Liberal Contract Theory and Actually Existing Contracts

Abstract

Most contemporary contract theory views contract through the lens of what Charles Fried called "the liberal ideal": a consensual exchanges of commitments to future behavior between autonomous agents. These ideal theories run into serious problems in application. Even as theoretical discussions continue to coo over the liberatory potential of consensual rulemaking, most terms of most contracts that most individuals and firms enter into consist of unread boilerplate over which one or both parties have little to no control. Thus, at best, vast swaths of contract theory have become irrelevant to a huge swath of actually existing contracts. At worst, it has become ideological cover for unaccountable private governance. Ideal theories of contract must thus be abandoned. Instead, a pragmatic approach should be adopted where contracts are understood as tools of governance the value of which can only be evaluated in the contexts in which they are used. Much actually existing regulation of contracts proceeds in this fashion, although ideal theories of contract obscure this fact. Some of the implications of adopting a pragmatic approach to the normative evaluation of contracts are explored, including the fact that there is no such thing as "contract law" (but rather contract laws) and the inseparability of contract evaluation from a theorist's overall political orientation.

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