53

Oldersourcesonthedoctrineaffirmtheideathatconsideration

suppliesareasonorcauseforcontractualobligation.InSt.German’s

1530DoctorandStudent,“consideration”signifiesthereasonwhya

promiseismade:“Butifhispromisebesonaked,thatthereisnomanner

ofconsiderationwhyitshouldbemade,thenIthinkhimnotboundto

performit.”54LikewiseinthelawdictionaryLesTermesdelaLey,itis

saidthat“Considerationisthematerialcauseofacontract,without

whichnocontractcanbindthepartie.”55

Commentatorshavealsooftennotedtheanalogybetween

considerationandamorphousciviliancontractualdoctrineof“causa.”56

And,aswehavealsoseen,considerationinitsmodernformintheUnited

Statesisstillconceivedasakindofcause:an“inducement.”

Todayitisoftenstressed,particularlyinEnglishlaw,that

considerationandthepromisor’smotivationarenotequivalent.Thomas

v.Thomasfamouslyrejectedtheunderstandingofconsiderationasjust

anymotiveor“causa”(whichwouldinclude,forexample“pious

52A.W.B.SIMPSON,AHISTORYOFTHECOMMONLAWOFCONTRACT:THERISEOFASSUMPSIT321(1975),citedinRANDYE.BARNETT,CONTRACTS149‐50(2010).53Id.54ST.GERMAN,THEDOCTORANDSTUDENT:DIALOGUESBETWEENADOCTOROFDIVINITYANDASTUDENTOFTHELAWSOFENGLANDch.xxiv(WilliamMuchalled.1874)(1530).55JOHNRASTELL,LESTERMSDELALEY165(WilliamRastelltrans.,1721ed.).56ErnestG.Lorenzen,CausaandConsiderationintheLawofContracts,28YALEL.J.621(1919).

227

respect”).57Thatcasethereforesharpenedtheconcepttorequireacause

“movingfrom”ororiginatingwiththepromisee.

7.3.2 Limitationtothecontractualcontext

Thesecondcluetounderstandingthedoctrineofconsiderationcomes

fromitscontext.58Thedoctrine,whichappliesonlytocontractsnot

underseal,isilluminatedbyviewingitalongsideotherkindsof

transactionsthatdonotrequireconsideration.Fromthisanalysisit

becomesclearthattheneedforsomesortofcauseorreasonforaright

orobligationarisesinonlyoneveryparticularcontext.Itariseswhere

theobligationisallegedtohavearisenonthebasisofoneparty’swholly

idealacquisition.Thatis,wheretheacquisitioncannotbeconceivedin

termsofanapparentrelationbetweentheacquirerandsomethingor

object.

Firstofall,itisnotablethatthereisnorequirementofconsideration

inwhatwemaycallthe“proprietary”context:whereanowner’schoice

oversomeobject,physicalorconceptual,isapparentlyestablishedjust

bythemdirectlycontrollingtheobject,withoutanyotherperson’s

participationbeingnecessarytoestablishthis.Where,forexample,a

personhasapropertyrightbecausetheyareinactualpossessionofa

physicalobject,itwouldneveroccurtoalawyerthattherightis

enforceableonlyifsome“consideration”canbefoundforit.

Theassumptionthatnoconsiderationisnecessaryintheproprietary

contextalsoholdstrueinproprietarytransactions.Thisisthecase,for

example,inthelawofgifts.Acompletedgiftbecomesirrevocablewhere

theobjectgiftedisdeliveredtothedoneebythedonor(withthe

appropriateintentiontogive).59Wherethereisanactualdeliveryofan

object,thedoneeistherebyplacedindirectcontrolofthatobject,such

57Thomasv.Thomas,supranote8.58ThissectionbuildsuponSage,supranote1,at25‐30,37‐39,andBenson,Consideration,supranote2,at258‐65.59Id.at258‐60.

228

thattheobject’ssubjectiontothedonee’schoiceisapparentjustfroman

observationofthedoneeandtheobject.Agiftdeliveredinthismanner

unproblematicallyestablishesthedonee’srightovertheobjectwithout

anyrequirementofconsideration.

Therearealso,however,moreattenuatedtypesofproprietary

transaction,inwhichatransfereeisrecognizedasbeingincontrolof

someobject,withoutevertakingactualphysicalcontrolofit.Thistypeof

transactionisalsoevidentinthelawofgifts,aswellasinbailmentsand

trusts.Notably,allofthosetypesoftransactionmustinvolvesome

specificobjectofproperty.60

Agiftcanbemadeirrevocable,withoutactualdelivery,butbythe

transferorperformingsomeactthatmanifestsherunconditional

intentiontotreattheobjectasdelivered.61Thetransfereeneednoteven

knowofthetransactionforittobecomeirrevocable—althoughofcourse,

shemayalwaysrejectthepurportedgiftonceshelearnsofit.62

Similarly,apersonmaydeclarethemselvestobeatrusteeofcertain

propertyforthebenefitofanothermerelybymanifestingan

unconditionalintentiontoholdtherelevantpropertyontrust,

irrespectiveofwhetherthebeneficiaryhasexplicitlyacceptedthetrust’s

establishment.63Apersonmaybecomeabaileeofgoodsforanotherina

similarway.64Butofcoursethebeneficiaryofatrustisalwaysableto

rejectadistributionfromthetrust,andthetrustcanbewoundupifall

thebeneficiariesseekthis.65Similarly,apurportedbaileesurelycould

60Ontrusts,forexample,seeSmith,supranote7,at56.61E.g.Standingv.Bowring,(1883)L.R.31Ch.D.282,discussedinBenson,supranote2,at259.62Id.63SeeSmith,supranote7,at56.64See,e.g.,Xenosv.Wickham,infranote70.65E.g.Cal.Prob.Code§15403(“ifallbeneficiariesofanirrevocabletrustconsent,theymaycompelmodificationorterminationofthetrustuponpetitiontothecourt”).

229

notthrustanobjectofpropertyuponasupposedbailorwhodoesnot

wantit.

Thesetransactionscanberegardedasconferringonthetransfereean

entitlementtotheobjectinquestion,albeitonelimitedbytheresidual

powersofthetransferortoadministerthepropertyonbehalfofthe

transferee.Thetransferornowisentitledtotheobjectorsomeaspectof

it,althoughthetransfereecontinuestoholditforherasasortofagent.

Thisisunproblematicallyachievedwithoutanyprovisionof

consideration.

Atthispoint,animportantpotentialproblemmustbeaddressed.

