The Political Significance of the Wisconsin School of Contracts

Jay M. Feinman1*

The Wisconsin school of contracts is one of the most important scholarly contributions to the understanding of contracting practices and contract law from the second half of the twentieth century to the present. As part of the broader law and society movement in which Wisconsin scholars played a major part, it shifted focus from law-in-books to law-in-action and brought to light the importance of relationships and the limits of law as central elements of contract in society. As summarized by Stewart Macaulay and William Whitford:

To us, as we use it in connection with contract law, it expresses a widespread interest of how in fact, as opposed to in theory, statutory law and case precedent come into being; how people and businesses use contracts to manage their lives; how disputes in the performance of contracts arise and are settled; and how the resolution of disputes affects the parties to the disputes and influences future parties to contracts.2

In addition to its contributions to contract law scholarship, the Wisconsin school has political significance in shaping our understanding of contract law. “Political” is first used here to refer to the authoritative allocation of values in society—authoritative because it is accomplished through the mechanism of the state. Contract law is widely understood to be the principal way in which the state enables and regulates private transactions.3 Therefore, contract law determines, among other things, what distinguishes a promise from other forms of expression (the law of formation), which promises are worthy of enforcement (consideration and other validation mechanisms), and how much a promise is worth (by providing a remedy for its breach). These determinations are implicitly political, in this broad sense. In that sense of “political,” the Wisconsin school provides a critique of fundamental views about the structure and function of contract law.

The Wisconsin school critiques of the structure and function of contract law are related in undermining the dominant understanding of contract law. In that understanding, contract law embodies a distinct set of principles and doctrines that regulates exchange transactions. Contract’s regulation is legitimate—a principled exercise of state power—because of two subsidiary claims. First, contract law is general. Contract law as we usually think of it—for example, the rules and principles embodied in the Restatement (Second) of Contracts or a contracts treatise—applies to almost any kind of private agreement. Second, contract law is functional. Contract law works; the rules and principles have purposes related to social behavior, and the operation of the rules through the courts and in the shadow of the law largely serve those purposes.

The more familiar sense of the term “political” involves disputes over particular contract rules and cases and the relation of those disputes to electoral politics and broad political movements. In addition to its critique of the structure and function of contract law, the Wisconsin school provides a perspective on the recent political history of contract law and some insights about the reasons for success and failure in the political reform of contract law.

I. The Structure of Contract Law

A principal claim of contract law is that it is general. Section I of the Restatement (Second) of Contracts defines a “contract” as “a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.”4 Thus, contract law regulates all promises that are enforceable, and by exclusion, defines those promises that are unenforceable. When the Restatement speaks of “a promise,” it means any promise, without regard to subject matter. The illustrations to section I and section II (defining the terms “promise,” “promisor,” “promisee,” and “beneficiary”) demonstrate this generality, as they involve agreements to sell land,5 build a house,6 carry ship’s cargo as a charter-party,7 or hire an employee.8

Part of contract law’s generality rests on its paradigmatic transaction, which is a discrete bargain. Contract law can apply to a broad range of transactions because its primary focus is on a limited interaction at a moment in time between two parties who are isolated from each other in all respects except for that moment, having no history and having a future defined only by their contract. The builder and owner of a house ordinarily would be enmeshed in a long-term relationship,9 and a charter-party and shipper of goods ordinarily would be part of a commercial community,10 but the Restatement illustrations reduce them to a hypothetical and singular “A” and “B.” The examination of some cases may need to be supplemented by facts about the parties’ context, but the discrete transaction is the starting point.

It is most accurate to describe contract law as general but not universal. Over time, some types of contracts or contractual settings have become so highly specialized and often heavily regulated that the basic principles of contract law have less or little relevance to them.

Labor law is one of the earliest and most distinctive subcategories. General principles of contract law formation and validation, for example, are largely irrelevant to the formation of collective bargaining agreements under labor law, and the remedial structure for breach of such an agreement is controlled by regulation rather than principles of expectation, reliance, or restitution damages.

Employment law is a more recent and lesser example. Many of the key rules and principles of employment law have supplanted ordinary contract law, but not entirely; the hoary rule of consideration still determines the enforceability of modifications of employment contracts, for example.

Sales law, governed by the Uniform Commercial Code, is a specialized branch of contract law, but the UCC is essentially a common law statute. Many of its provisions track the common law of contracts, or represent Karl Llewellyn’s attempt to modernize those rules.11 And the law of sales is itself general, applying equally to the sale of a refrigerator to a consumer and the sale of steel to Whirlpool Corporation.

But labor law, employment law, sales, and other categories that have been spun off or supplemented may be seen as exceptions that prove the rule.12 Indeed, the Farnsworth treatise opines that, “In recent decades the generality of contract law has shown surprising vitality, sometimes not undermined but reenforced by special fields.”13

Therefore, contract law is widely understood as general and residual, governing all but a few specialized fields and governing them according to general principles, in several steps.

