Columbia Law School Scholarship Archive Faculty Scholarship Faculty Publications 2020 The Case Against Equity in American Contract Law Jody S. Kraus Columbia Law School,
[email protected] Robert E. Scott Columbia Law School,
[email protected] Follow this and additional works at: https://scholarship.law.columbia.edu/faculty_scholarship Part of the Contracts Commons, Criminal Law Commons, Criminal Procedure Commons, and the Legal Remedies Commons Recommended Citation Jody S. Kraus & Robert E. Scott, The Case Against Equity in American Contract Law, 93 S. CAL. L. REV. 1323 (2020). Available at: https://scholarship.law.columbia.edu/faculty_scholarship/2537 This Article is brought to you for free and open access by the Faculty Publications at Scholarship Archive. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Scholarship Archive. For more information, please contact
[email protected]. THE CASE AGAINST EQUITY IN AMERICAN CONTRACT LAW JODY P. KRAUS* & ROBERT E. SCOTT† The American common law of contracts appears to direct courts to decide contract disputes by considering two opposing points of view: the ex ante perspective of the parties’ intent at the time of formation, and the ex post perspective of justice and fairness to the parties at the time of adjudication. Despite the black letter authority for both perspectives, the ex post perspective cannot withstand scrutiny. Contract doctrines taking the ex post perspective—such as the penalty, just compensation, and forfeiture doctrines—were created by equity in the early common law to police against abuses of the then prevalent penal bond. However, when the industrial revolution pushed courts to accommodate fully executory agreements, and parties abandoned the use of penal bonds, the exclusively ex ante focus of the new contract law that emerged rendered the ex post doctrines obsolete.