Michigan Journal of Race and Law Volume 11 2005 "We Insist! Freedom Now": Does Contract Doctrine Have Anything Consitutional to Say? Hila Keren Hebrew University of Jerusalem Follow this and additional works at: https://repository.law.umich.edu/mjrl Part of the Constitutional Law Commons, Contracts Commons, and the Law and Race Commons Recommended Citation Hila Keren, "We Insist! Freedom Now": Does Contract Doctrine Have Anything Consitutional to Say?, 11 MICH. J. RACE & L. 133 (2005). Available at: https://repository.law.umich.edu/mjrl/vol11/iss1/8 This Symposium Article is brought to you for free and open access by the Journals at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Michigan Journal of Race and Law by an authorized editor of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. "WE INSIST! FREEDOM NOW"t: DOES CONTRACT DOCTRINE HAVE ANYTHING CONSTITUTIONAL TO SAY? Hila Keren* On a daily basis countless people are refused contracts due to discrimination on account of their "Othemess "--their race, their disability, their gender, etc. Many of them are not welcomed by hotels, denied service in restaurants, rejected by banks when asking for a mortgage loan, and so on. The variety of transactions that are denied and the breadth of human interaction that they affect are simply overwhelming and result in afundamental exclusion from the marketplace. For years contract law has ignored this problem, while exclusive responsibilityfor contractual discrimination has been reserved for constitutional law and the antidiscriminationstatutes that were enacted to fulfill egalitarianideals. This Article attempts to break the contractual silence and to bridge the huge gap between discrimination and contracts by pressing up against traditional legal boundaries. Drawing on a broad understanding of the Thirteenth Amendment, as a promise of an egalitarian and mobile economy which heavily relies on contracts, the Article calls for addressing the problem of precontractual discrimination with contractual tools. Such a possibility has until now remained by and large unexplored, but as this Article seeks to show, it is an achievable and powerful step that can be well- integrated into up-to-date contract theory. t Max Roach's protest album "We Insist! Freedom Now Suite" (Candid/Columbia, 1960) is one of the defining statements of America's Black civil rights movement. The adoption of Roach's album-title here reflects the theme of this Article-the insistence on the urgent need to take better care of the freedom TO contract in order to ensure more equality. * Faculty of Law, Hebrew University of Jerusalem; Visiting Scholar (2003-2005) Center for the Study of Law and Society, Boalt Hall School of Law, University of Califor- nia, Berkeley; LL.B, PhD., Hebrew University of Jerusalem. For thoughtful comments and helpful suggestions along the evolvement of this project I would like to deeply thank: Kathryn Abrams, Hadar Aviram, Ian Ayres, Omri Ben-Shahar, Yifat Bitton, Eyal Diskin, Danny Evron, Tamar Kricheli-Katz, Kurt S. Keren, Michelle Oberman, Lateef Swain, Suzan Verberk, Neil Williams and Eyal Zamir. Special thanks to Amrita Mallik and Elise Beyer of Michigan Journal of Race & Law for their excellent suggestions and generous help throughout the editing process. I am also grateful to the Center for the Study of Law and Society in Berkeley for a unique interdisciplinary and international research environment and to the Hebrew University ofJerusalem for generous financial support. Michigan.Journalof Race & Law (VOL. 11:133 The Article first exposes the detachment between contract doctrine and the scattered antidiscriminationnorms and analyzes the harmful consequences of this detachment. It then creates an original meeting point between the two bodies of law, one of which is intentionally located within contract doctrine. This point isfound by dismantling the dominant concept of "freedom OF contact", and especially by defining and establishing thefreedom to make a contract. The novel insistence on the 'freedom TO contract," which gives the Article its name, is to be enforced, as proposed, through the duty to negotiate in good faith. Breaking contractual negotiationsfor discriminatory reasons, it is argued, should be seen as illegitimate business behavior, as an overt expression of badfaith that carries liability. One basis for imposing such precontractual liability can be found by applying to the issue of discrimination the "no-retraction" principle that was recently developed within the economic school of thought. Such reasoning is part of a more general effort to go beyond the opposition between equality and freedom by answering affirmatively the question raised by the Articles' title: contract law has something constitutional to say and it is the commitment and enforcement of the essentialfreedom to contract. INTRODUCTION ........................................................................ 