First, contract law is composed of a body of rules and standards of universal application: formation of a contract usually requires manifestation of assent and consideration.14 A mistake about a basic assumption that has a material effect renders a contract voidable.15 Course of performance “is given great weight” in the interpretation of a contract.16 And so on.

Second, all of these rules embody a limited set of fundamental principles that animate the definition and application of the rules: the presence of a bargain is the basis for enforcing a promise or agreement, and the absence of a bargain provides a basis in most cases for not doing so.17 In case of breach, the usual remedy aims to provide damages that compensate the injured party for the loss of the benefit of the bargain.18

Third, each of these principles works in service of the most basic principle animating contract law—protection of the reasonable expectations of the parties.19 The reasonable expectations principle is explicitly embodied in performance rules20 and interpretation rules,21 among others, but it is the foundation of every other contract law rule, whether expressly or implicitly.

And fourth, protecting legitimate expectations ultimately serves society by promoting and providing security for economic transactions that value-maximize for contracting parties, and the sum of such value-maximizing transactions in a market economy produces prosperity for society as a whole.

The work of the Wisconsin school suggests that proceeding from a posture of generality is the wrong way to think about contract law. To understand a single contract or all contracts and to formulate rules to govern contractual exchanges, we need to begin ground up, not top down. When we do that, we see that the generalized conception of contract law makes two errors: it uses the discrete exchange as the paradigmatic contract rather than the relation, and it fails to give proper emphasis to variations among relations in context.

A stylized version of classical contract law exclusively envisioned discrete individuals entering into one-off transactions. Neoclassical law has softened that picture, recognizing that many contracts are not discrete and that contracting parties often have histories with each other and reside in commercial communities, embodied in doctrines such as the UCC’s course of dealing, course of performance, and usage of trade.22 But the Wisconsin school, along with Ian Macneil, shifted rather than just softened the focus. The typical contract is not a discrete exchange—Macneil’s example of a motorist buying gas at a highway station far away from home, which even then has relational components23—but a continuing relationship such as an employment or franchise agreement; the archetype is a marriage, not a one-night stand.24 Moreover, such relationships usually are situated within commercial communities or relational networks that create more richness and complexity. Sometimes the relations involve relative equality among parties who enter into similar contracts with each other and with other parties over a long period of time, as when Whirlpool buys steel from U.S. Steel. Other contexts embody more complex and asymmetrical relations, as when a consumer buys a Whirlpool refrigerator from Best Buy.25 The communities and networks develop their own norms and practices, and the norms and practices are fluid and change over time. Typically, whatever formal contracts there are do not fully define the relationships but are merely a starting point, supplemented or superseded by other understanding, norms, and values.

One could imagine a body of contract doctrine built around relations rather than discrete transactions. Macneil developed an elaborate structure for understanding the norms embodied in exchange transactions, both discrete transactions and relations, that could be translated into a body of doctrine.26 But consistent with the Wisconsin approach, that structure still depended heavily on context, first distinguishing discrete from relational norms and then filling out the content of the general norms with examination of particular contexts. Because relations and relational networks have their own norms, practices, values, and understanding, those differ as the context differs.

A few examples from the Wisconsin and Wisconsin-inspired literature illustrate the primacy of context and relation. Macaulay’s foundational article, “Noncontractual Relations in Business,”27 is justifiably celebrated for its insights into the importance of relationships and the limited use of law in those relationships, but it is less often noted that the research underlying the article was limited to a particular survey of manufacturers and their merchant suppliers and customers28 That article therefore dealt with relations between businesses, sometimes of rough equality and sometimes not. A subsequent Macaulay article on consumer protection made the same point about the importance of context but looked at a very different setting, concluding that the non-use of law by consumers rested less on relational factors and more on an asymmetry of power.29 In the symposium of which this Article is a part, Trang (Mae) Nguyen examines the effect of the COVID-19 pandemic on cross-border supply chains,30 and Mitu Gulati and his co-authors find in a study of merger and acquisition agreements that the law-in-action in that context is inconsistent with the ordinary rules of contract remedies.31

Part of the power of context is that relational sanctions may be more important than the remedies nominally provided by contract law; the strong can dictate to the weak and “private government” reigns as law recedes.32 But relations involve much more than simple economic leverage. In relations, customs and norms matter, and customs and norms can be both power-enforcing and power-limiting, as parties respect relational norms that do not necessarily correlate with economic power.33

