Plural Values in Contract Law : Theory and Implementation

Contract theorists approach value pluralism in three ways: (a) Capitulation: the theorist shows how a single value – e.g., efficiency or community – explains a rule or an area and implies normative recommendations; (b) Leveraging: the theorist shows how multiple values that theorists find attractive all converge to explain a rule or an area, such as remedies or disclosure, and imply normative recommendations; (c) Embrasure: the theorist applies multiple values both to explain the law and to derive normative recommendations. Capitulation yields theoretical coherence but is normatively thin; and leverage has limited scope because disparate values seldom point in one direction. Value pluralism is normatively thick and widely applicable. It also is the animating theme in Hanoch Dagan and Michael Heller’s new book, “A Choice Theory of Contracts” (2017), which argues that the state should supply potential contracting parties with a variety of default contract types, each of which may reflect a different balance of relevant values. This Essay analyzes the three approaches to value theories in contracts, and then uses the “D&H” book as a vehicle to argue that while value pluralism avoids the theoretical problems of capitulation and leveraging, and so has theoretical appeal, value pluralism raises severe practical problems. In particular, how to implement a pluralist theory at the level of the rule is an unsolved problem in contract law and, we argue, D&H do not make much progress in solving it