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Contract Law Isn’t Even Contract Law
Yesterday, Peter Robinson had some short thoughts on marriage law being reduced to contract law. I got to wondering if most of us don’t make the classic mistake (codified in Sabrdance’s Laws, though I don’t recall the number) — “Don’t mistake the model for the reality.” It’s really easy to think of marriage as a contract. And it’s really easy to think how contracts work: there are provisions, everyone follows them to the letter, if someone doesn’t follow them there are specified sanctions, and the courts can sort it all out.
Now, I haven’t been involved in that many contracts, but I’m pretty sure that’s not actually how contracts work in real life because I listen to people who use contracts all the time. Here’s one recent example: “We set up a system that would in extremis function exactly as coldly, efficiently, impersonally, and legally as the most cartoonish games-mill dev studio in the world.” In the next paragraph, though, the author points out that they often ignored the contract-fudging, overlooking things and slackening up on the restrictions of the contracts. The host of that website has commented that he won’t work with anyone on a contract who he wouldn’t already work with over a handshake. I’ve read entrepreneurs talking about developing products and working with suppliers and venders saying similar things: contracts aren’t worth much if the handshake isn’t worth much.
There’s an entire subgenre of the management research literature addressing how organizations work with each other, and they often work on handshakes too. Even if they have contracts, they will ignore them to get the projects done. Notably, everyone involved has to know each other to make this happen. The clearest example of businesses that operate on a handshake are diamond dealers and garment manufacturers in New York City. The diamond dealers are all Jews, and many of them are family members. In the research, they said they couldn’t do their jobs—which often involve letting someone walk out of a store with tens of thousands of dollars of jewels with nothing but a promise to bring them back the next day—without high levels of trust. The garment district was more diverse, but not the supply chains. From design to rack chains that were entirely German or entirely Polish and, again, often based on family. Because of the need to trust deliveries that can’t be checked and make changes on the fly, the managers again thought contracts were useless (even if they did write them).
Step out of pure business: home loans are crazy, which is why, for a very long time, you had to borrow the funds from friends and family if you wanted to buy land. Megan McArdle went on at length several years ago on how our home mortgage markets rely on the fact that home owners won’t invoke the penalties to strategically default.
Academically, this was Coase’s major insight in “Theory of the Firm”: that contracts are so cumbersome and unwieldy that entrepreneurs would rather not use them, preferring instead to manage everything internally through much more flexible procedures — like an employee handbook subject to revision.
It seems to me that marriages work much the same way. That means, in order for marriages to work, you need very strong social norms, which in turn require a very thick society — one very rich in that great buzzword “social capital.” Contracts don’t replace that. We can pretend they do, but that’s because we analyze contracts within that thick social context. When we actually rely on the contracts, we are “in extremis.” Once that social capital is gone, we’ll discover that contracts don’t actually work the way we think they do, and we’ll fall back — as we always do — on using government to enforce contracts … but without any expectations on how to do so.
Published in General
Assuming captainpower is asking about FDR, gold clauses in contracts specified that the person or company could receive payment in gold. They could protect the provider in a case where the currency in question may not be stable in the long term. They were illegal in the US between 1935 and 1977, mainly because FDR confiscated all the gold. Congress, in a joint resolution, insisted that gold clauses interfered with the government’s right to regulate the currency.
Agreed, and I’m not suggesting that marriage contracts are always a bad idea, just that they’re not necessarily the way to re-strengthen marriage across the board. If you think you need a pre-nup, or that you need contracted and scheduled intimate times, well… um… er… let’s just say it’s your own business.
But I do think that the notion of written marriage contracts across the board would cause some severe problems for the IQ<110 crowd, and we can look to EULAs, boilerplate contracts, service contracts, etc. Marriages are complicated and very varied in their operations, and when I think of the sorts of clients Ryan M has to deal with, or that my wife has had, I’m pretty sure that contractual marriage would be beyond their reckoning.
Perhaps. But if these people cannot figure out the basics of contracts, our society would be screwed, since a great number of people would constantly be getting swindled in their wages, their rental apartments, or their car purchases.
If people of lesser intelligence can manage to get paid or handle a car loan, they’re probably savvy enough to figure out a marriage contract. Especially since the types of stipulations envisioned aren’t really regarding conjugal frequency and division of assets, but more along the lines of joint property ownership and hospital visitation/power of attorney rights.
With regards to wages, rentals, cars, etc., there is already a large base of cultural support. People know their expectations going in, even if they don’t know the nuances of the contracts.
Just to take car payments, the concept is simple: make car payment, keep car; miss payments and the car gets towed. Any contract they signed is really invoked only when they miss payments; it’s a very simple relationship. Same for wages or apartments.
A marriage is much more like a corporate charter or a business merger, and those are comparatively complicated relationships. Again, not saying that this is impossible, just very skeptical.
Okay, now I admit that I’m nowhere near this range, nor are most of the people I’ve dealt with lately. (There is that one lady at church who is probably <90, but still…) But I have dealt with average people in the past, and even dealt with them on financial contracts. I don’t think that people between 90 and 110 are so inept and incapable that they can’t handle contracts, especially if the contracts either skip the legalese or it is well explained. Don’t underestimate the average human when money is involved.