Contracts and therefore contract law, in its principles and application, are contextual, not general.34 The importance of context in the Wisconsin school tells us something about the structure of contract law. If context matters, and relational context particularly matters; a general, totalizing structure of contract doctrine misconceives the project, particularly a body of doctrine built around the model of the discrete transaction. For contract law effectively to serve purposes such as protecting the reasonable expectations of parties, it needs to focus much more narrowly on expectations in context rather than on doctrine in general. Otherwise, contract doctrines too often miss the mark. The principle of bargain consideration as a means of analyzing the enforceability of exchanges drifts into the ether when examining the relations between franchisors and franchisees,35 for example, or, more particularly, the story of Joe Hoffman and Red Owl Supermarkets.36 The rule of the primacy of expectation damages over specific performance is unjustified and even irrelevant in some contexts, such as the mergers studied by Gulati.37

II. The Function of Contract Law

But mainstream contract law has an objection to the idea that it is too general and too much focused on discrete transactions and that, conversely, context is a more important tool for understanding contracts and relational norms are a better tool for regulating them. Neoclassical law—modern contract law—has reformed from the classical, individualist image and it can and does take account of context and relations. Many rules require the use of context in their application. Whether there is a manifestation of assent sufficient to constitute a contract is always assessed by determining whether the reasonable person in the position of the promisee would conclude that there was such a manifestation, for example.

That objection leads to the second element of contract law’s claim to legitimacy: contract law works. That is, contract doctrine is functional for society in advancing the principles that underlie the doctrine. Courts in contracts cases take context into account in applying general rules and standards to the facts of particular cases. Parties who predict the probable outcome of litigation do the same and the contextual predictions shapes their behavior. The law does not get every case right, of course; mistakes are made, barriers to effective enforcement present themselves, and sometimes costs are too high and individual cases or classes of cases drop out. But contract law by and large gets the application of law to fact right and therefore successfully advances its purpose of protecting reasonable expectations, enforcing productive bargains, and ultimately furthering the benefits of a market economy.

Put more systematically, the mainstream view presents contract law as functional in three ways.38 Contract law is market-enabling.39 It sets rules about which bargains are enforceable, allows parties to create such bargains, provides doctrines that resolve performance disputes, and, where needed, enforces the bargains. Contract law also is market-correcting. Parties often will not fully bargain or fully specify their bargains, so the law efficiently supplements the limited expressions of their bargains, reducing transaction costs and backstopping the agreement process. 40 Finally, contract law is market-supplementing. Maximizing economic value through market transactions is not the only social goal the law ought to further. As a society, we conclude that some market transactions impinge on other important values such as fairness and equality, and contract law embodies those values as well.

The claim of contract law functionalism is vital to the legitimacy of contract law. Contract law—like all law—aims to serve principles and purposes. If it does not serve those principles and purposes, or does so only intermittently or haphazardly, then it loses its claim of authority.

The Wisconsin contracts school insights question this claim of functionalism and thereby diminishes contract’s claim of legitimate authority. As summed up by Macaulay, “While law matters in American society, its influence tends to be indirect, subtle and ambiguous.”41 Contract law has a much different and lesser role in contracting practice and contractual relations than the mainstream view assigns to it. As described above, relational sanctions and norms often are more important in policing behavior than law is. More immediately, contract law is realized largely through litigation, and contract litigation is rare, difficult, and expensive.

As the Wisconsin contracts casebook explains, a large part of the problem is that contract litigation, especially litigation that results in an appellate opinion comes only at high “costs in money, time, frustration, and lost opportunities to do something else. . . . [Additionally,]’expectation damages’ is only a sum that must be offset by the costs of getting it.”42 Accordingly, a remedy that is theoretically available is practically unavailable to many parties, and “the legal system in operation promotes giving up or settling rather than adjudicating to vindicate rights.”43 For contracting parties, resort to litigation is occasional and, worse, “opportunistic and tactical,” aimed less at effectuating the values implicit in contract law and vindicating their rights than seeking leverage in bargaining.44 There may be occasional victories, often symbolic and therefore frustrating,45 but on the whole, contract litigation lacks functional efficacy in implementing the principles of contract law.

For many contracting parties, things are even worse. When contract law does have significant effect, it often does so in ways not entirely consistent with its objectives and ideals. Marc Galanter helpfully separates the bulk of contract litigation into two categories.46 “Uphill” litigation typically is brought by individuals against organizations—claims by small buyers against larger institutional sellers, individual employees against corporate employers, and so forth. In “downhill” litigation, the typical plaintiff is an organization, and the defendant is either an individual or a smaller entity, a distinction somewhat related to his better-known analysis of repeat players and one-shotters,47 and the litigation is routine—think of the overwhelming number of cases that are technically within the domain of contract law but are largely bureaucratic processing of debt collection. There is much less uphill litigation, those cases tend to be more vigorously contested by the defendants and so take longer, are more expensive, and result in few plaintiff victories. In downhill litigation, by contrast, defaults are frequent, disposition comes sooner, trials are rare, and plaintiffs have a very high win rate.48 In short, litigation and especially adjudication are not crucial in the world of contract, so contract law too often fails to serve its ostensible functions.

