No Right to Lie, Cheat, or Steal: Public Good v. Private Order

Abstract

In the Nichomachean Ethics, Aristotle takes up the task of examining the meaning of “equity and what is equitable — about how equity is related to justice, and what is equitable to what is just.” In this Article, Professor Plasencia takes up Aristotle’s account of the completing role of equity as a lens through which to examine the concepts that inform the legal repudiation of fraud and deceit in three cases at the intersection of torts and contracts. The three cases — though taken from the different substantive areas of marital relations, business mergers, and real estate transactions — are shown in this Article to occupy a common field of meaning in which law repeatedly has been called upon to deal with the injuries caused by fraud and deception. Across different states, different countries, indeed even different centuries, these three cases show how law has chosen to take such injuries as a serious challenge both to do justice between the parties and to prioritize the public good over the inequities of private order. The author argues that excavating the understandings that inform the legal repudiation of fraud and deceit is a timely and pressing project precisely because America appears, at this time, to be struggling under the burden of an increasingly pervasive tolerance for lies and deception in our private and public affairs. This apparent tolerance is evident in the contours of the Supreme Court’s First Amendment jurisprudence and further exacerbated by the pervasive circulation of what the philosopher Harry G. Frankfurt has aptly called “bullshit.”At a surface level, each case appears to concern a very different area of law. Part II takes up the case of Moore v. Moore, in which the State of Texas court system was called upon to interpret the requirement of voluntariness in a Texas statute establishing the conditions for prenuptial agreements to be valid in the State, raising a debate as old as Aristotle as to the remedies that ought to be available for fraud in such agreements. Part III takes up the case of ABRY Partners V, L.P. v. F&W Acquisition LLC in order to examine how fraud and deceit are handled in the context of a stock purchase agreement negotiated between two private equity firms. Though contract law is said to maximize the realm of freedom by holding parties to the terms of their agreements, the author argues that in this case the Court of Chancery’s decision to prioritize the public interest over the private order of the party’s contract is fully justified, not only because giving the fraudster the benefit of judicial enforcement makes the court an accomplice in effectuating unfairness between the parties, but also because judicial enforcement in such instances would operate to unravel the Idea of a contract — what it is and what it needs to be in order to perform the functions the legal form was invented to perform. In Part IV, the author takes up the seventeenth-century Earl of Oxford’s Case, in which the English Court of Chancery declared the independence and the primacy of equity over common law courts. The court’s reasoning provides occasion to reflect on the fact that our understandings of the way law should deal with the injury caused by fraud and deception have deep roots in the struggle to reconcile law and ethics. In the Earl of Oxford’s Case, that struggle is mediated through the question of the place of equity, understood generally as fairness and justice and specifically as a body of doctrine, in the formal structure of law — a question dating, once again, at least as far back as Aristotle.All three cases, by their refusal to allow a liar to profit from his fraud, underscore the law’s repudiation of fraud and deception as more than “mere bullshit” for which there is said to be no legal remedy. Beyond the questions of private order versus public interest, this Article examines how the legal treatment of fraud and deception also implicates the relationship between common law and equity. Like contract and tort law, common law and equity establish two very different ways of understanding how our social relations are and should be configured. From this perspective, the choice is whether to ground social order on inflexible laws of general application or to adjudicate it through case-specific and fact-sensitive determinations that aim to effectuate the requirements of justice as between the parties. Through her reading of the cases, the author argues that equitable concerns and equity itself are an unavoidable and desirable, and specifically not a dangerous supplement to law because equity plays a completing role to law