Contract and justice: The relation between classical and social contract theory

Abstract

Classical contract theory is the exact opposite of social contract theory, and for this reason, they define two different frameworks through which the rationale for viewing agreements as justifiable can be understood. In this theory, usually named after the noted English philosopher Thomas Hobbes, agreements are labelled to be the very essence of justice. From this angle, people act thus with a mindful aim to further their interests and guard their own property. In fact, through this arrangement, they would establish some institutionalized system of laws and structures in a manner to promote the common good through which the rights and interests of all citizens would be duly protected. Social contract theory argues that ultimately, the formulating and enforcing of contracts is a responsibility of the state. The theoretical position stands that there needs to be a social contract between the individual and state whereby the former gives away certain of his or her rights for the sake of security.

The state, on the other hand, is supposed to protect that there exist provisions in the social contract and that all individuals have been justly handled. However different these theories are, they all consider contracts as essential tools which enable a society to be formed and upheld by justice. They are thus ordering that contracts also form the basis of stability and security in as far as they clearly state the level and nature of the power and responsibility that individuals and entities own. They also emphasize that one takes into consideration the other's aims and mutual agreements for the sake of upholding justice.

Keywords

Classical contract theory, relation, social contract theory.

Introduction

Social contract is a political theory that places the individual in the heart of the political discourse. The society that this theory brings into being has its consensual framework. There have been a million interpretations of the proposition of the social contract. It is an excuse or response for political authority against the traditional arguments in favour of individual freedom. The timelines associated with the theory significantly predate the biblical frameworks but it still gained immense value with the works of three political thinkers-namely Thomas Hobbes, John Locke and Jean-Jacques Rousseau at the dawn of modernity in the 17th and 18th century. As Hobbes says, men transfer their desires to a governing body so that they will not be in a stage of war perpetually whereas at this stage anarchy is perpetually overcome. Thereafter, Locke reasoned that individuals do agree to such an ability of legislation meant to protect their basic qualities: their rights to life, liberty, and their personal property. His original argument was strikingly unique with an assertion that when men combine, they at the same time agree with a course of action which promises uniform opportunities for every participant in society. Let it only be said that social contract theory is one of the most prevailing theories of political thought because it represents the attributes of the society in which people live and correspondingly their duties.

Classical contract theory developed in the wake of belief that a contract exists upon the agreement of the parties concerned, and hence, it is to be taken as a law. It, therefore, implies that duties and obligations of the parties must be carried out as agreed to by them in the contract.

Sir William Blackstone and William Holdsworth were the two most influential historians for the development of this theory that has so far dominated the front page of contract law. The classical theory of contract affirms that one party will be agreeable to forming a contract wherein an offer has been accepted by another party and that, as such, there will be a process through which the contract was able to be formed. It further postulates that the course of ordinary things applies when the parties have been assumed to have completed the contract, and the terms are the duties existing between the contracting parties. Along with this, it stipulates that for any contract to bind and be enforceable by the law, within limits and except for these set requirements of consideration, legality, and capacity, there must exist other concurrent conditions. Of course, there are criticisms on the fact that legal theorists argue against the classical contract theory in that it overemphasizes legal formalism at the expense of hypothetical individual and group initiatives towards the enforcement of social justice. But the concept has retained relevance in the modern law of contract, shaping and being shaped by existing regimes of the law of contract in different parts of the world.

Objectives

a. To study classical contract theory.

b. To study social contract theory.

c. To analyze and understand the relation between classical and social contract theory.

Hypothesis

H0: There is no relation between classical and social contract theory.

H1: There is a relation between classical and social contract theory

Statement of problems

There are various criticisms and challenges which have been forwarded against the theory of contracts over time. Some major issues attributed to contract theory include:

Accuracy: The major weakness of the contract theory is the inaccuracy in history. In this, the theory stipulates that individuals can somehow come together to form a society, but that is not how societies are formed. Many institutions, including churches, often come into being through conquest, coercion, or other means, other than by consensual agreements.

