PERSPECTIVES ON CONTRACT LAW, 4th ed., Randy Barnett, ed., 2009
52 Pages Posted: 11 Sep 2007 Last revised: 14 Dec 2011
Contract has been conceptualized as a species of promise. Treating contractual promise as a kind of promise highlights certain important aspects of contracting, but it also obscures essential differences between legally binding and everyday, or what I will call "private," promises. The moral character of a private promise depends on the fact that it is not only freely made but also freely kept. Most contractual promises are not intended to have and (by definition) do not have this voluntary character. A promisor essentially opts out of the private practice of promising when she assigns to a third party the authority to coerce performance of her promise.
In making a private promise, a promisor creates a sufficient reason to perform the content of her promise: the very fact of her promise. To the extent she creates a second sufficient reason - liability in the case of breach - the first reason does no work, or, there is no way for the independent sufficiency of the first reason to manifest itself objectively. Similarly, in being made a private promise, a promisee is given ground for belief that the promisor will perform: again, the fact of promise. To the extent the promisee is independently assured of performance, she cannot objectively rely on the fact of promise alone. The act of contracting removes one from the moral world of private promise.
Some contractual promises co-exist with private promises of the same content. But their co-existence is uneasy, because invoking the specter of the law undermines the commitment contained in a promise from the perspective of both promisor and promisee. The content of that commitment is possible only within a close personal relationship. It entails a combining of interests that were previously separately held by promisor and promisee. In a private promise, the promisor undertakes to give the promisee's relevant interests weight equal to or greater than her own. The specter of legal liability creates a reason for performance stemming from the separateness rather than the unity of interests between promisor and promisee. A sincere intent on the part of the promisor to perform for reasons unrelated to legal obligation does not dissipate this tension any more than a sincere intent on the part of the more powerful party in a dispute to resolve that dispute fairly would render her unilateral decision just.
Once we have disentangled private and legal promise, we can begin to adjust the boundaries and defaults of contract law accordingly. Because private promises are private, contract law should make it relatively costly for parties to bring the law to bear on such commitments; indeed, it already does. When public policy dictates affording a legal remedy for the breach of private promise, we can mitigate the conflict between private and legal promise by minimizing their overlap. This can be (and, in part, already is) done by limiting the remedies for breach to ones which the private promise did not contemplate. In fact, the remedy should deviate from both the obligations imposed by private promissory norms and the remedy usually awarded in commercial cases. In the context of personal relationships, reliance damages should be the preferred remedy. Reliance damages redress the injury inflicted by breach of the promise, in which the state may have a legitimate interest, but do not have the effect of either coercing performance or rendering the promisee indifferent to performance.
In other contexts, the distinction between private and legal promise calls for an expansion of the domain of contract. For example, promises made in the context of radical inequality in power, as in most employment circumstances, are often located outside the law. A promisor with vastly superior bargaining power need not promise in the contractual form in order to induce the desired conduct by the promisee; the promisor has no incentive to submit the unequal relationship to legal authority. Downward promises between hierarchically situated persons are not easily enforced by the state. Thus, performance of those promises usually remains at the discretion of the promisor. Such promises are false private promises. To the extent we see the depersonalization of the employment relationship as an important achievement of the liberal market economy, this account clarifies one task of contract law: the displacement of private promise in the realm of employment. Just as parties should have to go out of their way to make a private promise legally binding, legal defaults should make it relatively onerous for employers to avoid legal consequence when they make promises to their employees.
Keywords: contract, promise, private promise, reliance damages, employment contract, personal contracts, trust
Suggested Citation: Suggested Citation
Bagchi, Aditi, Separating Contract and Promise. PERSPECTIVES ON CONTRACT LAW, 4th ed., Randy Barnett, ed., 2009; Florida State University Law Review, Vol. 38, Pg. 707, 2011; U of Penn Law School, Public Law Research Paper No. 07-35. Available at SSRN: https://ssrn.com/abstract=1012150