Once, they say, freedom of contract reigned in American law. Parties could make agreements on a wide variety of subjects and choose the terms they wished. Courts would refrain from questioning the substance of bargains and would ensure only that parties had observed the proper formalities. In interpretation, objectivity was paramount. Courts would seek to ascertain, not what the parties had intended, but what a reasonable observer would understand the parties' words to mean. Contract law was a series of abstractions informed by individual autonomy and judicial deference.
This world, a classical paradise of doctrines with sharp corners, began to disappear in the mid-twentieth century, a victim of legal realism and its successors in the academy. Legislatures limited the scope of contract by enacting social welfare and consumer protection statutes. Courts began to police the fairness of agreements, developing new doctrines like unconscionability that allowed them to intervene to protect parties with unequal bargaining power. When it came to interpretation, courts discounted the apparent certainty of contract language and focused on what the parties had actually meant. Contract law became more egalitarian and more subjective.
But we live in a new day. Twenty-five years after Grant Gilmore famously declared it "dead," freedom of contract is experiencing a revival in American law. The bargain principle has proven remarkably durable, now extending beyond traditional contracts to govern institutions, like marriage, that once were grounded in status. Courts again refrain from challenging the substance of parties' agreements, and interpretation again emphasizes the written language. These developments reflect a new formalism that promises (or threatens) to restore the libertarian virtues of contract's classical past.
This is the conventional account of American contract law. Like most such accounts, it gets many things right and some things quite wrong. A recent collection of essays, The Fall and Rise of Freedom of Contract (F.H. Buckley ed., 1999) (Duke University Press, 461 pp.), explores the accuracies and flaws in the conventional story and reflects on the continuing vitality of freedom of contract. Many of the essays, contributed by some of today's most prominent scholars, come from a law-and-economics perspective, but the book is not unreflective or triumphalist. Taken together, the essays offer useful insights into the capacity of the bargain principle to withstand the critiques of the last century and the principle's adaptability in areas as diverse as tort law, zoning law, family law, bankruptcy law, and conflict of laws.
One cannot do justice to all these topics in a short essay. Instead, I will concentrate on two areas, marriage and conflict of laws, and discuss the ways in which freedom of contract can make useful contributions to both. In addition, I will address an overarching question that Fall and Rise provokes. Is it really correct to speak of freedom of contract's contemporary "revival"? To do so implies both that freedom of contract had gone into eclipse and that its present victory over rival concepts is more or less complete. Neither proposition is true. Today as always freedom of contract coexists with other, competing principles that stress substantive fairness and overriding social values. It seems fruitless to argue long about which of these many principles expresses the essence of contract law. The better part of wisdom, as Morris Cohen suggested many years ago, lies in accepting the complexity.
Movsesian, Mark L., "Two Cheers for Freedom of Contract" (2002). Faculty Publications. 108.