Academic journal article Northwestern University Law Review

Relational Contract Theory in Context

Academic journal article Northwestern University Law Review

Relational Contract Theory in Context

Article excerpt

When one struggles against ancient concepts-and their labels-it seems almost impossible to avoid being misunderstood, even by very perceptive people.1

Ian R. Macneil

INTRODUCTION

This Symposium, commemorating Ian Macneil's four decades as a contract law teacher and scholar, is filled with irony. All of the participants recognize the immense contribution Macneil has made to contracts scholarship, but only a few of us could be considered enthusiastic devotees of relational contract theory as articulated by Macneil. Even more ironically, while Macneil's work is widely cited, the level of engagement with its details has not been commensurate with its contribution, and the work is frequently misread by scholars. Moreover, Macneil's theory has had a limited direct impact on contract law as determined by the courts and legislatures. Finally-and this is an irony I would like to highlight in this Article-despite the limited engagement with Macneil's work, there have been significant developments in the law itself that are roughly parallel to the approaches he has suggested.

In this Article, I want to situate Macneil's relational contract theory within the story of the development of contract law, to describe the parallel developments in the law, and to draw out some of the implications of the theory and the developments. Macneil's scholarship inhabits the broader realm of social theory as well as the narrower realm of contract law, but it is only the narrower realm that I consider here. At each stage of the story I will consider three issues about the version of contract law under discussion. First, what is the scope or structure of the field? What does it contain, and how is its subject matter defined in relation to related fields? Second, what method does the field use? What tools of analysis does it employ to decide cases? Third, what is the field's substance? What are its core principles and purposes?

I. CLASSICAL AND NEOCLASSICAL CONTRACT LAW

Relational contract is one of the latest steps in the scholarly project of responding to the inadequacies of classical contract law, so the appropriate starting point is the familiar story of classical law,2 along the three dimensions of scope, method, and substance. The scope of contract law as conceived by classical scholars and judges was very broad. Classical contract law was the realm of consensual relations, as distinguished from the nonconsensual relations governed by tort law. All consensual relations of any kind were within the realm of contract. A single body of law could govern such a wide range of transactions because of its method. The classical method involved the application of relatively clear rules of legal doctrine, typically framed at a high level of generality and presenting dichotomous choices. The scope and method served the substance; as the realm of consensual relations, contract law simply set ground rules for self-maximizing private ordering.

By the time of its enshrinement in Williston's treatise 3 and the original Restatement of Contracts, classical contract law already was under attack. The essence of the criticism of classical law and its reconstruction through succeeding scholarly generations was contextualization; the more classical contract law was placed in context, the less sense it made. The contextualization took two forms, one internal and the other external to the body of law itself.4 The internal criticism compared the ostensible rules with the results in the cases, finding that the rules did not explain the cases and that no formal, general rules ever could. The external criticism situated the rules in the world of actual contracting practice, arguing that the law's approach needed to be changed to serve the objectives of contract law.

Neoclassical contract law-the law of the Uniform Commercial Code, the Restatement (Second) of Contracts, and today-is the product of this criticism. …

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