Paternalism and the Law of Contracts

Abstract

Our legal system, like every other, limits the power of individuals to enlist the state in the enforcement of their private agreements. In a broad sense, all limitations of this sort restrict the contractual freedom of those involved by depriving them of the right to decide whether their voluntary arrangements shall be legally binding. Many of these limitations are intended to protect the interests of third parties, including the general interests of society at large: Two neighbors cannot make an enforceable contract to rob a third, nor can a group of businessmen negotiate a price-fixing agreement that will be binding as a matter of law. Other restraints on contractual freedom, however, are primarily intended to protect those whose freedom they restrict. Restraints of this sort aim to protect people from themselves by limiting their capacity to make enforceable agreements of various kinds.\nIn general, any legal rule that prohibits an action on the ground that it would be contrary to the actor's own welfare is paternalistic. The prohibition against suicide, the requirement that motorcyclists wear helmets, laws that restrict the use of drugs or make education compulsory are all examples of legal paternalism. In this Article, I shall be concerned with one branch of this wide and heterogeneous family of legal rules—those that may properly be regarded as belonging to the law of contracts because the liberty they restrict is the liberty to bind oneself by making a legally enforceable promise.

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