The other trouble with social contract theory is that it assumes in individuals the kind of agency to accept or reject a social contract. Obviously, many individuals—people born into certain societies, for example, or those who have no way of leaving—lack these choices.

Individual autonomy: The theory regards the concession of a few liberties in exchange for protection and security as voluntarily vested upon individuals. The same theory is thus seriously flawed in providing the barter that actually denies them their certain freedoms and rights.

Others criticize the idea of a social contract, saying that it cannot deal with the unequal distributive problems related to social goods. Some who enjoy social power could distort the stipulations in the social contract to secure their own benefits at the cost of others.

Contract theory is often abstract and does not concern moral or legal rights of nonhumans-for example, animals or the natural environment. This may present difficulties where issues are to be addressed touching on environmental degradation or rights of animals.

The contract theory, in general, is another one of the important areas of study in the context of leadership, sans problems and constraints. Critics are suspicious, question, and develop theories for the purpose of changing such limitations and hence to further our understanding of interpersonal relationships and human relations.

Other criticisms and debates against classical theory include:

Power imbalances: The second key problem that arises with contracting involves issues of inherent power imbalances. A major critique against the theory of classical contract is that it views all the parties as equal and their respective voices being given equal voice. However, in reality, sharp divisions may exist between the parties which limits the extent to which the weaker parties can bargain fairly.

No consideration of the history of the relationship: The classical contract theory proceeds in the assumption that contracts are built in vacuum, devoid of the considerations of the history of business that is built into the contract. This makes it impossible to resolve such things as financial inequality, discrimination, or other injustices that shape the terms of the contract.

Lack of expression of ethical concerns: Traditional contracting arrangements are more focused on the legal obligations and the administration of the contract, but while doing that, they might poorly show the moral or ethical behaviour one party expects from the other party. This gap might create complications due to situations in which the enforcement of the contract is permissible yet is not morally fair.

Lack of flexibility: Promises may be difficult to fulfil if circumstances change or the unexpected arises. The change may lead to a variance in the transaction or resolve a situation where strict adherence to the contract would be unfair.

Social isolation In general, the classical theory of contract assumes that there are only two parties to a contract, and the community or social setting within which the term contract is produced is ignored. This may become a problem if the contract has serious social or environmental consequences

Therefore, the classical theory of contract is now mainly seen as an essential concept in law that is undermined and debated; and the development of a better theory on its weaknesses proceeds with scholars.

Review of literature

The classical theory of the contract is a juridical-philosophical school that has concentrated its attention on the relationship of man with the legal order. It shows that a man voluntarily agrees to a contract, and that it is for the law to enforce it. This concept has been the object of debate and discussion between jurists and philosophers for centuries, with many works published on the subject. In this literature review, we will examine certain of the most classic aspects related to classical contract theory. One of the landmarks in the works of classical contract law scholarship is "Constitution" by Sir William Anson, first published in 1879. It contains discussions on some serious legal points concerning how contracts are to be made and interpreted and on various remedies available regarding breach of contracts. He emphasized the importance of the parties' motives in establishing a contract and argued that such motives should be subject to legal norms.

The other classical treatise was The Principles of Law first published by Sir Frederick Pollock in the year 1876. Admittedly, it had influence on the formation of modern contracts. He emphasized that the agreement between parties, at the time of entering into a contract, is of the first importance and the goals of the parties should be guided by the rule of law.

In the ensuing years, scholars such as Charles Fried and Richard Posner still conducted assessments on this age-old covenant. In 1981, Fried wrote his book entitled The Promised Contract in which he argued that a contract is an agreement of the wills of people that places duties and responsibilities. Fried has himself stressed that in the act of contracting, it is the wills of the parties concerned and thus must be matters for the law. Contracts are a method of allocating resources. He made the intention of the parties to contract very important and said contracts, if to be practicable, must be enforced by the law. As explained by the different learned contributions of Anson, Pollock, Fried, and Posner amongst others, debate not only basic criteria of the law of contract but also go to the very relationship between people and the legal institutions. However, none of these theories is to be believed to have finally nailed this theory because ideas and debates presented in these articles continue to influence our understanding of how the social contract works. This would mean that one is willing to give up some of his natural rights to the government so that in return, he will be guaranteed security and safety. The idea has been the subject of hot debate and argument among scholars for several hundred years, with volumes having been written concerning the topic. In the ensuing literature review, we are going to present several recognizable key components of contract theory.

