Fundamental Rights, Contract Law and Transactional Justice

Abstract

Abstract This article critically engages with Peter Benson’s theory of contract law. It explores whether his juridical conception of contract as a transfer of rights, which is governed by the contract law’s internal principles of transactional justice, can be reconciled with fundamental rights. The article argues that the conventional distinction between the direct and indirect horizontal effect of fundamental rights is problematic because it does not make it unequivocal which body of law – fundamental rights or contract law – substantially governs the relations between contracting parties and determines the outcome of disputes between them. The answer to this fundamental question, however, is crucial for the stability of Benson’s theory of contract law. Drawing on the European experience, the article shows that the relationship between fundamental rights and contract law can take the form of the subordination of contract law to fundamental rights or the complementarity between the two. While the latter is compatible with Benson’s theory, the former is in tension with it. For the sake of conceptual clarity, therefore, it is useful to distinguish between three forms of the horizontal effect of fundamental rights in contract law – direct horizontal effect, strong indirect horizontal effect, and weak indirect horizontal effect.