Contract Law Beyond the State

Abstract

This chapter reflects on the increasing emergence of transnational efforts at both the global and regional level to bring about the greater convergence of national contract law regimes. The divergences between contract law regimes are seen as major obstacles to free trade, and removing these barriers is the primary motivation behind these initiatives. This chapter argues, using European Union (‘EU’) efforts to harmonize contract law in Europe as an illustration, that such efforts face a significant legitimacy burden, because on the republican view of contract law the principle of state sovereignty protects the freedom of states to interpret and balance the values that shape contract law in ways that reflect local needs, beliefs, customs, and so forth. That freedom protects the right to self-determination and is both constitutive and expressive of the political communities that nation states embody and represent. In the European context, there is no similar political community that legitimates the EU’s efforts to bring about the harmonization of the general law of contract. Furthermore, even if the issue of legitimacy could be overcome, it’s unclear that harmonization in the European context could be justified. The economic case made by the European Commission for convergence is based on questionable empirical assumptions, and attempts to bring about convergence face serious efficacy constraints due to the fact of ‘normative pluralism’.