Seana Valentine Shiffrin
Introduction: Some of What Is at Stake
Many, perhaps most, lawyers, theorists and lay people in the United States consider contracts to be “legally enforceable promises” (Fried 1981; Markovits 2004; Markovits 2012: 314–18; Murphy 2007; Shiffrin 2007; Wilkinson-Ryan and Baron 2009: 420–23). That description seems initially confirmed by examples like the following. Suppose that I promise to paint your house if you promise to pay me $3,000 for doing so. By exchanging these promises, we have formed a contract and each of us is both morally and legally obliged to perform. If one of us fails to perform, contract law empowers the other party to obtain a legal judgment and a remedy for the other’s failure to keep her promise.
Associated with this description of a contract as a legally binding promise is the theoretical ambition to use the moral, common-sense features of promises as starting material to fashion a plausible legal theory of contracts. The thought is that if contracts have, at their foundations, the same moral relations that we describe as promises in our everyday social relations, that fact might provide the seedlings both of a justification for contract law and of a guide to the principles it should follow.
For example, on the justification front, this description may encourage the view that contract law exists to buttress the moral institution of promising, whether by facilitating the social benefits we glean from that institution; by vindicating and protecting the rights promisors transfer to promisees; by providing support and recognition for a valuable social relationship; or, on still other moral theories, by protecting promisees’ reasonable expectations of legitimate public concern.
On the guidance front, such justifications may suggest that a contract’s doctrinal principles should be designed in ways that support and enhance the moral practice of promising, that protect promisees’ legitimate interests and/or, more weakly, in ways and for reasons that moral agents could accept while retaining their moral integrity and their stance of fidelity toward their promises (Shiffrin 2007: 713–18). From this perspective, lawyers, judges and scholars devising principles of contract law may have a great deal to gain by considering carefully what promises are, and why they are valuable to promisors, promisees and society at large. Of course, even on this view, the legal treatment of promises and the moral treatment of promises may vary substantially because our legitimate legal purposes may be both broader and narrower than our moral purposes. For instance, the law typically involves vindications of interests by outside parties (whereas that is rarer in moral life). But, while law’s sweep is broader than morality’s in that sense, it is narrower in another: in liberal societies at least, the law’s interest in enforcing moral behavior as such is limited and has a circumference limited to what facilitates shared social and political life (Shiffrin 2007: 740–46). So, contract may be devoted to the enforcement of promises and that understanding may inform the proper design of contract doctrine, yet the distinctively legal interests at stake may, in some cases, entail that the legal enforcement of promises differs from the form taken by their moral enforcement and vindication.
The “promissory” characterization of contracts also suggests some challenges that contract theorists would need to confront, including how the legal and moral interests in promissory fidelity differ, whether and why some promises should be legally enforceable but not others, as well as what sorts of reasons might be offered to explain and justify why the legal treatment of legally enforceable promises should differ, if at all, from the analogous moral treatment of promises.
But, although viewing contracts as types of promises might prove theoretically rewarding (Fried 1981 and 2011; Markovits 2004; Shiffrin 2007), some theorists regard this perspective as misguided (DeMoor 1987; Penner 1996; Schwartz and Scott 2003; Pratt 2007; Craswell 2011). They believe that some or all contracts are better described as legally binding agreements or commitments that need not be promissory agreements or commitments (Penner 1996; Pratt 2007: 532). On their view, some contracts are also promises, but not all contracts are promises.
Indeed, a redescription of our initial example might cast doubt upon the immediate plausibility of the idea that contracts involve promises. Suppose that instead of promising to paint your house for $3,000, I agree to paint your house if, in return, you agree to pay me $3,000. “Agreement theorists” believe that in so doing, we would have created a contract, but without having promised to engage in these activities. For many agreement theorists, our agreements in this case would not necessarily carry with them the moral duties associated with promises, although we would be legally obliged to discharge them.
