Distributive Justice and Contract Law: A Hohfeldian Analysis
54 Pages Posted: 11 Sep 2017
Date Written: September 7, 2017
According to Aristotle, justice consists of giving each person his due: equal members of society should be treated equally, and unequal members, unequally. This justice, in turn, comes in two flavors: distributive and corrective. Distributive justice — which has as its purview society at large — is concerned with distributing society’s shares to individuals according to merit. Whereas, the purview of corrective justice concerns voluntary (e.g., contracts) and involuntary (e.g., torts) transactions, and it seeks to rectify unjust alterations in the distributive scheme by returning the parties to the position they occupied before the distributive scheme was altered, which is to say, before a particular harm occurred.
Even today, Aristotle’s classification of these two types of justice holds a firm grip on the judicial imagination, and perhaps nowhere is this truer than in contract law. There, it is taken for granted that the distributive shares held by members of society are determined both prior to, and outside of, contract law. The distributive question having been settled, it is believed that the proper role of contract law is merely to (a) facilitate the just exchange of these distributive shares by allowing parties to bargain and form agreements with one another and (b) rectify any unjust alteration to these previously established distributive shares. To couch this in Aristotelian terms, contract law should be concerned with enforcing the rules of corrective justice — which will facilitate and rectify the just exchange of previously allocated distributive shares — but should not be concerned with the initial distribution of those shares.
This Article challenges that view, and argues that the seemingly value-neutral rules of contract law are fundamentally distributive in nature, and that to ignore these distributive considerations is more than just bad policy — it is to misunderstand how the fundamental building blocks of the law are arranged to form contract law in the first place. Indeed, given the distributive nature of contract law, even the most non-activist judge imaginable, who sees it as his or her role to simply apply the law as written, and who views it as entirely improper to consider notions of distributive justice for the purpose of achieving a fairer distribution of wealth among members of society, nevertheless cannot help but make distributive decisions whenever he or she selects among or administers the rules of contract law, which have embedded within their very structure a deeply entrenched view of distributive justice.
This is because every determination of law, including the determination of which rights ought or ought not to exist, or ought to be applied in a particular contractual setting, is the product (intentional or otherwise) of a policy decision regarding not whether the legal relationship in question ought or ought not to be regulated, but how that relationship should be regulated. And this regulation, in turn, requires that judges — even judges who adamantly view themselves as non-activist judges — make an ex ante distributive decision regarding which rights ought and ought not to exist, which rules ought and ought not to apply, and how those rights and rules ought and ought not be protected. These decisions, in turn, must all be made as a matter of policy rather than law.
Teasing out the implications of these insights can fundamentally alter the way we view and understand contract law. For instance, once we realize that the various legal rules that govern contract law are made up of a conglomeration of policy decisions regarding how to regulate (rather than whether to regulate) the relationship between the contracting parties, one of the largest obstacles to regulation — that of the perceived judicial interference with the rights of the parties — is removed as the need for regulation is now seen as mandatory rather than permissive. And because regulation is mandatory, the real question ought to be how we should understand, if not change, the manner in which the selection, application, and interpretation of contract rules affects the distributive arrangements between the parties to a contract.
Keywords: Contracts, Contract Law, Jurisprudence, Legal Philosophy, Hohfeld, Rights, Distributive Justice, Corrective Justice, Justice
JEL Classification: K12
Suggested Citation: Suggested Citation