Contract Theory

Paper Summary:

This paper discusses the theory of contract and provides a review of contemporary legal contract theories, the relation between contract law and trust and how important lawyers are in contract law for promoting trust in commerce. The paper shows how contracts are the primary business instrument used to transact commercial exchanges in the United States and abroad today. The paper concludes that contract law serves as a bastion of last resort because people will tend to behave in ways that maximize their self-interests at the expense of others.

Outline:
Introduction
Review and Discussion
Conclusion

From the Paper:

"Before examining any regulation of contracts, though, Collins (1999) suggests that it is important to gain some concept of a typical contractual relation itself: "This relation plainly differs from other types of human association, such as those found between friends, neighbors, members of a club, and between members of a family. Such an investigation of the social institution of contract presents a considerable problem, because the idea of contract possesses a confusing surplus of meanings" (p. 13). On the one hand, Black's Law Dictionary (1990) defines a contract as "An agreement between two or more parties which creates an obligation to do or not to do a particular thing. As defined in Restatement, Second, Contracts, Section 3, 'A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty'" (p. 322)."

Sample of Sources Used:

• Adams, J., & Brownsword, R. (1995). Key issues in contract. In D. Johnston & R. Zimmerman (Eds). Unjustified enrichment: Key issues in comparative perspective. Cambridge, UK: Cambridge University Press.
• Beatson, J. E., & Friedmann, D. E. (eds.). 1997. Good faith and fault in contract law. Oxford: Clarendon Press.
• Black's law dictionary. 1990. St. Paul, MN: West Publishing Co.
• Buckley, F. H. (ed.). (1999). The fall and rise of freedom of contract. Durham, NC: Duke University Press.
• Charny, D. (1991). Hypothetical bargains: The normative structure of contract interpretation. Michigan Law Review, 89(7), 1817.

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