Thesetypesoftransaction—agift,trust,orbailmentestablishedwithout

actualdeliveryoracceptancebythebeneficiary—mightseemtocreate

anobviousdifficultyforthewilltheorythatthisworkhasdeveloped.Do

thesetransfersnotviolatetheprohibitionsagainstfoistingand

suborning,andthereforethe“fundamentalnormativeprinciple”?Many

civilianjurisdictionsarguablyassumethattheydo:itisoftensaidinthe

civillawthat,forexample,agiftmustbeacceptedbeforeitcanbecome

conclusive.66

However,thesetypesoftransactiondonotviolatetheprohibitions

againstfoistingandsuborning.Indeed,inallowingthesetypesof

transaction,itissubmitted,thecommonlawhasmadeanoutstanding

advance.

Suchtransactionsdonotamounttoafoisting,becausethereisno

inconsistencywiththetransferee’schoice,untilthemomentshechooses

torejectthetransfer.Atwhichpoint,aswehaveseen,thetransactionis

immediatelynullified.

If,ontheotherhand,thetransfereedoesdecidetoenforcethe

transfer,sheatleastimplicitlyacceptsit,andsothereisnofoisting.But

66SeeStandingv.Bowring,supranote61.SeealsoSmith,supranote7,at24‐66.

230

whatifinthissituationthetransfereeseekstoholdthetransferortohis

originalintentiontotransferwhenthetransferorhassincechangedhis

mind?Doesthisnotamounttothetransferee’ssuborningofthe

transferor’scurrentchoice?

ForthereasonsdiscussedinChapterFive,inordertosaythatthe

transfereeisnotsuborningthetransferor’scurrentchoice,weneeda

reasontodisregardthetransferor’scurrentchoicetohavetheobjectin

question.Theonlyreasonfordisregardingthetransferor’scurrent

choiceisifitiswrongful:ifitviolatesthefundamentalnormative

principle,becausethetransferoristakingsomethingthatissubjecttothe

transferee’schoice.

Andcrucially,fromthetransferor’sperspective,fromthemomentthe

transferorchoosestoseetheobjectassubjecttothetransferee’s

exclusivechoice,thenthetransferor’spurportedre‐takingofitis

wrongful.Fromthetransferor’sperspective,thisisjustlikean

interferencewithanyordinaryobjectofpropertybelongingtoanother

person.

Thereisthereforenothingwrongwiththetransferee,whonow

implicitlyacceptsthetransaction,holdingthetransferortohischoiceto

recognizethetransfereeashavingtheobject.Forthetransferortodeny

thetransferee’sexclusivecontroloftheobjectiswrongful.

Finally,thereisanothertypeoftransactionthatalsoestablishesa

rightwithoutconsideration,butwhichislessobviouslyproprietary.

Thesetransactionsinvolvedeeds,orperhapsotherformsofwriting,

whichestablishanobligationassoonastheyareproperlyexecuted.

Thedeedistheclearestexample.Traditionally,tobeeffective,adeed

hadtobe“signed,sealed,anddelivered.”67Therequirementofasealhas

671CHITTYONCONTRACTS[1‐075](H.Bealeed.,29thed.2004).

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nowbeenabolishedinEnglishlaw.68Moreimportantlyforpresent

purposes,“delivered”heredoesnothaveitsordinarymeaning:

“delivery”merelymeansanactdonesoastoevinceanintentiontobe

bound.69Itisenoughthatanexecuteddeedstatethatitisdelivered,and

itwillthenberegardedaskeptonbailmentforthepartybenefiting,who

neednotevenbeawareoftheexistenceofthedeed.70

Thus,justlikeagift,adeedisirrevocableonceitisregardedbythe

executorassuch.Thismaybeaccomplishedbyahandingoverof

physicalcontrol,butitmayalsobeaccomplishedbyanyactintendedby

theexecutorofthedeedtoachievethesameeffect.(“Firmoffers”in

Americanlaw,andunilateralpromisesinScottishlaw,maybeother

examplesofthistypeoftransaction.)71

Thistypeoftransactionisexplicableonthefollowingbasis.The

promiseedoesnotholdsomephysicalobjectonbehalfofthebailor,asin

theproprietarytransactionswehaveconsideredpreviously.For

example,adeedmaygivethepromiseetherighttotheperformanceof

someactbythepromisor,ratherthanarightoveranyobject;orifthe

deedconcernsanobject,theconveyanceofthatobjectmaybesomething

thatistooccurinthefuture.Instead,thepromisor’schoiceis

externalizedinthewritteninstrument,whichitselfbecomesakindof

68LawofProperty(MiscellaneousProvisions)Act,§1(1)(1989).IntheUnitedStatesthelawislessclear.Thesamecommonlawruleprevailsthatcontractsundersealarebindingwithoutconsideration.However,mostAmericanjurisdictionshavesomehowalteredthesealrulebystatute.Thisstatutoryinterventionvariesfromalteringtheformofthe“seal”toabolishingitaltogether.Somestateshavemadethesealonlyapresumptionthatconsiderationhaspassed.Somestatutesprovidethatanywritteninstrumentshallimportconsideration.SeeRESTATEMENT(SECOND)OFCONTRACTS§95;LONL.FULLER&MELVINARONEISENBERG,BASICCONTRACTLAW19(7thed.,2001),citinge.g.Cal.Civ.Code§§1614,1629.Theinterplaybetweenthesestatutoryinterventionsandthedoctrineofconsiderationiscomplex.WILLISTON,supranote16,ch.2.Insomecasesithasleftpartiesunabletocontractwithoutconsideration,sincethedeedhasbeenabolishedwithoutbeingreplacedbyanyotherform.69CHITTYONCONTRACTS,supranote67,at[1‐082].70Xenosv.Wickham,L.R.2H.L.296,312(1866).71Supranote41;Ilona(CountessofCawdor)v.Vaughan(EarlofCawdor),(2007)S.C.285.

232

objectthatthepromiseecanacquire,asifitwereanobjectofproperty.

Thepromisor’schoice,crystallizedinthewriting,canthenbe

“transferred”tothepromisee.

This“transfer”canhappenbythepromiseeactuallytakingphysical

possessionofthewritteninstrument.Orthepartiescantakeadvantage

oftheabilitytotransfersomethingwithoutphysicaldeliverydiscussed

previously.Thetransfercanthenbeeffective,fromthepromisor’s

perspective,assoonassheovertlyrecognizesherselfashavingputher

choiceastothismatterbeyondhercontrol,andintothecontrolofthe

promisee,byexecutingthewriting.Again,ofcourse,thetransactionis

alwayssubjecttorejectionbythepromisee,whocannotbeforcedto

acquireanythingshedoesnotchoosetoacquire.

