Thursday, March 11, 2010

CONTRACTS OR CONSCIENCE? AN ETHICAL DILEMMA

AN ESSAY

During my first year in law school, I struggled to learn the endless verbal formulas and doctrines that apparently made the law a flawless machine. I did not have time to reflect on the law's theoretical weaknesses or its cynical role in maintaining power structures in our society. No, I was more worried about learning all the recipe-like elements for particular torts, contract defenses and crimes. I spent my time memorizing lists and hoping I would remember them for the exam.

It was a stressful time for me. It probably did not need to be, but I made it so. It likely had something to do with all the other stressed-out, high-striving, perspiring people around me. Put yourself in a room full of panicked people and chances are you'll soon feel panicked, too.

Despite all the stress and anxiety, however, I remember certain moments with great clarity. Now that several years have passed since law school, I understand these moments in a new way. At the outset I must confess that--in hindsight--I was never really law school material. I might have studied it well; but it was difficult for me--and almost unnatural--to suspend my creative powers for three long years. True, I always retained my satirical mistrust for power. But in law school, I had to suppress my bitter urge to laugh for long enough to get through the rigid curriculum.

I'm glad I managed it then, because there's no way I could have managed it today. I've returned to Nietzsche. I have reverted to my nature. I am--to use a Shakespearean phrase--a "satirical rogue." Yes, an analytical satirical rogue to be sure; but a rogue nonetheless. I have trouble taking anything too seriously, especially so-called "authorities." I have a socially-dangerous ability to see through pretense and to sniff out unfairness. I am not very discreet either. I call spades spades. I don't even whisper. I listen to my conscience and I speak my mind. These are not admirable characteristics for those who wish to make partner at a law firm.

Having returned to my natural habitat over the last few years, I now analyze my law school memories in a way that affirms my identity. Here's a good example: I was sitting in our first-year contracts class. Our professor had stumped everyone. It was some hypothetical problem about some guy who made a promise to another then broke it. The question was whether the aggrieved person could sue the other for breach of contract. The professor asked what legal rule justified recovery in the case. Several uneasy moments passed. About 90 twentysomethings sat there staring at their laptops in an effort not to be noticed.

Finally, I raised my hand and said: "Well, he made a promise and broke it." The professor sneered at my response. I will never forget the look on her face. Then she said: "So what if you break your promise? What does that have to do with anything."

At the time, I did not think too much about the professor's response. I was too worried about memorizing legal recipes. But over time, I have come to see this moment as a perfect illustration for the proposition that law and ethics virtually exclude each other. And I have also come to see this moment as an expression of my own character. It should have alerted me that I was ethically uneasy with the law. After all, in my heart I care whether I tell the truth. If I make a promise, my heart hurts if I break it. Yet my heart does not concern the law. The law deals only in extrinsic indicia, not ethical worries. The law is about empirically observable factors, not the pangs of conscience. When I raised my hand in that class, I showed my nature: At that early time in my law school career, I thought the law and ethics overlapped. I could not have known at the time that they do not.

From an ethical perspective, a promise is a promise. You fulfill it because it is the "right thing to do." You do not hem, haw, qualify, vacillate or renege. You do what you say because it bothers your heart if you do not. If you have a conscience, it hurts to break a promise. Then again, if you are unethical, it does not bother you to break a promise. Your heart does not torture you for the decision. You just move on; you break your word as necessary to suit present circumstances. That may be realpolitik. It may even be legal. But it is not ethical. Ethics is internal; it is about the heart and intuitive feelings. By contrast, law is external; it has nothing to do with the heart. Detective Alonzo, Denzel Washington's unscrupulously corrupt (and successful) character in Training Day (2001), put the distinction best when he told his ethically troubled partner: "It ain't what you know. It's what you can prove."

In ethics, you know. In the law, you prove.

From a legal perspective, there are mere promises and there are contracts. Contrary to popular belief, contracts are not necessarily imposing-looking official documents that you sign. You can assent to a contract without ever seeing a paper. Rather, contracts are legally-enforceable promises, whether written or not. To make a promise legally enforceable, it must meet certain objective elements. A "promise in the wind" might trigger an ethical responsibility to honor it. But unless the promise meets technical legal elements, you cannot go to court to force the other guy to honor his word.

Contracts serve commerce. They support our economic system. They give assurance to business people that others will adhere to their promises. As such, the law only enforces promises that arise in "bargained-for exchange." The law calls this "consideration." In theory, this means that both sides haggle over a deal. Each side benefits and suffers detriment in equal measure. One party parts with money. That is detriment. The other party gains the money. That is benefit. But to get the money, one party must do something. That is detriment. The other party receives something desirable from the activity. That is benefit.

