Every day, ordinary citizens enter into contracts. However, the extent or frequency to which the average Joe enters into a contract is more than they may realize at first glance. Whether it is getting a haircut or entering a business deal, every individual will at some point enter into a contractual agreement. Contracts have become a regular part of professional and social life. It is the foundation on which business leans to gain stability and accountability. Due to the difficulty of younger generations to gain a holistic perspective on the world of contracts, becoming well-informed on the rights and duties of contracts is now more strenuous than ever. How does Generation Z, when they grow up to become professionals, expect to enter contracts if the state of contract law is hidden beneath a veil of complexity? In today’s modern business world, staying informed about contract law in how it operates, how it pertains to individuals, and how it is evolving will allow individuals to better understand the business realm.
To begin, one must address the heart of what contract law truly is. What exactly is contract law and why does it matter? According to a Briannica piece titled, Contract, from Arthur Taylor Van Mehren, a professor at Harvard University, “Contract, in its simplest definition, is a promise enforceable by law.” [1] The world of contracts is built upon the basis of enforceability and liability. Is the agreement one entered into truly enforceable via the terms of the agreement? If so, who is liable? Within this exchange of terms, a promise is constructed placing both parties in a state of obligation to perform the agreed-upon transaction. Whether the transaction is a landlord providing a lease to a student, a brand new family purchasing a home from a real estate firm, or a team providing a salary to a star athlete, a contract can take on all shapes and forms, but in essence remains an enforceable deal. Both parties in an enforceable contract must perform. Using the example of the sports team, one can draw up a more detailed understanding by crafting a scenario. A sports team drafts a contract with their star quarterback. The value of the contract is $100 Million over 10 years. The team promises to pay the quarterback so long as the quarterback performs his duties on the field and his health reasonably permits him to play. A contract specifies all the reasonable elements. What qualifies as health? How will payment be distributed? What qualifies as a breach of contract? Questions such as these beautifully describe the role a contract plays in our society and the overall significance contracts provide to all parties involved.
Now understanding how a contract acts in theory, it is equally as important to understand how a contract acts in reality. Through the perspective of case law, specifically Johnson V. Walmart Inc., one can see the importance of contracts within business. [2] In 2018, Mr. Kevin Johnson bought Tires for his car via the Walmart website, therefore accepting Walmart’s terms of use. [3] Upon purchase of the tires, Johnson traveled to a Walmart Auto Care Center to effectively install the tires. [4] When he arrived, he purchased a lifetime tire balancing and service agreement for a distinct cost at the shop in person; separate from the online cost he paid for the tires. [5] Johnson experienced several issues with his lifetime tire balancing and service agreement, even so far as being denied his agreement at multiple Walmart locations. [5] From these repeated actions, Johnson brought forward a putative class action against Walmart for breach of contract, amongst other claims. [6] Walmart argued that when Johnson purchased the tires, he not only agreed to all of Walmart’s terms of use but also to a specific provision within the terms of individual arbitration. [7] After much deliberation and examination, the courts determined that the two transactions were separate in a series of related purchases. [8] Why? The courts first examined to see if a true contractual agreement existed between the two parties. [9] After determining the nature of the two transactions, the courts were able to decide whether or not arbitration applied to Johnson, which ultimately did not apply. [10] The Johnson V. Walmart Inc., case shows the average business doer how critical it is to gain a holistic perspective of the atmosphere in which one does business. By knowing if a contractual agreement exists, one can best equip themselves with the necessary tools to ensure security in their business relationships.
Contracts in the world of law have constantly evolved and have been reasonably updated to continuously provide value. However, what is the trajectory of contract law? Where is contract law trending? What will the contract law of tomorrow look like? To best describe the contract law of the future, it is recommended to remember that no one can truly predict the future. One may only offer insight via observation and expertise. Given these ideas in mind, the author of this article provides two following perspectives. The first stems from Stefan Grundmann, Professor of Private Law, European Private, and Business Law at Humboldt University. [11] In his work titled, The Future of Contract Law, he goes on to predict that “...contract law will be more international, interdisciplinary, more interested in the rule-setting process, more market and business oriented.” [12] As contract law has continuously evolved, Professor Grundmann forecasts that contract law will become more involved with business. As business requires experience in various backgrounds such as accounting, management, technology, and many others, contracts will have to interact with each sphere on an international scale to unite them all for the greater good of the business. Conversely, the author of this article offers the perspective of Lawrence M. Friedman and Stewart Macaulay. Mr. Friedman, a Professor of Law at Stanford University, and Mr. Macaulay, a Professor of Law Emeritus at the University of Wisconsin Law School, both offer a vastly different insight into the trends of contract law in the future. [13] According to their piece, Contract Law and Contract Teaching: Past, Present, and Future, the professors go so far as to say that “Not only is contract law not needed in many situations, its use may have, or maybe thought to have highly undesirable consequences.” [14] As reasoned the professors, contend that due to the professional nature of negotiations, the delicate nature of client relationships, and the important reputation of the average businessman among other reasons, contract law may hinder or even damage the way business is conducted, causing unnecessary intricacies between the parties. [15] Thus, the professors conclude, “...it is important to see that contract law very frequently plays no real role in business for all the reasons we have just discussed…” [16] As the two perspectives mentioned above very obviously clash against each other, one must remember one crucial fact: contract law is always changing. The contract law of today will not be the contract law of tomorrow, therefore emphasizing the importance of staying informed. One must best equip themselves for how the world of business will transform. In understanding how contract law operates today, one will effectively fortify their position to brave the winds of change in the business world, no matter when those winds strike.
Contract law is and will continue to be a fundamental aspect of business. Through a deepening of one’s intellectual understanding of the world of contacts in all of its intricacies, one can lucidly better conceptualize the world of business. Broken down to its most basic level, contracts provide a level of reliability. Can one truly predict the future of contract law? No, but one aspect of contract law is unwavering through the test of time: contracts have been, are, and will continue to provide reliability to individuals from all walks of life.
Edited by Nolan Dietz-Velarde
[1] Arthur Taylor von Mehren, "contract." Encyclopedia Britannica, August 13, 2024. https://www.britannica.com/money/contract-law.
[2] Johnson V. Walmart Inc, 57 F.4th 677, San Francisco, California, (2023)
[3] Johnson V. Walmart Inc
[4] Johnson V. Walmart Inc
[5] Johnson V. Walmart Inc
[6] Johnson V. Walmart Inc
[7] Johnson V. Walmart Inc
[8] Johnson V. Walmart Inc
[9] Johnson V. Walmart Inc
[10] Johnson V. Walmart Inc
[11] Stefan Grundmann, "The Future of Contract Law " European Review of Contract Law 7, no. 4 (2011): 490-527. https://doi.org/10.1515/ercl.2011.490
[12] Stefan Grundmann, “The Future of Contract Law”
[13] Lawrence M. Friedman; Stewart Macaulay, "Contract Law and Contract Teaching: Past, Present, and Future," Wisconsin Law Review 1967, no. 4 (1967): 805-821
[14] Lawrence M. Friedman; Stewart Macaulay, "Contract Law and Contract Teaching: Past, Present, and Future," 816
[15] Lawrence M. Friedman; Stewart Macaulay, "Contract Law and Contract Teaching: Past, Present, and Future," 814-816
[16] Lawrence M. Friedman; Stewart Macaulay, "Contract Law and Contract Teaching: Past, Present, and Future," 816
Comments