THE JURISPRUDENTIAL HISTORY OF CONTRACTUAL JUSTICE

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INDIVIDUALISM, THE SUBJECTIVITY OF VALUE AND THE WILL THEORY OF CONTRACT

The centrality of the project to continue privileging individualist politics in contract law is exposed by a substantive critical analysis of the field. Kennedy goes as far as to claim that individualism provides the law of contract with its justification.17 This individualist vision of the law of contract developed, as I have indicated in Chapter 2, out of a worldview in the late eighteenth century, which emphasised the relationship between the individual and society.18 This worldview was profoundly influenced by the escalation in commercial development at the time. People derived their positions of power within a society from their place in the social hierarchy as well as from their own efforts to assume and maintain the specific place within that hierarchy. Individualism accepts as given a world of independent individuals who are encouraged to prefer the perusal of self-interest rigorously. A consideration or sensitivity for the interests of others fall outside of the aims of this way of life, although one should be prepared to obey the rules that make it possible to co-exist with other self-interested individuals.20 The individual is entirely selfreliant. His conduct conforms to the belief that other individuals in the community are themselves motivated only by pure self-interest.21 The individualist morality is concerned with a respect for the rights of others but endorses the reluctance not to engage in communal activity. In addition, individualists are opposed to the use of private and public power to achieve social ends.22 Individualists believe that everyone should determine and achieve their aims without the help of, or in liaison with others.
Concerning the role of law in life, individualists believe that the law cannot impose upon legal subjects as a group the liability of shared profits or loss.23 The law merely fixes the boundaries of individual freedom by defining and enforcing rights. In the context of the law of contract, the parties create their own law through the agreement. Mensch refers to this phenomenon as a ‘magic moment of formation, when individual wills created a right whose enforcement was necessary for the protection of free will itself.’24 Contractual liability is thus only determined by the agreement (consensus) of the parties. The law of contract in an individualistic world, to borrow from Macaulay, provides the glue that binds individuals to their agreements. Unger points out that this political position which experienced its heyday in the nineteenth century was driven by the idea that only a system of clearly delineated rules and rights could define a free political and economic order. 26 This order was maintained by a strict adherence to a system of predetermined rules and attempts to prevent that it is contaminated by policy considerations. In the contractual context, Kelman summarises the situation as follows: ‘…the rulelike position is privileged…, experienced as the starting-point ‘free contract regime position” from which other positions represent departures’.27
Feinman indicates that the central economic and philosophical principle of the individualist ideology is the belief in the subjectivity of value – the concept of value understood as being entirely dependent on individual perceptions.28 In the previous chapter I emphasised that the subjectivist theory of value bears close relation with the development of the market economy.29 It can therefore be said that individualism both serves as the justification for the market economy and that its politics was primarily responsible for its escalation.30 Kennedy explains the relationship as follows:
The individualistic ethic is reflected in a perennial strain of economic theorizing that emphasizes the natural and beneficial character of economic conflict and competition. According to this view, social welfare, over the long run, will be maximised only if we preserve a powerful set of incentives to individual activity. The argument is that the wealth and happiness of a people depend less on natural advantages or the wisdom of rulers than on the moral fibre of the citizenry, that is, on their self-reliance. If they are self-reliant they will generate progress through the continual quest for personal advantage within the existing structure of rights.

General characteristics of formalism

The formalist approach to the law of contract is fundamentally rule-orientated.46 It advocates faith in a system of value-neutral rules which are applied within a moral vacuum and without reference to policy considerations in circumstances calling for its application. This according to formalist believers will provide clear and predictable answers in all cases, thus enhancing legal certainty.
The formalist agenda in the law of contract has been summarised by Adams and Brownswordin the manner I describe below:47 First and foremost, the rule-book rules the law: ‘The world may change, but the traditional rules, like ‘Ol’ Man River’, ‘jus’ keep rollin’ along.’
Secondly, the rule-book is (almost mathematically) comprehended of as a closed logical system. Just like one plus one must equal two, the contractual concepts embodied in the rules have a logic of their own.49 Thirdly, the ‘conceptual purity and integrity’50 of the rule-book should be maintained. This means that there will inevitably be a commitment to ‘clean-up’ the law where ill-fitting or non-rulelike doctrines are encountered. Fourthly, formalism reveals a preference for conservatism. Formalists encourages judges to base their decisions on well-established rather than less well-established or dubious doctrine. Fifthly, sympathy and politics are not regarded as material considerations of formalist judges, unless of course the rule-book elevates these considerations to a status of materiality. If the rule is against a party it is just too bad for him. No time is afforded to interpretation of the rule with reference to considerations of fairness or justice or some other moral or social purpose. Subjective judicial opinions (politics) about the fairness or not of a particular rule should not influence the decision and can never serve as an excuse to deviate from the rule-book. 51 In the sixth instance, formalists always apply the rule anti-critically and mechanically, precisely because politics are not allowed to play a role. ‘Shibboleths such as “freedom of contract” and phrases such as “sanctity of contract” are cited without considering the social context or the social outcomes of their application. The rule-book, like Iustitia, is blind to any and all considerations of merit, purpose of the rule or context of the dispute.’ 52 In the seventh place the formalist belief is that the routine application of rules will only be optimal where the rule itself is clear and certain and does not allow for any measure of judicial discretion. Formalists would, for instance, prefer a rule which unequivocally, prohibit the inclusion of exemption clauses in contracts, than a rule stating that the inclusion of an exemption clause is prohibited where the clause is (clearly) ‘unreasonable in the circumstances’.53 Finally, Adams and Brownsword point out that an approach to shy away from legal reform as well as a strict interpretation of appeal court jurisdiction, may be classified as by-products of formalism. The reluctance to effect legal reform accords with the formalist conception that judges should apply rules, not make them.54 The second by-product refers to the tendency of appeal courts to rather enquire into whether the correct rule was applied than to enquire into whether the correct legal question was asked or whether the decision was correct on substantive legal grounds.