III. The Politics of Contract Law

The Wisconsin contracts school thus undermines the mainstream view of the structure and function of contract law. In a very different way, the school also provides insights about the recent history of contract law, and the politics in both the broad and narrow sense of the term that are part of that history. Those insights also teach lessons about how political actors should think about contract law and the advantages and disadvantages of particular doctrinal tools to achieve political ends.

To set the stage for the impact of the Wisconsin school, here is a quick history of contract law and scholarly thinking about contract law up to the near present.49 The story begins with the theoretical underpinnings of classical contract law, which reigned from the 1870s through the 1920s. The world envisioned by this body of law was composed of independent individuals, each of whom acts within a broad sphere of legal autonomy to pursue his (always “his”) own self-interest. The courts, applying a complete, coherent, and formal body of law, define the ground rules for interaction among private individuals through the rules of contract law (and tort and property law, too).

In the world imagined by classical contract law, individuals exercise their autonomy by consenting to agreements. Individuals can accept the liability of an enforceable contract by exercising consent and can be free from liability unless consent had been exercised. Formation rules require that there be an identifiable moment at which the parties’ clear and definite expressions of assent consent match to create a contract. Because individuals only act in self-interest, the doctrine of consideration requires that the agreement contain the expression of an exchange, limiting potential liability by rendering gratuitous promises unenforceable. The agreement embodies the terms of performance and the events of breach, so interpretation questions can be resolved by adverting to the plain meaning of the contract. When a breach occurs, it violates the expectation created by the agreement and damages can be quantified by referring to that expectation. These principles were expressed in a complete and coherent body of doctrine expressed in formal rules that permitted mechanical application by the courts.

If a convenient marker for the beginning of classical contract law was the publication of Langdell’s contract law casebook in 187150—the first casebook—the critique of classical law began almost immediately with the publication of Holmes’s The Common Law a decade later.51 Elements of the critique varied, but its common thrust was an attack on the grand classical claims to abstraction, autonomy, and rigor.

The critique was both theoretical and empirical. The lawyer-economist Robert Hale, for example, showed that a basic principle such as freedom to contract in fact represented the exercise of legal power enabled by the state, not the exercise of individual autonomy, and so lacked the purity ascribed to it by classical law.52 When comparing the claims of classical law to the reality of law in the courts, doctrines such as assent and consideration could not maintain their burden of establishing contract law as exclusively a realm of private ordering. Indeed, even courts claiming to adhere to the classical program were never entirely on board, as famously demonstrated by Llewellyn on formation cases,53 Corbin on consideration and reliance,54 and Fuller on remedies,55 among others. No fixed expectation arises as an objective fact from the parties’ interactions, so courts were forced to choose which interests contract law should advance. The point, then, was to add a focus on social conditions. For most critics through the 1950s, the relevant social interests were adequately developed in the case law; for a few others, notably Karl Llewellyn, there was need to further resort to norms of commercial practice, as ultimately was incorporated in the Uniform Commercial Code. 56

The critique of classical law produced neoclassical contract law, which first recognized the need to incorporate context in determining and protecting expectations and then balanced individual autonomy in the marketplace and non-individualist considerations of social welfare such as fairness to the unsophisticated or disadvantaged. A contract could be found even though it was indefinite on previously-essential terms such as price and quantity.57 Interpretation could favor context as well as plain meaning,58 and a relaxed parol evidence rule undermined the primacy of written agreements.59 Promissory estoppel expanded to provide a remedy for reliance created by promises that failed the traditional standards of assent and consideration.60 And courts reviewed the fairness of contracts and struck down oppressive contract terms, especially between parties of unequal bargaining power, such as the cross-collateral clause in a consumer installment sale in Williams v. Walker-Thomas Furniture Co.61

Beginning around 1980 neoclassical contract law was met with a challenge that was a manifestation of the age of Reagan. President Ronald Reagan proclaimed the basis of the challenge in his first inaugural address: “government is not the solution to our problems; government is the problem.”62 In this vision, government is the problem because it interferes with individual freedom, particularly the individual freedom to pursue self-interest through the market. If government is the problem, then the solution is to reduce the reach of government. In contract law, this solution took the form of a reaction to neoclassical contract law and a reversion to a simple model of contract based on an ideal market. The solution aimed at strictly enforcing the bargains that parties make, not reading beyond the four corners of a document in enforcing a contract, and certainly not evaluating the bargains for fairness.

