6.1 Contract as the Realization of Personality

In the previous chapter, I tried to show how the objective realization of personality leads from possession to use to exchange as progressively more adequate confirmations of personality's end-status and therefore as progressively superior properties. Use is superior to possession because it explicitly subjugates to the self the thing that possession leaves independent; exchange is superior to unilateral use because the self thereby renounces the thing on which use is still dependent and receives back from another self (in the form of a free transfer of equivalent value) objective recognition of ownership. Property—in the sense of an objectively valid mastery of a thing—is thus perfected in exchange. The account of contract must take up the narrative of personality's serf-objectification at this point. It must first clarify the transition from use to exchange. Subsequently, it must recognize the structure of dialogic community in the exchange of possessions as well as in the law of quasi-contract that explicates the rights and duties implicit in exchange. Then it must carry the narrative further by asking what form of exchange best objectifies personality's end-status in relation to things.

Though superior to bare possession, use is still inadequate as a realization of personality. In use, first of all, the self is still self-contradictorily dependent on the sensuous thing for confirmation of its mastery of it; it seeks an unconditioned or absolute right to the thing, and yet its right is contingent on the fact of use. In use, furthermore, the self unilaterally excludes another person whose own serf-realization as an end is frustrated by that exclusivity. Because formal right identifies the unconditioned end with the atomistic person, personality's right to subjugate all things is the equal right of each singular person to do so. This right, moreover, involves more than the bare permission to appropriate that formal right isolates. Because

personality is self-inadequate as an end without things, it is impelled to objectify itself; it is not fully an end unless it does so (41). Thus any unilateral exclusion of a person from a thing denies the other's equal right to confirm itself through an infinite acquisition. Because it involves this denial, unilateral exclusion by use cannot generate an objectively valid property.

The alienation of the thing in exchange remedies the two defects inherent in use. In alienating the object, I demonstrate my capacity as a free self to withdraw myself from attachments to material things; and I thereby demonstrate to another self my qualification (as in the life-and-death struggle) to recognize or give objective reality to the end-status of another. If, however, I alienate the thing simply by abandoning it, I lack another self's recognition of my ownership and hence of my end-status in relation to the thing. If I alienate it as a gift, I gain recognition of ownership in the donee's acceptance of the thing as a gift, and he is reciprocally acknowledged as an end through my voluntary surrender of the thing to his ownership. However, the recognition received by both parties in the gift transaction is formal rather than real. Consider, first, the donee. Because the donee does not reciprocally surrender anything to me, he fails to reveal himself in the transaction as a free self capable of renouncing dependence on, and hence of owning, things; thus my recognition of him as an end is formal in the sense that I pay him a tribute he has done nothing to deserve. Equally formal is the recognition of the donor. In accepting the gift, the donee recognizes the donor's capacity to alienate the thing, to transcend particular attachments; yet because the donee has not revealed himself as a free self capable of owning, his recognition of the donor's ownership fails to validate it in a satisfying way. Thus, if the donee receives recognition for a feat he has not accomplished, the donor fails to obtain the recognition he deserves.

Exchange remedies the defects inherent in gift. In exchange, each party alienates a possession to the other, thereby demonstrating his or her qualification as a self to own and to give an effective validation of ownership. Moreover, in receiving back an equivalent value, each obtains the other's recognition of his ownership of the thing he alienates. Each self can defer to the other's ownership without a servile self-denial because each gains control of the very thing he recognizes as belonging to the other and a recognized authority over the thing he abandons. Each renounces a de facto, subjective, and hence inchoate property and receives back a de jure and perfected property (72-74).

The material exchange of possessions instantiates the threefold mediation characteristic of dialogic community. In freely relinquishing my possession to another, I cancel my atomistic isolation and make myself a means to the other's property, hence to his objective confirmation as an

end. His property is no longer infected with subjectivity because it no longer involves a one-sided subjugation of the thing at my expense; rather, his property is now mediated through my free surrender of my possession to his recognized authority. But this surrender establishes his property rather than arbitrary domination only because (and to the extent that) he transfers an equal value to me, reciprocally acknowledging me as an end. The property of each is thus mediated through the parties' mutual self-surrender. Each recognizes the ownership of the other in order that the other might be qualified to give an effective recognition to the first. And because each recognizes the other, each is preserved as an end in his self-abnegation.30 The middle term linking the isolated subjectivities of the parties—the embodiment of their union—is exchange value (77). In renouncing this particular object as well as the value it has in relation to my subjective wants, I obtain recognition of my ownership of its social value in relation to other things. This value is independent of the subjective preferences of either party, and yet it does not submerge their distinctive identities, for it embodies an intersubjective consensus, an overlap of the opinions of both. Each thus cancels his isolated subjectivity and receives back a confirmed dignity as owner within community of exchange value.

