Prof. Robert E. Scott,
University of Virginia
"The Death of Contract Law"
March 2, 2004
As an area of research, contract theory has claimed three Nobel prizes in economics and attracted countless studies across a range of disciplines. This years Cecil Wright Lecturer, Professor Robert Scott of the University of Virginia, Faculty of Law, dedicated his talk to an exposition of the advances made in this area. Scott advocated a return to the classical common law approach to contract law, preferring a strict interpretation of the written contract to the contextual, reliance-based enquiry of modern times. Using examples from the United States, he cautioned against interference by courts in situations that are ill-suited to judicial intervention. The enforcement of some promises may appeal to our sense of justice and fairness but too much intervention by the courts comes at a cost, said Scott. He went on to point out that psychological experiments reveal that parties are less likely to deal fairly if there is the threat of legal enforcement; that is, fairness cannot be imposed from above. Scott concludes from this that contract law should interpret only the plain meaning of the written text and cautioned that efforts to judicialize standards of fair-dealing may be subversive. It would dampen the natural social forces which impel us towards cooperative reciprocity and it would destabilize existing transactions by attracting judicial intervention in cases where parties are better capable of self-enforcement. Scott concluded that whatever use they may have had to the Chancery, the doctrines of good faith or the standards of commercial reasonableness may have no place in a modern courtroom.
