George Mason School of Law

1. George Mason School of Law Contracts II Illegality: Perfectionism F.H. Buckley fbuckley@gmu.edu

2. When Are Promises Not Binding? • 1. Perfectionism • The Enforcement of Morals

3. When Are Promises Not Binding? • 1. Perfectionism • The Enforcement of Morals • 2. Paternalism • Vices of capacity

4. When Are Promises Not Binding? • 1. Perfectionism • The Enforcement of Morals • 2. Paternalism • Vices of capacity • 3. Vices of Consent • Fraud, Duress

5. When Are Promises Not Binding? • 1. Perfectionism • The Enforcement of Morals • 2. Paternalism • Vices of capacity • 3. Vices of Consent • Fraud, Duress • 4. Unconscionability • Substantive Unfairness?

6. Perfectionism • The subject has immoral preferences which the perfectionist would reform • As contractual enforcement benefits the parties, courts might enforce morality by refusing to enforce immoral agreements

7. We’ve already seen an example of this

8. That’s an example of protecting third partiesBut this is about reforming the individual

9. Anti-perfectionism (neutralism) • Mill’s harm principle: • “The only purpose for which power can rightfully be exercised over any member of a civilized community, against his will, is to prevent harm to others.” • Mill, On Liberty (1859)

10. John Stuart Mill & Harriet Taylor

11. The Film Version With Hugh Grant as JSM

12. The Film Version And Emma Thompson As Harriet Taylor

13. The Film Version“Hi Mom. Hi Dad. I’m home!” And Jerry Mathers As The Beaver

14. Perfectionism defies stereotypes • Right-wing perfectionism • Drug laws • Sexual immorality • Same sex marriage • Left-wing perfectionism • Smoking • Expansive civil rights laws • Same sex marriage

15. Perfectionism in the Law • Contracts rendered illegal by statute: Watts v. Malatesta • Contracts illegal at common law: Baby M

16. WattsEx turpi causa oritur non actio A suitable case for perfectionism?

17. Watts • If a contract is illegal, what’s the best contract law response? • No remedy of any kind? • Ex turpi causa oritur non actio • In pari delicto, portior est conditio defendentis • Or NY Penal Code § 994, which reverses this? • How do the incentive effects cut?

18. Watts Π Δ $37,500 $37,500 +++ • Π sues under NY Penal Law § 994 • to recover his losses. • Can Δ offset against this claim • his far greater losses to Π?

19. WattsIn pari delicto, portior est conditio defendentis • How did the In pari delicto maxim apply? • Crane on the mischief rule. • Was it fairly applied here? • Crane’s dissent

20. Watts • Just how do professional gamblers collect their winnings?

21. Remember Nick the Chin? • How do professional gamblers collect their winnings? I’m tinkin’ youse should pay what youse owe

22. A special case • Contracts in restraint of trade • Why do cartel arrangements tend to break down?

23. Hewitt • Does marriage matter? • “Merely lacking legal formality”: Is that how you see marriage? • Does the state have an interest in promoting it? • Is child support a separate issue?

24. Baby M • How do you imagine Mary Beth Whitehead?

25. Baby MMary Beth Whitehead

26. Baby MMary Beth Whitehead

27. Baby MThe Sterns

28. Baby M Why did the Whiteheads enter into the contract?

29. Baby M Why did the Sterns not have their own children?

30. Baby M What was the problem with the name “Melissa”? 30

31. So what did the court hold?

32. So what did the court hold? • Contrary to statute • Contrary to public policy

33. What about the following? • A futures contract for a kidney?

34. What about the following? • A futures contract for a kidney? • A sale of a kidney?

35. What about the following? • A futures contract for a kidney? • A sale of a kidney? • A sale of one’s eyes?

36. So what did the court hold? • Contrary to statute • Contrary to public policy • Sara Elizabeth Whitehead or Melissa Sterns?

37. Baby MWho’s got the better c.v.? Who is more likely to: subscribe to The New Republic? attend an Arthur Miller play? read a Jonathan Franzen novel?

38. Baby M Was it relevant that “most of his family had been destroyed in the Holocaust.”

39. Baby M Did Whitehead’s extreme attachment to her daughter render her an unfit mother?

40. Surrogacy Contracts • Should they be enforced? • Note that the industry has expanded, AFTER Baby M. • Are there ground rules you’d adopt to make it more palatable? • Is this merely about the surrogate’s capacity to contract?

41. Two kinds of Perfectionism • Private Perfectionism overrules personal choice to make the subject a better person • Social Perfectionism overrules personal choice to protect third parties from moral externalities

42. Social Perfectionism • Mill’s harm principle: • “The only purpose for which power can rightfully be exercised over any member of a civilized community, against his will, is to prevent harm to others.” Mill, On Liberty (1859) • But what counts as a harm?

43. Physical spillovers

44. Moral spillovers? Couture, Les Romains de la decadence, 1847

45. Social Capital • Physical Capital

46. Social Capital • Physical capital • Human Capital • Intelligence and health • Private virtue, good character

47. Social Capital • Physical capital • Human Capital • Social Capital • Do you have any preferences about your neighbors and fellow citizens? • Republic of Defection: Edward Banfield’s Montegrano, • The Moral Basis of a Backward Society

48. What’s wrong with hog-dog fights?

49. What’s wrong with hog-dog fights?

50. Social Capital • What were the externality concerns in Baby M? • Was it simply the child, as the casebook suggests? • Are surrogate parents any worse than natural parents? • Posner and Landes on baby-selling