Reconciling Contract Law's Objective and Subjective Standards
| Published date | 01 November 2023 |
| Author | Nick Sage |
| Date | 01 November 2023 |
| DOI | http://doi.org/10.1111/1468-2230.12819 |
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Modern Law Review
DOI:10.1111/1468-2230.12819
Reconciling Contract Law’s Objective and Subjective
Standards
Nick Sage∗
Although the common law of contract is often said to favour ‘objectivity’,it sometimes seems to
adopt a ‘subjective’standard. The apparent tendency to switch between rival standards troubles
many contract scholars. In response, some seek to vindicate objectivity alone as the one true
standard. Others propose a single abstract theoretical rationale that can allegedly encompass
both standards. I suggest a dierent approach. I try to develop a fuller appreciation of what the
objective and subjective standards are and what they seek to achieve. I conclude that each is
a substantive ethical ideal that species certain minimal requirements of decency in business
dealing. On this view, the two standards are not rivals but complementary.Nor need we invoke
any more abstract theoretical rationale to understand them.
INTRODUCTION
In this article I present a view of the common law of contract’s ‘objective’ and
‘subjective’ standards and the relationship between them. The view is in many
ways orthodox. It can be gleaned from the case law and I suspect it comports
with many lawyers’ assumptions about what this doctrine seeks to achieve. Ac-
cordingly some readers may nd some of the points I make familiar or even
obvious. But in other respects, the view I present is unorthodox. It diverges
signicantly from many of today’s leading scholarly accounts, and indeed aims
to avoid certain assumptions and intellectual tendencies that pervade them.
My view has two key features. First, I depict contract law’s subjective and
objective standards as substantive ethical ideals. They are standards of decent
business dealing in the striking of contractual bargains. Each standard is com-
plex and variegated and not easy to encapsulate briey.But in essence I suggest
that judges engage in a ‘subjective’ inquiry to disapprove various forms of un-
scrupulous advantage-taking. They appeal to an ‘objective’ standard to uphold
norms of contractual seriousness and f air play.
Second, on my view the subjective and objective standards are not rivals but
continuous and complementary ideals. We can imagine them as addressing two
adjacent sections of a spectrum of commercial behaviour, ranging from quite
outrageous forms of deceptive advantage-taking (indeed outright fraud) to far
∗London School of Economics.Thanks to audiences at the University of Central Lancashire, the LSE,
the Global Seminar on Private Law Theory,and the University of Auckland,and to Paul MacMahon,
Lionel Smith, Jack Enman-Beech,Nicole Roughan and Arie Rosen.
© 2023 The Authors. The Moder n Law Review published byJohn Wiley & Sons Ltd on behalf of Modern Law Review Limited.
(2023)86(6) MLR 1422–1446
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License,which per mits
use and distribution in any medium, provided the original work is properly cited,the use is non-commercial and no modications or
adaptations are made.
Nick Sage
less blameworthy conduct that nonetheless oends a sense of contractual fair
play.
Viewing the two standards as variegated and continuous ethical ideals helps
us avoid the temptation to pursue a monistic or overly unied account of this
area of law. Over the centuries and into our own day, contract scholars have
worried that the objective and subjective standards are in tension. In part to
address this worry, some have sought to vindicate ‘objectivity’ as the common
law’s one tr ue approach (and to explain away the law’s apparently ‘s ubject ive’
aspects). Others have sought intellectual unity by proposing a single abstract
theoretical rationale that can allegedly encompass both standards.Each of these
strategies, I will argue, is problematic.
To show how these monistic or unifying strategies are problematicI will con-
sider cer tain leading scholarly accounts that pursue them. In particular, I will
consider certain versions of what I label the ‘linguistic’, ‘reliance’, ‘practice’,
and ‘cor rective justice’ theor ies of objectivity and subjectivity. I will not dis-
cuss many other important accounts that raise quite dierent issues and would
require a dierent treatment.1
My positive view identies a set of ethical concerns underlying appeals to
objectivity and subjectivity across a fairly wide swathe of contract law. Some
scholars distinguish various conceptual questions in this area, such as whether
there is a contract, what the contract’s terms are, and what those terms mean.
They then adopt dierent views about objectivity and subjectivity in each con-
text. Others stress distinctions among the various doctr inal departments of con-
tract law,such as oer and acceptance, mistake,rectication, incor poration, and
interpretation. Notably, those who draw these distinctions have quite various
reasons for doing so.2Yet another group of scholars – including most of those
I focus on in this article – seek an understanding of objectivity and subjectivity
that is broadly consistent across the various boundary lines. My view joins their
camp.I do not deny one can draw conceptual and doctrinal distinctions in this
area, nor that they may be useful for cer tain purposes. On the other hand, it
may be possible to identify a common set of concerns that animates, at least in
part, judicial appeals to objectivity and subjectivity across the subelds I have
mentioned.3This article sets forth such an account.
I present an interpretation that endeavours to be faithful to the existing law
while revealing it to be intelligible.4Thus I emphasise some aspects of the case
law and downplay others.While I do not cr itique the law or propose reforms,
1 For example I will not directly address David McLauchlan’s extensive body of work, though I
will draw on some of his insights and note some anities between my view and his.
2 Compare for example Anne de Moor, ‘Intention in the Law of Contract:Elusive or Illusory?’
(1990) 106 LQR 632 with Hugh Collins, The Law of Contract (Cambridge:CUP,4th ed, 2003)
117-123, 228-238.
3 I will not roam further aeld into other aspects of contract law (such as damages) or private law
(such as tort), where ‘objectivity’ and ‘subjectivity’ are invoked.In my view a full appreciation of
these concepts must connect with an understanding of the substantive aims of the bodies of law
in which they appear.The contractual doctr ines I focus on in this article aim,roughly speaking,
to determine what sorts of conduct and evidence properly bear on the construal of a bargain.
Other areas of contract and private law have dierent aims.
4 Stephen Smith, Contract Theory (Oxford:OUP,2004) 5.
© 2023 The Authors. The Moder n Law Review published byJohn Wiley & Sons Ltd on behalf of Modern Law Review Limited.
(2023) 86(6) MLR 1422–1446 1423
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