Fairness and the Law of Contract

Abstract

Relief is given for severely unfair contracts, and yet there is no generally accepted explanation of what makes a contract unfair. Neither is there a generally accepted explanation of why contracts should be enforced. The explanation popular in the 19th century was that contracts should be enforced because the parties expressed their will to be bound. According to the members of the law and economics movement, they should be enforced because it is efficient to do so. Neither the will theorists nor the partisans of economic analysis can accommodate the concept of fairness. For that reason, their explanations of why contracts should be enforced are flawed. Contracts should be enforceable when they are fair. That principle explains not only the doctrine of unconscionability but the doctrines that traditionally determine when a contract is to be enforced such as consideration, impracticability, mistake, and frustration of purpose.

Keywords: Fairness Theory of Contract Law, Will Theory, Law and Economics, Voluntary Commutative Justice