Article by Robert A. Hillman
Contract lore consists of “traditional beliefs” about contract law that judges, lawyers, and scholars applying and writing about contract law, employ so routinely and confidently that the principles demonstrate how we perceive contract law today. Previously, I presented three illustrations of contract lore: First, expectancy damages put the injured party in as good a position as if there were no breach. Second, the reasons for a breach, “whether willful, negligent, or unavoidable, are irrelevant to the rules of performance and remedies.” Third, contract formation and interpretation focus on the parties’ intentions.
None of these principles are factually or historically even close to true and are nothing more than myths. When pressed, most people with knowledge about contract law would admit this. Nevertheless, why do these people invoke these “traditional beliefs” even though they are, in reality, nothing more than myths? I reckoned that “contract lore represents contracts people’s aspirations—their strong preference for how contract law should operate if realities did not preclude it.” Further, people tend to seek consistency in their beliefs, which “leads them to believe things that are not true and to avoid conflicting information.” As such, contract lore represents an example of the psychological phenomenon of cognitive dissonance.
In this article, I delve deeper into the phenomenon of contract lore. I offer additional examples that focus on the contract lore of consent in the context of standard-form contracting, “intention of the parties” in the context of gaps in contracts, and the requirement of a “bargained-for exchange” in the context of promise enforcement. Based on these examples, I don’t abandon cognitive dissonance as one explanation of contract lore, but I offer additional explanations and show that context plays an important role in explaining contract lore. My ultimate goal is to show how contract lore sheds light on possible areas of contract law in need of reform.
About the Author
Robert A. Hillman. Edwin H. Woodruff Professor of Law, Cornell Law School.
Citation
94 Tul. L. Rev. 903 (2020)