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Obligations & Contract Law II summary weeks 1-5
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Summary of Obligations and Contract Law II weeks 1-5, including summary of the readings with the most important pieces of information!
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Week 1: Contract & RegulationBasic info:
- Openbook: Midterm (50%) & final exam (50%)! → need to register
- Midterm: about meetings 1 t/m 5
- Final exam: about meetings 6 t/m 10
Readings
● Hugh Collins, ‘Regulating Contract Law’, in Christine Parker et al (eds),
Regulating Law, Oxford University Press: Oxford 2004, pp. 13-32, available in
the Module files.
○ Contract law as a mechanism of governance:
■ What can be regarded as rules of contract law? Not only legal
treaties / private law, particular legislative interventions,
constitutional provisions, and international treaties.
■ To evaluate contract law from a regulatory perspective, we need to
place the general private law of contract in the context of
overlapping and interacting regulatory mechanisms.
■ Scope of inquiry has to be determined by reference to a social
practice.
■ How do contracts steer social behavior?
● Two problems for determining the object of inquiry
○ Which kinds of social practices need to be regarded
as ‘contractual’ practices?
○ The teasing ambiguity in the phrase ‘regulating
contracts’. Contracts represent self-regulation at a
micro level. So, ‘regulating contracts’ requires us to
view contracts as both the subject of regulation AND
as a type of regulation governing contractual
practices.
■ Parties to the contract can choose if any legal regulation will be
applicable to their transaction, in the contract. They can choose to
not make it legally enforceable.
○ The effectiveness of contract law:
■ Arguments against its effectiveness^:
● Distributive justice: each individual chooses its own lot
according to their efforts in making beneficial transactions, or
on the ground that no justification is called for bc the state
, does not seek to impose any pattern of distribution at all.
Contract law enables individuals to pursue their own goals!
● Logic of social types: ‘law as integrity’ (=Dworkin’s theory)
where it is expressed that legal reasoning can proceed
according to a process for the reconciliation of individual
rights without the need to employ consequential or policy
arguments in order to reach determinate results. Unger’s
‘logic of social types’ criticizes Dworkin’s theory, bc it states
that in order to believe that legal reasoning can operate on
the basis of a calculus of competing rights, it is necessary to
assume that the social and political order contains within it a
coherent, interrelated, and a fixed scheme of individual
rights. However, the objection towards Unger’s idea is that
no such pre-existing scheme exists.
● Strategic litigation: how legal rules are made or interpreted in
courts. The process of making rules determinate and
applying them in concrete situations involves litigation,
where parties try to persuade courts that their view of the
particular rule is correct. Especially powerful actors try this.
● Purposive legal reasoning: removes the search for integrity
from its pedestal as the sole and governing criterion to one
consideration among many others, which often turns out to
be the weakest concern.
○ The reflexivity of the private law of contract:
■ It doesn’t cost governments a lot to regulate in this area bc most of
the costs are borne by the parties that bring their claim to court to
litigate, and the sanctions they get out of it is either escape from a
contract or compensation.
■ Reflexivity derives from the system theory, which refers to the
interaction between law and the social practices it regulates. These
social practices are conducted under one or more communication
systems, and the latter provides the way in which participants in a
social practice think ab their activity, with a view to producing
regulatory outcomes that avoid as far as possible interventions that
distort, devalue or corrupt the social practice.
■ Two reservations about the capacity of private law as a regulatory
mechanism:
● The use of standard-form contracts by businesses (bc they
care ab the business’ interests, and fail to accommodate the
, consumer’s interests and expectations in express terms of
the document)
● Future markets and the operation of Exchanges. It is
necessary to provide a homogenous description of the
product, so that there is certainty ab the product. But,
exchanges speculate on future prices only. But which
communication system should receive priority? There are
two discourses: 1) moral discourse concerning the good of
keeping one’s promises, and 2) an economic discourse
about making a profit through trade.
○ Meta-regulation of contract law:
■ The objective of meta-regulation should be to try to align general
contract law w the state’s welfare and social inclusion goals and to
coordinate its regulation with other regulatory systems.