Thiswayofconceivingofadeedinparticular,withtherecipient

controllingitasifitwereanobjectofproperty,isevidentfromtheharsh

traditionalrulesgoverningtheenforcementofdeeds.Aswesawinthe

discussionofMosesv.MacferlaninChapterSix,forexample,traditionally

inthecommonlawapromissorynotewouldremainenforceabledespite

apromisenottosueonit,solongasthenoteitselfwasnotdestroyed.72

Whatnoneofthevarioustypesoftransactionwehavesofar

consideredamountsto,however,isawhollyidealacquisitionnot

involvinganyapparentrelationsofpersonstoobjects.Inthemore

“proprietary”transactions,thetransfereeisrecognizedashavingdirect

controloverasomeobject—controlthatisfromthemomentofdelivery

onwardsreadilyapparentjustbyobservingthetransferee’sphysical

controloftheobject.Themoreattenuatedformsofproprietary

transactionhavethesamestructure,albeitthatthetransferorremainsin

possessionoftheproperty,holdingitonbehalfofthetransferee,

followingthetransfer.Intransactionsoccurringthroughadeedorother

writteninstrument,thepromisor’schoiceisrepresentedasexternalized

72Section6.3.5.1,supra.

233

inaphysicalwritingthatcanthenbepassedtothetransfereeorheldon

herbehalf.Innoneofthesetypesoftransactionisanyextra

“consideration”neededtosupporttherightorobligationestablished.

Finally,wemustnotforgetoneothersortoftransactionforwhich

considerationisunnecessary:apromisethatisnotlegallyenforceable.A

promisorneednotsubjecttheobjectofthepromisetothepromisee’s

exclusivechoice,butmaymerelyestablishanethicalobligationuponthe

promisortouseherchoicetoperformthepromise.Nobodythinksthat

thiskindofpromiserequiresany“consideration”beforeitisvalid.

Thus,itisevidentthatthedoctrineofconsiderationaddressesa

concernthatarisesinonlyonespecialcontext:wherethereisapurely

idealacquisitionbyonepartythroughanother’schoice.

7.3.3 Considerationasform

Onefinalclueastothenatureoftheconcernthatconsideration

addressesistheaugusttraditionofregardingthedoctrineasaform.

Scholarshaveregardedconsiderationasasortofsign,whoseinvocation

suggeststhatthepartiestrulyintendedtoestablishacontractual

obligation.

ThistraditiongoesbackatleasttoHobbes,whotreatedtheprovision

ofreciprocalbenefitasasignthatthepartieswilledthecreationofan

obligation:

Foritisamanifestsign,thathewhichdidperform,understooditwasthewillofhimthatwastrusted,toperformalso.Promisestherefore,uponconsiderationofreciprocalbenefit,arecovenantsandsignsofthewill,orlastactofdeliberation,wherebythelibertyofperforming,ornotperforming,istakenaway,andconsequentlyareobligatory.73

Likewise,thefirstcommonlawcontractstreatisewriters,suchas

GilbertandColebrooke,tookconsiderationtobeevidenceoftheparties’

73THOMASHOBBES,THEELEMENTSOFLAWNATURALANDPOLITICI.15.9(1640).

234

willtobebound.74LordMansfieldinPillansv.VanMieropstatedthat“the

ancientnotionaboutthewantofconsiderationwasforthesakeof

evidenceonly:forwhereitisreducedintowriting,asincovenants,

specialties,bonds,etc.,therewasnoobjectiontothewantof

consideration.AndtheStatuteofFraudsproceededuponthesame

principle.”75OliverWendellHolmeswasofasimilaropinion.76

ThismodernreferencepointforthisapproachisLonFuller’s

ConsiderationasForm.77InhisarticleFullersoughtto“disentangl[e]”the

formalandsubstantivefunctionsaddressedbythedoctrineof

consideration.Heidentifiedthreeformalfunctions:“evidentiary,”

“cautionary,”and“channeling.”First,thatyouconferabenefiton

someoneelse,Fullerargues,isgoodevidencethatyouexpecttoget

somethinginreturn.Second,theactofgivingsomethingawayalertsthe

transactingpartiestothesignificanceofthetransactionanditspossible

legalconsequences.Third,Fullersuggests,thedoctrineenablesparties

tochanneltheirdealingsintoarecognizedlegalcategory,which

facilitatesjudicialanalysis.78

ThedifficultieswithFuller’sanalysisarewellknown.79Thedoctrine

ofconsiderationisamanifestlyinadequatedeviceforaddressingFuller’s

threeformalconcerns.Ratherthansmoothly“channeling”judicial

analysis,considerationprobablydoesmoretodisruptsoundreasoning

andcompeljudicialsleightofhandthananyotherdoctrineofcontract

law.Withregardtothe“cautionary”function,itisfarfromobviousthat

thegivingofvaluewillnecessarilyalertpeopletothecreationofbinding

legalrelations.Peopleexchangethingsallthetimewithoutintendingto

bringtheforceofthelawtobearonthetransaction.Finallythealleged74SeeSwain,supranote15,at56‐57,discussingJEFFREYGILBERT,OFCONTRACTSff.40‐58(c.1710),HENRYCOLEBROOKE,TREATISEONOBLIGATIONSANDCONTRACTS38(1818).75Supranote18.76O.W.Holmes,ThePathoftheLaw,110HARV.L.REV.991,1004(1894)(“Considerationisamereform.”).77LonL.Fuller,ConsiderationandForm,41COLUM.L.REV.799(1941).78Id.at800‐01.79E.g.Markovits,supranote6,at1479‐81;Benson,supranote2,at243‐47.

235

makingofareturnpromise,whichmayleavenodocumentaryorother

evidentialtracewhatsoever,isaverydubiousdeviceforensuring

evidentialcertitude.

Moreover,ifconsiderationweremerelyaformdesignedtoensure

thatthepartiesintendtocontract,otherformsorothermeansof

establishingtheseriousnessoftheirintentionshouldsurelyalso

suffice.80Yetapromisormayshouthiscommitmenttotherooftops,

recitingtheseriousnessofhisintentionwithgreatenthusiasm,andstill

theircontractwillfailforwantofconsideration.81

Fulleralsoofferedvarioussubstantivepolicyreasonsforenforcing

onlyundertakingsthatamounttoeconomicexchanges.82Butnordo

these,ashasalsooftenbeenpointedout,explaintheconsideration

requirement.Itisfarfromclearthatonlyexchangescreateeconomic

value.83Inanyevent,apolicyagainstgratuitoustransactionsalsoleaves

oneunabletoexplainthecommonlaw’senforcementofcompleted

gifts,84or,forthatmatter,theothertypesoftransactionsoutlinedearlier

forwhichthereisnorequirementofconsideration.