The conservative reaction to neoclassical contract law first adopted a more formal structure, favoring clear, rigid rules over flexible standards in order to enable private actors to better predict the outcome of cases and especially to constrain courts. Then the substance of the rules was transformed to also favor formality. In this approach, written contracts (including standard form contracts) are favored over oral contracts, the interpretation of contracts looks primarily to their plain meaning, and parties are given great freedom to define the terms of their relationships without second-guessing by the law.

The Wisconsin school initially entered this history of contract law thinking by extending the critique of classical law through redefining the gap between law-in-books and law-in-action. The traditional critique focused on the gap between the formal rules and the behavior of courts in applying those rules. Wisconsin scholars demonstrated that two bigger gaps exist.

First, the traditional critique focused on the unwillingness of courts to realize the formal rules of contract doctrine as they applied those rules to the messy or unappealing facts of individual cases. Wisconsin scholars also demonstrated that the legal process fails to realize the rules because of the cases that never go to the appellate courts, the trial courts, or even to court at all. The cost and difficulty of litigation as described above filtered out too many cases to start with, and more dropped out along the way.

Second, whatever rules the courts announced and applied, a key feature of the reality of contracting was the relational nature of most contracts. Also as described above, leverage, norms, values, and other intangible factors in the context of relations typically feature more prominently in regulating exchanges than contract rules or the threat of their enforcement.

The story of the transformation of contract law embodies two other obvious points, each of which is within the scope of the Wisconsin school: power matters, and ideology matters, too. The focus of this article has been on the common law of contracts, but the Wisconsin school literature also contains tales of interest group politics and the legislative arena as sites for disputes over contract law.63 The rise of neoclassical contract law and the subsequent classical revival are parts of a much larger political story involving the manifold successes of progressive Democratic politics through much of the twentieth century and the conservative Republican reaction from the 1980s forward. Those shifts were about ideology as much as power, as they were animated in part by changes in prevailing belief systems, from the possibility of a New Deal and a Great Society built by government programs to the effort to shrink government down to the size where it could be “drown[ed] . . . in a bathtub”64 and to make the market the measure of all things.

The Wisconsin school also has more pointed lessons about the importance of institutional factors in attempting to use law to achieve certain ends, the efficacy of doing so, and the significance of the form that law takes. Institutional factors certainly do not determine the changes in contract law in the story, but it is equally certain that they play a role.

Return to Galanter’s characterization of uphill and downhill contract litigation.65 The lesson in both areas is that the effectiveness of contract law depends on institutional factors such as the availability of lawyers and the cost of litigation, and that typically parties with greater economic power benefit the most from the institutional factors, whatever the state of contract law doctrine.

The story of neoclassical law from the 1960s and 1970s through the 1980s and 1990s in part describes efforts to change that dynamic. The efforts involved statutory reform at the state and federal levels as well as changes in the common law of contracts. For the common law changes, there is a familiar account. Doctrine became more expansive, more expectations-based, less formal, and more amenable to individualized claims, especially those brought by subordinate parties. But within a decade or so, these promising developments largely ran aground. Good faith became focused more on subjective ill-will and less on enforcing reasonable standards of commercial behavior.66 A broadly applicable remedy for bad-faith breach of contract receded to its insurance law roots.67 The expansive possibilities of reliance-based obligation through promissory estoppel never materialized.68 Plain-meaning interpretation increasingly was favored over contextual interpretation. Unconscionability failed to realize its potential as a powerful tool for striking down unfair bargains.69

Part of the reason for these developments was the general shift in the courts that accompanied the rise of conservatism. But each of the potentially expansive doctrines suffered from two problems: they required litigation to realize their potential, which is expensive and time-consuming, and the litigation was standards-based and fact-intensive, meaning that the litigation would be even more expensive and time-consuming than usual. The Wisconsin school insight about the limited capacity of litigation to enforce legal rules because of its expense, delay, and inconvenience, especially for subordinate parties engaged in uphill litigation, suggests a strong correlation between the nature of the proposed reforms and their ultimate limitations. Institutional factors matter a lot, and the progressive doctrines addressed only the substance of the law, not the institutional factors, and they did so through forms that made failure more likely.

The validity of this Wisconsin insight is reinforced by looking at reforms that may have been more successful. Those reforms, typically statutory, addressed the institutional factors. The success of state consumer fraud statutes, for example, derives not only from their definition of wrongful behavior but from the provision of attorney’s fees, punitive or treble damages, or both. Litigation matters only where it embodies sufficient potential rewards for clients and especially lawyers to engage in it, and changes in the substantive doctrine alone rarely do that.

