Paternalism and contract law

Contract law is a body of legal rules that pertains to the enforcement and regulation of voluntary private transactions: it provides a normative framework for the social practice of contracting. At least a limited version of freedom of contract may be supported by autonomy-based, welfarist and aretaic (virtue-based) arguments. Paternalism seems antithetical to freedom of contract yet contract law is pervaded by prima facie paternalistic rules. Statutory rules and legal doctrines provide a range of instruments for paternalistic intervention either in the soft sense of protecting or promoting the interests of not fully voluntary contracting parties - formation defenses, procedural requirements (formalities, cooling-off periods), information disclosure rules - or in the hard sense of overriding contracting parties’ will by mandatory substantive rules. This chapter suggests classifying prima facie paternalistic contract law rules and doctrines as constitutive, procedural, informational, and substantive limits to freedom of contract. It also discusses nonpaternalistic rationalizations of some of these rules in terms of justice, the social protection of autonomy or dignity, or as responses to third-party effects or collective action problems.