Contract Law and the Liberalism of Fear

Liberalism’s concern with human freedom seems related to contractual freedom and thus contract law. There are, however, many strands of liberal thought and which of them best justifies contract is a difficult question. In The Choice Theory of Contracts, Hanoch Dagan and Michael Heller offer a vision of contract based on autonomy. Drawing on the work of Joseph Raz, they argue that extending autonomy should be the law’s primary concern, which requires that we extend the range of contractual choices available. While there is much to admire in their work, I argue that autonomy as conceived by Dagan and Heller cannot justify contract law. First, there are reasons to doubt the coherence of autonomy as an ideal. Second, given the pluralism of liberal societies, which, for example, often include substantial numbers of religious believers who reject core assumptions of autonomy theory, it is doubtful that such a theory can legitimate contract law. A more modest version of liberalism concerned primarily with protection against cruelty and providing a modus vivendi in pluralistic societies is more tenable. Such a vision of liberalism yields a more modest vision of contract law. Rather than making it into another means of realizing the dream of a more autonomous self, it is enough that contract law facilitates commerce and the marketplace. Markets in turn can serve an important — albeit limited — role in sustaining the peaceful cooperation and coexistence toward which a more realistic liberalism should aim.

Parol Evidence Rules and the Mechanics of Choice

Scholars have to date paid relatively little attention to the rules for deciding when a writing is integrated. These integration rules, however, are as dark and full of subtle difficulties as are other parts of parol evidence rules. As a way of thinking about Hanoch Dagan and Michael Heller’s The Choice Theory of Contracts, this Article suggests we would do better with tailored integration rules for two transaction types. In negotiated contracts between firms, courts should apply a hard express integration rule, requiring firms to say when they intend a writing to be integrated. In consumer contracts, standard terms should automatically be integrated against consumer-side communications, and never integrated against a business’s communications. The argument for each rule rests on the ways parties make and express contractual choices in these types of transactions. Whereas Dagan and Heller emphasize the different values at stake in different spheres of contracting, differences among parties’ capacities for choice — or the “mechanics of choice” — are at least as important.

The Use of Full-Line Forcing Contracts in the Video Rental Industry

Bundling is at the forefront of many policy debates as new technologies allow firms to implement more complex bundling arrangements. Realistic analyses of bundling—particularly between suppliers and retailers—require detailed data on both supply arrangements and consumer demand. We analyze firms' use of bundling as a vertical restraint (known as full-line forcing) using extensive supply and demand data from the video rental industry. Our model captures key details of the market that determine firms' contractual choices, and sheds light on the implications of these decisions. The empirical approach provides a model for how to analyze bundling when detailed data are available. (JEL D86, L14, L81, L82)

The global farmer: typology, institutions and organisation

The purpose of this paper is to study the phenomenon of 'global farmers' and how they are organised. The paper establishes a definition and a typology of global farming; sketches a theoretical framework based on property rights theory; and uses case studies to illustrate the theory and typologies. Global farmers are defined as farmers or farming enterprises that carry out activities in more than one country. Specific objectives of the present paper are first to define a typology of global farming, second to explore evidence of the existence of and incentives for global farming, third to propose a theoretical approach to examining the global farmer phenomenon, and fourth to discuss regularities in the governance and contractual choices made by farmers to coordinate their production. Global farms are found to have a variety of governance forms; they tend to not be operated as traditional family farms, but are more often incorporated or operated as formal partnership corporations. The farmers also form alliances and contractual arrangements with other farmers and agri-businesses in both the host country and their country of origin. The study is based on case studies developed in Latin America and Europe. The results of a questionnaire completed by four farmers reveal their reasons for choosing global farming, the specifi contract profile for farm resources and product marketing as well as the institution-related costs faced by farmers. Specific contracts for land, labor and farm inputs are compared in relation to the available services, credit, horizontal collaboration and product distribution.