Larry Cunningham Responds, Part I: Politics in Contracts

Lawrence A. Cunningham is the Henry St. George Tucker III Research Professor of Law at the George Washington University Law School.  He is also the author of Contracts in the Real World.

The following post is cross-posted from an online symposium that previously appeared on Concurring Opnions.  The original post can be found here.

Before wrapping up the symposium about Contracts in the Real World, I wanted to offer two posts on main themes of the contributions–which were wonderful.

The first concerns the role of politics in contract law adjudication. It emerged as a theme from several posts, explicitly by Dave and Miriam, implicitly byJake’s discussion of Baby M and by Nancy’s of ProCD, and more obliquely in Tom’s (and Miriam’s) reference to my notion of the “sensible center” in contract law.

Perhaps the safer way to put the point would be to say that the common law of contracts is among the least political of subjects in law. The book does recognize the potential for political factors, of course, including variation among states. And while it celebrates the impressive power of the common law of contracts to deal neutrally with change, it also notes limits.

This is most explicit in the case of Baby M and its contrast with California’s Baby Calvert. I agree with Jake, and his agreement with Dave, that these two cases illustrate the driving role that judicial worldviews, and perhaps local state outlooks, can play in the approach to a case and the outcome.

The pairing of the two cases helps to show such features, in a context where opposition seems particularly acute. This is the context of “public policy,” an area where the common law of contracts is often inferior to administrative or legislative solutions precisely because at stake are exquisitely political decisions. That’s why p. 56 notes that judges on both (or all) sides of the debate about surrogacy contracts “usually concede that better solutions are likely to come from legislation. As magisterial as the common law of contracts is, many of society’s vexing puzzles should be resolved by the legislative branch of government.”

The differences between California and New Jersey on surrogacy contracts reminds me of the differences, to which Dave adverts, between California and New York on the parol evidence rule. In California, Chief Justice Roger Traynor helped to forge a weak parol evidence rule, stressing context and reflecting skepticism of the unity of language, compared to New York, where judges since Andrews and Cardozo (noted at pp 7-8) have shown greater interest in finality and the security of exchange transactions.

Those differences, in the doctrine and underlying attitudes, are real. But as this example shows and Dave notes, this is not so easy to classify in political or ideological terms.  It may be due more to New York’s history as a commercial center and may reflect something about how California is just a more relaxed place in general.

I think the example of ProCD, about which Miriam, Nancy and Jake commented, is an instance of the potential but vague role of politics or judicial worldview in contract adjudication. In the book, I summarize the case as a possible precedent for the main case, which concerned consumers “assenting” to inconspicuous terms in an on-line license—the Netscape spyware case. The ProCD precedent, I note, pointed in opposite directions for the Netscape case, forcing the judge to choose whether to follow in its path or not. The judge chose not to. The related facts seem to support that outcome.  So far so good.

But given the charged setting of electronic commerce, I suspected that readers would have a sneaking suspicion that something else is going on. So I identify the judges—something done rarely in the book, as follows: at page 28 “[ProCD was written by] Frank Easterbrook, the federal judge in Chicago appointed by President Ronald Reagan” . . . and at page 27 “Netscape was written by Judge Sonia Sotomayor for a federal appellate court in New York, several years before her promotion by President [Barack] Obama to the U.S. Supreme Court.”

The real problem with ProCD may be more akin to the real problem with Baby M: even the common law of contracts nods. The issues are so novel and vexing that legislatures should act.  Even the UCC—part of a long tradition in sales law recognizikng the limits of the common law—may not be readily adaptable to the world of electronic commerce, as Miriam’s post about ProCD hints.

But to return to the broader thrust of the sensible center and the generally apolitical quality of contract law, consider two points Jennifer made in her post. The first concerns the political fury that erupted amid the AIG bonus contracts. While politicians were calling for scalps and the company’s PR team intoned about the sanctity of contracts, Jennifer notes the op-ed I wrote summarizing the comparatively cool tools and results recognized by the common law of contracts.

Jennifer also calls attention to the list of conclusions at the end of Contracts in the Real World. Look at those statements of earthy contract law (some listed here) and it will be difficult to deny the truth or to detect a political or ideological edge within the spectrum of American political discourse. Let contract law do its knitting, and my own answer to Dave’s excellent question is that contract law really is pragmatic.

[Posted by JT]