■ General law of contract should become more open in its reasoning
processes to two kinds of normative influence: 1. It has to be able
to incorporate in its reasoning reference to general abstract
principles of justice such as those found in statements of
fundamental rights of citizens, and 2. Private contract law must find
ways to align its standards w those produced by actors in the
market when they cooperate through democratically accountable
associations to create self-regulation of market sectors.
● Ordinary contract law has to become a site where the
demands of private autonomy are reconciled with the need
to support social solidarity.
○ Conclusion:
■ Contract law is now playing a more important role in the
governance mechanisms of the post-regulatory state.
■ Contractual practices are being used to deliver services to the
public and to control relations between different parts of the
government.
■ But, contract law needs to be open to engage with broader political
and social values, rather than limiting itself to efficiency of markets
and protection of economic rights.
● Cass R. Sunstein & Richard. H. Thaler, ‘Libertarian Paternalism Is Not an
Oxymoron’, 70 University of Chicago Law Review (2003), p. 1159-1202, available
here Links to an external site.
○ Libertarian paternalism = the idea that it is both possible and legitimate for private
and public institutions to affect behavior while also respecting freedom of choice, as
well as the implementation of that idea.
, ○ Libertarians embrace freedom of choice, and so they deplore paternalism.'
Paternalists are thought to be skeptical of unfettered freedom of choice and to
deplore libertarianism. (deplore= disapprove)
■ The idea of libertarian paternalism seems to be a contradiction in terms
○ in many domains, people lack clear, stable, or well ordered preferences.
■ Dus dit betekent ipv zelf ervoor kiezen om iets te doen (zoals een % van
je salaris vrijwillig sparen, doet je employer dat automatisch al en wordt
dat alleen niet gedaan ALS jij zelf kiest voor een opt-out).
○ such rules should be chosen with the explicit goal of improving the welfare of the
people affected by them.
○ The libertarian aspect of our strategies lies in the straightforward insistence that,
in general, people should be free to opt out of specified arrangements if they
choose to do so. To borrow a phrase, libertarian paternalists urge that people
should be "free to choose.""
○ The paternalistic aspect consists in the claim that it is legitimate for private and
public institutions to attempt to influence people's behavior even when third-party
effects are absent. In other words, we argue for self-conscious efforts, by private
and public institutions, to steer people's choices in directions that will improve the
choosers' own welfare.
○ Libertarian paternalism is a relatively weak and nonintrusive type of paternalism,
because choices are not blocked or fenced off. In its most cautious forms,
libertarian paternalism imposes trivial costs on those who seek to depart from the
planner's preferred option. But the approach we recommend nonetheless counts
as paternalistic, because private and public planners" are not trying to track
people's anticipated choices, but are self-consciously attempting to move people
in welfare-promoting directions.
○ Op blz 6 is een goed voorbeeld!
■ 4 opties die ze geven, wrm is geen een ‘keuze maken gebaseerd op net
revenue’? Omdat cafetaria niet als doel heeft om zoveel mogelijk profit te
behalven, want dure items staan niet gelijk aan lekkere items, aka,
mensen zullen het niet kopen omdat ze het toch niet lekker vinden. It’s
more profitable to put populaire items vooraan, en er zeker van zijn dat ze
sneller verkopen, dan onpopulaire items, die toch geskipt worden!
○ Lots of examples that show that people do not choose optimally, even when the
stakes are high (to counter the freedom of choice argument and show that there’s
proof that their own choice is not always better, hence why governments should
be able to choose for them)
○ Required active choosing (choosing opt in or out, instead of either giving freedom
of choice or chosing for the employees by yourself) is also an option
○ Stated values will often be affected, at least across a range, by how the
questions are set up. (de manier waarop je een vraag stelt heeft effect op het
antw, bv. Hoeveel van zijn salaris is een employee bereid om op te geven voor 2
weken extra vakantie? VS Hoeveel moet een employee minimaal extra betaald
worden om zijn 2 weken vakantie op te geven?)
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