Contract Law: Socio-Legal Accounts of the Lived World of Contract

Linda Mulcahy1 and Sally Wheeler2

Introduction

The law of contract is ideally suited to teaching from a socio-legal perspective. While doctrinal scholars place primary emphasis on the text, socio-legal researchers prefer to focus on context. They look, in particular, at the extent to which the formal rules of contract are considered legitimate or useful by those for whom they are designed. A wide range of empirical studies of the 'lived world of contract' now exist across time, industries and legal systems which suggest that contract law is not always used in the ways anticipated by doctrinal lawyers. Whilst textual analysis remains important, these findings have challenged the academy to consider the legitimacy of laws of contract which do not always reflect the practices and needs of the commercial sphere. They also encourage us to look beyond what Macaulay (2003) has called the 'paper deal' to the range of extra-legal normative frameworks which bind and govern commercial relationships. Research suggests that phenomena such as trust, co-operation and a good reputation can be as effective in making a commercial deal work as the threat of litigation or liquidated damages clauses. In short, socio-legal accounts of contracts encourage scholars to be more modest in their claims about the centrality of law in successful business deals.

Despite this active interest in the lived world of contract, it could be argued that socio-legal accounts of contract remain under-represented in textbooks written for students. There are a few notable exceptions but most popular textbooks continue to present contract doctrine as a series of rules with their own jurisprudential and internal logic. In other instances, there is a tendency to discuss empirical studies as an 'add-on' to discussions of doctrine by way [1]

of providing some context but little direct challenge to the canon. Used in this way, socio-legal studies is presented as representing a different world of contract which is of some relevance to hard law but should not be allowed to detract too much from the learning of it. In this chapter we argue that a socio-legal approach can, and should, play a much more central role in our analysis of case law. In particular we attempt to demonstrate that sociolegal approaches can be used as a powerful tool to critique the credibility of contract jurisprudence and imagine different ways of conceiving of exchange. Our position is that legal formalism has tended to encourage the spurious idea that law is in some way autonomous, an end in itself, rather than a means to a legitimate social order.

It is undoubtedly the case that legal doctrine can provide insights into the commercial world. It is after all partly produced as a result of observation of social practices and engagements with the very real commercial problems brought before the courts by litigants. But doctrinal analysis can only be enriched when we have something to compare each case with besides another case. Our concern is that formal legal analysis often provides only a selective and partial view of commercial practice which ensures that the problems presented to the courts fit within pre-defined doctrines. These may be valued for the certainty that they appear to bring but they are in danger of attempting to produce an imagined vision of the social world rather than reflecting it. A close reading of doctrine encourages students to critique the internal logic of law and to decide whether its reasoning is compelling and consistent. In this chapter we attempt to demonstrate how socio-legal scholars can use the same law reports but ask different questions of a case. Why did the parties come to law in the first place when other ways of solving their dispute were possible? Do the rulings of the court have legitimacy within the commercial community they were originally designed to serve? Is there evidence that the values reflected in doctrine are shared by contractors? How do judgments represent the commercial sector? What elements of common commercial practice and commercial litigation are rendered invisible by the ways in which cases are presented and reported?

A wide range of literature on the lived world of contracts already exists for those attempting to approach the subject from a socio-legal perspective. Rather than revisit this material we have chosen to consider how this wealth of information might help an undergraduate student to understand how socio-legal analysis can be used in the reading of a case and how it places that case in a broader context. Instead of 'cherry picking' a case that neatly reflects the problems that socio-legal researchers might have with doctrine, the authors have selected the first contract dispute to appear in the Appeal Cases at the time we began this project. We think this demonstrates the breadth of possibilities for the undergraduate curriculum offered by context-based study. Using it as a case study, we consider how this dispute might be analysed through a socio-legal lens. In the first section of this chapter, we explain the factual matrix of the case and set out the approaches that were taken to deciding it as it progressed through the court system. In the second section, we go on to discuss the sort of questions that a socio-legal scholar would pose about this case.

The facts of RTS v Muller are complicated and there are four implications of this for teaching purposes. Firstly, this offer and acceptance case is much more complex than the usual diet of cases about flick knives, bullfinches and smoke balls which we offer to undergraduate students. It reveals the rather artificial nature of generations of exam papers in which telex machines break down and messages left on answer machines are not heard. Instead, it immediately introduces students to the much harder reality of incomplete contracts in a commercial setting. Empirical accounts of the lived world of contract suggest that incomplete contracts are quite common and that many commercial deals would not pass the test of contractual formation or variation if challenged in the courts. Despite this, substantive sections on incomplete contracts remain rare in textbooks or lecture programmes. Secondly students might be asked to read and rewrite the convoluted account offered by the Court of Appeal which attempts to explain how the dispute between the parties erupted and got to trial. The importance of how a legal story is told is being given increasing recognition by scholars (Hunter et al., 2010) and this exercise could provide students with the opportunity to reflect on what messages selective and expert legal narratives might convey to the lay reader of cases.

RTS v Muller could also be used to encourage students to research the impact that procedural law has on the presentation of issues. The original hearing in the Technology and Construction Court was called to try preliminary issues only with the expectation that the litigation would be disposed of in a timely and relatively cheap manner. The fact that the case eventually went to the Supreme Court and that there was parallel litigation dealing with issues around costs demonstrates that these goals were not achieved in this instance. Viewed in the round, RTS v Muller provides students with a case study in the efficiency and effectiveness of the Woolf reforms and offers opportunities for cross-modular learning. Finally, the case gives students the possibility of looking at the operation of a standard form contract in the business sector. We tend to present standard form contracts to students as falling into two separate categories. In the first classification, we characterize standard forms to students as devices which are commonly an attempt to avoid negotiations and protect business interests when offered to consumers. In the second classification, we present them as exemplars negotiated by trade associations or professional bodies at national level by and for members of the group.

Students are encouraged to be less concerned by these contracts because the parties are of approximately equal bargaining strength. Our presumption is that, as a result, they are usually fair but this does not mean that they are without their problems. Less regularly discussed in undergraduate courses but deserving of attention are the ways in which the latter type of contract may still be the subject of extensive negotiations in order to ensure that it is customized for a particular local deal.

  • [1] Professor of Law at London School of Economics and Political Science. Please address correspondence to This email address is being protected from spam bots, you need Javascript enabled to view it 2 Professor of Law at Queen's University Belfast. Please address correspondence to This email address is being protected from spam bots, you need Javascript enabled to view it
 
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