Toward a Realist Theory of Contract

Abstract

Most contemporary theorists begin from the premise that one must have a general account of what makes contracts valuable as distinct from other legal forms. Such “ideal theories” of contract generally attempt construct a general theory of promissory morality that pivots analysis around the ability to choose one’s own obligations. But in the contemporary world very few contracts can accurately be portrayed as promissory in this sense. It is well known that most provisions of most contracts consist of boilerplate that one or both parties have not read, or, even if they were to read, would have practically no control over. To accommodate this reality (to the extent they acknowledge it) ideal theories either have to water down their account of consent or treat most actually existing contracts as not really contractual. The former risks normative degradation and the latter irrelevance. Ideal theories of contract, in other words, are a dead end. As such, this article argues for dusting off the realist orientation to contract that predominated until roughly the 1980s and updating it by drawing from recent realist/pragmatist theory in moral, political, and epistemological philosophy. The basic argument is that contracts cannot be cogently analyzed out of their context of use. Ideal theories create an artificial context to test intuitions and then assume its applicability to all contexts; realist theories explore how actual contexts structure contractual rulemaking. One cannot give a determinate answer about the correct rules to govern a particular type of contract (or whether contracting is warranted at all) without an understanding of (at least) the topic governed by a contract, the institutional location of the parties, and the surrounding rules and norms. Some implications of this perspective are explored.

Keywords: Contract, Contract Theory, Liberalism, Pragmatism, Consumer Contracts, Employment Contracts