IntheendFullernotestheinadequacyofhisexplanationfor

consideration.Hedoesnotarguethatthedoctrinecanbefullyjustified,

onlythatitaddressesacertainsetofconcernsthatthelawofcontract

mustsomehowaddress.85InthiswayFuller’saccountsatisfiesour

secondrequirementforatheoryofconsideration:thatitnotshowthe

doctrinetobeunproblematicallycorrect.However,insodoingFuller’s

accountfailsourfirstrequirement:toshowwhythedoctrineisso

centralandenduringthecommonlawofcontract.Thedoctrineistoo

manifestlyinadequateonFuller’saccount.

80E.g.Markovits,supranote6,at1480.81Id.at1478,1480‐81.82Supranote77,at806ff.83Markovits,supranote6,at1480;Benson,supranote2,at246‐47.84Markovits,supranote6,at1480.85Fuller,supranote77,at824.

236

Theunderlyingproblemisthatthe“considerationasform”view,at

leastinitsmodernarticulationbyFuller,explainsthedoctrineas

mistakeninacertainway.Itexplainsthedoctrineasaninstrumental

mistake.Thedoctrineisaflawedmeansusedtoaddressendsthatare

independentofit—here,theformalandsubstantivegoalsthatFuller

identifies.Becausetheendfloatscompletelyfreeofthemeans,it

becomesapparentthatothermeansshouldalsobeavailable,andthatthe

meansisatotalfailureinsomecircumstances.86

7.4 SomeProposedSolutions

Moreassistancewithunderstandingtheproblemofconsiderationis

providedbytheworkofscholarswiththeoreticalapproachestocontract

thatbearsomeaffinitytothewilltheorydevelopedinthiswork.87In

particular,ErnestWeinrib,DanielMarkovits,andPeterBensonhaveall

developedilluminatingaccountsofthedoctrineofconsideration.

Theseaccountsareunitedinthatallofthetheoristsunderstandthe

doctrineofconsiderationtobeconnectedtoaconcernaboutensuring

themutualityoftheparties’willsincontractformation.Theaccounts

also,withvaryingdegreesofexplicitness,allconnectconsideration,and

someconceptionofmutuality,tothepresenceofabindingcontractual

obligation.

However,ineachoftheaccounts,itwillbesuggestedhere,thenature

of,andtheconnectionsbetweenthethreeelementsinplay—86E.g.Markovits,supranote6,at1480:“[S]uchinstrumentalapproachescannotpossiblyaccountforthelaw’smonotonous,strangelyprecise,andhighlyformalfocusonreciprocalbargainsasthetouchstoneofenforceability.Forifbargainsplayonlyaninstrumentalroleintheconsiderationdoctrine,thenitisnaturaltosupposethatthedoctrine’seffectivenesswouldbeenhancedifatleastsomeotherinstrumentswerealsoadmittedtothedoctrineandallowedtoservealongsidebargainsinpromotingthedoctrine’sends.”87Numerousotherilluminatingaccountsofconsiderationarenotdiscussedhere,inpartbecausetheysitwithinbroadertheoriesofcontractthathavelessaffinitytothetheorydevelopedinthiswork.E.g.J.E.Penner,VoluntaryObligationsandtheScopeoftheLawofContract,2LEGALTHEORY325(1996);ALANBRUDNER,THEUNITYOFTHECOMMONLAWch.4(2ded.2013).

237

consideration,mutuality,andobligation—arenotfullyexplained.The

resultisthatthateachofthetheoriesultimatelyfailstoprovideafully

satisfactoryaccountoftheconsiderationdoctrine.

7.4.1 Weinrib

InTheIdeaofPrivateLaw,inthecourseofoutlininghowvarious

categoriesofprivatelawliabilityarestructuredintermsofcorrelative

rightsandduties,ErnestWeinribbrieflydiscussescontract.Weinrib’s

understandingofcontractisKantian:contractualobligationariseswhen

thepromiseeacquiresthepromisor’schoice.88

Weinribexplainsthedoctrineofconsiderationbysuggestingthatthe

doctrinereflectsthebipolarity,unityandequalityoftherelationship

betweenthecontractingparties:89

Underthedoctrineofconsideration,apromiseiscontractuallybindingonlyifthepromiseehaspromisedordonesomethinginreturn.Theprincipalfunctionofthisdoctrineistocapturethebipolarityofthecontractualrelationshipbyaffirmingthepromisee’sparticipationintherighttothepromisor’sperformance.Thedoctrinealsoreflectstheunityoftheparties’relationship:promiseandconsiderationarenotbountiesunilaterallyvolunteeredtoeachother;rather,theconsiderationissomethingthatthepartiesunderstandtobegiveninreturnforthepromise.Furthermore,thedoctrineatteststotheequalityofthecontractingparties,sinceitrequiresthatbothpartiesgivetokensoftheirwillandthusparticipateasequalagentsinthecreationofthecontract.

Thus,Weinribidentifiesthreefunctionsforthedoctrineof

consideration.Allthreeseemtobevariationsonthesameessentialidea:

thatbothpartiesmustparticipatemutuallyincontractformation.Thisis

explicitinWeinrib’sfirst,“principal”functionofconsideration:to

“affirm[]thepromisee’sparticipationintherighttothepromisor’s

performance.”Butitalsounderliesthesecondfunction:ensuringthat

eachoftheparties’provisionsofpromiseandconsiderationarerelatedto

88ERNESTJ.WEINRIB,THEIDEAOFPRIVATELAW136‐40(1995).SeealsoErnestJ.Weinrib,PunishmentandDisgorgementasContractRemedies,78CHI.‐KENTL.REV.55(2003).AsdiscussedinChapterSix,Weinrib,followingKant,regardsthepromisor’schoiceastheobjectofthecontractright.89WEINRIB,IDEA,supranote88,at137‐38.

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eachother,andnotindependentunilateralacts.Itisalsothebasisfor

Weinrib’sthirdfunction:considerationensuresthat“bothpartiesgive

tokensofthewillandthusparticipate…inthecreationofthecontract.”

Whatisnotclear,however,iswhytheparties’mutualparticipation

musttaketheformthattheconsiderationdoctrinemandates.Whymust

eachpartyparticipatespecificallybygivinga“token[]oftheirwill”that

amountstoareturnpromiseorperformance?Whycannotsomeother

tokenofthewilldo?Why,forexample,isthepromisee’sparticipationby

acceptingthepromiseinsufficient?

Thus,Weinribequatesaconceptionofmutualitywiththerequirement

ofconsideration,buthedoesnotestablishalinkbetween,ontheone

hand,thisconceptionofmutualitythattrackstheconsideration

requirement,andontheother,contractualobligation—thatis,theform

ofthecontractrightthatKantidentifies.