That property is completed only within an exchange of equivalent values is the idea that unifies the law of quasi-contract or restitution. According to doctrinal discourse, the law of quasi-contract imposes an obligation on someone who has been unjustly enriched at another's expense to restore or pay for the benefit he has received. Thus, if A pays money to B and fails to receive any part of what he paid for, he has a right to recover the money;31 or if A confers a benefit on B in the mistaken belief that he is indebted to him, A has a right to a restoration of the benefit;32 or if A partially performs services for B under a void contract, he has a right to recover from B for the services already rendered.33 The completion of property in exchange explains the beneficiary's obligation in these cases as well as the nature of the injustice that triggers restitutionary liability. If A confers a benefit on B without intending a gift, B has an objective property in the value received only insofar as he reciprocally recognizes the end-status of A by paying him an equivalent value. Without such a reciprocal transfer, the transaction is servile; one self becomes a means to the appropriation of another without being recognized in turn as an end. But the recognition thereby accorded B does not come from a free self qualified to validate another's property, and so B has no objective right. A has a right to sue for an equivalent value, because the value in the hands of B is not his until he reciprocates the recognition of A.34 B's enrichment is at the expense of A, not in the sense that it involves a diminution of A's wealth (A might be able to pass on his loss), but in the sense that it occurs within a one-sided transaction wherein B is realized as an end through the

subordination of A. And the enrichment is unjust because no property—no objective confirmation of one's end-status—can emerge from such a nonreciprocal transaction.

We have now to inquire whether the material exchange of possessions (through barter or sale) adequately realizes the self as an unconditioned end. To see that it does not, we must recall the precondition for the person's self-realization. To gain confirmation of its end-status in relation to things, the self must first free itself from their hold. It cannot master the world of things as long as it is itself immersed in and dependent on it. In alienating its possession, the person partially revealed its power to withdraw itself from mundane attachments; however, in acquiring something immediately in return, the self was still driven by the particularistic appetite for things, and the rational embodiment of personality was thus still embroiled in the satisfaction of want. Furthermore, the self seeks an absolute or unconditioned worth, a worth independent of locale and time, and yet the self is thus far dependent for validation on the contingent existence here and now of an empirical exchange of possessions. These deficiencies of material exchange reveal the conditions of a complete embodiment of personality. First, to gain confirmation as the end of things, the person must reveal itself to be radically independent of them; second, the person must gain confirmation in a way that is independent of sensuous exchange—in a way that establishes a purely conceptual property abstracted from time and place.

These desiderata bring into view the executory contract, the contract that consists of an exchange not of things but of promises to exchange things in the future (78-79). Here the self decisively renounces subjective appetite as the motive force of action, for his promise signifies the subordination of alterable inclination to the rule of the abstract will. Insofar as he promises, he reveals himself as one capable of achieving this radical emancipation from the objects of momentary appetite and so as one qualified-as a self—to give objective reality to the end-status of another. Insofar as he promises to another, he renounces changeable inclination for the sake of the other's present property in the agreed-to value of something yet to be empirically exchanged. The value of the thing that the promisee will transfer in the future is, by virtue of the promisor's submission, his now in an intellectual present. It is his independently of whether he actually acquires the specific object pledged in return; and it is his now, not in this empirical now, but in a conceptual now in which temporality is reduced and mastered. Moreover, this conquest of temporality is the perfection of property, for it signifies a property in the purely intellectual sense that is alone adequate to the idea of an unconditioned right. But the promise accomplishes this perfect property for the promisee only

insofar as the promisee reciprocally renounces impulse for the sake of the promisor, for only then is the latter preserved as an end in his self-subordination—preserved as a self qualified to give objective reality to the end-status of the other. Given this reciprocal self-surrender, the promise of each is binding, for each now has a valid confirmation of worth in the free submission of the other; and this validated claim of worth is his contractual right to the value of the promise.35

Accordingly, personality's objective realization as an absolute end is a dialogic relationship wherein each renounces subjective inclination for the sake of the definitive property of the other. Since we have here an exchange not of things but of promises, we have a pure relation of will to will that is free of any sensuous admixture. All the elements of the formalist paradigm of contract law are derivable from this simple relationship. To these elements we now turn.

i) The Expectation Measure of Damages. The measurement of contract damages by the value of the promisee's expectation has always puzzled contract theorists. If A reneges on a promise to B, it seems that justice requires compensating B for any benefit he has transferred to A or for any other costs he has incurred in relying on the promise, for B is thereby returned to the position he was in prior to the transaction. Yet the normal rule for contract damages puts the promisee in the position he would have enjoyed had the promise been performed. This remedy applies quite independently of any benefit the defendant has received or of any reliance costs the plaintiff has incurred, for it assumes that the promisor's obligation derives simply from the mutuality of promise. The promisee's moral boundary vis-à-vis the promisor is thus defined not by his holdings prior to their transaction but by his constructive holdings as a result of it. But why does the promisee have a right to the protection of his expectations? Morality might require the promisor to keep his pledge, but why does justice between the parties demand that the promisee gain something he did not previously possess?