For these thinkers, the justifications for contract law and its particular doctrines need not bear any close relation to the moral structure of promises; nor is it evident for them that contract theorists should be attentive to questions about whether and how the institution of contract supports or detracts from moral agency or the moral practice of promising. Thus, although the separation of contracts from promises might deprive contract theory of what appears to be a natural resource to draw upon for justification and guidance, that separation may also be liberating. If contracts are not promises, then we may be freer to structure contract law in ways that allow us to achieve important purposes that we might not be empowered to achieve if contracts were promises. (Some critics take this stance only with respect to particular sorts of contracts or contracting parties, e.g., contracts between business firms or intimates (Schwartz and Scott 2003; Bagchi 2011).)
For example, if contracts are agreements but not inherently promises, then perhaps the law may legitimately authorize (and even encourage) contractors to break these agreements intentionally and pay their disappointed contractual partners a price (say the financial amount that performance would have been worth to the partner) if breaching the contract would allow one party to take advantage of a remarkable and more profitable opportunity that has unexpectedly arisen (Craswell 2001: 21–25; Craswell 2011: 11–20). Permitting such flexible arrangements might serve our overall economic welfare. It may encourage parties to make agreements (and thereby to make mutually advantageous exchanges) that they might otherwise be shy to forge if they thought they would be more inflexibly bound to perform.
On the other hand, if contracts are promises and contract law enforces promises in order to provide official recognition and support to the moral institution of promising, we may feel less comfortable with the idea of officially authorizing or encouraging parties to break their promises, at least not for the mere reason that it would be financially advantageous for them to do so. It is an important moral aspect of a promise that you commit to doing what you have promised, even when a better opportunity comes along, unless your promisee releases you from your commitment. Your promisee may, therefore, count on you to do what you said you would do; he may also count on you to be settled and focused on doing what you said you’d do, rather than scouting for better opportunities. Although being paid the financial value of the performance one expected might mitigate the sting of an intentional breach of a promise, most promisees will understandably not feel as though a promise was satisfied or taken seriously if they are paid a price by a promisor who simply no longer feels like performing. Promises are valued in part for the commitment by the promisor not to reconsider; what was promised is no longer up for grabs, but rather is a settled matter. If the promisor wishes to change course, she should seek the promisee’s permission. Indeed, if promises are conceived as transfers of decision-making power (Owens 2006: 71–75), then a promisee may still legitimately feel wronged if a promisor pays him money while breaking his promise. The promisee may feel as though a decision that was his to make, namely whether to require or to waive performance, has been wrested from him without consultation; the promisor unilaterally treating payment as an unexceptionally satisfactory alternative pays no heed to the disrespect done to the distribution of decision-making authority established by the promise (Shiffrin 2007, 2008 and 2009).
So, if that analysis is right (and, of course, not everyone agrees), you can see why it might matter whether a contract is a promise or not. If it is a promise, then that fact may help us see how contract law should be structured, but we may have to investigate what function(s) promises serve, what is required of a promisor once she has made a promise, as well as what sorts of rules support and what sorts of rules disrespect, undermine or are in tension with the institution of promising. If a contract is not a promise, then some of these constraints will not confine how we construct the rules of contract. On the downside, however, it may then be less clear why we should enforce contracts and we may have to turn elsewhere for guidance about what justifications contract doctrines should answer to.
Assuming it does matter whether a contract is a promise or not—is it? Both the answer and the methodology of arriving at an answer are contested.
How We Characterize Contracts and Promises
Ordinary and Legal Language
A natural place to begin might be to characterize what promises are and then examine how we, and the law, characterize the relationship between contracts and promises. Unfortunately, it is difficult to identify a clear characterization of a promise around which a consensus has formed; indeed, some of the controversy about the relation between contracts and promises may well trace to disagreements about what is essential to promises. Still, to start somewhere, consider the rough, abbreviated idea that a promise is a voluntary commitment to perform (or to omit) an action the promisor has the authority to perform, a commitment qualified (sometimes explicitly) by apt conditions of performance, that works by transferring some form of the promisor’s right to decide whether or not to perform that action to the promisee. In light of this transfer, the promisee has a right to expect (and often to demand) performance and has the concomitant power to use her transferred power or decision to waive or excuse the promisor’s obligation of performance.