Contract as Promise (1981)

One of the most important early works in the tradition of contract theory is Thomas Hobbes' Leviathan, published in 1651. He theorized that humans are basically selfish and brutal, arguing further for a centralized authority to guide their behaviours. He contended that people should give up their liberties to the state, which would then provide them with security and stability.

Another potent book of contract theory is "Contracts" by Jean Jacques Rousseau published (1762). He argued that a part of people's freedom should be submitted to the state, though it should be controlled only by people who want it. commitment theory. According to Locke, people are naturally entitled to their lives, freedom, and property. A social contract is made, according to him, with the state through

agreement by giving up some of their rights in lieu of protection of basic rights, thoughts. Kant believed that peace could only be achieved on the condition that each individual was treated as an end in themselves, not as a means to an end. He declared that men and women should agree to the social contract that would safe keep their rights and observe their liberties. The renowned scholar Rawls maintains that men and women should agree with the social contract that should be just and fair for all the concerned parties. He maintained that there had to be a theory of justice to be accepted by each individual of society regardless of personhood. Works by Hobbes, Rousseau, Locke, Kant, Rawls, and many other thinkers discuss the relationship between the state and its people; what is said to be a social contract. At least, in this regard, maybe not always explicitly, theories and debates posed in these works are further speculated upon and discussed, filtering into our impressions of how the state is to act in society.

Historical background

The concept of classical contract theory comes from the earlier forms of legal systems but finds its most solidification in the 17th and 18th centuries due to the combined works of, among others, Sir William Blackstone, William Holdsworth, and John Locke. The scholars maintained that a contract is created by an agreement between two or more parties in the sense that both the employing parties must have the intention to carry out their promises. It is also ideal to note that the theory puts into recognition some of the conditions necessary for a contract to be binding, and among them include discretion, legality, and capacity. During the ensuing several centuries, classical theory of contract developed further and its great influence touched on the statutes of many countries across the globe. For instance, the principle of freedom of contract enjoyed much importance in the US as a part of their contract law, which mentioned that both parties will have a deal and can enforce their contracts based on their own prerogative without any effect from the state.

However, with the emergence of time, there has been criticism and modification of the classical contract. There has been a question by scholars on the balance of the bargaining power between the parties, understatement with respect to human rights and responsibilities, and also an exclusion of the social setting and the participation of the community in the contracts. This was the dawn of other theories and methods that emphasized relationships and relations during the negotiation process and governance, some of which include contract theory and feminist contracting. The law during the last few decades has significantly developed because of the changes in the social, economic and technological areas. One of the new problems created with the expansion of digital platforms is the use of contracts online, problems related to consent, models of contracts, and how electronic signatures are managed. These and many other questions draw interest from legal scholars and practitioners alike, which perhaps motivates their continuous effort to better develop the contract in such a way that it becomes responsive to particulars of context and needs.

The roots of the social contract lie in ancient Greek and Roman political philosophy, but modern contract theory began in the 17th and 18th centuries as embodied in the political philosophies of Thomas Hobbe and John Locke who entrusted Thomas Hobbes with writing in the home for protection and security. During World War II, contract theory became a major theme in political discourse and thought, influencing the development of modern democracy. It was also echoed during the American and French revolutions, where the idea of a contractual relation between the citizens and the state formed the core from which new governments would arise.

