Contract as Evil
40 Pages Posted: 8 Jul 2015
Date Written: July 6, 2015
Contract is, of course, often good. It permits parties to negotiate terms that are specific to their needs, something statutes can’t do. But contract is often evil and used for evil ends, particularly because much of contract theory and doctrine is unconcerned with the distribution of power; information and shrewdness between the parties and is based, in part, on a romantic view of contract, emphasizing its basis in free will and liberty. This almost deification of Contract blinds those who follow it to the very absence of free will and liberty when the ability to deal in contract is unbalanced. The current dialogue about contracts of adhesion and the question whether they should even be considered contracts requires us to take a new look at contract. The use of contract to limit constitutional and other rights based on a notion of voluntary waiver raises serious issues about whether we should be skeptical about the assumed good of contract. We need contracts, but we need also to rethink what we mean by contract and whether the formalistic conservative libertarian approach to it needs to be reined in.
This Article looks at Margaret Jane Radin’s argument that adhesion contracts are not really contracts and should be treated more through tort law, and looks briefly at the progression of product liability from contract to tort to strict liability. The Article also consider whether the model of agency regulation should be applied when traditional contract reasoning is overwhelmed by the actual facts of a supposed bargain. The Article then examines judicial approval through contract reasoning of unfair or even dishonest conduct in a number of quite different contexts. Sometimes the good guys win, but too often they don’t because contract is said to beat them.
Contract often aids evil. Government regulation — thoughtful but serious regulation by Congress, legislatures, administrative agencies and courts — is not antithetical to freedom of contract. It is needed to protect those who lack power and skill and consequently, the very free will and liberty that are supposedly the basis of contract.
Keywords: adhesion contracts, freedom of contract, individual contracts, consumer contracts, boilerplate, Consumer Financial Protection Bureau, CFPB, contract theory, libertarianism, romance of Contract
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