Investment, Information, and Promissory Liability

In Contracts Without Consent: Exploring a New Basis for Contractual Liability, Omri Ben-Shahar, a talented and creative economic analyst of law, advocates a principle—which he calls the “no-retraction” principle—that is so at odds with the existing structure of the common law of contracts as to basically turn contract law upside down. BenShahar’s no-retraction principle would radically alter the line between agreement and no agreement, between liability for unkept promises or assurances and no liability for such unkept promises or assurances. Indeed, under a no-retraction regime, there would be no line between agreement and no agreement, and contractual liability could exist even in the absence of any communication (or what Ben-Shahar calls a “proposal”) at all. Transactions could be forced upon parties who want nothing to do with them—either because they’ve walked away from failed negotiations or because they were never in any negotiations to begin with—but only on the terms that were or would have been demanded by the unwilling party. By incurring reliance expenditures early in a contractual negotiation (or, apparently, before a negotiation had even begun), a relying party could hold the other negotiating party liable for those reliance expenses, regardless of