There are two common explanations for the expectation measure, neither of which takes it seriously as a principle of justice between parties. Lon Fuller and William Perdue, Jr., argued that reliance costs were the only ones whose compensation was demanded by corrective justice but that the expectation measure was usually the best protector of reliance because of the promisee's lost opportunity to make an alternative bargain. Moreover, they argued, reliance was often difficult to prove, so that a remedy compensating only for reliance would be a weak deterrent to breaches of contract and hence an ineffective way of promoting reliance on promises.36 Economists offer a different rationale. From their perspective, the

expectation measure promotes an efficient allocation of resources because it provides incentives to keep promises only up to the point where a breach would be more efficient than performance.37 If A had to compensate B only for his reliance, he would have an incentive to breach whenever a better opportunity presented itself, even if the profit he would realize would be less than B's. Requiring A to compensate B for his lost profit ensures that he will breach only when his profit from doing so exceeds the profit expected by B.

Each of these explanations has an air of plausibility when considered in isolation from the practice it is supposed to explain, but neither provides a satisfying interpretation of the practice. The account of Fuller and Per-due fails to explain why the expectation measure is applied categorically even where the promisee has lost no equivalent opportunity to bargain and where reliance costs are (as in the case of the half-completed contract) easily proven. In this account, the expectation measure begins to look like a rule that has become detached from its vivifying purpose and that is now mechanically followed whether or not its rationale applies. The theory works, therefore, more as a critique of the expectation principle than as a justification and should thus be accepted only if no theory capable of supporting the expectation measure is available. Furthermore, the argument that the expectation measure is the only effective deterrent of breach encounters the same difficulty that confronts the economist's claim that it is the only efficient deterrent. If the point of the expectation measure were to deter breaches of contract, there would be no necessity to pay anything above reliance costs to the promisee.38

An adequate account of the expectation measure must show why the promisee's present holdings are properly defined by his expectancy, so that a breach of contract infringes his property right even in the absence of reliance on the promise or of a transfer of benefit to the promisor. The foregoing account of contract in terms of the self-objectification of personality meets this requirement. The executory contract is (so far) the best embodiment of personality's absolute worth, because the exchange of promises effects the mutual recognition of ownership in a way that is independent of empirical exchange and hence of material objects. We have here an interaction of abstract wills wherein each is confirmed as an end (an owner of value) through the other's renunciation for his sake of momentary appetite. But this objectified end-status of personality through a purely intellectual (hence atemporal) union of wills is just the present right to the value of the future performance. Since each person's property is decisively confirmed through the other's promise of an equal value in exchange, each acquires a present property in the value promised. Hence a breach of contract infringes a property right irrespective of reliance or of transferred benefit; and the remedy vindicates this right by putting the

promisee in the position he would have enjoyed had the promise been performed.

That the promisee's contractual right is a present property in the value of a future performance explains why compensation for damages and not specific performance is the normal remedy for a breach; and it explains the promisee's duty to mitigate his or her damages. Neither of these rules, we should note, fits within a theory of contract that sees it as a special case of the moral duty to keep promises. Were contractual obligation a species of promissory obligation, one would expect that the promisor would be required to perform his promise rather than pay damages, for otherwise the obligation would go unfulfilled in cases where the promisee suffers no monetary loss. Moreover, if the obligation were a promissory one, the fact that the promisee can mitigate his damages by returning to the market would not affect the extent of the promisor's liability; since his moral duty is to perform the promise, he can hardly demand that the promisee search out alternative bargains to lighten his burden. Holmes was therefore correct to distinguish contractual from promissory obligation and to characterize the former as an optional duty either to perform or to pay damages.39 However, this does not mean that the law imposes a lower standard of right conduct than morality. The reason for the promisor's choice is that his legal obligation is correlative to the promisee's right; and this right, as we shall now see, is respected whether the promisor performs or compensates.

