Private Law Theory

ABSTRACT
We defend the common law conception of freedom of contract against criticisms that unregulated contractual freedom permits strong parties to impose unjust terms on weak parties. Common law courts enforce contracts when the parties are informed, competent and free from coercion, and performance of such a contract would not impose costs on nonparties. These contracts are ‘preferred’ in the sense that each party believes that it reflects the best deal the party could have made given its circumstances. The contractual social justice critique responds that such a contract nevertheless can be unjust in four ways: (i) it divides the expected surplus a deal could yield unequally; (ii) it does not realize substantive justice between the parties because the contract contains unjust terms; (iii) performance of the contract would degrade the weaker party or otherwise violate his dignitary interest; and (iv) systematically enforcing unjust contracts-eg, very one-sided risk allocations-would increase the economic subordination of nonparties or otherwise negatively affect them.

Schwartz, Alan and Sepe, Simone M, Freedom of Contract at Common Law (June 8, 2026).