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In this article, the author challenges the received wisdom of "gap-filling in the absence of consent" by showing how the concept of default rules bolsters the theoretical importance of consent. He accomplishes this by expanding and refining his analysis of a "consent theory of contract." The author proposes that the concept of default rules reveals consent to be operating at two distinct levels of contract theory. First, the presence of consent to be legally bound is essential to justify the legal enforcement of any default rules. Second, nested within this overall consent to be legally bound, consent also operates to justify the selection of particular default rules.

In part I, the author elaborates in some detail on the essential social functions that consent plays in the liberal conception of justice and the rule of law. He discusses how the consensual element of contract that comprises the liberal principle of freedom of contract addresses the pervasive social problems of knowledge and of interest. Freedom of contract entails both freedom to contract-the power to effect one's legal relations by consent-and freedom from contract-the immunity from having one's rights to resources transferred without one's consent. Working together, these two components of contractual freedom harness the personal and local knowledge possessed by individuals and associations by enabling them to put their own knowledge into action while taking into account the vast knowledge possessed by others of which they are necessarily ignorant. Moreover, these components of contractual freedom also address the problem of interest by providing incentives both to use the knowledge in one's possession and to take into account the knowledge of others.

In part II, the author uses this functional analysis of consent to explain the important justificatory role played by manifestations of consent. He shows how, by manifesting their intention to be legally bound, contracting parties are implicitly committing themselves to the jurisdiction of a legal system that is thereby justified in using the background rules of contract law to fill the gaps in their agreement. Under certain circumstances, this "consent to jurisdiction" would also justify the enforcement of any promulgated set of default rules. In sum, a consent to be legally bound provides a necessary but only sometimes sufficient justification for enforcing whatever set of default rules may be promulgated by a legal system.

In part Ill, the author argues that, within a consent theory of contract, silence can be meaningful and that its meaning should influence our choice of default rules when the circumstances described in part II are absent. He defends his "consent theory of contract" against Richard Craswell's recent criticism that, whatever other justificatory virtues it may have, a consent theory of contract cannot assist in selecting among possible default rules. In particular, the author shows how a consent theory provides two compelling reasons to choose default rules that reflect the conventional or commonsense understanding existing in the relevant community of discourse. First, conventionalist default rules are likely to reflect the tacit subjective agreement of the parties and thereby facilitate the social functions of consent. Second, when parties have asymmetric access to the background rules of contract, enforcing conventionalist default rules will reduce subjective disagreements by providing parties who are rationally informed of the background rules with an incentive to educate those parties who are rationally ignorant of these rules. This, too, facilitates the social functioning of consent. In sum, where a consent to jurisdiction exists but is insufficient to justify the enforcement of any promulgated set of default rules, consent justifies the enforcement of conventionalist default rules.

In part IV, the author takes up the issue of why objective or manifested consent can be considered as "real" or genuine as subjective consent. He discusses how the concept of default rules not only reconciles the idea of gap-fillers with consent as the basis of contractual obligation, but also may justify a more radical change in the legal system that makes contract law. In particular, it may support a horizontal legal order composed of competing legal systems, in contrast to the relatively vertical, monopolistic legal order we live in today. Finally, in Part V, he concludes by briefly discussing the difficult methodological problem of determining the commonsense or conventional meaning of silence.

Publication Citation

78 Va. L. Rev. 821-911 (1992)