We saw that, since ownership is consummated in exchange, the serf's final property is not in the thing it possesses alone but in the value the thing commands in the marker That the person's property is ultimately in exchange value rather than in a material thing is crucial to its self-validation, because the person cannot be an absolute end (an owner) if it is in thrall to material objects: exchange value thus mediates between the sensuous object and the person. Now the movement from barter to sale to the executory contract involves the progressive emancipation of the self's property in value from material exchange and hence the progressive fulfillment of property. In barter, the exchange value of one's possession is still crudely expressed in terms of some specific object. In sale, it is expressed more conceptually in terms of something—money—that abstracts from the specific character of ail objects, though one's property in value is still tied to the exchange of desired objects, and the self still depends on the object it receives for proof of its mastery of objects. In the executory contract, however, the serf's property is adequately realized in an exchange value divorced from all connection with material exchange, and so this property is now entirely independent of his receiving the specific thing bargained for. But if the promisee's property is in the agreed-to value of the thing he will alienate rather than in the specific thing promised in return, then he

has no right to specific performance.^[*] His property is equally respected whether the promisor fulfills his promise or compensates him for the amount by which the contract price exceeded the market price at the time (normally) of breach.

The promisee's duty to mitigate his or her damages is also explained by the proprietary nature of a contractual obligation and by the intersubjective foundation of property. Because the promisee has a right only to a certain, agreed-upon exchange value, he or she has a right to compensation only to the extent of the difference between this value and the one prevailing in the market at the time when a prudent person would have sought an alternative bargain.40 This difference represents the middle term between the particularistic rule of the parties and thus signifies their mutual recognition. To require the promisor to compensate the promisee for losses the latter could reasonably have avoided is to subordinate the promisor to the caprice of the promisee; while to limit compensation to the difference between the contract price and the best price available between breach and judgment is to subordinate the promisee to the particular interests of the promisor. From neither of these servile relationships can an objective right emerge. Accordingly, whatever the moral obligation of the promisor to perform, his only legal obligation is to pay damages to the extent of the loss in exchange value suffered by the promisee—a loss determined intersubjectively.41

ii) Offer and Acceptance. In this and the following section, I give a philosophical account of the legal elements of an enforceable contract. These are the elements that, as a matter of positive law, distinguish promises one has a coercive duty to keep from those whose obligation is an affair of private morality. We understand these elements when we see them as generated from the theory of contractual obligation set out earlier—and specifically, when we see them as instances of dialogic community.

In contract law, a promise is an offer binding on the offerer only if intended to create legal relations and only when accepted by the offeree. Moreover, the acceptance must be directed toward the offer; there is no acceptance if the offeree, unaware of the offer, makes an identical proposal that crosses the first.42 Third, an acceptance binds the offeror only if communicated to him (though the mailbox rule is an exception). Fourth, whether a form of words or conduct constitutes an offer or acceptance de-

[*] I mean, of course, that there is no such right within the paradigm of formal right. Within this framework, money is always a good equivalent for the lost performance, since every commodity is considered in abstraction from its subjective use value to a particular individual with certain wants and goals. The possibility of a divergence between damages and adequate compensation arises only from the perspective of equity, which takes into account the motives of the parties in entering the contract.

pends on an intersubjective intention, that is, on what someone in the heater's position would reasonably infer about the speaker's meaning. I will try to account for this cluster of rules, leaving aside for the moment the consideration requirement of a binding offer.

We can perhaps already glimpse in the rules of offer and acceptance an instantiation of dialogic community. To draw this connection more explicitly, I will describe the structure of offer and acceptance as a threefold mediation, where the legal force of each term is constituted in relation to the other and to the totality that links them.

Let us first consider the offer. An offer eligible for enforcement is distinguished from a mere statement of intention by the fact that it imports a willingness to surrender one's freedom of action for the sake of the offeree. An offer is a relational promise: it signifies a renunciation of changeable appetite for the sake of another's control of the future. Yet not all offers are candidates for enforcement. An offer directed toward the welfare of someone bound to the offeror by ties of family or friendship is not (in the usual case) legally binding, for such an offer is presumptively not in relation to the end-status of an abstract person. Because enforcement would here exalt the offeree's person above the union whose priority is the basis of family and friendship, it would contradict the essence of these relations. For contract to be possible, there must first be a self who claims absolute worth as an isolated and abstract self and whose claim the offer validates. To be potentially binding, then, the offer of self-renunciation must be in relation to the other as person ; it must be for the sake of the objectified end-status or property of another self external to the self of the offeror. The law expresses this requirement by saying that there must be an intention to create legal relations.43 An invitation to dinner is normally not a binding offer because it has in view the concrete individual whose company is desired rather than the abstract person and its capacity for rights. In this way the binding offer presupposes, or is mediated by, the end-status of the offeree for whose sake it is made. An offer can bind someone otherwise free to change his mind only if it signifies the objective reality of the other's status qua person as an absolute end.

