Adam Smith and the Social Foundation of Agreement: Walford v Miles as a Relational Contract
Author | |
DOI | 10.3366/elr.2017.0435 |
Published date | 01 September 2017 |
Date | 01 September 2017 |
Pages | 376-404 |
In his 2013 judgment in
A decision of the High Court, such authority as
As stated, this distinction is, with respect, not securely founded. Citing the already famous
whatever the broad similarities between them, [interpretation and implication] are ‘different processes governed by different rules’ … because ‘the implication of contract terms involves a different and altogether more ambitious undertaking: the interpolation of terms to deal with matters for which,
the concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations. Each party to the negotiations is entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations.
I am of the opinion that no real progress will be made until this opposition of the attitudes towards contracting thought to be captured by good faith and self-interest is shown to be the false dichotomy it is. I have long believed that the English law in fact contains the doctrinal resources to do this,
In what may be the most influential passage in all of modern European social thought, Smith unforgettably wrote that:
In civilised society [man] stands at all times in need of the co-operation and assistance of great multitudes [and] has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour … and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It 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, and never talk to them of our own necessities but of their advantages.
But I will argue that Lord Ackner did not grasp the essential, other-regarding dimension of Smith's concept of economic self-interest, and therefore the essential, other-regarding moral content of the doctrine of agreement in the law of contract. Our understanding of Lord Ackner's famous
It is very arguable that Smith's most important achievement was, with others of whom Mandeveille was the most important other than Smith himself, to give self-interest a central and, more importantly, a positive, role in modern moral and political philosophy and, as part of this, in what is now “economics”. As will be seen,
Smith regarded it as a very positive feature of self-interest as the motivation of economic exchange that it was quite distinct from a direct concern with the public interest. Smith believed the impulse to “bettering our condition” to be universal amongst humankind,
It is impossible even to be remotely fully cognisant of, much less to supervise, the tantamount to infinite complexity of economic action under a developed division of labour.
Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage indeed, and not that of society which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to society … every individual necessarily labours to render the annual revenue as great as he can. He generally indeed neither intends to promote the public interest, nor knows how much he is promoting it … he intends only his own gain and he is … led by an invisible hand to promote an end which was no part of his intention.
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