Binding Promises: The Late 20th-Century Reformation of Contract Law


During its classical period, American contract law had three prominent characteristics: nearly unlimited freedom to choose the contents of a contract, a clear separation from the law of tort (the law of civil wrongs), and the power to make contracts without regard to the other party's ability to understand them. Combining incisive historical analysis with a keen sense of judicial politics, W. David Slawson shows how judges brought the classical period to an end about 1960 with a...

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Binding Promises: The Late 20th-Century Reformation of Contract Law

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During its classical period, American contract law had three prominent characteristics: nearly unlimited freedom to choose the contents of a contract, a clear separation from the law of tort (the law of civil wrongs), and the power to make contracts without regard to the other party's ability to understand them. Combining incisive historical analysis with a keen sense of judicial politics, W. David Slawson shows how judges brought the classical period to an end about 1960 with a period of reform that continues to this day.

American contract law no longer possesses any of the prominent characteristics of its classical period. For instance, courts now refuse to enforce standard contracts according to their terms; they implement the consumer's reasonable expectations instead. Businesses can no longer count on making the contracts they want: laws for certain industries or for businesses generally set many business obligations regardless of what the contracts say. A person who knowingly breaches a contract and then tries to avoid liability is subject to heavy penalties.

As Slawson demonstrates, judges accomplished all these reforms, although with some help from scholars. Legislation contributed very little despite its presence in massive amounts and despite the efforts of modern institutions of law reform such as the Conference of Commissioners on Uniform State Laws. Slawson argues persuasively that this comparison demonstrates the superiority of judge-made law to legislation for reforming private law of any kind.