Social contract theory during the 19th and 20th centuries expanded to rise to powerful influence, both in political and legal context. These kinds of insights find application in various branches of law, including employment and environmental law, where the points of departure for certain rights and duties take the theory of contracting partners between employers and employees or between people and the natural environment themselves.

The critique of contract theory has continuously evolved over the years. One underlying concern has been with tolerance and the unequal distribution of social benefits, which a number of academics have mentioned. Due to these concerns, other theories and approaches emerged--for example, feminist social contract theory and communitarianism--as a means in which one can give emphasis to the interpersonal connection and active membership in the community to build relationships that will prove beneficial. Contract theory's domain has been in continuous evolution according to changes taking place within society, commerce, and technology in general in post-modern times. Consider the developments in social media and digital communications that challenge the theory of contract related to privacy, freedom of speech, and regulation of online platforms. Legal scholars and researchers still consider those and many other questions, working to make the social contracts even more specific and uniform in the face of events and needs that arise.

Difference between classical contract theory and social contract theory

Classical Contract Theory and Contract Theory, though similar in certain respects, encompass both a theoretical framework and a set of legal principles.

Classical contract theory reveals legal and moral commitments that emanate from a priority of a voluntary agreement between different persons or groups. Here, everyone is at liberty to enter into a contract with others based on agreed terms which bind the parties together. Its main function is to control personal rights, protection of property and personal freedom 14. The theory of the contract is concerned about relationships between individuals and states. That's what it is, a theoretical framework upon which people got together to form a society that began a relationship with the state, whereby in return, some rights and freedoms may be given up in order to enjoy protection and security on the part of the state. The social contract, which prescribes how power and resources are to be apportioned within society, requires the state to act in the best interest of society.

The main difference between classical contract theory and social contract theory is what it contracts. Where the former accords some importance to individual agreements struck among parties, the latter refers to the larger agreements done between the individuals and the state. Another place at which they differ is the preoccupation with personal rights as opposed to those of social responsibility. While classical contract theory emphasizes individual rights and responsibilities, the social contract emphasizes the state's duties and responsibilities to protect the welfare of the whole. Of course, the resemblance of both theories is in emphasis on the importance of consensus, whereas the social contract is emphasizing the consensus of the members of the community against the consensus of individuals expressed in the classical theory of contract

Domestic laws/provision (Indian laws/provision)

This theory of classical contracts, in fact, has moulded Indian jurisprudence and political ideology during both colonial and early years of independence. The British colonial masters built their legal and administrative edifice in India on the presumption of free consent between individuals and collectivises by taking the theory of classical contract as a model. The Indian Contract Act of 1872 is still in force today. It draws the line for legally structuring agreements between persons and prescribes ways and means for enforcing such contractual obligations.

However, classical contract theory is not without criticism in India. To begin with, reliance on individual autonomy and freedom may not apply all that well to the nature of community and family relationships. The other fear is that classical contract theory will not be very appropriate or strong in dealing with problems that concern the issue of power imbalances and inequalities in the Indian setting, especially between two parties that participate in different discourses.

Gravitated by these and other criticisms, Indian legal scholars and legislators have come up with options to the contract law in this field. For instance, some would support that the contract law should be more deliberated to include the customs and traditions of the parties concerned. Justice, fairness, and equity in contract formation have been discussed by some scholars in classical theory, the majority of who have played a pivotal role in setting and devising legal and political discourses within the Indian context, though limitations and applicability of this theory still remain a hot topic of debate and scrutiny. It has greater relevance to Indian political and legal discourse on democratic structuring of the nation and its social configuration. The principles of the theory were used during the period of independence for the legitimation of struggle for self-governance and the formation of a sovereign government. In this sense, it may be hoped that India will evolve a fresh social contract based on the principles of freedom, equality, and justice. These are sentiments and are couched in the backdrop of the Constitution of India, adopted in 1950. Protection of public health is a cardinal duty. Perhaps, the most important bone of contention could be on the count that the tenets of contract theory do not capture the essence of the multi-religious, multilingual, and multi-ethnicity features of Indian society. However, this social contract might not be strong enough to deal with problems of power relations and inequality in Indian society, related above all to poor and underrepresented groups. So, taking into the account all these and other critics it's considered that scholars in India along with country policy experts have developed their alternatives to the classical theory of contract. While some scholars emphasize the aspect of social engagement in forging the social contract, others refer to greater understanding of the democratic way of life with equality and social justice as imperative in the Indian context.