Second, the bindingness of the offer depends on its acceptance by the offeree. If the promise is potentially binding only if offered for the sake of the offeree's end-status, then it becomes actually binding only when it reflects back to the offeree his end-status in relation to the value of the thing relinquished. Because the offer is obligatory only as transforming a subjective conviction of right into an objectively known right, it is binding only at the instant when the offeree self-consciously appropriates the offer, when he apprehends it as conferring on him an objective property in the value of his possession.

So far we have seen how the promise is constituted as a binding offer

only in relation to the offeree's person for the sake of whose self-conscious worth it is made. But further, the offer is not binding until the acceptance is communicated to the offeror. We will understand this requirement when we consider what would follow from its absence. Were the offer binding on an unmanifested acceptance, the offeree would knowingly be master of the offeror's will, but the offeror would not knowingly be master of the offeree; and not knowing whether the offeree was bound to him, the offeror would not be self-consciously an owner of value. He could not, for example, act in reliance on the offeree's being bound. However, this asymmetry is servitude, which, because it subordinates the self of the offeror, can generate no objective right in the offeree and hence no correlative duty in the offeror.^[*] We can see, then, that the bindingness of the offer presupposes not only the person of the offeree but also the totality formed by the parties' mutual self-surrender. The offeror is not bound except through the interaction wherein his end-status is reciprocally confirmed.

Let us now consider the acceptance. Since the bindingness of the offer presupposes acceptance in the way I have explained, acceptance is in turn a power to bind the offeror. The legal force of this power is likewise mediated both by the offer and by the interaction as a whole. First, it is mediated by the offer: the significance of the acceptance is that it is the offeree's awareness of his freedom as mirrored by another self, his seeing his end-status objectively confirmed in the self-surrender of the offeror. Hence the acceptance must be an intentional acceptance of the offer; it cannot be a coincidental agreement with it. Stated otherwise, the bindingness of the offer is just the objectified or known worth of the offeree. It is the normative stamp placed on an offer that succeeds in confirming to the person his or her end-status in relation to things. Because, however, the realized worth of the person is mediated through the offer, it depends on one's consciously apprehending the offer as made for the sake of one's property. Thus an acceptance can bind the offeror only if intentionally directed to the offer. But second, the acceptance has binding power only through the intersubjective totality wherein the offeree is reciprocally bound to the

[*] Does this mean that the "mailbox rule" stating that an acceptance by correspondence is valid when mailed rather than when received is wrong? If the acceptance were not valid until received, the positions would be reversed: the offeror, on receiving acceptance, would knowingly bind the offeree, but the latter, not knowing if and when the offeror had received the acceptance or whether the offer had been revoked prior to receipt, would be in the dark as to whether the offeror was bound. Theoretically, then, we would need a further communication indicating that the acceptance had been received (itself not valid until received), and so on back and forth ad infinitum. The mailbox rule is an attempt to achieve symmetry in the face of the technological problem caused by noninstantaneous communication. On the one hand, a communication of acceptance is required, so that the offeree cannot bind the offeror without manifesting a reciprocal willingness to be bound to him; on the other hand, he can be sure of the offeror's being bound as soon as he mails the acceptance.

offeror. The offer does not succeed in proving the offeree's end-status unless it is the offer of a free self recognized as such by the offeree. This means that the acceptance must be communicated to the offeror in a reciprocal act of self-surrender consciously apprehended as such.

We now focus on the totality formed by the mutual dependence of offeror and offeree. Here we must show how the rules of offer and acceptance dimly reflect the intersubjective nature of dialogic community. I say "dimly" because we cannot expect a contract law ordered to the primacy of abstract personality to preserve and validate as ends the parties considered as differentiated individuals. On the contrary, the totality within which contractual rights are established is an abstract universal—a common will—wherein the parties are present only as identical. Later on, when we deal with the features of the formalist paradigm that are specifically determined by the abstract conception of personality governing this framework, we will point out how the totality comes to be hypostatized as an "objective intention" ranged against the will of the parties and negating their freedom. That is to say, we will deal with the totality under the aspect of its estrangement from the selves it is supposed to vindicate. At this point, however, our interpretive attitude is more conciliatory than critical, for we are concerned to recognize even in the formalist law of contract the lineaments of rationality.

