Document Type

Book Chapter

Publication Date

9-22-2022

Abstract

Contract theorists naturally focus on the duty to perform. This chapter argues they should also pay attention to duties of candor in the contracting context. The most obvious example of such duties can be found in the misrepresentation defenses, which aim to ensure that contractual undertakings are sufficiently voluntary and to allocate the costs of defective consent. But other laws of deception, such as the torts of negligent misrepresentation and deceit, are also integral to the law of contracts. Separate liability in tort for both pre- and post-formation misrepresentations helps parties who mistrust one another determine whether an exchange is in their mutual interest and maximize the gains from it. Like liability for breach, these torts enable persons to engage in joint endeavors that might otherwise fail for lack of trust, thereby expanding their autonomy. Application of the misrepresentation torts in the contracting context also requires sensitivity to market norms that determine both when there is a misrepresentation and whether it is wrongful. If the goals of contract law include establishing socially desirable market structures and recognizing the distinctive moral relationships in them, laws of deception are essential to the project too. In these and other ways, duties of candor are as integral to contract law as is the duty to perform.

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