Corrective Justice in Contract Law: Is There a Case for Punitive Damages?

Twentieth-century American legal theory has been dominated by utilitarian and economic approaches. As a result, scholarly analyses of contract and tort law have focused on the public effects of the resolution of private disputes. But in the last twenty years or so justice has undergone a renaissance as so-called corrective-justice theorists have tried to shift the discussion in private law back to the relationships between individual parties. Tort law has been a particularly fertile ground for corrective-justice theorists, and a lively debate has developed about what the best corrective-justice account of tort law would look like. By contrast, comparatively little has been written about corrective justice and contract law. In fact, Jules Coleman, one of the most influential corrective-justice theorists, argues that contract law is best explained by economic considerations that make bargaining easier and more reliable, whereas tort law requires corrective justice because the bargaining costs are simply too high among tortfeasors and victims.\u27 Coleman is the exception: Most corrective-justice theorists assume, or argue briefly in passing, that corrective justice will apply equally well to contract law. However, few attempts have been made at anything like a comprehensive corrective-justice account of contract. This lacuna is surprising. While most major doctrines of contract law are well entrenched and accepted, the theories meant to explain those doctrines are not so well accepted, and many scholars believe that there is no generally recognized theory of contract. Economic and utilitarian analyses aside, twentieth-century theories of contract generally fell into one of two broad categories. The first claimed that what little distinct law of contract exists was simply manufactured by Christopher Columbus Langdell and Oliver Wendell Holmes, among others. Contract law is a subset of tort law, according to these theorists, and we should realize that and treat it as such. The courts were already doing so, it was claimed, leading these theorists to talk of the death of contract, and to speak hopefully of the future when law schools would teach contract and torts together, perhaps even calling them contorts. In fact, Grant Gilmore was so convinced that he began his 1974 book, The Death of Contract, with the claim that not only was contract dead, but that the point is hardly worth arguing anymore, and proceeded to apologize for even writing on such an uncontroversial subject. For death-of-contract theorists, the fallacy of the Langdell-Holmes view lay in the link of contract to promises. Contracts are binding, these theorists argued, not because of promises, but rather because the promisee generally relies on the promise to her detriment. As Charles Fried, an opponent of the contract-as-tort theories, put it, My statement is like a pit I have dug in the road, into which you fall. I have harmed you and should make you whole. P. S. Atiyah went so far as to give a comprehensive historical argument claiming that only the Victorian morality of the nineteenth century had led to the focus on promising and to a willingness of courts to enforce executory contracts