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CHAPTER 1: INTRODUCTION
I INTRODUCTION: WHY IT IS NECESSARY TO ARGUE FOR CONTRACTUAL JUSTICE IN THE SOUTH AFRICAN LAW OF CONTRACT
II AN ALTERNATIVE STORY OF CONTRACT LAW
III APPROACHING THE FUNDAMENTAL CONTRADICTION: THE HISTORY OF FREEDOM OF CONTRACT AND CONTRACTUAL JUSTICE
IV FORM, SUBSTANCE, THE FUNDAMENTAL CONTRADICTION AND THE LAW OF CONTRACT
V THE CONSTITUTION, TRANSFORMATION AND CONTRACT LAW
VI CONCLUSION: AN EMPHASIS ON THE ETHICAL ELEMENT OF CONTRACT
CHAPTER 2: THE JURISPRUDENTIAL HISTORY OF CONTRACTUAL JUSTICE: A HISTORICAL OVERVIEW OF THE ORIGIN AND MARGINALISATION OF FAIRNESS IN THE LAW OF CONTRACT
I INTRODUCTION
II ARISTOTLE AND EARLY ROMAN CONTRACT LAW
III THE (ARISTOTELIAN) VALUES UNDERLYING ROMAN CONTRACT LAW
IV MORALITY IN THE ROMAN LAW OF CONTRACT
V CONTRACTUAL EQUITY IN EARLY ENGLISH AND ANGLO AMERICAN CONTRACT LAW
VI THE DEVELOPMENT OF MODERN CONTRACT LAW IN THE NINETEENTH CENTURY
VII THE SUBJECTIVITY OF VALUE AND THE OBJECTIVE THEORY OF CONTRACT
VIII CONCLUSION
CHAPTER 3: THE SOUTH AFRICAN LAW OF CONTRACT: A CRITICAL EVALUATION
I INTRODUCTION
II INDIVIDUALISM, THE SUBJECTIVITY OF VALUE AND THE WILL THEORY OF CONTRACT
III FORMALISM: THE SHAPE OF INDIVIDUALISM
IV INDIVIDUALISM’S AND FORMALISM’S ‘NATURAL AFFINITY’
V ‘FREEDOM OF CONTRACT’ AS A POLITICAL SLOGAN IN SOUTH AFRICA
VI DEDUCTIONS
VII THE IDEAL OF ALTRUISM
VIII THE NATURAL AFFINITY OF ALTRUISM FOR STANDARDS
IX THE PICTURE EMERGING
X JUDICIAL CHALLENGES OF THE STRICT ENFORCEMENT OF CONTRACTS IN SOUTH AFRICAN CASE LAW
XI CONCLUSION
CHAPTER 4: TRANSFORMATION, THE CONSTITUTION AND CONTRACT LAW
I INTRODUCTION: THE BREAK WITH THINGS PAST, A TRANSFORMING SOCIETY AND THE CONSTITUTIONAL RULE OF LAW
II A TRANSFORMATIVE APPROACH TO THE CONSTITUTION AND ITS INFLUENCE ON THE LAW OF CONTRACT
III DECISIONS IN THE LAW OF CONTRACT AFTER 1994
IV CONCLUSION
CHAPTER 5: THE SOUTH AFRICAN LAW COMMISSION’S PROJECT ON UNFAIR CONTRACTS
I INTRODUCTION: THE CHALLENGE OF REFORM: THE SALC’S PROJECT ON UNFAIR CONTRACTS
II THE ‘NO’ ANSWER
III RESPONSE TO THE ‘NO’ ARGUMENTS
IV THE UNQUALIFIED ‘YES’ ANSWER
V THE QUALIFIED ‘YES’ ANSWER
VI THE ‘OFFICIAL’ STORY
VII CONCLUSION
CHAPTER 6: THE ETHICAL ELEMENT OF CONTRACT AND CONTRACTUAL JUSTICE
I INTRODUCTION
II THE NATURE OF THE ETHICAL ELEMENT OF CONTRACT
III FALSE CONSCIOUSNESS AND THE LACK OF AN EMPHASIS ON THE ETHICAL ELEMENT OF CONTRACT
IV AN EMPHASIS ON THE ETHICAL ELEMENT OF CONTRACT: FREEDOM OF CONTRACT AND HUMAN DIGNITY
V REFLECTIONS ON CONTRACTUAL JUSTICE (UTOPIA)
VI CONCLUSION
ANNEXURE A 
BIBLIOGRAPHY

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