7.4.2 Markovits

DanielMarkovitshasdevelopedatheory,influencedbyKantian

ethics,onwhichcontractisconceivedasaspecialkindof“collaboration.”

AccordingtoMarkovits,thespecialkindofcollaborationthatappearsin

contractlawariseswhenapromisor“subordinate[s]herwilltoher

promisee’s.”90Itiswhenapromisorintendsnotonlytocoordinateher

activityinsomewayrelativetothepromisee,but“intendstogivethe

[promisee]authorityoverherintentions,”thatacontractualobligation

arises.91Markovits’theoryisverydifferentinmanyrespectsfromthe

willtheoryadvancedinthiswork.However,forpresentpurposes,we

canputmostofthosedifferencestooneside.

Withrespecttothedoctrineofconsideration,Markovitsattheoutset

identifieshistaskastoshowthatthebargainformitselfisvaluable,and

toshowhowitconnectstothevaluesthatunderliethemoralityof

90Markovits,supranote6,at1460.91Id.at1461‐62.

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contract.92Thisisofcourseexactlywhatwassuggestedaboveshouldbe

theaimofatheoryofconsideration.

ThebargainformthatMarkovitsidentifiesisthatof“reciprocal

conventionalinducement”setoutintheSecondRestatement:some

promiseoractionmustbegivenbythepromisee,andsoughtbythe

promisor,inexchangeforthepromisor’spromise.93Markovitsargues

thatthisbargainformis“intimatelyconnected”totheideaofcontractual

collaborationbecausebargainsarebilateralormutual:theyinvolve

decisionsmadebybothcontractingparties.94Furthermore,Markovits

suggests,inabargain,eachpartynecessarilysubordinatesherwilltothe

authorityoftheotherparty,thusestablishinganobligation.Markovits

makesbothofthesepointsinthefollowingpassage:

Bargainsinvolvepreciselytheschemeofinterlockingintentions—inwhicheachpartytakestheother’sintentionsasauthoritativeforherown—onwhichthecollaborativeidealattheheartofcontractdepends.Bargainsareintheirnaturewantedby,andinvoketheintentionsof,allparticipants.Eachpartytoabargainexpresslyintendstogivetheotherauthoritytorequireperformance,andeachpartyexpresslyintendstoexercisetheauthoritythatsheenjoysinthisconnection.…Bargains…generaterelationsinwhichthebargainersengageeachother,andsubjectthemselvestoeachother’sauthority,inpreciselythepatternthatcollaborationrequires.95

Thereare,however,anumberofproblemswiththisapproach.

First,Markovits’conceptionofmutuality,ontheonehand,andthe

requirementsofconsiderationonthebargaintheory,ontheother,donot

align.

Markovits’formulateshisconceptionofmutualityinvariousdifferent

ways,butitinvolvesbothparticipantsincontractformation(1)wanting

thecontractand(2)intendingtoallowthepromisortorequireorinsist

onperformance.Thisisevidentinthepassagequotedabove.Itisalso

92Id.at1482.93Id.at1477,citingtheRESTATEMENT(SECOND)OFCONTRACTS§71.941482‐83,citingPenner,supranote87.95Markovits,supranote6,at1483.

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evidentinMarkovits’discussionof“passive”promises:promisesin

whichthepromisee“doesnotexerciseherownershipofthepromissory

obligation,[but]remainsdisengaged…and[does]notparticipate”init.96

ForMarkovits,passivepromisesareproblematicbecausetheylackthe

requisitemutuality.WhereasaccordingtoMarkovits,“[b]argains…are

neverpassive:Eachpartytoabargainintendsactivelytoinsistonthe

performanceitisdue.”97

Howevergiventhisconceptionofmutuality,wecanimmediatelysee

thatitdoesnotalignwithconsiderationonthebargaintheory.Because

sometimespeopleenterbargains—reciprocalexchanges—without

wantingorintendingtoallowthepromisortorequireorinsiston

performance.Forexample,aparentmayprovidemoneytoachildin

exchangeforthechild’sstayingenrolledincollege,withoutever

intendingtoenforcethechild’ssideofthebargain.Thus,Markovits’

claimthat“bargains…areneverpassive”isdemonstrablyfalse.

TotheextentthatabargaindoeshavethemutualityMarkovits

requires,thatisbecauseithasthatmutuality,notbecauseitisabargain.

Likewise,totheextentapassivepromiselackstherequisitemutuality,it

isbecauseitislackinginthatrespect,ratherthanbecauseitisnota

bargain.MutualityandconsiderationdonotalignonMarkovits’

approach.

Likewise,Markovits’conceptionofobligationorauthority,ontheone

hand,andontheotherconsiderationonthebargaintheory,donotalign.

Nothingabouttheexistenceofanobligationorauthorityrelationship

entailstheneedforabargain.Conversely,nothingaboutthebargain

formentailsobligationorauthority.Astheexamplegivenintheprevious

96Id.at1486.97Id.

241

paragraphalsoshows,peoplecanenterbargainswithoutestablishinga

legallyrecognizedobligation.98

Furthermore,itisunclearonMarkovits’accounthowmutuality,ashe

conceivesit,andobligationorauthorityareconnected.Whyshouldthe

factofbothpartiesmerelywishingto,orintendingto,insiston

performance,etc.,establishtheobligationorauthoritythattheydesireor

intend?AsMarkovitsconcedes,heprovidesnoanswertotheconcerns

raisedbyHumethatweaddressedinChaptersThreeandFive.99

Wecanseethedisjunctionbetweenconsideration,obligation,and

mutualityonMarkovits’theoryinanotheroftheexamplesthathe

providesofundertakingsthatdonotinvolvetherightkindofobligation

orauthority:vowsorresolutions.Avoworresolutionisan“obligation[]

undertakeninthenameofsomeidealorintheobligor’sownname,

respectively.”100Vowsorresolutions,Markovitssuggests,areneither

properlymutualnorobligatory:“thosewhomakethemdonotengage

theirbeneficiariesandcertainlydonotsubjectthemselvestotheir

beneficiaries’authority.”101However,clearlyMarkovits’reasoninghere

canbestatedwithoutanyreferencetoconsiderationorbargain.What

preventsavoworresolutionbeingmutualandobligatoryisnotits

failuretoachievethebargainform,butitsfailuretobeproperlymutual

orobligatory.

98Seethediscussionof“intentiontocreatelegalrelations,”infraat§7.6. Markovitsmightrespondthatapromiseinherentlyinvolvesasubmissionofone’swilltoanother’sauthority,butthatwouldonlyhighlighttheirrelevanceofthebargainformtotheestablishmentoftherequisiteauthorityrelationship.

