Contract’s Constitutive Core: Solving Problems by Making Deals

Problem solving begins at the earliest stages of development and is central to human experience. While individuals solve simple, everyday problems automatically using cognitive shortcuts, more complex problems require self-conscious, creative mental processes. Unilateral processes of decision making solve most of these more complex problems. But when unilaterally derived solutions call for reliance on help from others, parties often engage in deal making to arrange for mutual assistance. Thus, the main purpose of deal making is to implement each side’s solutions to its own problems rather than to reach joint solutions to common problems. Collaboration does occur in deal making, but it is not the main purpose in most instances.This Article offers a descriptive, instrumental analysis of U.S. contract law as a problem-solving enterprise, and argues that problem solving, both private and public, is the primary focus of U.S. law generally and contract law in particular. It models the building-block concepts of problems, solutions, and methods of implementation, describing how individuals, groups, and governmental institutions reach and implement solutions. It then uses this problem-solving perspective to explain aspects of U.S. contract law, such as the unenforceability of gift promises and gambling contracts, that traditional bargain theories cannot explain adequately, if at all. The Article’s unique perspective also explains why courts cannot function effectively as problem solvers. Because solving complex problems requires the exercise of broad discretion, individuals can accomplish the task by drawing on creative intuition. By contrast, courts are not institutionally capable of solving such problems because the adjudicative process does not allow for the exercise of broad discretion.In developing its central thesis, this Article distinguishes between contract’s constitutive core and its regulative penumbra. The core empowers private actors to reach and implement solutions to private problems, while the penumbra consists of public regulations that courts apply both to deal making and to deals to solve public coordination problems. This Article concludes that in U.S. contract law, only bargains that unambiguously reflect an effort to use contract’s core to solve preexisting problems are deemed worthy of judicial enforcement. This problem-solving account not only carries explanatory force in describing U.S. contract law, but offers a starting point to begin to develop a robust problem-solving perspective on both private and public U.S. law.

The full text of this Article is available to download as a PDF.