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Most Downloaded Articles
- Rethinking Citizenship through Alienage and Birthright Privilege: Bosniak and Shachar's Critiques of Liberal Citizenship by Song, Sarah
- Making Sense of Citizenship by Bosniak, Linda
- `The Reliance Interest in Contract Damages' and the Morality of Contract Law by Smith, Stephen A.
- Backlash, Covering, and the State of Feminist Legal Theory by Chamallas, Martha
- The Dark Side of Citizenship: Membership, Territory, and the (Anti-) Democratic Polity by Hayward, Clarissa Rile
`The Reliance Interest in Contract Damages' and the Morality of Contract Law
1McGill University, email@example.com Associate Dean and Associate Professor of Law, McGill University. I would like to thank the Social Sciences and Humanities Research Council of Canada for financial assistance in preparing this essay; I am also indebted to my colleague Daniel Jutras for our many discussions on the role of reliance in contract law.
Citation Information: Issues in Legal Scholarship. Volume 1, Issue 1, Pages –, ISSN (Online) 1539-8323, DOI: 10.2202/1539-8323.1000, August 2001
- Published Online:
This essay explores the moral foundations of Fuller and Perdue's The Reliance Interest in Contract Damages (hereafter The Reliance Interest). These moral foundations can be summarized in two propositions. The first, a negative proposition, is a moral objection to traditional 'will' or 'promissory' theories of contract. In its simplest (but also its strongest) version, this proposition holds that it is illegitimate for the state to enforce promises qua promises. The second, a positive proposition, is offered in moral support of what I will call the 'reliance theory' of contract. This proposition holds that it is proper for the state to enforce an obligation not to disappoint those whom you have induced to rely upon you - in other words, it is proper for the state to protect induced reliance. These two propositions fit together. If it is illegitimate for the state to enforce promises qua promises, then either contract law cannot be justified or, more plausibly, the state is doing something else that is legitimate when it enforces contracts. Contract scholars have made different suggestions as to what this 'something else' could be. In The Reliance Interest, Fuller and Perdue argued that the something else was protecting reliance.
In Part I of this essay, the significance of the moral objection to promissory theories for Fuller and Perdue's article is explained, and the objection is further developed and situated within a broader theoretical background. Part II examines two alternative theories of contract, each of which can be regarded as responses to the moral objection: (1) the reliance theory (Fuller and Perdue, Atiyah, Gilmore); and (2) the transfer theory (Barnett, Benson). As part of our discussion of these theories we will examine the second (positive) moral proposition described above. Part III then presents a new moral defense of the traditional promissory theory of contract, drawing on an analogy between contract law and property law. Lastly, in Part IV, I summarize the main arguments of the essay by offering a new 'map' of private law. The essay's main argument is that while Fuller and Perdue correctly identified the central moral question of contract theory, and (even more importantly) rightly stressed the importance of reliance-based liability in private law, their moral objection to promissory liability was unfounded and their moral acceptance of reliance-based liability was (and remains) in need of supporting arguments.