Abstract
This study explores the legal and ethical issues associated with contract pricing. In particular, it focuses on a set of legal precedents which have addressed the enforceability of allegedly “unfair” contract prices. Traditionally, the common law has emphasized the consent of the parties. If the parties consented to a given price; it is presumptively fair and enforceable. The cases reviewed in this study, however, seem to draw upon alternative moral conceptions of fairness not normally associated with the common law. The analysis begins by distinguishing the traditional legal conception of fairness from alternative moral conceptions. The cases are then read with a critical eye so as to tease out the underlying principles which best explain them. The analysis illustrates that, notwithstanding judicial rhetoric to the contrary, the courts continue to employ the traditional legal notion of fairness, to the exclusion of alternative moral concerns. The study clarifies an otherwise murky area of the law and illustrates that the legal meaning of fairness differs greatly from the moral one.
Similar content being viewed by others
References
Commons, J.: 1924,Legal Foundations of Capitalism (Macmillan Company, New York).
Eisenberg, M.: 1982, ‘The Bargain Principle and Its Limits’,Harvard Law Review 95, p. 741.
Fried, C.: 1981,Contract as Promise — A Theory of Contractual Obligation (Harvard University Press, Cambridge, Mass., and London, England).
Hillman, R.: 1981, ‘Debunking some Myths About Unconscionability’,Cornell Law Review 67, p. 1.
Johnson, J.: 1985, ‘Unconscionability and the Federal Chancellors’,Lincoln Law Review 16, p. 21.
Komesar, N.: 1981, ‘In Search of a General Approach to Legal Analysis: A Comparative Institutional Approach’,Michigan Law Review 79, p. 1350.
Macneil, I.: 1980,The New Social Contract — An Inquiry Into Modern Contractual Relations (Yale University Press, New Haven and London).
Macneil, I.: 1983, ‘Value in Contract — Internal and External’,Northwestern University Law Review 78, p. 340.
Mallor, J.: 1986, ‘Unconscionability in Contracts Between Merchants’,Southwestern Law Journal 40, p. 1070.
Phillips, M.: 1985, ‘Unconscionability and Article 2 Implied Warranty Disclaimers’,Chicago-Kent Law Review 62, p. 199.
Trebilcock, M.: 1980, ‘An Economic Approach to the Doctrine of Unconscionability’, in B. Reider and J. Swan, eds.,Studies in Contract Law (Butterworths, Toronto).
White, J. and R. Summers: 1988,Handbook of the Law Under the Uniform Commercial Code (West Publishing, St. Paul, Mn.).
Author information
Authors and Affiliations
Additional information
Daniel T. Ostas is an Assistant Professor at the College of Business and Management, University of Maryland. He holds both a J.D. and a Ph.D. A member of the Indiana Bar since 1980, Dr. Ostas has published several articles on real estate and antitrust law. This present paper derives, in part, from his dissertation entitledEconomic Logic of Unconscionability Adjudication.
Rights and permissions
About this article
Cite this article
Ostas, D.T. Ethics of contract pricing. J Bus Ethics 11, 137–145 (1992). https://doi.org/10.1007/BF00872321
Issue Date:
DOI: https://doi.org/10.1007/BF00872321