The Role of the State in Contract Law: The Common-Civil Law Divide

There is a vast literature documenting how contract laws differ across jurisdictions. However, we still know little about the reasons for, and the implications of, the observed distinctions, which are generally viewed as isolated, unrelated, and arbitrary. This Article reveals a clear, but thus far overlooked, pattern in the comparative law of contracts. The civil law places more limits on the scope of contractual obligations, whereas the common law more forcefully constrains the remedies available for breach of contract. The Article offers two interpretations for these differences. On the one hand, civil and common law systems reflect different roles of the State in contract law. In the civil law, the State plays a greater part in all respects: it goes further in providing and policing the substantive terms of the agreement, but once the contract passes muster, it is willing to sanction breaches with more severe consequences. Common law systems embrace the opposite, more restrained, approach: the State is less willing both to meddle with contract terms and to supply strong remedies for non- performance. On the other hand, the treatment of contract rights and remedies in each legal tradition can be viewed as complementary. Policing the terms of the contract and limiting the consequences of breach serve as alternative, though not equivalent, strategies to mitigate the effects of harsh bargains.