Justice, Fault, and Efficiency in Contract Law

Abstract

This article explores some of the core concepts that underlie contract law. It rejects the feasibility of a uniform theory of contract law including a critique of the economic analysis of contract law. The importance of efficient contract rules and efficient contracts is not disputed, but efficiency’s explanatory power is limited due to the breadth of contract law, as well as the complexity and dynamism of modern contracting. Behavioral law and economics is introduced as a method for making law and economics more predictive of real world contracting. The article selects three core principles for analysis—justice, fault, and efficiency that help explain the essence of contract law. It also reflects on the tension between freedom of contract and paternalism.

Keywords: contract law, efficiency, law and economics