To interpret the bond between offer and acceptance as a manifestation of dialogic community is to reveal it as a middle term between the isolated subjectivities of the parties, independent of either taken separately, yet preserving both in union with the other. The totality's independence from the isolated extremes is reflected in the legal irrelevance of a purely subjective intention.44 The intention that is relevant in constituting a form of words or conduct an offer or acceptance is the reasonably interpreted intention—the intention as mediated through the understanding of the reasonable person in the position of the recipient. Similarly, the judge's guide for interpreting the agreement is said to be the parties' intention, but this intention is determined in accordance with a reasonable understanding of the language used. The intersubjective character of the ruling intention ensures that each party's dependence on the other is compatible with the preservation and equal confirmation of both. Were either the subjective intention of the speaker or the subjective understanding of the listener decisive of contractual rights, one party would be subordinated to the idiosyncratic will of the other. The authority of the intersubjective intention guarantees that each person remains free in surrendering to the other, for he surrenders only through the mediation of the reasonable person in whose reasonableness he participates. Moreover, while independent of the isolated subjectivity of the parties, the totality that grounds their rights and duties is nevertheless formed from an agreement of wills.

It is not a "natural law" in the sense of an externally given order imposing obligations that treat the will as a nullity; rather, it is an intersubjective law proceeding from, and ordered to, the parties' wills as ends. Hence there is no duty on the parties to enter a contract: their positive obligations have a consensual origin in a free offer and acceptance.45 And in interpreting their agreement, the judge is not free to impose a meaning independently dictated by his sense of right reason but is constrained by the language the parties used and the context in which they used it. While independent of either will taken alone, therefore, the foundation of their rights is nonetheless a common will

iii) Consideration. Although there are exceptions with which we shall presently deal, the basic rule is that a promise is not legally binding unless made under seal or unless something of value—consideration—is given in return for it. The doctrine of consideration has been greatly maligned by contract scholars. The fact that promises under seal are binding without consideration has led many to surmise that consideration must be a functional substitute for the seal.46 If the seal's purposes are to evidence an intention to beget legal consequences, to encourage careful deliberation, and to route activity into legal channels, then the doctrine of consideration must have these purposes as well. And then it is a short step to the conclusion that many things (such as a signed writing) besides consideration may perform the evidentiary, cautionary, and channeling functions, so that the bargain requirement begins to look like a fetish if insisted on without regard to contextual features that might make it superfluous. Taken to its extreme, this reasoning issues in a proposal to redefine consideration to mean any good reason for enforcing a promise, of which the existence of a bargain is only one.47

The flaw in this reasoning is the assumption that consideration and the seal are interchangeable means by which to test the legal seriousness of a promise. Those who start from this premise forget that the enforcement of sealed promises in an action for debt long predates the writ of assurapsit from which the modern action for breach of contract derives;48 and they forget too that promises under seal are enforceable only on delivery to the donee. These phenomena suggest that the enforcement of promises under seal rests on theoretical foundations different from that of the enforcement of promises per se.49 In fact, promises under seal are enforced not as executory promises but as executed gifts. A gift does not pass title to the donee until delivered, but the delivery of a sealed deed of gift counts as a symbolic delivery of the object. In the same way, a promise signed, sealed, and delivered passes possessory title to the donee, and the court enforces that title.50 Thus the seal is not an alternative to consideration in trigger-

ing the enforcement of a promise; rather, it is something that (along with delivery) transforms a promise into an executed transfer. By contrast, the element required for the enforceability of a promise as promise is consideration. This distinction will perhaps seem artificial to those who see only the identical act of promising in both cases. However, what matters for our understanding of deeds and contracts is not that the same raw acts of promising underlie both; what matters is the theory behind the legal enforcement of these acts. Before the law attained the sophistication of enforcing executory contracts, it enforced promises by interpreting them as symbolic transfers when accompanied by formalities signifying the crossing of a boundary between promise and "deed." But if the legal theory behind enforcement differs as between deeds and contracts, then the formalities attached to these instruments must also differ in significance, since the only meaning these formalities can have is the one that theory gives them. If promises under seal are enforced only as executed transfers of possessory title, while unsealed promises for consideration are enforced as promises, then the seal provides no hint to the meaning of consideration. The real clue to this meaning is the judges' expressed intuition that consideration for a promise is required in order to give the promisee a right to the value of his expectation. But why should consideration make the difference between a right and no right?

