Regulating Contracts, Strictly Speaking

24 Pages Posted: 9 Apr 2025

See all articles by Hanoch Dagan

Hanoch Dagan

University of California, Berkeley - School of Law; Berkeley Law School

Date Written: February 11, 2025

Abstract

This Essay integrates two ambitions: to defend a strict conceptualization of contract regulation and to highlight its justification and proper limitation.

The concept of regulating contracts implies imposing on contract law a standard that is, in some sense, external to it, namely: one which is not part of what contract is, is supposed to be, or supposed to do. This means that in a liberal polity, which respects people’s right to freedom of contract, regulating contract is legitimate only where this external requirement is weighty, and if the proposed intervention in contract is both necessary and not overly burdensome given this competing interest.

But for this to be the case – for this threshold to be justified – the standard at hand should indeed be external to the idea of contract. The strictly voluntaristic vision of contract, which is often assumed in this context, implies that the right to freedom of contract is impinged upon whenever the law adds, qualifies, or refuses to enforce any aspect of the parties’ voluntary agreements. But this view of contract is conceptually, normatively, and descriptively troublesome. Therefore, it must not stand for the idea of contract.

A better conception of contract, or at least so I’ve argued in these pages, recognizes contract’s intrinsic jurisdictional boundaries. It implies that rules that safeguard the just relationships between the contractual parties (including contract’s intended beneficiaries) and the autonomy of their future selves are not interventions in contract. These rules must not be subject to the demanding requirements of contract regulation. Quite the contrary, to secure the integrity of contract and thus its continued legitimacy, law should vigilantly ensure that only agreements that comply with these requirements can recruit its authority and coercive power.

Suggested Citation

Dagan, Hanoch,

Regulating Contracts, Strictly Speaking

(February 11, 2025). Available at SSRN: https://ssrn.com/abstract=5133851 or http://dx.doi.org/10.2139/ssrn.5133851

Hanoch Dagan (Contact Author)

University of California, Berkeley - School of Law ( email )

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Berkeley, CA 94720-7200
United States

Berkeley Law School ( email )

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