Thursday, September 17, 2015

By Alvin Yau, 1L

The question of morality in contract law took centre stage at the 2015 Cecil A. Wright Lecture at the University of Toronto’s Faculty of Law where Seana Shiffrin, Professor of Philosophy and Pete Kameron Professor of Law and Social Justice at the University of California, Los Angeles delivered her lecture Enhancing Moral Relations through Strict Liability. The two-hour annual talk was the latest in the venerable lecture series in memory of the renowned Faculty of Law dean Cecil “Caesar” Wright, and provided a thoughtful and eloquent discussion on the merits of strict liability within the realm of contractual performance.

Early on in her lecture, Shiffrin evaluated the current state of affairs in contract law and noted that “no talk of morals” underpin areas such as remedies to breach of contract. As a result, Shiffrin argued there is an implied “indifference to morality” under contemporary contract law, which leads to her main thesis that morality should have a role to play and at least a viable object of discussion among legal scholars. Insofar as one believes that “contracts are moral institutions”, Shiffrin proposes that a focus on fault and strict liability can enhance the moral role of contracts while fostering positive relationships between promisor and promisee and  addressing certain shortcomings under the current system.

The issue of strict liability has a well-established place in legal areas such as tort or criminal law, and the possibility of achieving greater prominence for it in contract law raises some very interesting prospects. Within the context of contract law, introducing discussions of morality brings alongside issues such as challenging the prominence of mitigation of damages doctrine in contract law, and promoting a broader public policy agenda based more on trust and less on fault-finding.

“Contract law should play a role of public importance,” Shiffrin proposed, “[and] should not ignore public norms.” Under the focus of the mitigation of damages doctrine, the wronged party is often found to have not taken sufficient reasonable care to avoid such damages or at least internalize the costs of such damages. However, Shiffrin proposes that under the alternative of a strict liability view of contract law, there are embedded elements which would reduce the likelihood of such scenarios where the injured party shoulders such costs.

For Shiffrin, a strict liability view of contractual performance yields greater advantages since it “encourages greater relationships between promisor and promisee” thereby ensuring the centrality of the idea of a promise within contractual agreements. Morally speaking, a promise is made with the intention to fulfill it despite whatever circumstances contrary to its fulfillment. In the contract law context, a strict liability view predicated on the moral idea of promise would mean that promisees and promisors work together in building relationships founded on trust in the good faith of the promise’s initial undertaking. In contrast, Shiffrin argues the current view of mitigation of damages doctrine forces people to “scrutinize [and] cover the gaps” between an unfulfilled or breached contract, subjects both parties to mistrust and also to bear higher costs of hedging risks of non-performance.

“Contract law should play a role of public importance,” Prof. Shiffrin proposed, “[and] should not ignore public norms.”

While the idea of intention to fulfill a promise has less legal prominence under the mitigation of damages doctrine, Shiffrin argues that strict liability would thereby enhance “meaningfulness of autonomy” for both parties, since moral relationships based on trust will ensure less time is spent on the part of the promisee to supervise the promisor in fulfilling the task and similarly, the promisor can work in an environment with less tension due to the supervisory role of the promisee. It seems like a mutually beneficial scenario under the strict liability proposal.

In emphasizing the moral aspect of contract law and the prominent position of strict liability within this framework, Shiffrin challenged audience members to consider the benefits of having a relationship-based view of contracts where tensions between promisors and promisees are reduced via trust and that the “internal tension in contract law” under the current mitigation of damage doctrine are lessened.

Yet if this strict liability view of contract law was in effect, what implications could it have for existing contract law in Common Law jurisdictions? Shiffrin says it would give courts greater flexibility to deal with fault-based problems of contract law rather than the current one-size approach towards deciding upon remedies for contractual breaches. Perhaps most beneficially, a strict liability approach “goes out of the way of people who want to build closer relationships between promisor and promisee”, which makes for a more morally defensible position of enforcing contractual performance versus the current mitigation of damages doctrine. 

Whatever one’s particular views about morality in the law, Shiffrin’s lecture made for a lucid and compelling appeal to consider the broader idea of intent via strict liability, and its possibility for greater integration in contract law. Certainly this author came away from her talk  with greater respect for the possibility of introducing greater moral considerations into contractual breaches and its potential to remedy future contract law disputes.  

In the end, Shiffrin capably argues that it is necessary to “recalibrate the relationship between morality and the law.” Her proposal to do so via strict liability considerations of contractual performance is a novel idea for contract law and one well worth considering.