Some Preliminary Remarks on a Liberal Theory of Contract

By Gutmann, Thomas | Law and Contemporary Problems, Spring 2013 | Go to article overview

Some Preliminary Remarks on a Liberal Theory of Contract


Gutmann, Thomas, Law and Contemporary Problems


I

INTRODUCTION

There is no such thing as a non-liberal theory of contract. Because the normative structure underlying the concept of contract is basically and essentially a liberal one, (1) non-liberal approaches fail to grasp its meaning. They may, at best, be able to denote limits of the realm of contracts, but because they cannot explain what contracts are, non-liberal approaches lead to contract theories built around a void. (2) There are some theoretical implications to be derived from this. (3) When dealing with the challenges of the liberal approach--for example, with the problem of unequal power relations between contracting parties--the crucial question is which normative tools are compatible with the very idea of a contract in order to qualify as a part of a theory of contract. (4)

II

THE LIBERAL THEORY OF CONTRACT

The liberal theory of contract (as is sketched in quite broad strokes here) locates the normative foundations of the institution "contract" in individual rights, especially in freedom of contract. Contracts, in the liberal conception, are tools for realizing individual self-determination by means of voluntarily entering legally binding agreements. This notion of individual autonomy is not ahistorically given; rather, it was established and expanded through the social struggles that transformed the main determinant in our lives from "status to contract." (5) Guaranteeing this sphere of individual self-determination as a structural feature of liberal societies ("contract societies," as Weber called them, (6) or the "regime of contract" in Spencer's words (7)) is the public dimension of contract.

The liberal theory of contract is based upon the concept of respect for persons as agents and bearers of individual rights--including freedom of contract, the right to have their voluntary agreements respected. It conceives of private law only as "a system of reciprocal limits on freedom" (8) and of contract law as a legal institution that, in general, recognizes and respects the power of private individuals to effect changes in their legal relations inter se. (9)

According to the liberal theory, the implicit dimension of a contract is a relationship of mutual recognition between the individuals party to it. The particular pattern of this form of mutual recognition--"legal recognition," in Axel Honneth's terms (10)--respects the other party as equal, as a legal person capable of following her own conception of the good and of raising accepted claims. Thus, the notion of contract is deeply rooted in a universal respect for the equal autonomy of persons, and not in the non-egalitarian kinds of recognition embodied in relationships of love and of solidarity (that is, relationships based on a shared orientation towards values). (11)

This basic rationale for a liberal contract theory is not market-oriented. Instead, its focus on autonomy rights and equality demands priority of the right before the good, embracing the conviction that basic individual freedoms impose limits on the collective search for the good life. (12) In the history of ideas, this one was not fully developed until the legal philosophies of Kant, Fichte, and Hegel. (13)

The notions of "autonomy," "equality," and "rights" used here require some clarification. Autonomy, in a liberal theory of contract, is a formal notion of agency freedom. The subject matter of law, and especially of contract law, is free from any perfectionist or moral content--what Kant called "Willkur." (14) The question whether a person is autonomous (or acts autonomously) has different functions in different normative settings. For reasons of social inclusion and equality, the notion of "autonomy"--regarding a person's claim for respect as an agent who is entitled to choose her own path and follow it (such as by making contracts)--has to be a low-threshold concept. Autonomy must be the default case, at least for adults. …

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