Contract as Empowerment

Abstract

This Article offers a novel interpretation of contract law, which I call “Contract as Empowerment”. On this view, contract law is neither a mere mechanism to promote efficiency nor a mere reflection of any familiar moral norm — such as norms of promise keeping, property, or corrective justice. Contract law is instead a mechanism of empowerment: it empowers people to use legally enforceable promises as tools to influence other people’s actions and thereby meet a broad range of human needs and interests. It also empowers people in a special way, which reflects a moral ideal of equal respect for persons. This fact explains why contract law can produce genuine legal obligations and is not just a system of coercion. This Article introduces contract as empowerment and argues that it reflects an interpretation of contract with distinctive advantages over the alternatives. Contract as empowerment is an “interpretive” theory: it is simultaneously descriptive, explaining what contract law is, and normative, explaining what contract law should be. To support contract as empowerment’s interpretive credentials, I identify a core set of doctrines and puzzles that are particularly well suited to testing competing interpretations of contract. I argue that contract as empowerment is uniquely capable of harmonizing this entire constellation of doctrines while explaining the legally obligating force of contracts. Along the way, contract as empowerment offers (1) a more penetrating account of the expectation damages remedy than exists in the current literature; (2) a more compelling account of the consideration requirement; and (3) a concrete framework to determine the appropriate role of certain doctrines — like unconscionability — that appear to limit freedom of contract. The whole of this explanation is greater than the sum of its parts. Because of its harmonizing power, contract as empowerment demonstrates how a broad range of seemingly incompatible surface values in modern contract law can work together — each serving its own distinctive but partial role — to serve a more fundamental principle distinctive to contract. These surface values include the values of fidelity, autonomy, liberty, efficiency, fairness, trust, reliance and assurance. Although many people think that contract law must involve trade offs between these values, contract as empowerment suggests that tensions between them are not always real. So long as the complex system of rules that governs contracts is fashioned in the right way, these doctrines can work together to serve a deeper and normatively satisfying principle distinctive to contract. This framework can therefore be used to guide legal reform and identify places where market regulation is warranted by the principles of contract in many different contexts of exchange — from those involving consumer goods to labor, finance, credit, landlord-tenant, home mortgages and many others.