The theory of contractual obligation set forth earlier yields an answer. Whatever evidentiary or cautionary functions the consideration doctrine may accidentally serve, its innermost significance is that it embodies the reciprocity condition for the objectified end-status of the person that we call a contractual right. My promise signifies a surrender of my freedom of action for the sake of the realized end-status of another. But my surrender would be servile without a reciprocal act of self-surrender for my sake. It would not be the surrender of a self that likewise asserts itself as an end, that is radically other than the self of the promisee, and that is thus onto-logically qualified to deliver reality to him. The promisee's end-status requires confirmation from a free self who is himself an end and whose freedom is preserved in his self-surrender. But this means that the promisee must recognize my end-status in order that my promise may succeed in objectifying his. He must reciprocally defer to me, either by performing some service for me, transferring some possession to me, or by renouncing his freedom by a promise. This, I submit, is the meaning of the doctrine of consideration. It is no mere technical requirement, as Patrick Atiyah says, having nothing to do with justice.51 On the contrary, it is a clear manifestation of dialogic community, which, as the overcoming of one-sided relations of domination and subordination, is the very structure of whatever counts as just. It is true, of course, that the courts enforce

some promises in the absence of consideration, and no interpretive theory of contract law can safely ignore these exceptions or dismiss them as mistakes. Later on we will see how (and within what limits) these exceptions are consistent with dialogic community; why they are indeed exceptions--marginalia--to the undiminished centrality of the bargain; and why there is thus no need for a "fundamental restatement" of consideration doctrine, one that would subordinate the bargain to some more general, policy-oriented theory of enforceability.^[*]

The foregoing theory of consideration yields a solution to the controversy regarding preexisting duties. In return for A's promise, B promises A something he (B) already has a duty to give him. Is this good consideration for A's promise? If the preexisting duty arises from statute or from a contract with a third party, B's promise should be good consideration.52 B's self-renunciation must be for the sake of A in order to give A an objective right to the value of B's performance. Since a preexisting duty arising from statute or another contract is not for the sake of A, the promise signifies a deference to A he had not previously received and is thus good consideration for A's promise. Suppose, however, the preexisting duty is a contractual one owed to A himself. In this scenario, B, reacting to an increase in the market price for his goods, extracts extra money from A by threatening to break his contract to supply the merchandise at a time when

[*] The interpretation of the consideration doctrine offered here explains the complex of rules forming the doctrine. For example, past consideration is in general no consideration for a promise; see Lampleigh v. Brathwait, 80 E.R. 255 (1615). If A, in gratitude for a previous favor from B, promises to reward him, the promise will not be enforced. The reason is that unless the favor is for the promise, enforcing the promisee one-sidedly subordinates A to B. Enforcement thus asserts B's power over A rather than recognizing his objective right. Second, consideration must move from the promisee; see Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd., [1915] A.C. 847, at 853 (H.L.). Thus, if A promises to pay B for a service to be rendered by someone independent of B, B cannot enforce A's promise. The promise is servile in respect of B, and so B has acquired no objective right. Similarly, if A promises B and C jointly to paymoney to C but only B pays for the promise, C cannot sue on it because A's promise is servile in respect of him. The obverse of the rule that consideration must move from the promisee is that only a party to whom a promise is made can sue on it; unless equity intervenes, third-party beneficiaries cannot (Tweddle v Atkinson, 121 E.R. 762 [1861]). Thus, if A pays B for a promise to benefit C, only A can sue on the promise. The reason judges give for C's disqualification is that he is a "stranger to the consideration." His problem is not that consideration did not move form him (he could not sue even if he had conferred a benefit on B) but that it did not move to him. We can perhaps now see why this circumstance should disqualify him. B's promise, being directed toward A, objectifies A's end-status alone; hence A alone acquires rights under the contract. No doubt the benefit of the promise is intended for C; but what is relevant to the crystalization of contractual rights is not the benefit to material interests (consideration need not involve such a benefit, as the example of the guarantor of a loan shows) but the objectification of personality as an end. Since B's promise was made to A, it was for the sake of his end-status alone; hence the promise establishes A's right and no one else's.

A is heavily dependent on him. Is B's promise to fulfill the contract good consideration for A's promise of a higher price?

Since A already has a right to the value of B's performance, the actual performance, while beneficial to A's interests, has no additional significance for the confirmation of his person. Hence the promise to fulfill a contractual obligation is not valid consideration for a promise to pay more money, and this is what the courts have generally held.53 Some commentators believe the courts are here manipulating the consideration requirement in order to prevent the exploitation of unequal bargaining power. They see that the promise to fulfill what one has the power to break confers a real benefit on the promisee, and they conclude that there is here ample consideration for a promise in exchange. Their prescription, accordingly, is that the courts should enforce such bargains subject to an open scrutiny for unconscionability.54

