Rawls and Contract Law
37 Pages Posted: 15 Jan 2005 Last revised: 21 Sep 2018
Date Written: March 1, 2005
The conventional view of Rawlsian political philosophy is that the private law lies outside the scope of the two principles of justice - it is not part of the basic structure of society which, in this view, is limited to basic constitutional liberties and the state's system of tax and transfer. This narrow view of the basic structure invites the conclusion that Rawlsian political philosophy is neutral with respect to the contemporary debate over the ex ante and ex post conceptions of contract law. We argue, however, that the narrow view is incorrect and the private law is properly understood as subject to the two principles of justice. We argue that individual areas of the private law must be constructed - in conjunction with all other legal and political institutions - in a manner which best meets the demands of the two principles of justice. In our view, the private law, for Rawlsianism, should not be viewed as separable from other areas of law. Despite the confusion in the literature over the narrow view of the basic structure, we maintain that the private law is not independent of the demands of the principles of justice. We argue that private ordering for Rawlsianism is properly understood as one component of an entire scheme of legal and political institutions. Taken as a whole, this scheme (in comparison with all other possible complete schemes of legal and political institutions) best meets the demands of the two principles of justice. Importantly, we also argue that our thesis - that contract law is subject to the two principles of justice - does not imply that either individual contracts or doctrines of contract law answer directly to the two principles of justice. That is to say, individual contracts and rules of contract law need not, in our view, pattern themselves after, nor be read directly off the principles of justice. Instead, we argue that for the Rawlsian, contract law is a matter of (re)distribution, consistent with a post-institutional right to freedom of contract. We understand freedom of contract, for Rawlsianism, to be defined as the scheme of contracting options constructed as open or free (in the post-institutional sense) in conjunction with the overall scheme of legal and political institutions which, when taken as a whole, best serves the demands of the two principles of justice.
Keywords: Contracts, Contract Law, Promise, Private Law, Rawls and Contract Law, Seana Shiffrin, Kronman, Fried, Rawls, Basic Structure, Unconscionability, Distributive Justice, (Re)distribution, Private Law, Law and Economics, Kaplow and Shavell, Libertarianism, Wealth Maximization
JEL Classification: K12, D63
Suggested Citation: Suggested Citation