This is what makes a promise enforceable at law: Bargaining. Exchange. Haggling. Negotiation. Dickering. It is commercial. It is not gratuitous. In fact, gifts are not contracts. Quite the contrary: If only one party in a transaction receives benefit without a bargain, there is no contract. A kid can't sue his father if his father simply tells him he'll buy him an Xbox, then he breaks his word.

I mention all this to show that contracts are strictly technical. As such, the heart plays no part in their formation or performance. Put another way, ethics exerts no influence on contracts, even if it exerts influence on individuals who make promises. In fact, sometimes it makes more economic sense to break a contract than to keep performing it. For example, if a farmer promises to sell corn to a wholesaler at $1 a pound for a year, but then the price of corn suddenly rises to $10 a pound, it makes more sense to break the contract than keep performing it at a loss. After all, the law only provides a remedy for the contract price. In this case, the farmer could easily break the promise to sell for $1, pay the wholesaler $1 damages, then sell his corn at $10 a pound for a huge profit.

It might be unethical to break promises, but in circumstances like these, money talks and ethics walks. From the law's perspective, it makes more sense to break a promise than continue performing at a loss. The law actually encourages this unethical result. This demonstrates once again that contracts exist to support our free market economic system, not ethical imperatives.

In our free market economic system, people want to profit from their bargains. If they make a deal, they want their money. Contracts provide them with a weapon to either force compliance with the bargain or force the bad party to pay the expected profit. That is why contracts exist: To ensure that commercial men make their profits. They protect expectations. And contract law is completely indifferent to ethical considerations if they cut against those expectations.

Despite the law's requirements, sometimes ethical considerations wield very strong influence on individual people. And sometimes the imperative to tell the truth is not the only ethical conundrum that intervenes to interrupt a contract.

In the movie, Ray (2004), for example, Ray Charles makes a contract to play several concerts in racially segregated Georgia during the early 1960s. While he leads his band into a concert hall, protestors clamor that he is ethically wrong to support an unjust social custom. At first, Ray says that he has a contract with the promoters to do the show. But then he stops and thinks. Finally, he says: "No, no, they're right. Everybody get back on the bus. We're not doing any more shows at segregated venues." The promoter gets furious and says: "You have a contract to do these shows! I'll sue your black ass for this, Ray, and I'll win!"

Ray had profound ethical qualms about performing a contract that indirectly supported racial segregation. His conscience compelled him to refuse to perform it. But from a legal perspective, the promoter was right: He would win the case against Ray. Contract law cares nothing for ethics; if you make an enforceable contract and you refuse to perform it, it is no excuse to say: "I had an ethical problem with the subject matter." As admirable as that sentiment may be, it would not save you from paying full damages to the other party in a contract case. In this light, contract law once again supports commercial expectations, not ethical imperatives. It even supports commercial expectations when those commercial expectations perpetuate fundamental injustice. As long as there is a bargained-for exchange, the show must go on. Ethics is no excuse.

In hindsight, Ray could have avoided the problem altogether if he had raised his ethical objection prior to making the contract. Ethics can dissuade a person from entering into bargains that implicate ethical problems. But once made, ethics cannot excuse performance.

Still, this is hypertechnical rubbish. Conscience does not always materialize on cue. Sometimes our ethical sensibilities only awake once a contract begins. Perhaps it is not possible to foresee ethical difficulties in a contract until after we strike the deal. Yet the law does not see it that way. Once you make a deal, you are stuck with it, no matter what your conscience says about it. You might be able to shed your obligations by pleading some other, legal, defense. But neither ethics nor conscience is on the list of acceptable legal defenses.

And why should they be? Contracts are about commercial expectations. What does conscience have to do with those? The most successful commercial men easily escape all these issues by adopting a simple tactic: Just don't have a conscience.

Without a conscience, life is easy. You just follow the rules in the contract and go with the flow.

4 comments:

Sarah said...

i thought a verbal contract is still a contract and you should honor it? is the tv program wrong?

Balthazar Oesterhoudt said...

That's true. Contracts can be verbal. I'm not sure what the TV lawyers said, but the common law says that any promise can be a contract as long as it meets the technical requirements, whether the promise is in writing or not.

Problem is, if you say you made an oral contract, you get into difficult proof territory. After all, if you try to hold someone to an oral contract, he comes back and says: "What contract?" Then it just turns into a big, ugly "he said, she said" fight. This is why people put things in writing. It eliminates the "what contract?" defense.

But all this doesn't matter from an ethical perspective. If you know you made a promise, you honor it because your heart tells you, not a court.

angelshair said...

And so many artist like Ray sign non ethical contract...everybody knows it is non ethical, and yet they have to respect the terms. This makes me sometimes if law and justice work together.

angelshair said...

The missing word is wonder :)