Markovits’conflationofbargainandauthorityexplainsanotheraspectofhispresentationthatisotherwisepuzzling.Hesuggeststhatcontractlaw’s“emphasisonbargains”entailsthatpresent,fullyexecutedexchangesarenotpartofcontractlaw,becausetheydonotinvolveanyongoingrelationshipinwhichonepartyhasauthorityovertheother.Id.at1484.ThisexclusionofpresentexchangefromthelawofcontractturnsentirelyonMarkovits’ideasaboutauthority,andhasnothingtodowiththebargainformitself—aformthatapresentexchangeinfactsatisfies.99DanielMarkovits,MakingandKeepingContracts,92VA.L.REV.1325(2006).100Supranote6,at1485.101Id.

242

Markovitsaccepts,therefore,thatconsiderationdoctrineisnota

“perfectproxy”forhisconceptionsofmutualityandobligation.102In

particular,henotesthatagratuitouspromise,solongasitinvolvesa

promiseewhoisnot“passive,”shouldbeobligatoryonthistheory.103

(Markovitsalsosuggeststhatthisdivergencebetweentheconsideration

doctrineandthemutualityorobligationconcernthatitaddressesleads

courtstoinventconsiderationinsomegratuitouspromisecasessuchas

AlleghenyCollege.)104

7.4.3 Benson

PeterBensonhasofferedexplanationsforthedoctrineof

considerationthattieittoconcernsaboutsuccessionandsimultaneity,

theneedtohaveareasonforcontractualobligation,andmutuality.105In

hismostrecentwork,however,hefocusesontheideasofmutualityand

obligation.

Bensonbeginswithaconceptualizationofthecompletedgift,which,

aswehaveseen,isunproblematicallyenforceablewithoutconsideration.

Bensonpointsoutthatinagift,thedonor’sdelivery,actualor

constructive,“cancels”thedonor’spre‐existingunilateralcontrolover

theobjectthatisgifted,by“yieldingtheobjectintothe[donee’s]implicit

exclusivecontrol.”106

Contractformation,incontrast,doesnotrequiredelivery.Indeed,the

hallmarkofcontractisthatthepartiescanestablishanobligation

entirelyindependentofanydelivery,merelybyanexchangeofpromises.

102Id.at1488.103Id.at1489.104AlleghenyColl.v.Nat’lChautauquaCountyBank,159N.E.173(N.Y.1927).MarkovitsalsoinstructivelydiscussesWilliston’sexampleofabenevolentpasserbywhopromisesatrampthatifhegoestotheclothingstorearoundthecornerhemaybuyacoatonthepasserby’scredit.Markovits,supranote6,at1490n.175.105PeterBenson,TheUnityofContractLaw,inTHETHEORYOFCONTRACTLAW:NEWESSAYS(PeterBensoned.,2001).106Benson,Idea,supranote2,at260.

243

Buthowcanitbeensured,inacontractualtransfer,thatthepromisor’s

unilateralcontroloverthecontractualperformanceiscancelled?

Benson’sansweristhedoctrineofconsideration.Where

considerationisprovided,Bensonargues,“Eachsidehasengagedthe

participationoftheotherinthemostcompletewaythatisavailableto

herindependentlyofdelivery.”107Eachhasissuedapromisethatis

whollyconditionedupontheother’slikepromise.108This,accordingto

Benson,hasthesameeffectasdeliveryofagiftincancellingthe

promisor’sunilateralcontrolandsupplantingitwiththepromisee’s.

Benson’saccountofthesimilaritiesbetweengiftsandcontractsis

instructiveandhasalreadybeendrawnoninthediscussionabove

(7.3.2).However,itstrikessomeofthesameproblemswehave

encounteredinWeinribandMarkovits’accounts.

Bensondoesalignconsideration(onthebargaintheory)withhis

conceptionofmutuality,becausehispreferredconceptionofmutual

participationrequiresmutuallyconditionedpromisesthatare

reciprocallyinducing.However,Bensondoesnotexplainthelink

between,ontheonehand,consideration/mutuality,and,ontheother,

theexistenceofobligation.

First,acceptingforthemomentthatabargainisthe“mostcomplete”

formofmutualparticipation,wemightask,whydoesonlythemost

completeformofmutualparticipationsufficetoestablishacontractual

obligation?Whycouldnotother,lesscompleteformsofmutual

participationalsosuffice?Now,thereissomethingattractiveintheview

that,wherethepartieshavedonetheirutmosttoparticipatemutually,

thelawcouldnotdemandanythingmoreforthecreationofan

obligation.Atthesametime,however,thisviewseemstosuggestthat

thepartiesarestrivingtoachievesomethingthattheycannotquitedo

107Id.108Id.

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forthemselves,withthelawsteppingintocreateanobligationonly

becausetheycannotdoanybetter.Itseemsunlikelythatwewouldbe

speakinginthesetermsifthelinkbetweenmutualityandobligation

wereclear.Ifitwere,wecouldpresumablyshowthatthepartiesare

doingexactlywhattheyneedtodotoestablishanobligation,avoiding

anytalkofvaryingdegreesofcompleteness.

Second,andrelatedly,whyaremutuallyconditionedpromisesthe

“mostcomplete”formofmutualparticipation?Itisnotatallclearwhy

thatshouldbethecase.Inthisconnection,Bensondoesask,“Whycan’ta

simple‘Iaccept’fromthepromiseewithoutconsiderationsuffice”for

therequisitemutualitytoestablishacontractualobligation?109His

answeristhat“Iaccept”canreasonablybeconstruedasjustareactionto

thepromise,andnotasanindependentactoriginatingfromthe

promisee.110The“Iaccept”couldbetakentomeanthatthepromisee

acceptsthepromisor’sstatedintentiontoconfersomesortofbenefiton

her,andthatshewillnotturndownthatbenefitwhenthetimefor

performancecomes,withoutestablishingthatthepromisorisboundto

perform.

However,evenifthisistrueofthesimplephrase,“Iaccept,”itdoes

notruleoutthepossibilityofotherformsofmutualparticipation,more

mutuallyparticipatorythan“Iaccept”butnotamountingtotheprovision

ofareturnpromiseorperformance,thatcouldsufficetoexplain

contractualobligation.

Finally,itmustalsobenotedthatthepromisor’s“unilaterality”isnot

necessarily“cancelled”justbecausethereisabargain,oranexchangeof

reciprocallyconditionedpromises.Aswesawinthediscussionof

Markovits’account,therecanbemutuallyconditionedpromiseswithout

anycontractorbindingobligation.

109Id.at263.110Id.

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7.5 Solution

Sofar,wehaveseenthatconsiderationamountstoasearchforareason.

