Private Law Theory

ABSTRACT
It is blackletter law that agreements or terms which violate public policy are unenforceable. But the precise role of the public policy in contract law remains elusive, which may explain the chaotic state of this veteran doctrine. Without a principled framework to guide judges in deciding when the law should refuse to lend its hand by enforcing people’s agreement, the doctrine retains its dubious reputation as an unruly horse, which should be severely constrained and marginalized. This is unfortunate given the critical contributions, both existing and potential, of the doctrine to the integrity and legitimacy of contract law.

The liberal theory of public policy doctrine we develop in this Essay dissolves the dilemma. We explain why the cautious attitude advocated by the doctrine’s critics is often (but not always) appropriate regarding the subset of public policy rules that seek to protect the integrity of our public institutions and the general welfare. But this attitude is misplaced, and indeed troublesome, outside this limited domain, where (somewhat paradoxically) public policy doctrine is about the rights of people, rather than about the policy that best serves us as a public.

Indeed, numerous public policy rules vindicate the rights of contractual parties or those of nonparties who may be injured by an agreement. Here, the discretion embedded in the doctrine enables courts to develop contract law – as per their traditional role – so that it better serves people’s autonomy. That courts do this to protect the rights of nonparties, as well as parties, reminds us that contract law’s purpose is not just to serve the autonomy of parties to a contract, its purpose is to serve people’s autonomy generally. Looking forward, we argue courts should use the public policy doctrine to vindicate workers’ rights domestically by extending rights of employees to workers classified as independent contractors and globally by refusing to enforce agreements that predictably involve human rights violations.

Dagan, Hanoch and Gergen, Mark P, Harnessing the Unruly Horse: Public Policy in Contract Law (August 31, 2025).