On this view of promise (and on many others), the idea that contracts are composed of promises seems, at first, like a plausible idea for a couple of reasons. First, legal authorities commonly describe contracts as “legally enforceable promises.” The Restatement of Contracts, for example, defines a contract as “a promise or set of promises for the breach of which the law gives as a remedy, or the performance of which the law in some way recognizes as a duty” (American Law Institute 1981, § 1; see also § 75). Contract cases are saturated with references to promises that the parties made to one another and frequently refer to the parties as “promisors” and “promisees.”
Second, making a promise (whether through the explicit language of “promise” or through other communicative means) is how contracts are fashioned. Of course, not all promises are legally binding. Under U.S. law, a promise must either be supported by some offering by the other party in return (whether a promise or a performance or through the other party’s active and reasonable reliance). But, interestingly, in the U.S., a promise need not be made with the specific, positive intention to be legally binding; just by promising, without an eye to the legal consequences, one may make a legally binding contract (ibid., § 21).
Third, upon making a promise, contracts have the same elemental features of promises. The recipient of a contractual commitment has a right to expect performance and if performance is not forthcoming (and no valid justification or excuse pertains), this suffices to show breach, just as it would with a promise. Further, just as with a promise, the recipient of a contractual commitment has the power to waive or excuse performance. These practices provide some support for the view that contracts are constituted by promises and for the working hypothesis that contract law is an institution meant to support promissory relationships and trust, to encourage promissory fidelity, to react to promissory infidelity and to protect those whose trust was induced by others’ promises.
A Challenge to the Ordinary-Language Argument
One may object that this appeal to our linguistic practices and the law’s own perspective on promises does not yield conclusive results. We and the law may call the sorts of commitments contract law recognizes “promises” but that semantic institutional practice may not settle the matter. It may just amount to convenient shorthand or the coining of a legal term of art, one that confusingly overlaps with, but is not identical to, a common lay term. (This is not unheard of. For example, the commonplace meaning of “assault” differs from its legal meaning. In common parlance, an assault involves unconsensual physical contact, and is usually understood to be violent, whereas, in law, an assault need not involve physical contact but may be accomplished just through a threat that causes the victim to apprehend the possibility of violence. “Burglary” too has a technical legal meaning that resembles, but differs from, the common meaning; commonly, burglary is thought to just involve breaking and entering, but in legal contexts, burglary often requires a further intent to commit a felony.)
Indeed, with respect to “contract” and “promise,” other practices suggest that at least some legal contracts reasonably fail to carry with them the moral significance of promises; this may lend support to the hypothesis that the use of “promise” in legal contexts is more a term of art. As Michael Pratt has argued, one can make sense of the following question: “It’s a contract, sure. But is it also a promise?” Moreover, the following exchange (a variation on an example of Pratt’s) seems entirely sensible and possible: Meg asks Peter to build her a bookcase for $1,000. Peter says, “I’ll happily contract with you to do so, but I only wish to be legally bound. I don’t care to be morally bound to a friend over a business matter. So, I won’t promise to build the bookcase but I will place myself legally on the hook.” The sensible possibility of a stance like Peter’s, Pratt concludes, shows that contracts need not be promises and that one could create a contract without thereby promising (Pratt 2008: 807–9).
To elaborate: Pratt’s interpretation is that a contract often involves a concomitant (morally tinged) promise but it does not do so necessarily. Peter’s distinction clarifies the separation between the two commitments. This distinction may seem reinforced by the fact that different remedies are available for breach of promise, morally, and for breach of contract, legally. The moral remedy for failing to perform a promise without excuse would generally be to perform; failing that, the moral consequences for breaching a moral promise may include others’ disapproval, reputational damage, guilt and other forms of recrimination, as well as some sort of compensation to the promisee where appropriate. For unexcused breach of contract, the legal remedy is, typically, the (required) provision of expectation damages, that is, an amount of financial compensation meant to give the promisee the financial equivalent of the position she would have been in had the contract been performed. Punitive damages, the law’s standard civil remedy that expresses disapprobation, are generally disallowed for garden-variety breach of contract. When Peter denies he is making a promise but affirms that he is making a contract, he may be thought to be clarifying that, should he fail to perform, he would appropriately be susceptible to demands for expectation damages but not appropriately castigated, blamed or otherwise regarded as having acted wrongly from a moral point of view.
