Fault Lines in Contracts Theory I: Martha Ertman

 This week, the Blog will feature a series of posts on recentscholarship relating to the relationship between contract and fault or betweencontract and promissory obligation. These themes are explored in greater detail in the forthcoming book,edited by Omri Ben-Shahar and Ariel Porot, Faultin American Contract Law (Cambridge University Press 2010).  Today’s post is about Martha Ertman’schapter in the volume, “The Productive Tension between Official and UnofficialStories of Fault in Contract Law,” which can be downloaded from the SocialScience Research Network here.

Professor Ertman presents as the “official story” the notionthat contracts law is a strict-liability regime and that the state of mind ofthe breaching party ought to have no role in the assessment of damages.  As Justice Holmes put it, “the wickedcontract-breaker should pay mo more in damages than the innocent and the purein heart.”  But that official storyis supplemented, as is often the case in contracts law, with numerousexceptions in which courts do consider fault either in determining liability orin assessing damages.  ProfessorErtman argues that these exceptions facilitate rather than undermine contractslaw by facilitating ex ante planning.

The chapter comes complete with its own Venn diagram andwith some colorful metaphors to help the reader conceptualize the relationshipbetween contract and fault, between contracts damages and tort damages, andbetween public and private mechanisms for social regulation.  But Professor Ertman also hammers herthesis home with evidence from the Restatement (2d) of Contracts, the UniformCommercial Code and case law to demonstrate that there have always beenexceptions to the general rule that contracts law is not about fault.   R.2d § 90 permits recovery basedon promissory estoppel and thus incorporates a notion of fault to the extentthat promisors induce reasonable reliance.  UCC § 2-713 permits additional damages in cases of willfulbreach.  In Jacob & Youngs v. Kent, Judge Cardozo would have awardeddamages but for his finding that there was an “innocent breach of aninessential term.”

In the final section of her chapter, Professor Ertman drawson George Lakoff’s work on body-based metaphors to suggest ways in whichcontracts doctrine benefits from the supplement fault-based theories provide tothe general strict-liability regime that constitutes the “official story” ofcontract law.  She concludes thatwhile the official story “buttresses the planning or certainty side of contractlaw,” the unofficial story tempers the law by permitting considerations offault, thus preventing contracts law from encouraging opportunistic breachesthat would undermine the goal of certainty. 

Professor Ertman’s chapter is short, but it provides a very usefulframework that contracts profs could utilize to help students organize theirideas about contracts damages.

[Jeremy Telman]