The more recent part of the historical account reinforces the insights. The classical revival in the common law aimed to preserve power and privilege or reclaim them where they were under threat, and it did so in part through changes in contract doctrine. Some means were obvious; limiting market-supplementing doctrines such as unconscionability removed the potential, small as it may have been, that courts could invade the prerogatives of dominant parties to dictate terms. In a number of other areas, the change was less direct and accomplished through an emphasis on formalism, as in plain-meaning interpretation. Formalism and conservatism cohere even if they do not necessarily entail each other, but in the development of contract law there is a more direct relationship. Formal rules buttress the power of dominant economic parties who can manipulate their contracts to take advantage of the formal rules. Plain meaning, for example, favors the drafting party. In Galanter’s terms again, in the face of a form contract disadvantageous to the subordinate party, which has become ubiquitous, downhill litigation becomes even more routine and uphill litigation practically impossible.70 And this is especially true with respect to perhaps the most dramatic development in contract law in the period—the use of form contracts to remove many disputes from the law at all, through the expanded use of mandatory, pre-dispute arbitration.

These general insights into our recent political history as related to the development of contract law and lessons for legal reform show again the strength of the Wisconsin school of contracts. Power is important in individual exchange relations and in shaping the law as a whole. Institutional factors and the form of law also matter. But to preserve hope, the fundamental Wisconsin lesson is worth stressing: contracting practices are messy, complicated, and contextual and one needs to exercise caution in theorizing about them. Relational norms can give power to the less powerful. Judges and juries may respond to particular facts in the cases before them and decide in surprising and idiosyncratic ways. There always are exceptions to rules and aberrations from general principles and historical trends. To borrow from Galanter once more, the haves come out ahead,71 but not everywhere and always.

