One might be tempted to think that status-based relationships were displaced by contract in modern societies, in the way that Henry Maine suggested over fifty years ago. However, it is now also understood that many specific kinds of relationships are governed by their own rules, even if some elements of voluntary agreement are present. For example, even if one chooses to get married and to marry a particular person, many of the surrounding rules are outside of the parties’ control. Employers and employees choose not only their contractual partners but also most of the critical terms of the employment relationship; but the state imposes a variety of mandatory terms and prohibits others. In these contexts, status-based rules sharply delimit the application of general contract rules. We have paid relatively less attention to how status informs the affirmative application of general contract law, even though there are a variety of doctrines internal to contract that apply “special rules” to tenants, consumers, insured, franchisees, and many others.
In his insightful recent article, Unifying Status and Contract, Kaiponanea Matsumura corrects this neglect. He shows that contract law is responsive to vulnerability in a variety of specific kinds of relationships, and not just ones that we associate with separate bodies of law. He offers illustrative detail on three kinds of relationships: cohabiting partners, contractors and subcontractors, and online service retailers and their customers. He shows how courts balance traditional contract-law considerations of morality and efficiency differently in each context. The most important facts about each relationship that inform special treatment are those that speak to the power balance between the parties.
Matsumura’s discussion of status and its infusion into contract law raises further questions about what motivates the infusion of status into legal reasoning. Why does status matter to contract? Is it the package of facts, including power imbalances, that status implies about the parties in a particular case, in which case it is unsurprising that judges would sometimes take advantage of the information that a familiar status supplies? Or does status matter instead because of the social ramifications of a pattern of contracting across many similarly situated parties, in which case judges accounting for status are responding to policy imperatives, especially distributive principles? (I put aside for now whether such distributive principles are properly regarded as internal or external to contract law.) Another way of getting at the distinction in purpose is to ask, if status matters because it identifies vulnerability, whose vulnerability matters? Is it the vulnerability of one of the parties in the contract, whose situation is illuminated by reference to her status, or the vulnerability of people like her, who will benefit from favorable treatment of their representative party?
There is no need to choose, perhaps. But it would be good to know what we are doing, because it speaks to how much we want to know and about whom. That is, if status sheds light on parties’ claims, we might want to know more than the relationship-type that frames a particular agreement; we will want to know if the contractual relation tracks the power dynamic we associate with relationships of that type, at least where such information is readily available. If status is important for surfacing the distributive consequences of how contract rules are applied in a given context, then we might not care about status in the context of contracts between socially privileged groups, even if those groups have an imbalance of power between them.
Matsumura’s invocation of recent “law and political economy” scholarship suggests that he is interested in the distributive dimensions of patterned relationships. However, he also argues, and indeed, shows that the details of relationships matter because they reveal power imbalances between specific contracting parties. Does status matter only when those power imbalances repeat themselves en masse? Matsumura points out that there is usually nothing mysterious about how patterns of power work out in different kinds of relationships. But while it might not be mysterious, it seems likely to be inconsistent. For example, the power dynamic we observe between cohabiting partners might turn on quite a few facts separate from the fact of their cohabitation. The power dynamic between general and subcontractors might depend on features of the particular market in which they are operating, which might vary by geography and across an economic cycle. The power dynamic between online service retailers and consumers also varies, but in luxury markets, do the informational asymmetries that consumers face warrant the same protection as in lower-end retail markets?
Matsumura offers many insights about the shortfalls and dangers of our present thinking about the relationships between status and contract. He is persuasive that status-based rules are not an external constraint on the boundaries of contract but animate the application of contract law in many areas, and rightly so. He also invites us to continue to think about why status matters—and therefore—when it matters, and what other kinds of facts judges should take into account or ignore about contractual relationships.
