Sunday, January 28, 2007

Looking for Law in All the Wrong Places - My Reaction to a New Theory of Contract and Promise

Posted by Jeff Lipshaw

Professor Seana Shiffrin's just published Harvard Law Review article, The Divergence of Contract and Promise, has received a flurry of attention, including from Larry Solum over at Legal Theory Blog and Ethan Leib over at PrawfsBlawg.  It's hard for me not to be interested, in view of the fact that I published an essay a year or so ago entitled Duty and Consequence:  A Non-Conflating Theory of Promise and Contract (not in the Harvard Law Review, by the way).

There's an interesting matrix that frames the various positions on the philosophy of contract.  OnMatrix one axis, we have business versus personal contracts.  On the other axis, we have the justification of the law of contract by morality versus justification by efficiency.  In recent years, the seminal "personal-morality" article is Contracts and Collaboration by Daniel Markovits (113 Yale L.J. 1417), and the seminal "business-efficiency" article is Contract Theory and the Limits of Contract Law (113 Yale L.J. 541) by Alan Schwartz and Robert Scott.   By and large, the two camps, it seems to me, are ships passing in the night.  Markovits expressly disclaimed any application of his thesis to business entities, and Schwartz and Scott limit their models not only to business entities, but to sophisticated business entities.  (In addition, I am positive I heard Alan Schwartz at the AALS say words to the effect that issues other than efficiency could not possibly enter into a contract between General Motors and General Electric.)  This is the primary point Ethan Leib makes in his essay on the subject.

Occasionally you see thinkers struggle with the "business-morality" and the "personal-efficiency" quadrants, and that is what is interesting about Professor Shiffrin's piece.  What she rightly observes is that both justifications - economic efficiency and moral imperative - seem to influence why we think the law ought to enforce promises, even if neither on its own is wholly satisfactory.  Certainly I won't do justice to her thesis in a blog post, but hers is another attempt to unify more broadly the reconciliation between law and morality within the microcosm of the relationship of private promising to private law.  And I am wholly sympathetic to her underlying concern, which is that, if we advocate a justification for systems of law leaving no room for moral agency, we will get exactly the kind of amoral (or immoral) law we deserve.

I know the following statement is going to come across harsher than I mean it (particularly given my sympathy for Professor Shiffrin's project), but the efforts to articulate an all-quadrant-encompassing theory of contract always seem to highlight two things: (a) jurisprudential justification that barely peeks out of its hermetically-sealed universe, and (b) the over-simplification of the very complex world out there that seems to be the special province of the law professor.  The particular culprit is the concept of efficient breach, and the idea that the law of contract is, and should not be, more lax than the equivalent moral principles inherent in promising.

How Professor Shiffrin's insight impacts my developing thesis comes below the fold.

Here's the thesis I want to develop (it began in the Duty and Consequence essay, and I continued it in Freedom, Compulsion, Compliance, and Mystery:  Reflections on the Duty Not to Enforce a Promise, 3 Law, Culture, & the Humanities 82 (2007), and Law as Rationalization:  Getting Beyond Reason to Business Ethics, 37 U. Tol. L. Rev. 959(2006), so look for something in the coming months).  By standing on an Archimedean fulcrum of law, or even legal philosophy, we find ourselves looking for law in all the wrong places. Professor Shiffrin is onto something important in her conclusion - by creating a contract, we invite the public into what was heretofore a private relationship.  And at that point our concern becomes focused on the public interest - whether of economic efficiency or morality - in the institution that is enforcing these private relationships.  So, not surprisingly, the focus is on how morality infuses itself into the institutional structure.  (Aside.  The following is a particularly intriguing passage from Divergence:  "In creating a contract, the parties render public their efforts to manage morally their disparate interests, as well as the associated latent or emergent vulnerabilities this disparity may create or feed."  It is delightfully ambiguous on the question when that public rendering occurs. Is it when you make the contract, or when you decide to fight about the contract?  That would seem to make all the difference, particularly when the issue is the central one in the philosophy of contracts - did you have a legally enforceable promise to begin with?)

One of the most interesting avenues, and one I discussed in Law as Rationalization, is the second-person perspective being articulated presently in philosophy by Stephen Darwall at Michigan, and in law by Rob Kar at Loyola-LA.   These approaches explore the nature of second-person morality - the claims YOU make upon ME.  Yet even focus, legally, on what is essentially the adjudication of rights - yours against me, or mine against you.

I want to suggest, if we move off the legal Archimedean fulcrum, and place ourselves in the position of moral agents at the moment of moral choice, the public aspect of the relationship, and the apparently clean dichotomies of contract and promise, fall away.  This is the pure second-person relationship, in which I and You consider our respective obligations to ourselves, each other, and to others, and in which easy moral imperatives like "always fulfill your promises" become harder.  Perhaps we can find an answer in the intuitionism of W.D. Ross; the feeling that we ought to fulfill our promises, or have them fulfilled when made to us, are prima facie duties, but not necessarily our final duties.  As I suggested in Freedom, Compulsion, the law cannot deal with a duty that both exists and does not exist in the same circumstance, but morality can.  Perhaps another way to look at it, and that is Professor Shiffrin's contribution to my thinking, is the difference between what we are capable of compromising when it is just us, and what we are required to decide when the matter becomes public.

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