The political morality of convergence in contract

• Published date: 01 January 2018
• DOI: http://doi.org/10.1111/eulj.12228
• Date: 01 January 2018

ORIGINAL MANUSCRIPT

The political morality of convergence in contract

Aditi Bagchi*

Abstract

One of the most interesting recent developments in contract law has been an academic and political effort to inte-

grate private law. The proposed Common European Sales Law was ultimately withdrawn, and a series of setbacks,

including the British referendum to exit the EU, has recast the politics of convergence. But it remains an objective

for many European scholars. This essay considers the wisdom of convergence on a single law of transactions from

the perspective of philosophical contract theory.

The essay proceeds by disaggregating the rights at stake in contract law. It characterises the formal right to con-

tract and describes its moral impetus as one that should underwrite contract law in all states, especially liberal

states. But the essay argues that the legitimate contours of the formal right are contingent on tenets of political

culture that vary across Member States. Similarly, substantive regulation of contract is morally compulsory and

serves universal interests; the essay takes regulation of permissible work and remuneration for work as examples.

But the rules and standards that best advance those moral interests depend on economic facts specific to individ-

ual political communities. The essay concludes by arguing that contract law is a poor tool by which to accelerate

political and economic convergence.

1|INTRODUCTION

Contract famously allows parties to create legal obligations where they had none. Each party0s obligations correspond

to legal rights by the other. But the rights and obligations created by any given contract do not arise out of thin air: the

state credits voluntary obligations assumed in the course of exchange as legally binding; it recognises a right to

contract. And because parties are subject to a variety of legal duties independent of those they elect to assume,

parties0rights are not wholly dependent on their agreed terms.

Contractual obligations are thus carved in the light of two sorts of background rights. First, parties have

formal rights to control the terms on which they transact. Second, parties have substantive rights with

respect to certain kinds of transactions, which limit parties0control over terms. Neither right is a human

right, in the sense of a transcendental right that every person enjoys irrespective of time and place. The

content of both substantive and formal rights in contract is highly contingent. So much so that, I will argue

here, regulation of contract by way of either general principle or substantive regulation is highly resistant to

convergence.

More specifically, m y aim is to show, first, that a regime of contract mus t be responsive to forma l and sub-

stantive background rights. However, and second, their appropriate content depends on other background insti-

tutions and political commitments. The result is a picture of contract as morally and politically laden. Importantly,

*

Fordham University Law School, New York, New York, USA

Received: 7 October 2016 Accepted: 5 February 2017

DOI: 10.1111/eulj.12228

36 © 2018 John Wiley & Sons Ltd. Eur Law J. 2018;24:36–56.wileyonlinelibrary.com/journal/eulj

the latter feature refers not just to its dependence on political principles but actual politics. The view here is

intended as a point of contrast to some other pictures of contract, which portray the principles of contract as

either derivative from a series of moral propositions to which we must invariably commit ourselves, or a moral

blank space to be filled by politics. Understanding contract as an exercise in political morality, by contrast, gen-

erates moral criteri a by which we can assess th e politics of contract r egulation—or, in this case, the politics of

convergence.

The paper has three parts. Part 2 will assess the extent to which the right to contract, or the criteria that govern

our ability to enforce voluntarily assumed obligations, should be homogeneously conceived. Part 3 will assess the

extent to which mandatory regulation of contract, designed to substantiate ‘substantive’rights, should be

transnational. Part 4 considers whether formal and substantive contract rules can be used to advance a broader

project of European convergence.

If the right to contract in principle reflects a fundamental commitment that European countries share, we might

think that its essential contours, including its answer to pressing policy questions such as treatment of standard form

contracts, should be uniform. Likewise, if the substantive rights implicated by consumer, employment and other

contracts are a species of human right, we should favour homogenisation of substantive regulation of contract. Given

the historical arguments that propel regional integration, it is no longer enough to explain persistent differences

between national regimes by reference to their separate legal histories.

1

I will argue that the forma l right to contract and the substantive right si mplicated by contract are both highly

contextual. In parti cular, the formal right to con tract should manifest simil arly only where political cu ltures converge.

The substantive rights implicated by contract should be uniform only where there is substantial macroeconomic

convergence.

The argument here does not rest on the inherent flexibility of a particular legal form or even the capacity

of national institutions to adapt to path‐dependent national cultures, since any legal form might be replicated

at the transnational level.

2

Nor does it concern the democratic credentials of any particular integrative

project.

3

The argument in this essay does depend on familiar descriptive claims about the present state of

diversity among Member States on matters of political and legal philosophy that are directly implicated by

contract law.

Even allowing for diversity within Members States, many observers perceive differences among states in their

prevailing or median positions. Brigitta Lurger has argued that contract law necessarily involves ‘political choices

and [requires that one] strike the right balance between the individualistic pole of contractual freedom and the

altruistic pole of regard and fairness’, and further concludes that ‘there is no agreement among the Member States

about where to draw the line between the two principles.’

4

Similarly, Daniela Caruso has argued that even apparently

1

‘It is no longer taken for granted that political communities are historically path‐dependent and for that reason alone legitimately dif-

ferent.’Alexander Somek, ‘The Cosmopolitan Constitution’, in M. Maduro, K. Tuori and S. Sankari (eds.), Transnational Law: Rethinking

European Law and Legal Thinking (Cambridge University Press, 2014), 97, 104.

2

Cf. Friedrich Carl von Savigny, Of the Vocation of Our Age for Legislation and Jurisprudence (Lawbook Exchange, 2011 [1814]) (primarily

targeting the idea of a civil code). Nevertheless, the general thrust of this essay is in line with much of Savigny0s claims about contract

law and the lessons of Roman law.

3

My paper addresses the question of whether convergence is desirable in principle rather than the legitimacy of convergence by way

of any particular instrument or ushered in by a particular institution. For the latter considerations, that speak to the democratic cre-

dentials of a particular project of harmonisation, see Florian Roedl, ‘Private Law, Democracy, Codification: A Critique of the European

Private Law Project’, in C. Joerges and T. Ralli (eds.), European Constitutionalism without Private Law, Private Law Without Democracy

(ARENA, 2011) (complaining of the allegedly apolitical process by which the draft common frame of reference was developed).

4

Brigitta Lurger, ‘The Future of European Contract Law between Freedom of Contract, Social Justice and Market Rationality’(1995) 1

European Review of Contract Law, 442, 454. See also Brigitta Lurger, ‘Old and New Insights for the Protection of Consumers in European

Private Law in the Wake of the Global Economic Crisis’, in R. Brownsword, H.‐W. Micklitz, L. Niglia and S. Weatherill (eds.), The Founda-

tions of European Private Law (Hart, 2011) 89, 98 (‘There is no consensus among member states on the answers [to the core philosophic

questions that underlie contract law]. Some of them tend to more social or protective (for instance Nordic countries, Austria); others to

more liberal approaches (for instance, Great Britain, Ireland), most of them having long traditions in their respective market policies’).

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