Dear Friends,
It seems to me, our present paradigm, where you and I are held to every nuance of a contract but those we sign them with are not, and in fact have the ability to change them as they wish… may be lucrative for the politically favored but deadly for our economy. Moreover, as courts erode the protections of contracts for profit, the utility of contracts is eroded. As the utility of contracts is worn away, people will stop using them. A contract is just a written handshake. When dealing with someone dishonest… whose handshake is worthless, even a contract will not keep them honest. So why pay a lawyer tons of money for a worthless piece of paper, that’s expensive simply to enforce? The pragmatist will keep agreements short, instantly verifiable, and without a contract.
A contract is a written handshake. There was a time that a handshake between men was a bond. Once agreed both would diligently work to that end. Contracts were introduced as a way to make complex agreements understandable. Attorneys found that a loophole is profitable, however. So they found lots of loopholes. So many that now if a contract isn’t more than twenty pages it’s useless to hold the other party. Moreover, many “contracts” are written so one party can change it as they see fit merely by sending the other party a letter notifying them the “contract” has been changed in the favor of the party who wrote the contract. This means the agreement is that one party will be the master and the other will be the slave. One held to it to the letter and the other not subject to it at all.
People follow their leaders. As ours became ever more corrupt, self-interested, and liars, those tendencies oozed down to the rest of us. That’s why, over time, contracts became necessary. Handshakes became as worthless as the leaders of society. So corrupted people could do business with honest people… as long as they had an iron-clad contract. Lawyers are no different and became as corrupt as any despot, so exploited clever conniving to render contracts useless. The more they erode the utility of a contract, the more money they make. This becomes a self-enforcing mechanism that can only end in contract law becoming extinct. Why spend gobs of money to get a contract that will cost gobs of money to enforce? That doesn’t make sense.
Lately there is a trend of companies using “contracts” that they aren’t held to but their customers and employees are. Labor contracts today are mere suggestions to the corporation, but wrought iron manacles to the employee. Every company you do business with sends you notices of how they have changed the contract in their interest and against yours. It’s in the “terms of service agreement.” They change willy-nilly depending on the executives mood. I wonder, what good is such a “contract?” It’s of no use whatsoever to the employee or customer. Try sending a letter to a corporation changing the terms of service and see how the courts enforce that. You’ll be laughed at as the same judge holds you to a new clause in the “contract” forcing you to work for them for free. Money is an analogue of labor.
An economy where contracts are useless will be impoverished. Why? Because business can’t be done. That economy will grind to a halt. How can you build a factory if every contractor will screw you over? How do you buy products and services if you know they will harm your interests? Why would anyone participate in an extractive economy? Everyone is self-interested, not only the politically favored and lawyers. When confronted with a lose lose game… no one will play. The economy collapses like a balloon with a gaping hole. This is inevitable because the incentive structure insures it. As long as there is profit in undermining contract law, it will be undermined. Eventually making it an expensive boondoggle. So if you want a thriving economy, contracts must be enforced on everyone.
Sincerely,
John Pepin