135 I. THE CONSTITUTIONAL PROMISE OF EQUAL CONTRACTING AND ITS STATUTORY IMPLEMENTATION .................................... 142 A. The Thirteenth Amendment ........................................ 143 B. Civil Rights Act of1866 (42 US. C 5 1981 and 5 1982).. 145 C. Additional Civil Rights Legislation ............................... 147 1. Civil Rights Act of 1964 (42 U.S.C. § 2000) ...... 147 2. Civil Rights Act of 1968-Fair Housing Act ...... 148 D. Mrs. Murphy's Exemption .......................................... 149 E. Summary: Efforts and Hurdles ..................................... 151 II. THE SOUND OF SILENCE: How CONTRACT DOCTRINE TREATS THE PROBLEM ............................................................ 152 A. Ignoring the Problem Altogether .................................... 152 B. Marginalizing the Problem.......................................... 155 C. Anti-Antidiscrimination:The Problem will Solve Itself ........ 156 D. Summary: Contractual Hush ....................................... 157 III. THE TRADITIONAL STRUCTURE OF THE DILEMMA ..................... 158 A . Private v. P ublic ....................................................... 159 B . E conom ic v. Social .................................................... 161 C . J' hite v.B lack ......................................................... 162 D. Summary: Multilayered Segregation............................... 163 IV RECONSTRUCTING THE DILEMMA ........................................... 163 A. The Logic: The Harm of External Treatment .................... 163 FALL 2005] "We Insist! Freedom Now" 1. Locking the O utsiders O ut .................................164 2. The Harm to the Individual Self .........................165 3. The Boom erang Effect .......................................166 4. Summary: The Need for Reconstruction ............167 B. A ContractualModel: A Myriad of Freedoms of Contract..... 168 1. Freedom IN Contract .........................................169 2. Freedom FROM Contract .................................170 3. Freedom TO Contract .......................................172 4. The Added Value of Competing Freedoms .........176 V. SUPPORTING THE FREEDOM TO CONTRACT ............................179 A. The PrecontractualDuty of Negotiating in Good-Faith....... 179 B. The "No-Retraction" Basis of Liability .......................... 183 1. The No-Retraction Principle .............................183 2. T he B asic M atch ................................................185 3. The U nwanted Partner .......................................186 4. Further Im plications ...........................................187 C O N C LU SIO N .............................................................................190 "The subject of 'Freedom of Contract and Constitutional Law' has provoked little discussion in the United States." -E.Allan Farnsworth, 19981 INTRODUCTION Jackie Robinson was an extraordinary baseball player, but until 1947 he, like every other Black player before him, was not allowed to play in the Major Leagues.2 The team owners refused to contract with him be- cause of his race. Later, when he traveled with his team, the Brooklyn Dodgers, he was often not allowed into the hotels where his White teammates spent the night. The hotel owners refused to contract with Blacks.3 Stories of this type are all too frequently told in past tense, often opening with words such as "once upon a time," as if to soothingly 1. E. Allan Farnsworth, Freedom of Contract and Constitutional Law: United States Report, in FREEDOM OF CONTRACT AND CONSTITUTIONAL LAW 261,261 (Alfredo Mordechai Rabello & Petar Sarcevic eds., 1998). In the memory of Prof. Farnsworth who passed during the final stages of writing, this Article is a humble attempt to break this silence. 2. See generally American Treasures of the Library of Congress, http:// www.loc.gov/exhibits/treasures/tri042.htmnl (last visited Nov. 11, 2005); The Jackie Rob- inson Foundation, http://www.jackierobinson.org/aboutjackie/imdexO3.htm (last visited Nov. 11,2005). 3. See PETER GOLENBOCK, ThAMmAT s (1990). MichiganJournal of Race & Law [Vor. 11:133 indicate the anachronistic nature of the reality related therein.4 This is a misleading tone. Decades have passed but discrimination is still here with us, stubbornly surviving years of social and legal combat. On a daily basis, countless people are refused contracts due to dis- crimination on account of their "Otherness"-their race, their disability, their