  1. ↑ 1 *Distinguished Professor of Law, Rutgers Law School. This article was prepared for a panel on The Enduring Impact of the Wisconsin School of Contracts at the 100th anniversary symposium of the Wisconsin Law Review, October 2020. My thanks to Jonathan Lipson for organizing the panel and for his insight, and to the editors of the Wisconsin Law Review for a superb organizing job.The Wisconsin school of contracts is an extraordinary body of literature produced by an extraordinary group of scholars. For me and many others, the founders of the school were generous mentors and colleagues. This article is for Stewart Macaulay, Bill Whitford, and the memory of John Kidwell.
  2. ↑ 2
    . Stewart Macaulay & William C. Whitford, The Development of Contracts: Law In Action, 87 Temp. L. Rev. 793, 799 (2015).
  3. ↑ 3
    . It is of course not the only state vehicle for doing so; legislative and administrative regulation have become increasingly important and even dominant in some areas of contract. But at least within much of contract law thinking, the common law of contracts retains pride of place.
  4. ↑ 4
    . Restatement (Second) of Contracts § 1 (Am. L. Inst. 1981).
  5. ↑ 5
    . Id. at § 1, illus. 1.
  6. ↑ 6
    . Id. at §2, illus. 1.
  7. ↑ 7
    . Id. at § 2, illus. 2.
  8. ↑ 8
    . Id. at § 2, illus. 3.
  9. ↑ 9
    . Id. at §2, illus. 1.
  10. ↑ 10
    . Id. at § 2, illus. 2.
  11. ↑ 11
    . See infra note 55 and accompanying text.
  12. ↑ 12
    . Robert Gordon suggests that, in the Wisconsin view, “the most important and contentious fields of contract relations” were split off, including insurance, labor, and consumer credit. Robert W. Gordon, Is the World of Contracting Relations One of Spontaneous Order or Pervasive State Action? Stewart Macaulay Scrambles the Public-Private Distinction, in Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and Lyrical 49, 61 (Jean Braucher, John Kidwell & William C. Whitford eds., 2013) [hereinafter Gordon, in The Empirical and Lyrical].
  13. ↑ 13
    . E. Allan Farnsworth, Contracts 24 (4th ed. 2004).
  14. ↑ 14
    . Restatement (Second) of Contracts § 17 (Am. L. Inst. 1981).
  15. ↑ 15
    . Id. at § 152.
  16. ↑ 16
    . Id. at § 202(4).
  17. ↑ 17
    . Farnsworth, supra note 12, at 47‒48.
  18. ↑ 18
    . Id. at 46, 757.
  19. ↑ 19
    . Arthur Linton. Corbin, Corbin on Contracts 1 (one vol. ed. 1952).
  20. ↑ 20
    . Farnsworth, supra note 12, at 502.
  21. ↑ 21
    . Id. at 453.
  22. ↑ 22
    . See generally Jay M. Feinman, Critical Approaches to Contract Law, 30 UCLA L. Rev. 829 (1983) [hereinafter Feinman, Critical Approaches]; Jay M. Feinman, Un-Making Law: The Classical Revival in the Common Law, 28 Seattle Univ. L. Rev. 1 (2004) [hereinafter Feinman, Un-Making Law].
  23. ↑ 23
    . Ian R. Macneil, The Many Futures of Contract, 47 S. Cal. L. Rev. 691, 720‒21 (1974).
  24. ↑ 24
    . Robert W. Gordon, Macaulay, Macneil, and the Discovery of Solidarity and Power in Contract Law, 1985 Wis. L. Rev. 565, 569 (1985) [hereinafter Gordon, Macaulay, Macneil, and the Discovery of Solidarity and Power].
  25. ↑ 25
    . To illustrate the complexity, note that the consumer’s purchase is enacted through form contracts dictated by Whirlpool and Best Buy, but that those firms’ market power and ability to dictate terms and enforce them is bounded by market influences such as Consumer Reports and Yelp reviews.
  26. ↑ 26
    . The literature is vast. For an introduction, see Jay M. Feinman, Relational Contract Theory in Context, 94 Nw. Univ. L. Rev. 737 (2000) [hereinafter Feinman, Rational Contract Theory in Context].
  27. ↑ 27
    . Stewart Macaulay, Non-contractual Relations in Business: A Preliminary Study, 28 Am. Sociological Rev. 55 (1963).
  28. ↑ 28
    . Id.
  29. ↑ 29
    . Stewart Macaulay, Lawyers and Consumer Protection Law, 14 L. & Soc’y. Rev. 115 (1979). See also Stewart Macaulay, An Empirical View of Contract, 1985 Wis. L. Rev. 465, 469 (1985) (“Power, exploitation, and dependence also are significant. Continuing relationships are not necessarily nice.”) [hereinafter Macaulay, Empirical View].
  30. ↑ 30
    . Trang (Mae) Nguyen, Assistant Professor of Law, Temple University Beasley School of Law, Panel Discussion at the Wisconsin Law Review Symposium: Wisconsin’s Intellectual History and Traditions (Oct. 23, 2020) (transcript on file with Wisconsin Law Review), https://youtu.be/fcqGg6P9Y7w.
  31. ↑ 31
    . Theresa Arnold, Amanda Dixon, Hadar Tanne, Madison Sherrill, & Mitu Gulati, “Lipstick on a Pig”: Specific Performance Clauses in Action, Wis. L. Rev. (forthcoming 2021).
  32. ↑ 32
    . Macaulay, Empirical View, supra note 28, at 468; Gordon, in The Empirical and Lyrical, supra note 11, at 59.
  33. ↑ 33
    . Macaulay, Empirical View, supra note 28, at 478.
  34. ↑ 34
    . In that regard, the Wisconsin school is a species of relational contract theory. For different perspectives, see Feinman, Relational Contract Theory in Context, supra note 25; Robert E. Scott, The Promise and the Peril of Relational Contract Theory, in Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and Lyrical 105 (Jean Braucher, John Kidwell & William C. Whitford eds., 2013).
  35. ↑ 35
    . Stewart Macaulay, Changing a Continuing Relationship Between a Large Corporation and Those Who Deal with It: Automobile Manufacturers, Their Dealers, and the Legal System, 1965 Wis. L. Rev. 483, 506‒09 (1965) [hereinafter Macaulay, Changing a Continuing Relationship].