Inparticular,itisasearchforreasonfortheestablishmentofan

obligation.Itseemsthatthereasonwouldexplainobligationbylinkingit

toaconceptionofmutuality.Notably,theneedforthisreasonarisesonly

inaveryparticularcontext,thatofinformalcontractualobligation,i.e.,

thewhollyidealacquisitionbyonepersonsolelythroughanother’s

choice.Finally,wehavealsonotedtheaugusttraditionofunderstanding

considerationasasortofform.

Itwassaidabovethattheproblemwiththetraditional“consideration

asform”viewisthatitwouldrevealthisform(thebargainformor

benefit‐detrimentdoctrine)tobeaninstrumentalmistake:aflawed

means.Thatapproachwasproblematicbecauseitshowedthedoctrineof

considerationtobetooobviouslymistaken.Anyonecanseethat

considerationissometimesnotagoodmeanstothevariousendsthat

havebeensuggestedforit.Thus,theinstrumentalviewofthedoctrine

seemsimplausiblegivenhowcentralandenduringthedoctrineisinthe

commonlawofcontract.

However,wehavealsosuggestedthatthedoctrineofconsideration

mustbeviewedasinsomewayflawed,becauseanyaccountofthe

doctrinethatshowedittobeunproblematicwouldbeunfaithfultothe

troubledhistoryofthedoctrineinthecommonlaw.If,then,

considerationmustbeunderstoodassomehowflawedormistaken,what

isthealternativetoregardingitasaflawedinstrumentormeans?

Theansweristhatconsiderationcanbeunderstoodasa

noninstrumentalmistakeifitisa(flawed)representation.Onthis

approach,understandingconsiderationisliketryingtoextracta

philosophicaltruththatisrepresentedinaworkofart,orfromaparable

orreligiousimage.Theartwork,parableorimagerepresentssometruth.

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Butitmaynotpresentthetruthtransparently:elementsinthe

representationcorrespondtotheelementsofthetruth,butthe

respectiveelementsarenotthesame.

Thedoctrineofconsideration,itissubmitted,isarepresentationofthe

necessaryformofacontractualobligation.Thatis,theformthatthis

workhassoughttoelucidate:thepromisee’shavingthepromisor’s

choiceastoperformance.

Considerationisasignthatsignalsthepresenceofthisform,butnot

intheinstrumentalsensethatthepresenceofconsiderationtendsto

produce,orcorrelatewith,therequisiteformofcontractualobligation.

(Althoughthatisalsonodoubtthecase.)

Rather,thepromisee’sprovidingsomethinginreturnforthepromise

isitselfsymbolicofhertakingorhavingthepromisor’schoiceasto

performance.

Thisexplainstheverypeculiar,verypreciseformoftheconsideration

doctrine.Aswesawpreviously,thelawrequiressomethingtobedoneby

thepromiseeforthepromisor’spromiseorperformance.Thatsomething

mustbedonebythepromisee—itmust“movefrom”her(onthebenefit‐

detrimenttheory),ormovefromherandcausethepromise(onthe

bargain/inducementtheory).

Onthissolution,considerationyieldsareasonforcontractual

obligation.Moreprecisely,considerationrepresentsthereasonof

contractualobligation.Thereasonofcontractualobligationisaspecial

formofmutuality—aparticularpermutationofmutualchoice.

Therepresentationisflawed,however.Considerationdoctrinelooks,

notforthepromisee’stakingofthepromisor’schoice(astothepromise

orperformance),butfortheprovisionofsomethingelsebythepromisee

inexchangeforthepromisor’schoice.

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Thisconcernaddressedbyconsiderationdoesnotariseintheother

typesoftransactionwehaveconsidered,whichdonotrequire

consideration.Therethetransfereeorpromisee’s“having”something

subjecttoherchoiceappearsevidentfromhisphysicalcontrolofan

object,orbecausethetransferororpromisornowholdsthatobjecton

hisbehalfasasortofagent.Wecanthinkofrelationsbetweenpersons

andobjectshere,whereasinaninformalcontractwemustsourcethe

entitlementinawhollyidealacquisitionsolelythroughtheparties’

choice.

Importantly,therequisiteformofacontractualobligationisnot

ensuredbyanyotherdoctrineofcontractformation.Offerand

acceptancedonotensureit.Anacceptanceisa“manifestationofassent

totheterms[oftheoffer]made…inamannerinvitedorrequiredbythe

offer.”111ThisleavesopenthepossibilitythatBensonidentifiesinhis

discussionoftheinsufficiencyofamere“Iaccept.”Theacceptorcould,

forexample,merelybeassentingtotheofferor’sproposedcourseof

action,withoutthepartiesregardingtheacceptorashavingacquiredthe

offeror’schoiceastoperformance.

Nordoes“intentiontocreatelegalrelations”ensuretherequisiteform

ofacontractualobligation.Thereiscurrenttheoreticalanddoctrinal

divergenceoverwhetherthereis,orshouldbe,aseparaterequirement

of“intentiontocreatelegalrelations”inthecommonlaw.112Onour

analysis,inorderfortheretobeacontractualobligation,theparties

mustchoosethatthepromisor’schoiceastoperformancebesubjectto

thepromisee’schoice.Thereisnoneedwhatsoeverfortheparties’

advertenceastothe“legal”effectsofthischoice.Forexample,thereneed

benointentionastowhethertheattentionofthecoerciveapparatusof

thestatewillbetriggered,orthatacertainchangeofstatusoccurin

positivelaworjuridicalmorality.Hencethereisnodifficultywiththe

111RESTATEMENT(SECOND)OFCONTRACTS§50.112See,e.g.,GregoryKlass,IntenttoContract,95VA.L.REV.1437(2009).

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Americanapproachthatthereisnoseparaterequirementof“intentionto

createlegalrelations.”113

Atthesametime,however,anintentionthatthecontractnotbe

legallybindingwillclearlyunderminetheestablishmentofanexclusive

rightonthepartofthepromisee.Bymakingitclearthatapurported

rightshouldnotbelegallyenforceable,thepromisorindicatesthatshe

doesmeantofullyexcludeherselffromtheobjectofthatright.She

intendstoretainasortofbackgroundrighttoreassertcontrol—sheisat

mostlicensingthepurportedpromisee’sactions,ratherthancontracting.

