Econlib

The Library

Other Sites

 Front Page arrow Titles (by Subject) arrow Contract Law & Justice - Literature of Liberty, Autumn 1980, vol. 3, No. 3

Return to Title Page for Literature of Liberty, Autumn 1980, vol. 3, No. 3

Search this Title:

Also in the Library:

Subject Area: Political Theory

Contract Law & Justice - Leonard P. Liggio, Literature of Liberty, Autumn 1980, vol. 3, No. 3 [1980]

Edition used:

Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.

Part of: Literature of Liberty: A Review of Contemporary Liberal Thought, 20 vols. 19781-982

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Contract Law & Justice

Anthony T. Kronman

  • Yale Law School

“Contract Law and Distributive Justice.” The Yale Law Journal 89, 472(1980):472–511.

The law of contracts has three agreed upon functions: specification of arrangements which are legally binding; definition of rights and duties created by enforceable agreements; indication of consequences for unexcused breach. Beyond these universally recognized functions, however, has been the suggestion that the law of contracts should be used as an instrument of distributive justice in a selfconscious effort to achieve a “fair” distribution of wealth.

In the libertarian view, the state is never justified in the forcible redistribution of wealth. Many liberals, though believing in the desirability of compulsory reallocation of wealth by politically derived favor, are also opposed to the use of contract law as a mechanism for redistribution because distributional objectives are better achieved through the taxation and reallocative process of the state. Kronman, by contrast, argues that the nondistributive concept of the function of contract law is not supportable either on libertarian or liberal grounds, and attempts to articulate and defend a position that a conscious teleological use should be made of contract law for the purpose of accomplishing desirable redistribution.

Kronman challenges the univeral validity of the libertarian position by questioning the justice inherent in the voluntariness of exchange. He adopts a working postulate that when a libertarian asserts that contract law should not be used to redistribute wealth (he assumes that the redistributive direction is from rich to poor), his position is reducible to one of two claims: either existing inequities are justified, or that contract law is an unsuitable instrument for correcting inequities which are unjustifiable.

Noting that wealth may be redistributed through taxation or through contractual regulation, the author challenges the alleged liberal preference for taxation by questioning whether it is either less restrictive of individual liberty or more neutral than is contractual regulation. His ultimate conclusion—assuming one desires to utilize a coercive apparatus in the form of state rules and regulations to reallocate the product of one group or class on behalf of a more favored group or class (making the only viable question that of how the redistribution of product should be accomplished)—is that both taxation and regulatory control of private transactions are equally appropriate, and the choice between them ought to be made on the basis of the situation.