  36. ↑ 36
    . See William C. Whitford & Stewart Macaulay, Hoffman v. Red Owl Stores: The Rest of the Story, 61 Hastings L.J. 801 (2010).
  37. ↑ 37
    . Arnold, Dixon, Tanne, Sherrill, & Gulati, supra note 30.
  38. ↑ 38
    . Macaulay addressed these issues and others in a series of articles, discussed in Jay M. Feinman, Ambition and Humility in Contract Law, in Revisiting the Contracts Scholarship of Stewart Macaulay: On the Empirical and Lyrical 140 (Jean Braucher, John Kidwell & William C. Whitford eds., 2013).
  39. ↑ 39
    . Property law, which creates the entitlements about which parties can bargain, also is part of the picture.
  40. ↑ 40
    . This is a principal basis for default rules analysis. See generally Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87 (1989).
  41. ↑ 41
    . Stewart Macaulay, The New Versus the Old Legal Realism: “Things Ain’t What They Used to Be,” 2005 Wis. L. Rev. 365, 383 (2005).
  42. ↑ 42
    . Macaulay & Whitford, supra note 1, at 802.
  43. ↑ 43
    . Macaulay, Empirical View, supra note 28, at 470.
  44. ↑ 44
    . Gordon, Macaulay, Macneil, and the Discovery of Solidarity and Power, supra note 23, at 572.
  45. ↑ 45
    . Gordon, in The Empirical and Lyrical, supra note 11, at 60; Macaulay, Empirical View, supra note 28, at 475.
  46. ↑ 46
    . Marc Galanter, Contract in Court; or Almost Everything You May or May Not Want to Know About Contract Litigation, 2001 Wis. L. Rev. 577 (2001) [hereinafter Galanter, Contract in Court].
  47. ↑ 47
    . Marc Galanter, Why the “Haves” Come Out Ahead: Speculations on the Limits of Legal Change, 9 L. & Soc’y. Rev. 95 (1974) [hereinafter Galanter, Why the “Haves” Come Out Ahead].
  48. ↑ 48
    . Marc Galanter, Contract in Court, supra note 45, at 593; see also Stewart Macaulay, Elegant Models, Empirical Pictures, and the Complexities of Contract, 11 L. & Soc’y Rev. 507, 514‒15 (1977) (“[L]oopholes, salvage operations, the bureaucratic process of debt collection, and evasions of responsibility seem to account for a large proportion of contract activity found in the real world of the courts.”).
  49. ↑ 49
    . See generally Feinman, Critical Approaches, supra note 21; Feinman, Un-Making Law, supra note 21.
  50. ↑ 50
    . C.C. Langdell, A Selection of Cases on the Law of Contracts (1871).
  51. ↑ 51
    . O. W. Holmes, Jr., The Common Law (1881).
  52. ↑ 52
    . See Morton J. Horwitz, The Transformation of American Law 1870‒1960: The Crisis of Legal Orthodoxy 163‒64, 195‒98 (1992).
  53. ↑ 53
    . K. N. Llewellyn, On Our Case-Law of Contract: Offer and Acceptance, I, 48 Yale L.J. 1 (1939).
  54. ↑ 54
    . See Grant Gilmore, The Death of Contract 58‒65 (1974).
  55. ↑ 55
    . L. L. Fuller & William R. Perdue, Jr., The Reliance Interest in Contract Damages: 1, 46 Yale L.J. 52 (1936); L. L. Fuller & William R. Perdue, The Reliance Interest in Contract Damages: 2, 46 Yale L.J. 373 (1937).
  56. ↑ 56
    . Llewellyn, supra note 52, at 1.
  57. ↑ 57
    . See U.C.C. §§ 1-201(3), 2-204, 2-305, 2-311 (Am. L. Inst. & Unif. L. Comm’n 2019).
  58. ↑ 58
    . See, e.g., C & J Fertilizer, Inc. v. Allied Mut. Ins. Co., 227 N.W.2d 169 (Iowa 1975).
  59. ↑ 59
    . Farnsworth, supra note 12, at 419.
  60. ↑ 60
    . See Jay M. Feinman, Promissory Estoppel and Judicial Method, 97 Harv. L. Rev. 678 (1984).
  61. ↑ 61
    . 350 F.2d 445, 447, 449‒50 (D.C. Cir. 1965).
  62. ↑ 62
    . President Ronald Reagan, 1981 Inaugural Address (Jan. 20, 1981).
  63. ↑ 63
    . See, e.g., Stewart Macaulay, Law and the Balance of Power: The Automobile Manufacturers and Their Dealers (1966); Macaulay, Changing a Continuing Relationship, supra note 34, at 485‒88.
  64. ↑ 64
    . Laura Blumenfeld, Sowing the Seeds of GOP Domination, Wash. Post (Jan. 12, 2004), https://www.washingtonpost.com/archive/politics/2004/01/12/sowing-the-seeds-of-gop-domination/ab47e635-9f07-40bb-a676-74da7fad4017/.
  65. ↑ 65
    . Galanter, Contract in Court, supra note 45, at 593.
  66. ↑ 66
    . Jay M. Feinman, Good Faith and Reasonable Expectations, 67 Ark. L. Rev. 525, 525‒26 (2014).
  67. ↑ 67
    . The landmark case is Foley v. Interactive Data Corp., 765 P.2d 373, 389‒401 (Cal. 1988).
  68. ↑ 68
    . For a review of the literature, see Jay M. Feinman, The Last Promissory Estoppel Article, 61 Fordham L. Rev. 303 (1992), and the article that demonstrated the inaptness of that title, Charles L. Knapp, Rescuing Reliance: The Perils of Promissory Estoppel, 49 Hastings L.J. 1191 (1998).
  69. ↑ 69
    . See Jacob Hale Russell, Unconscionability’s Greatly Exaggerated Death, 53 U.C. Davis L. Rev. 965 (2019). Russell reports this general view of the failure of unconscionability and then argues that the view is exaggerated because unconscionability maintains vitality in a number of areas. A quick review of the cases in his appendix suggests that the common law doctrine of unconscionability is mostly helpful as an add-on when there are statutory remedies that change the dynamics of litigation. This interpretation of his research supports a Wisconsin-school point: institutional factors matter, particularly factors that make the cases worth more than their ordinary value under contract remedies, such as attorney’s fees or punitive damages.
  70. ↑ 70
    . Galanter, Contract in Court, supra note 45, at 593.
  71. ↑ 71
    . Marc Galanter, Why the “Haves” Come Out Ahead: Speculations on the Limits of Legal Change, 9 L. & Soc. Rev. 95 (1974).