In other words, it is safe to conclude that contract theory has to a great extent developed the political legal discourse of India. It remains the biggest site of contestation and re-evaluation of its limitations and validity as a theory relevant to Indian reality.

Role of judiciary

Graced by these and other criticisms, Indian legal scholars and legislators have come up with options to the contract law in this field. For instance, some would support that the contract law should be more deliberated to include the customs and traditions of the parties concerned. Justice, fairness, and equity in contract formation have been discussed by some scholars in classical theory, the majority of who have played a pivotal role in setting and devising legal and political discourses within the Indian context, though limitations and applicability of this theory still remain a hot topic of debate and scrutiny. It has greater relevance to Indian political and legal discourse on democratic structuring of the nation and its social configuration. The principles of the theory were used during the period of independence for the legitimation of struggle for self-governance and the formation of a sovereign government. In this sense, it may be hoped that India will evolve a fresh social contract based on the principles of freedom, equality, and justice. These are sentiments and are couched in the backdrop of the Constitution of India, adopted in 1950. Protection of public health is a cardinal duty. Perhaps, the most important bone of contention could be on the count that the tenets of the contract theory do not capture the essence of the multi-religious, multilingual, and multi-ethnicity features of the Indian society. However, this social contract might not be strong enough to deal with problems of power relations and inequality in Indian society, related above all to poor and underrepresented groups. So, taking into the account all these and other critics it's considered that scholars in India along with country policy experts have developed their alternatives to the classical theory of contract. While some scholars emphasize the aspect of social engagement in forging the social contract, others refer to greater understanding of the democratic way of life with equality and social justice as imperative in the Indian context.

Findings

Contract theory has been the issue of dispute and debate for a long period by lawyers and academicians for centuries. Classic theory of contract underscores the parties' intent at the time entering into a contract and holds that it should be subject to the rules of law. In contrast, the consensus theory deals with the relationship between the state and an individual assuming that the latter is prepared to give up part of the rights they do possess in the state in return for protection and safety.

While there are a number of similarities between the theories of classical contract and social contract theory, equally there are a number of differences. While classical contract theory focuses its attention on the relationship between an individual and the law, the latter pays attention to the relationship that exists between individuals and the state. And even though single ideas for a very important ground, on which classical contract theory is based, it is the mutual interests that stress the theory of contract.

There are, however, some relationships between classical contract theory and contract theory. The first is that mutual consent and assent are similarly approached. Another connection of the theories is that justice and fairness are incorporated into both theories.

Conclusion

The relationship between classical contract theory and contract theory is complex and multifaceted. While both theories share some similarities, they also have some differences. However, both theories are concerned with justice and fairness, and both have had important impacts on our understanding of contracts and the responsibilities of the state in society.

AUTHOR:

Arni Madiyar

KIRIT P. MEHTA SCHOOL OF LAW, NMIMS UNIVERSITY

References:

Economic Analysis of Law, Posner (1973) Principles of the English law of contract and of agency in its relation to contract (Anson et al. - Clarendon Press – 1879)
Principles of contract: a treatise on the general principles concerning the validity of agreements in the law of England (Pollock - Stevens and Sons – 1876)
Leviathan, Thomas Hobbes (1651)
The Social Contract, Jean-Jacques Rousseau(1762)
Two Treatises of Government, John Locke's (1690)
Perpetual Peace, Immanuel Kant's (1795)
Two Treatises of Government, John Locke's (1690)
The Social Contract, Jean-Jacques Rousseau(1762)
Indian Constitution (1957)