Unifying Status and Contract

Kaiponanea T. Matsumura - Loyola Law School, Los Angeles
Vol. 56
April 2023
Page 1571

For over a century, courts and scholars have been operating under the assumption that status and contract are oppositional concepts. Under the traditional view, status is an identity-based, bundled, mandatory, and socially embedded package of regulation significantly affecting one’s rights and obligations. Contract, in contrast, involves voluntary, discrete transactions, the parameters of which are determined by private parties and in which the state has no particular interest. The status/contract dichotomy dictates our understandings of important relationships like marriage, employment, and business organizations, and has been used to describe the very trajectory of the law from primitive (status) to modern (contract).

This Article argues that the status/contract dichotomy is descriptively misleading and normatively harmful. Scholars have already recognized that statuses like marriage and employment have become more contractual over time, but they have neglected how the nature of contracting parties’ relationships shapes their freedom of contract. Contract doctrine has adopted special rules for cohabitants, insureds, franchisees, and the like. The law of contracts is also a law of relationship types. Put differently, contract law bears the unmistakable imprint of status. The failure to recognize this statusization of contract has propped up a caricatured notion of contract with pernicious effects: obscuring the relational aspects of market transactions and perpetuating the mistaken belief that hallmarks of private agreement justify extreme deference to the formal preferences of one of the parties. The dichotomy continues to mask and distort the courts’ active balancing of autonomy, relational vulnerability, and other values in ways that systemically favor powerful interests under the guise of contract.

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