Answering Pratt’s Challenge
A different interpretation of this exchange is possible, however, that avoids the counterintuitive, even “oxymoronic” (Kimel 2010: 220), conclusion that a contract has been made without a promissory commitment or that a contract and some kind of commitment have been made, yet without moral significance. Instead of interpreting the example as Pratt does, we might instead think that, through his clarification, Peter does not successfully rebuff a promissory commitment so much as clarify and constrain the promissory terms to which he commits himself.
That is, one may insist that contracts are, in fact, promissory commitments, whatever protestations or silent reservations contractors may make to the contrary. Peter’s effort to distinguish between a promise and a contract and to attest that he is making only the latter misdescribes what he achieves. Counter to his own description, he has specified the terms of his promise in a way that departs from the standard promissory terms that would be presumed absent explicit clarification; he has not evaded making a promise, but rather has altered (or clarified) the terms of the promise he makes when he forms the contract.
He may have clarified in one (or both) of two ways. First, in my variation on Pratt’s example, the fact that the parties are friends about to enter into a business relationship may contribute significantly to the hypothetical’s intelligibility. Peter may be clarifying that he regards this promissory commitment as more on the model of a promise between strangers than one between friends. The moral impact of most promises between friends encompasses more than just the promissory commitment as such to performance. The moral connotation of promising to perform a service for a friend usually involves a larger commitment to care for the underlying interests of one’s friend that are promoted by that service (see also Shiffrin 2011: 170–72; Dannenberg 2010). The duty to promote those interests is less concrete and specific than the promissory core (namely to perform (or omit) a specified activity or activities); this subsidiary obligation is usually limited to reasonable efforts proportionate to the effort envisioned in the promised performance. But, still, between friends, although one needn’t make a promise, once one does, one often implicitly assumes some obligation that ranges beyond the particular performance promised. In Kantian lingo, one assumes a perfect duty to perform what is promised and, also, alongside the promise, a more open-ended, imperfect obligation of care toward the friend’s underlying interest. In less Kantian jargon, we might say that one has to do what one has committed to do through the promise, even when other tempting opportunities arise, but that the relation of friendship tends to add, on the occasion of the promise, a looser obligation to try to promote the underlying interest. For this secondary obligation, by contrast with the promissory obligation, the occasions of satisfaction may be more flexibly identified and may more readily give way if there are competing considerations to act otherwise.
For example, suppose you ask me to promise to take you to the airport. I know you ask not because you lack funds for a cab, but because you are nervous before a flight and want company so you are not alone mulling over your potentially imminent demise. Suppose after taking you, we discover that your flight is delayed for two hours. Then, if I am free, there may be a reasonable moral presumption that I will continue to keep you company because the underlying aim promoted by the promise has not been satisfied, even though the promised performance has been rendered. Or, if I promise to help you to build five bookshelves and we understand that the reason you want them is to tidy the unholy mess your office has become, then when we discover that five is not enough and you need six, then I may have a loose obligation to help with the sixth. This further duty is not part of the promise, per se, but may be a presumed concomitant responsibility between friends.
When friends do business with one another, however, it may be rather unclear whether the presumptions of friendship apply or whether the promise’s penumbra extends strictly only to the specified performance. Peter’s clarification may underscore that his promise to build does not carry with it the further duties often implicated through undertaking a project for a friend. By saying he “contracts but does not promise,” he may be taken to convey that he is only promising to build the shelves but nothing more; that his promise covers only the moral territory typically associated with promises between strangers rather than that traversed through promises between friends.