HencethereisalsonodifficultywiththeAmericanrulethatanexpressed

intentionnottobelegallyboundwillrenderthecontractright

unenforceable.114

ItisoftensaidthatthereisadifferencebetweentheAmericanlawand

thepositioninEngland.However,acloserinspectionrevealsthatthey

areinfactequivalent.Englishlawdoesrequireanintentiontocreate

legalrelations.115However,thisispresumedincommercial

relationships,116andisthuseffectivelyequivalenttotheAmerican

positioninthosecases.Innoncommercialrelationships,thecourt

effectivelyadoptsadefeasiblepresumptionthatthepromisordidnot

intendtoconferexclusivecontrolonthepromisee,whichislikely

warrantedasanevidentialpresumptionabouttheparties’intentions.117

Whileintentiontocreatelegalrelationsdoctrineistherefore

unproblematic,itcannotensuretherequisiteformofthecontractright.

Thepartiesmay“shouttotherooftops”thattheyintendtobringthefull

forceofthelawtobearontheirrelationship;theycanbeasserious,

deliberate,considered,etc.asanycontractorhaseverbeen,still

113RESTATEMENT(SECOND)OFCONTRACTS§21.114Id.cmt.b.115BalfourvBalfour,[1919]2K.B.571.116EdwardsvSkyways[1964]1W.L.R.349.117Cf.PeterBenson,AbstractRightandthePossibilityofaNondistributiveConceptionofContract,10CARDOZOL.REV.1077,1085(1989).

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contractualobligationisinexplicableunlesstherequisiteformofmutual

choiceisestablished.118

InhisHarvardLawReviewarticlecallingfortheabolitionofthe

doctrineofconsideration,LordWrightclaimedthatthereareonlytwo

possiblewaystoapproachthedoctrine:

[L]ogicallythereareonlytwotheories….Onetheoryisthattheremustbesomethingoutsidethecontractualintention,togiveit,asitwere,supportandsubstance;theother,thatthedeliberatenessofthecontractualintentionisinitselfthesolesufficienttest.Nothingintermediateseemstobelogicallypossible.119

Thischapterhassuggestedthatthereisathirdway.Thereisnothing

“outsidethecontractualintention”—nothingbeyondthechoiceofthe

contractingparties.Nor,however,isthe“deliberateness”oftheintention

the“sole,sufficienttest.”Whatisrequiredandwhatthedoctrineof

considerationseekstoensure,isthattheparties’mutualchoicehasthe

requisiteform.

7.6 Estoppel

Finally,nodiscussionofconsiderationcanignoretheissueofpromissory

estoppel.Hereitshallbeverybrieflysuggestedthatpromissoryestoppel

takestwoforms.WecanillustratethesebyconsideringWilliston’s

famousexampleofanunclewhopromiseshisnephewJohnny$1,000if

hebuysacar.IfJohnnyspends$500onacarinrelianceonthispromise,

andtheunclereneges,whatdamagesshouldJohnnybeawarded?120

Onouraccount,theunclecouldbeliablefor$1,000—thatis,for

breachofacontractualobligation.(ThiswasWilliston’sview,andisalso

118Thesamepointcanbemadevis‐à‐vistheciviliantheoryofthe“juristicact.”SeeLorenzen,supranote56,at642n.117.119at1226. 120SeeL.L.Fuller&WilliamR.Perdue,Jr.,TheRelianceInterestinContractDamages:1,46YALEL.J.52,64n.14(1936).

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possibleundertheSecondRestatement.)121Thisresultmakessenseifthe

uncleandJohnnymutuallyrecognizedthattheuncle’schoicetopaythe

$1,000wasnowJohnny’s,justasifitwereJohnny’sproperty.Thatis,the

expectationremedymakessenseifthepartieshaveinformationmadea

mutualchoicethathastherequisiteformofacontractualobligation.

Ontheotherhand,ifthepartieshavenotmadeamutualchoicewith

thisform,thentheuncleshouldnotbeliableforthe$1,000,butmaystill

beliablefor$500—areliance‐basedmeasure.(Alsoavailableunderthe

SecondRestatement.)122Thereasoningherehasbeenexplainedby

PeterBenson.123Wewillmerelysketchhowthisaccount,adaptingit

slightlytofitswiththeideasdevelopedinthepresentwork.124

Ifonepartyintendsforanothertoactonthebasisofsome

representation—here,thatthereisacontract—andthenbecauseofthe

representer’sactionstherepresentationisrenderedfalse,then

representershouldbeliablefortheother’sreliancelosses.Therelying

party’sactionorchoicethatproducestherelevantharmisfullychosenby

therepresentingparty,whointendsforthereliancetooccur.125In

contrast,therelyingparty’sactionorchoiceisdefective—itislessthan

fullychosen—becauseitproceedsonthebasisoftherepresentationby

therepresentingpartythatturnsouttobefalse.Inthissituationwemay

beabletodescribetherepresentingpartyashavingusurpedtheother

party’schoice.Thisisofcourseaviolationofthe“fundamentalnormative

principle.”Itmustbeundonebyputtingtheinjuredpartyinapositionas

121RESTATEMENT(SECOND)OFCONTRACTS§90&cmt.d.122Id.123TheExpectationandRelianceInterestsinContractTheory:AReplytoFullerandPerdue,inISSUESINLEGALSCHOLARSHIP(R.Cooter&J.Gordley,eds.,2001).124ItisadaptedbecausewedonothelpourselvestoBenson’snotionofa“baselineentitlement”thatisestablishedbytheplaintiff“independentlyofthedefendantandpriortoanyinteractionwithhim.”Id.atnn.62‐67andaccompanyingtext.Thewrongisdescribedonouraccountmakesnoreferencetoanybaselinethatcouldbeconceivedindependentlyofthewrongitself.125AsCardozosaystotherepresentingpartyinthissituation,“thisisyouractandyouaredamnifiedbyyourowndoing.”ImperatorRealtyv.Tull(1920)127N.E.263,citedinBenson,ExpectationandReliance,supranote123,atn.66andaccompanyingtext.

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ifthereliancehadneveroccurred—thatis,byawardingreliance

damages.

7.7 Conclusion

Thecoreofthecommonlawofcontract—theformationandformofa

contractualobligation—canbeunderstoodentirelythroughtheconcept

ofmutualchoice.Thisworkhasamountedtoasustainedefforttohold

ontothatidea,resistingthetemptation,whichreappearsinanewguise

ateverystageinthedevelopmentofatheoryofcontract,toletgoofit.It

hassoughttoshowthatthemajordifficultiesinunderstandingthecore

ofthecommonlawofcontractoccurbecausetheoristsaredrawnaway

fromtheideaofmutualchoice,ratherthantreatingitasexplanatorily

andnormativelysufficientinitself.

Theproductofthiseffortisthewilltheoryofcontract:thereisa

contractwheretwopersonsrecognizethatoneofthemhastheother’s

performance.Thatis,wheretwopersonschoosethatonechooses

somethingthroughtheother’schoice.