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Contracts Without Consent: Exploring a New Basis for Contractual Liability

By Omri Ben-Shahar

Abstract

This Essay explores an alternative to one of the pillars of contract law, that obligations arise only when there is “mutual assent” – when the parties reach consensus over the terms of the transaction. It explores a principle of “no-retraction,” under which each party is obligated to terms it manifested and can retract only with some liability. In contrast to the all-or-nothing nature of the mutual assent regime, where preliminary forms of consent are either full-blown contracts or create no obligation, under the no-retraction regime, obligations emerge gradually, as the positions of the negotiating parties draw closer. Further, the no-retraction liability regime can be coupled with different damage measures to advance various social goals, including optimal reliance. The theory is applied to areas of contract formation that have produced inconsistent jurisprudence, such as precontractual liability and misunderstands, and resolves them in a simple and unified fashion. Finally, the analysis provides a fresh understanding of the obligation to negotiate in good faith and explores a new criterion for gap-filling in incomplete contracts

Topics: Contracts, Law and Economics, Contracts, Law and Economics
Publisher: University of Michigan Law School Scholarship Repository
Year: 2004
OAI identifier: oai:repository.law.umich.edu:law_econ_archive-1028
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