Contractual Relations

Abstract

Abstract This book demonstrates that economic exchange and legal contract rest on a moral relationship by which each party recognises the autonomy of the other. Through this relationship of mutual recognition, the parties each pursue their legitimate self-interest by the persuasion of the other. Consciousness of this essential relationship is in stark contrast to the alienated belief in solipsistic self-interest that is central to the classical law of contract. Given such belief, it seems justified to take a purely instrumental attitude towards the other party to a contract. But such an attitude is not morally defensible, nor does it enhance economic welfare; and it is for these reasons that the classical law is legally incoherent. The fundamental shortcomings of the classical law arise because it cannot comprehend the way that the doctrines of the positive law do, in fact, give effect to the relationship of mutual recognition. The welfarist criticism of the classical law has, however, failed to develop a workable concept of self-interest, and so is at odds with what must be retained from the classical law, and, behind this, what is welfare enhancing about the market economy. The relationship of mutual recognition can and must be derived from an immanent critique of the classical law that restates self-interest in a morally, economically, and legally attractive manner. The law of contract which emerges is the law of liberal socialism and the social market.