Externalities & European Contract Law - Capabilities as the Minimum Standard of Social Justice

Abstract

The subject of this paper is the question whether contracts that fundamentally damage the quality of life and capabilities of others should be invalid under European contract law. Two short case descriptions show the relevance of this question in light of globalization. An economic view of these cases emphasizes problems of social justice. The paper discusses the capabilities approach as a possible minimum standard of social justice for European contract law. For the capabilities approach to be accepted as such it needs to overcome critique from legal scholarship with regard to its relevance for contract law as well as critique with regard to the theory itself as a standard of justice. The latter is addressed by contrasting the approach with other traditions such as utilitarianism and the social contract. The relevance of the capabilities approach for European contract law is discussed in the remainder of the paper: why should European contract law incorporate a standard of social justice and how does the capabilities approach translate into rules of contract law? This paper aims to offer a convincing argument for the capabilities approach as a minimum standard of social justice in European contract law.