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Distributive Justice and Contract Law: A Hohfeldian Analysis
Marco Jimenez*
Abstract
According to Aristotle, justice consists of giving each person his due: equal members of society should be treated equally, and unequal members, unequally.1 This justice, in turn, comes in two flavors: distributive and corrective.2 Distributive justice—which has as its purview society at large—is concerned with distributing society’s shares to individuals according to merit3. Whereas, the purview of corrective justice concerns voluntary (e.g., contracts) and involuntary (e.g., torts) transactions, and it seeks to rectify unjust alterations in the distributive scheme by returning the parties to the position they occupied before the distributive scheme was altered, which is to say, before a particular harm occurred.4
Even today, Aristotle’s classification of these two types of justice holds a firm grip on the judicial imagination, and perhaps nowhere is this truer than in contract law. There, it is taken for granted that the distributive shares held by members of society are determined both prior to, and outside of, contract law. The distributive question having been settled, it is believed that the proper role of contract law is merely to (a) facilitate the just exchange of these distributive shares by allowing parties to bargain and form agreements with one another and (b) rectify any unjust alteration to these previously established distributive shares. To couch this in Aristotelian terms, contract law should be concerned with enforcing the rules of corrective justice—which will facilitate and rectify the just exchange of previously allocated distributive shares—but should not be concerned with the initial distribution of those shares.
This Article challenges that view, and argues that the seemingly value-neutral rules of contract law are fundamentally distributive in nature, and that to ignore these distributive considerations is more than just bad policy—it is to misunderstand how the fundamental building blocks of the law are arranged to form contract law in the first place. Indeed, given the distribu-
* Professor of Law, Stetson University College of Law; J.D., Yale Law School, 2000; B.A. and B.S., University of Southern California, 1997. This Article was supported by a generous research grant from the Stetson University College of Law. I would like to thank Dean Pietruszkiewicz and the Stetson University College of Law for their support of this project. I would also like to thank Christian Pezalla for his valuable research assistance, and Professor Podgor and members of the Honors Colloquium at Stetson University College of Law for allowing me to present some of the ideas contained in this Article and providing me with valuable feedback. Finally, I would like to thank my wife and son for their enduring love and support.
1. See generally Aristotle, Nicomachean Ethics bk. V, 3 (W. D. Ross trans.) (c. 350 B.C.E.) (“The just, therefore, involves at least four terms; for the persons for whom it is in fact just are two, and the things in which it is manifested, the objects distributed, are two. And the same equality will exist between the persons and between the things concerned; for as the latter the things concerned—are related, so are the former; if they are not equal, they will not have what is equal, but this is the origin of quarrels and complaints—when either equals have and are awarded unequal shares, or unequals equal shares.”).
2. See id. at 2-5.
3. See id. at 3 (“[A]wards should be ‘according to merit’; for all men agree that what is just in distribution must be according to merit in some sense . . . .”). The concept of merit, in turn, was dynamic, and varied from society to society. See id. (“[D]emocrats identify [merit] with the status of freeman, supporters of oligarchy with wealth (or with noble birth), and supporters of aristocracy with excellence.”).
4. Ernest J. Weinrib, Corrective Justice in a Nutshell, 52 U. Toronto L.J. 349, 349 (2002) (“Corrective justice, in contrast [to distributive justice], features the maintenance and restoration of the notional equality with which the parties enter the transaction. This equality consists in persons’ having what lawfully belongs to them. Injustice occurs when, relative to this baseline, one party realizes a gain and the other a corresponding loss. The law corrects this injustice when it re-establishes the initial equality by depriving one party of the gain and restoring it to the other party.”).
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distributive nature of contract law, even the most non-activist judge imaginable, who sees it as his or her role to simply apply the law as written, and who views it as entirely improper to consider notions of distributive justice for the purpose of achieving a fairer distribution of wealth among members of society5
, nevertheless cannot help but make distributive decisions whenever he or she selects among or administers the rules of contract law, which have embedded within their very structure a deeply entrenched view of distributive justice.6
This is because every determination of law, including the determination of which rights ought or ought not to exist, or ought to be applied in a particular contractual setting, is the product (intentional or otherwise) of a policy decision regarding not whether the legal relationship in question ought or ought not to be regulated7, but how that relationship should be regulated. And this regulation, in turn, requires that judges8—even judges who adamantly view themselves as non-activist judges—make an ex ante distributive decision regarding which rights ought and ought not to exist, which rules ought and ought not to apply, and how those rights and rules ought and ought not be protected. These decisions, in turn, must all be made as a matter of policy rather than law.
Teasing out the implications of these insights can fundamentally alter the way we view and understand contract law. For instance, once we realize that the various legal rules that govern contract law are made up of a conglomeration of policy decisions regarding how to regulate (rather than whether to regulate) the relationship between the contracting parties, one of the largest obstacles to regulation—that of the perceived judicial interference with the rights of the parties—is removed as the need for regulation is now seen as mandatory rather than permissive. And because regulation is mandatory, the real question ought to be how we should understand, if not change, the manner in which the selection, application, and interpretation of contract rules affects the distributive arrangements between the parties to a contract.
5. This, for example, is the view held by many libertarians, who maintain that distributive considerations should never be taken into account in formulating the rules of contract law, because the state is never “justified in forcibly redistributing wealth from one individual or group to another.” Anthony T. Kronman, Contract Law and Distributive Justice, 89 Yale L.J. 472, 473 (1980) (“[R]edistribution of wealth restricts liberty and inappropriately attempts to align compensation with moral worth.” (citing Friedrich A. Hayek, The Constitution of Liberty 93-102, 133-61 (1960))); see also James M. Buchanan, Political Equality and Private Property: The Distributional Paradox, in Markets and Morals 69-84 (G. Dworkin et al. eds. 1977) (noting that individual freedom is inconsistent with forced economic equality); Robert Nozick, Anarchy, State and Utopia 149-53, 167-74 (1974) (arguing that property rights, established by principles of acquisition and transfer, should be inviolate); Richard A. Epstein, Unconscionability: A Critical Reappraisal, 18 J.L. & Econ. 293, 293-94 (1975) (noting that contract law provides individuals with a “sphere of influence” in which they are not required to justify their activity to the state). According to Kronman, “[t]he libertarian’s opposition to the use of contract law as a mechanism for redistribution derives from his general belief that the compulsory transfer of wealth is theft, regardless of how it is accomplished.” Kronman, supra, at 473-74.
6. Although this Article only addresses contract law, the thesis presented here (and outlined in the previous paragraph) applies with equal vigor to many other areas of law as well, ranging, for example, from criminal law to tort law to constitutional law.
7. Indeed, one cannot even speak of having a “right” capable of protection until a court or legislature first determines that a party’s conduct ought to be regulated in such a way that recognizes that party’s right to begin with.
8. Or legislatures, where the rules of contract law are not made into law by common-law courts, but enacted into law by legislatures, as in the case of the Uniform Commercial Code or the Convention on Contracts for the International Sale of Goods.