Future Freedom and Freedom of Contract
| Date | 01 March 1996 |
| Author | Stephen A. Smith |
| Published date | 01 March 1996 |
| DOI | http://doi.org/10.1111/j.1468-2230.1996.tb02073.x |
THE
MODERN LAW REVIEW
Volume
59
March
1996
No.
2
Future Freedom and Freedom
of
Contract
Stephen
A.
Smith”
Introduction
John Stuart Mill defended the law’s refusal to enforce self-enslavement contracts
on the ground that the ‘principle of freedom cannot require that he [the would-be
slave] be free not to be free.” Mill’s statement has received much attention over
the years, but little support. Critics argue that Mill’s position is paternalistic, if not
actually incoherent,* and that the legal bar on contracts of self-enslavement can be
explained more easily on the basis of
a
concern for procedural and/or substantive
unfaimess.3
In this article, I defend Mill’s statement. Moreover,
I
shall argue that a concern
for ‘future freedom’ justifies not only the courts’ approach to self-enslavement
contracts, but also the courts’ scrutiny of a number of other (as
I
shall call them)
‘autonomy-endangering
agreement^.'^
In addition to self-enslavement contracts,
the category of autonomy-endangering
agreement^'^
includes three other
examples discussed in this article:6 (a) restrictive covenants, (b) ‘equitable
relief clauses (clauses specifying specific or injunctive relief), and (c) stipulated
damages clauses.
I
shall argue that each of these agreements poses a special danger
to future freedom and that the law’s refusal to enforce ‘~nreasonable’~ restrictive
*Fellow of St Anne’s College, Oxford.
I
would like to thank Tim Endicott, Nick McBride and Ewan McKendrick for their valuable comments on
an
earlier version of this article.
1 Mill,
On
Liberty,
ed Spitz (New
York
Norton, 1975) ch V, para
1
I.
See also Mill, ‘Case of Contracts
in Perpetuity’ in ‘Principles of Political Economy’
in
Collected
Works
VIII (Toronto: University of
Toronto Press, 1965),
s
10,
pp953-54.
2 See eg Feinberg,
Harm
to
Self(0xford Oxford University Press, 1986) pp71-81; Ameson, ‘Mill
Versus Paternalism’ (1979) 90
Ethics
471, 487; Dworkin,
The
Theory
and
Practice
of
Autonomy
(Cambridge: Cambridge University Press, 1988) p 129.
3 See pp 172-175 below and the footnotes therein.
4 Mill himself thought his argument had ‘far wider applications’ and he specifically adverted to specific
performance, writing that ‘there are perhaps no contracts
or
engagements, except those that relate to
money
or
money’s worth, of which one can venture to say that there ought to be no liberty of
retraction’:
op
cit
n
1, ch
V,
para 11.
Unlike self-enslavement contracts, and
with
the exception of some restrictive covenants, the examples
that follow are strictly speaking parts of contracts rather than contracts
per
se.
But
as
there is no single
term that covers contracts and contractual terms,
I
shall refer generally to ‘agreements.’
6 Other possible candidates include agreements not to sue for divorce, ‘servile’ incidents in employment
contracts and invalid restraints on the alienation of property.
7 ‘Unreasonable’ here means invalid. This terminology conforms to common usage
in
respect of
5
167
Q
The Modem Law Review Limited
1996
(MLR 592, March). Published by Blackwell Publishers,
108
Cowley Road, Oxford OX4
IJF
and 238 Main
Street,
Cambridge, MA 02142. USA.
The Modem Law Review
[Vol.
59
covenants, equitable relief clauses and stipulated damages clauses is, like the
refusal to enforce self-enslavement contracts, best justified on the basis of a
concern for future freedom
in
and of itself. The suggestion is not novel. Although
the class of autonomy-endangering agreements cuts across orthodox distinctions
between validity rules (self-enslavement contracts and restrictive covenants) and
remedial rules (equitable relief clauses and stipulated damages clauses), judges
often describe the problems with such agreements in terms of future freedom.8
What has been lacking thus far is a theoretical foundation for such statements. This
article attempts to provide such a foundation.
Part one outlines the law relating to self-enslavement contracts, restrictive
covenants, equitable relief clauses and stipulated damages clauses. In part two,
alternative justifications for the law are briefly examined. Part three explains how
contracts can unduly restrict future freedom and why, under certain conditions, the
courts should refuse to enforce such contracts. Part four returns to the law and
explains how the treatment of my chosen categories of contract can
be
justified on
the basis of a concern for future freedom. Finally, in part five, I explain
why
judicial concern over future freedom is directed at these particular contracts rather
than at all contracts
-
in other words, I defend the label ‘autonomy-endangering.’
Two provisos and one terminological matter should
be
noted. First, this is not an
article about Mill. Although Mill’s position on self-enslavement is defended, no
attempt is made to situate that defence within Mill’s general theory. Second, not
every feature of the law on autonomy-endangering agreements can be justified in
terms of
a
concern for future freedom. Many of the more controversial features of
the relevant doctrines are explicable only on the basis of general considerations
about the proper scope of judicial control of private agreemenkg In addition, and
more generally, the courts have undoubtedly made mistakes in applying and
refining these complex legal doctrines. My claim is not that the law regarding
autonomy-endangering agreements is perfect, but rather that its core features are
justified and that this justification is grounded in a concern for future freedom.
Finally, for convenience I shall use the term ‘unreasonable’ to describe all invalid
autonomy-endangering agreements, including self-enslavement contracts. Thus,
rather than referring to ‘self-enslavement contracts and unreasonable restrictive
covenants, equitable relief clauses and stipulated damages clauses,’ I shall simply
refer to ‘unreasonable autonomy-endangering agreements.’
The
relevant
law
Self-enslavement contracts
There are no reported English cases on self-enslavement,lO but it is well-
established that a contract
in
which one person agrees to become another person’s
restrictive covenants and stipulated damages clauses. There are no accepted adjectives to distinguish
between valid and invalid equitable relief clauses, but ‘reasonable/unreasonable’ seem the most
appropriate terms here
as
well.
8 See eg
McEllistrim
v
Ballymacelligott Co-operative Society
[I9191 AC 548, 590;
Dunlop
Pneumatic
Tyre Co Ltd
v
New Garage and
Motor
Co Ltd
[I9151
AC
79,
86.
9
I
discuss these considerations
below
in part five, but do not go into them in great detail
as
they
are
not
directly connected to
a
concern for future freedom. The question of the proper limits of judicial
control over autonomy-endangering agreements arises whatever substantive justification (substantive
fairness, efficiency, etc) is offered for the law.
10
Nor are there any Commonwealth or American cases. For historical examples,
see
Patterson,
Slavery
and
Social Death:
A
Comparative Study
(London: Harvard University Press, 1982) p 130.
168
0
The
Modern
Law Review
Limited
19%
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