Abstract
This chapter is about how corrective justice accounts of contract law manage to explain material nondisclosure in the common law. Following the distinction proposed by Marc Ramsay, I will differentiate between what he refers to as “robust corrective justice” and “nonrobust corrective justice”. First, I argue that the robust corrective justice theory demands too much from the parties to a contractual agreement, leading to the transformation of obligations undertaken between parties into obligations of distributive justice. Second, I will defend the position held by nonrobust corrective justice accounts that seems consistent with the common law of contracts: the bargaining principle and the reasonable transparency principle proposed by Ramsay well explain the existence of what Ramsay refers to as an asymmetry between the obligations of the vendor and the buyer in terms of each one’s respective duty to make information known. My contribution will be to offer a theory of justice as a background for explaining why Ramsay’s vision is satisfactory. The theory of justice I propose is that of the division of responsibility.
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Notes
- 1.
For a discussion on the notion of distributive justice, see Chap. 2.
- 2.
Similarly, then, an efficiency-based account of contracts also fails to qualify as a “corrective justice account” because an economist of law would consider the best explanation of the doctrines of contract law to be the one that appeals to efficiency as an important value. Efficiency is a value that depends upon how much aggregate welfare there is in a society. The obligations that the parties have do not depend upon the specific interaction between them but rather upon what efficiency requires (see Chap. 9). As I have explained earlier, theories of contract law based on efficiency must face the problem that they cannot explain the correlation between the rights and the obligations that exist between the parties. So, for example, when A breaks a contract that he has signed with B, if a court rules that A should pay damages and reparations to B, an efficiency-based account of contracts explains A’s duty by invoking the incentives that are generated by requiring A to pay the corresponding damages. A corrective justice account, by contrast, would posit that if A owes B something, it is because A has an obligation to B based on A’s having consented to being obligated in this way. Under this second conception, the relationship between A and B is not contingent because it could not have been otherwise except that A pays damages (Third parties, [or the community in general,] are foreign to the contractual relationship between the parties), whereas, under an efficiency account, the relationship that unites the parties is contingent. It is merely coincidence that what ends up being efficient is that A, and not some third party, who bears the burden of the damages sustained by B; another person would be charged if this were to yield [more] efficient results. In Chap. 3, in which I discuss Kronman’s distributive thesis, I explain that distributive accounts of contract are liable to the same problem.
- 3.
“The Buyer/Seller Asymmetry: Corrective Justice and Material Non-Disclosure” (2006), 56 U. Toronto L. J. 113.
- 4.
Idem at139.
- 5.
Idem at 140. The reference to advantage-taking is familiar to the reader: I discuss it in Chap. 3, which is devoted to Kronman’s distributive thesis—Kronman argues that all contracts involve permissible advantage-taking.
- 6.
(Cambridge: Harvard University Press, 1981).
- 7.
Ramsay, supra note 3 at 140.
- 8.
Fried, supra note 3 at 16.
- 9.
Idem at 17 [emphasis omitted].
- 10.
Ibid.
- 11.
For a discussion of Fried on pre-contractual disclosure, see Piotr Tereszkiewicz, “Promises, Contracts and the Question of Precontractual Disclosure” (unpublished, on file with author).
- 12.
Fried, supra note 6 at 78–9, cited in Ramsay, supra note 3 at 54.
- 13.
Ramsay, idem at 135.
- 14.
56 Wash. 2d 449, 353 P. 2d. 672 (1960).
- 15.
In order to distinguish the nuances of lying as opposed to merely not revealing, Fried proposes two hypothetical cases, I and II as we shall see shortly. For Fried, Obde and Case I are analogous in that the seller in Obde and the buyer in Case I are each aware of the other party’s mistake and so contribute to creating his confusion.
- 16.
Fried, supra note 6 at 79–78.
- 17.
Michael J. Trebilcock, The Limits of Freedom of Contract (Cambridge: Harvard University Press, 1993), 117, cited in Ramsay, supra note 3 at 135.
- 18.
Ramsay, supra note 3 at 137.
- 19.
Ibid.
- 20.
Fried, supra note 6 at 79.
- 21.
Idem at 80.
- 22.
Idem at 83,
- 23.
Ramsay, supra note 3 at 140.
- 24.
Ibid.
- 25.
Ibid.
- 26.
Idem at 141.
- 27.
For an economic approach, see A. Kronman, “Mistake, Disclosure, Information, and the Law of Contracts” (1979), 7 J. Legal Stud. 1.
- 28.
Ramsay, supra note 3 at 141.
- 29.
See, in general, Ramsay’s argument, ibid.
- 30.
Idem at 143.
- 31.
In fact, the buyer-seller asymmetry does not usually manifest itself when the buyer must also disclose information about what he brings to the negotiating table. In the majority of cases, what actually occurs is that the buyer offers money in exchange for some good that the seller [offers]. Money is transparent: unlike houses, it cannot be infested with termites. Idem at 144.
- 32.
Idem at 144.
- 33.
Ibid.
- 34.
Ibid.
- 35.
Ibid.
- 36.
Idem at 145.
- 37.
See my discussion of the division of responsibility in Chap. 5.
- 38.
John Rawls, Political Liberalism (New York: Columbia University Press, 1993), 53.
- 39.
I borrow this idea from Peter Benson, “Philosophy of Property Law,” in The Oxford Handbook of Jurisprudence and Philosophy of Law, ed. Jules Coleman and Scott Shapiro (New York: Oxford University Press, 2002), 756 at 786.
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Hevia, M. (2013). Material Nondisclosure, Corrective Justice, and the Division of Responsibility. In: Reasonableness and Responsibility: A Theory of Contract Law. Law and Philosophy Library, vol 101. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-4605-3_10
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