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Kevin E. Davis & Mariana Pargendler, Contract Law and Inequality, 107 Iowa Law Review 1485 (2022)


Abstract: Does contract law have any role to play in tackling economic inequality, one of the most pressing problems of our time? The orthodox answer to this question is no: Contract law should promote autonomy, efficiency, and/or justice in exchange, while distributive objectives should be dealt with exclusively through the fiscal system. While scholars have often debated the question of whether contract law should be reformed to address inequality, that question misses the reality that, at least in some contexts, it already does. This Article shows how courts in South Africa, Brazil, and Colombia—prominent developing countries from different legal traditions —have diverged from orthodoxy to embrace the task of using contract law to address inequality. The emergence of contract law heterodoxy in developing countries draws attention to the existing, if more limited, instances of heterodoxy in the contract laws of the United States and Europe and to the stakes of contract law more generally. This analysis highlights how mounting inequality may increase the appeal of contract law heterodoxy and suggests that the present reign of contract law orthodoxy is neither universal nor inevitable.