Carrying the Choice Theory of Contracts Further: Transfers, Welfare, and the Size of the Community

Abstract

Abstract The Choice Theory of Contracts is an ambitious, concise, and largely successful contribution to contract theory. Choice Theory is a liberal theory of contract law, grounded in a rich notion of autonomy, which stresses the obligation of the legal system to enhance our autonomy by ensuring the multiplicity of contractual types within the spheres of family, employment, home, and commerce.This article mitigates three shortcomings in The Choice Theory of Contracts and tries to carry Choice Theory further. A first shortcoming of the book is that the critique of transfer theory fails to acknowledge its analytical value. Second, in Part II of the book, Dagan and Heller overlap two issues: what the goods of contract are, and the compatibility of Choice Theory with the key concepts used by mainstream contract theories. Finally, Dagan and Heller do not fully acknowledge that the value of our autonomy is related to our ability to choose well. These revisions are useful to channelling scholarly attention on the implementation of Choice Theory and to sharpening the conceptual tools needed to do so.To show the potential of Choice Theory, this article carries it further. First, the economic concept of consumer sovereignty extends the programme of autonomy-grounded economic theories of contracts. Second, the size of the communities in which contractual relationships are created helps understand how various doctrines and even entire branches of the law foster the autonomy-enhancing capacity of contracts.The article concludes with a series of suggestions for carrying Choice Theory even further.