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Freedom of Contract: The Church and Western Philosophy

by Dr Carlos Bugeja – Senior Associate

In the previous article about Freedom of Contract, it was concluded that it cannot really be said that the principle of freedom of contract (that is, the right of parties to a contract to choose the terms which govern their rights and obligations in terms of their values and preference) entered the western legal systems through Roman law.

The influence of the Church in the doctrine of freedom of contract is however fairly evident.

One of the earliest tributes to the sanctity of contract can be seen in Saint Paul’s letter to the Galatians, in which he explains that: ‘Brethren, I speak after the manner of men; though it be but a man’s covenant, yet if it be confirmed, no man disannulleth, or addeth thereto’. One may argue that here, Paul is really talking about wills (testaments) rather than contracts; be it as it may, it is undeniable that the gist of his illustration is that no man may revoke or change what another man has promised. That would include man-made laws. This can be interpreted as an early suggestion of freedom of contract.

Under canon law, failure to fulfil one’s promise (that is, breach of contract) constituted a sin. This practice can be said to have developed from the medieval practice of sealing contracts with an oath, which created an obligation to God. Canon law eventually abolished the distinction between normal and oath-sealed promises by imposing a general moral obligation to keep one’s promises. During the fifteenth and sixteenth centuries, secular courts began to gradually adopt the successful principles in canon law, including the binding nature of nudum pactum, a bare or scant agreement lacking consideration.

Nevertheless, it can hardly be said that the Church’s understanding of freedom of contract was and is in its strict absolute doctrinal sense. Since the beginning, Christianity (and later, the Church) repeatedly condemned oppression against the weak; therefore, it is unlikely that freedom of contract could have been justified unconditionally, even where it served to take undue advantage of others.

In time, European legal systems began moving towards the right to enter contracts freely, this perhaps in the wake of several historical events, amongst which were the Industrial Revolution (1760) and the French Revolution (1789), which led Western legal systems to liberalise economic rules to adopt this concept.

The role played by political theorists and legal thinkers commentating on the principle of liberty before and during these events, such as Thomas Hobbes, Jean-Jacques Rousseau, Adam Smith, and John Stuart Mill, cannot be discounted. There are various passages by western philosophers that seem to indicate an early desire to more freedom, including in contract. Indeed, the philosophical conception of liberty would seem to have aided greatly in the birth of the modern understanding of contractual liberty.

The question is: should the state intervene with measures (even one for its subjects’ own good) that suffocate contractual liberty?

Hobbes saw contracts as being made in the state of nature, and shall thus be fully enforceable. In the Leviathan, he argues that where there is no breach of contract, there is no injustice in a party being on the wrong side of what objectively could be seen as a bad bargain, since ‘the value of all things contracted for, is measured by the appetite of the contractors: and therefore the just value is that which they be contented to give’. What the parties choose is to be respect. Therefore, in a Hobbesian society, it is unlikely for one to find place for the Roman concept of laesio enormis.

Jean Jacque Rousseau is famous for the dramatic opening line of his Du Contrat Social (‘L’homme est né libre, et partout il est dans les fers’, meaning that ‘man is born free and he is everywhere in chains’). This shows the struggle of a theorist who deeply values liberty but is aware of the difficulties it presents. The hostility expressed by Rousseau to limitations of liberty which are brought about by the deliberate subjection of one’s will to that of someone else is well known, to say the least. It was he who pleaded that ‘(t)o renounce liberty is to renounce being a man, to surrender the rights of humanity and even its duties’. He does however qualify his statement by acknowledging that certain restrictions to freedom made in the common good could be acceptable, but still was a big promoter of freedom, including in contract.

Immanuel Kant gives liberty utmost priority, and denounces any concept of paternalistic laws contrary to one’s freedom. In fact, Kant fiercely opposes paternalism by stating that: ‘No one can compel me to be happy in accordance with this conception of the welfare of others, for each may seek happiness in whatever way he sees fit, so long as he does not infringe upon the freedom of others to pursue a similar end which can be reconciled with the freedom of everyone else within a workable general law.’ To deny an adult from committing a mistake by enacting paternalistic laws (including therefore contrary to contractual liberty_ is to encourage him to act passively and to treat him as simply a mean to his own good, rather than as end in himself. According to Kant, a government of this kind ‘is the greatest conceivable despotism’.

Kant’s principle that laws should not intervene to protect one from oneself is notably repeated by another philosopher, John Stuart Mill, whose most famous line says that: ‘(t)he only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant’. This also echoes Bentham’s proclamation that each person is the best judge of his own interests and that every individual shall be left free to pursue his own happiness in his own way.

Finally, any account of pre-twentieth political theory would not be complete without exploring Adam Smith’s concept of the ‘invisible hand’. There is a lot to say about Smith’s large contribution to economics and law, but for the purpose of this article, it is sufficient to mention that Smith managed to fuse the two branches together and unlike the philosophers of his time, discussed political and ethical values in terms of economic and market necessities.

In his idea of a ‘free market’, Smith considers that unintended social benefits will result from individual actions which may be selfish to begin with. He says that ‘(i)t is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love…’ He would therefore definitely agree with contractual liberty in its absolute sense.

From the analysis of the philosophical conception of liberty, one can come up with at least one axiomatic conclusion: most philosophers agree that in an ideal scenario, freedom is desirable, in one way or another. Truthfully, each and every philosopher has his own view of what freedom is and how can one attain it, but freedom’s intrinsic value is rarely if ever contested or neglected in philosophical discourse.

Disclaimer: This article is not to be considered as legal advice, and is not to be acted on as such. Should you require further information or legal assistance, please do not hesitate to contact Dr Carlos Bugeja on carlos@abalegal.eu.