There are two misconceptions at work in this reasoning. One is that a benefit to interests is sufficient for consideration; the other is that the doctrines of consideration and unconscionability rest on different ethical concerns. It is generally acknowledged by contract writers that a benefit to interests is unnecessary for consideration, that it is enough if one party restricts his freedom of action in return for a like serf-restriction by the other.55 Thus, if A promises B to pay money to C in return for B's promise to guarantee the loan, B's promise will be binding even if he derives no benefit from the arrangement.56 Similarly, the nephew who gave up drinking and gambling in return for his uncle's promise of $5,000 gave good consideration for the promise whether or not his abstinence benefited the uncle and even though he suffered no detriment to his own interests.57 The theory of consideration we have proposed shows why this is so. The paradigm of formal right views the parties as abstract persons seeking confirmation of their worth in property and ignores the fact that they are also determinate individuals pursuing their particular interests. Accordingly, a consideration is valid if it involves one person's serf-renunciation for the sake of another's mastery of part of the world, and it makes no difference whether any special interest of the recipient is thereby advanced. But the theory that explains why a benefit to particular interests is unnecessary for consideration also shows why such a benefit cannot be sufficient. For a promise to confirm the promisee's worth (and so to be binding), the promisor must be reciprocally confirmed as an end. Hence the consideration moving from the promisee must go to the promisor as a free serf and not simply as a determinate individual with particular interests. To count as consideration, an act must signify a reciprocal submission of one will to the will of the other. Accordingly, the mere fact that some benefit flows to the other party does not mean that consideration does. Where B, by his promise, has already confirmed A's property in the value of B's

performance, no further consideration flows from B's promise to keep his promise; thus A's promise to pay more than originally agreed cannot be enforced without subjecting A to the power of B.58

Second, it makes no sense to castigate the courts for disguising a concern for undue pressure behind the technicalities of the consideration requirement, as if the latter embodied no ethical principle. The judges' refusal to enforce contracts in the absence of consideration rests on the same concerns about interpersonal domination that underlie the doctrine of unconscionability. To be sure, the existence of a bargain is no guarantee against domination, and this is why the framework of equity, with its expanded vision as to what constitutes domination, will give us a doctrine of unconscionability. Nevertheless, the refusal to sanction domineering relationships lies at the heart of the consideration doctrine as well. Moreover, in circumstances where the pressure exerted by the party threatening to breach is indistinguishable from the everyday commercial exploitation of want, the only "undueness" of the pressure consists precisely in the lack of consideration for the extracted promise. The absence of consideration is the element of domination in the relationship.59

iv) Formalist Excuses. The theory of contractual obligation underlying formal right generates two fundamental kinds of excusing conditions. The promisee acquires a contractual right when his end-status is objectively confirmed through the free recognition of another self. Accordingly, he fails to acquire a right either if the submission to his will is not free or if the free submission is not to his will. In either case, the promisee lacks objective reality for his claim of right, and so the promisor incurs no obligation to him. The first condition (the submission is not free) obtains in two types of situation: in those involving nonvolitional events—as when one's hand is forced to scrawl a signature on a document, an offer is altered in transmission, or assent is given by an undeveloped self-consciousness unaware of itself as a purposive agent; and in those involving coerced volition--as when a promise is extracted by threats to interests (life, bodily integrity) that personality cannot, consistently with its end-status, renounce. The second condition (the submission is not to the person seeking enforcement) exists if the free assent of one party issues from a mistake as to the other's identity, or as to the terms the other has proposed, or if it is directed to an impersonation—to an expression of will that masks or misrepresents its true knowledge or intention.60

Since all of these circumstances negate either the freedom of recognition or its relation to the person seeking to enforce a promise, their validity as excuses manifests dialogic community as the foundation of valid rights. However, I wish to focus on the excuse of mistaken terms, since we have here a manifestation that is particularly striking. We can reveal dia-

logic community in the excuse of mistaken terms by explicating the latter in terms of the threefold mediation.

First, A's right, his objectified end-status, is mediated by B's free self-renunciation for the sake of A's ownership of value. If B's submission is not to A's will—if, owing to a mistake about A's proposal, his promise is not in relation to the expression of A's will—then the promise fails to validate A and so A has no right. However, B is excused only if his mistake is "fundamental," only if it goes to the nature of the agreement rather than to a detail, for only then does the mistake totally negate the attornment of B's will to A's.61

Second, A's end-status is not objectified in B's submission unless A reciprocally submits to B and B sees his own end-status reflected in this submission. Thus, if B's acceptance is, due to a mistake about terms, not a self-conscious appropriation of the offer, then B is not validated and so neither is A. Hence A's right depends also on the second mediation, that of B's end-status through him. But third, A's dependence on B's knowledge confirms rather than contradicts his end-status only if he is linked to B through the mediation of an intersubjective totality that, while independent of the idiosyncrasies of both, also contains both. So whether B's mistake breaks the circuit depends neither solely on what B thinks nor on what A knows about what B thinks but on whether a reasonable person in the position of A would know of B's mistake.62 In this way, A's right is finally mediated by the totality formed by the interdependence of the parties.