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Editorial Reviews

From the Publisher
"Binding Promises is an excellent book that makes a substantial contribution to the understanding of U.S. legal history. It is superbly written in understandable yet literate prose. Moreover, the author is to be complimented for emphasizing persuasion over passion in his arguments. This is an original work . . . there is quite simply no other text to which it might be compared."Perspectives on Political Science
Michael E. Solimine
In 1970 Grant Gilmore famously opined that contract was dead. By this he meant that centuries-old doctrine governing voluntary transactions between individuals was being preempted and eclipsed by tort law, especially that governing consumers and manufacturers of mass-produced products. Gilmore probably overstated the status of the supposed corpse at the time, and developments since then have proven him to be a poor prognosticator as well. (Braucher 1995). W. David Slawson's recent book, BINDING PROMISES: THE LATE 20TH CENTURY REFORMATION OF CONTRACT LAW, further undermines Gilmore's predictions. Slawson, a law professor at Southern California, has been a frequent and important contributor to contracts law scholarship in the past two decades. His engaging and well-written monograph summarizes change in contract law during this period, mostly approving of developments but challenging and critiquing reforms, as well. As befits its honored position in law school curriculums (it is no accident, I think, that Professor Kingsfield of PAPER CHASE fame taught contracts), contract law has some of the deepest roots in Anglo-American jurisprudence. Classical contract doctrine, as well-summarized by Slawson, was marked by a deference to the parties' choice of contract terms, even when one party had considerably less bargaining power or information than the other, and by a clear demarcation from the duties improved by tort law (i.e., concerning injuries to persons or property not covered by a contract). The intellectual underpinnings of classical doctrine--liberalism, laissez-faire economics--were gradually challenged in this century. And for good reason, Slawson argues, since the complexity of modern life has led to considerable contractual relationships between parties of unequal power. Indeed, a "person today who refused to contract unless he understood what he was committing himself to would deny himself most of the means of living in society." (p.21). It is artificial, Slawson argues, for courts to a blindly enforce contractual terms when the parties' reasonable understanding of the contractual relationship is different from those terms. The core of the book consists of Slawson's review and critique of the court's departures from classical contract norms. He surveys several major reforms. One is to limit or deny enforcement to standardized, form contracts. While such contracts are easy to prepare and cheap to use, they are rarely read by consumers who invariably have less information and bargaining power than the producers of products and services. Those producers, of course, also draft these contracts. In these circumstances, courts have often refused to enforce terms such as blanket disclaimers of tort liability. A second reform has been the creation of relational torts. Such causes of action impose duties upon the party with superior information or bargaining power, even when the contract is silent in the issue or disclaims the duty. Thus, home sellers have been held to be required to disclose defects to buyers, in order to further the publics purpose of safer homes. A third reform has been the development of the bad faith breach action, where parties who egregiously break contractual obligations can be subject to tort liability. Much of Slawson's book consists of sound doctrinal analysis, and for that reason it will be primarily of interest to legal academics. But his consistent theses--that disparities in bargaining power and market failure justify departures from classical contract law--should interest social scientists as well. Slawson surveys these arguments with a deft hand, generously crediting other writers and referencing the relatively small body of empirical work (e.g.; by Stewart Macauley) that can be brought to bear. He fairly anticipates and responds to criticisms of his approach (e.g., Huber 1988). The critics, often adherents of the Law and Economics school, contend that the classical norms work. A free market will respond to consumer demand, eventually driving out sharp practices and unsafe products. Consumers can educate themselves (by reading Consumer Reports, for example), and will pay for higher qualities of products and services. Slawson argues that the critics advance unrealistic assumptions about consumer behavior and knowledge, and about the actual workings of the marketplace. "Unequal bargaining power," he says, "As now characteristic of contracting generally." (p. 32) Most consumers simply won't read standardized contracts in depth, and competition among producers, while it does take place, cannot replicate the protections provided by courts. The complexity and proliferation of modern products makes comparison shopping by consumers difficult. Likewise, he argues, competition between manufacturers to provide warranty protections only works well when products are substantially identical. Two aspects of his work should particularly appeal to non- legal academics. One is his emphasis on the development of cases in all state supreme courts, which could inform the literature on the diffusion of innovative court doctrines. Not surprisingly, a number of the leading cases come from the highest courts of California and New Jersey, which have been in the forefront of tort reform, as well. A second emphasis is his conclusion that the judge-made common law process is superior to reform by the legislative process. Acknowledging that legislatures can and have enacted consumer protection statutes, he nonetheless argues that judge-led reform leads to a more current, uniform and coherent of law in this area. He persuasively supports his thesis by referencing what he regards as the numerous failings of the Uniform Commercial Code (UCC), which has been adopted in all fifty states and governs the sale of goods. Most state lawmakers gave only passing attention when enacting the UCC (though this observation no doubt applies to much other legislation, as well). More importantly, the UCC itself is largely a series of standards which, with a few exceptions, inhibit the flexible, common law judging favored by Slawson. (He dedicates the book to the "American common law judge.") The common law process as compared to the UCC is both more current (since it was courts, not legislatures, that led modern contract law reform), and more uniform (the courts of different states disagree more, Slawson contends, over interpreting the language of the UCC than over common law norms). Slawson's views are more nuanced than the above summary might suggest. While many of the reforms he applauds aid individual consumers, his writing does not slip into uninformed advocacy. For example, he frequently observes that small companies are often at a comparative bargaining disadvantage (like consumers) with large product manufacturers, and should accordingly receive the protection of the reforms. He carefully delineates the respective roles of the judge and a jury in adjudicating relational torts that go to trial. And he suggests limits on the remedies available to plaintiffs under the new causes of action. For Slawson, contract law is happily alive and well, though to be fair to Gilmore, it differs in important ways from doctrine as it existed 25 years ago. And outside courts, contract law is hardly static. Currently, article 2 of the UCC is undergoing revision in areas which would impact much of the doctrine addressed by Slawson. His book is an important contribution to the literature on private law, and should inform both supporters and critics of the recent transformations in contract law that he surveys so well. References Braucher, Jean 1995. "The Afterlife of Contract." NORTHWESTERN UNIVERSITY LAW REVIEW 90 (Fall) 49-88. Huber, Peter W. 1988. LIABILITY: THE LEGAL REVOLUTION AND ITS CONSEQUENCES. New York; Basic Books.
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Product Details

  • ISBN-13: 9780691044156
  • Publisher: Princeton University Press
  • Publication date: 7/8/1996
  • Pages: 224
  • Product dimensions: 6.35 (w) x 9.62 (h) x 0.83 (d)

Table of Contents

Introduction 3
1 Classical Contract 9
2 Product Dependence and Unequal Bargaining Power 22
3 Reasonable Expectations 44
4 Relational Torts 74
5 Bad Faith Breach and Remedies Reform 104
6 Article 2 of the Uniform Commercial Code 133
7 Choices and Prohibitions 151
Notes 175
Index 201
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