Deconstruction of Fairness in Contract Law

This is Volume III of The Studies in the Contract Laws of Asia, the series by Oxford University Press on Asian contract laws. It was published in 2020. This book deals with the contents of contracts and unfair terms. In this book, I wrote Chapter 11 on regulations of unfair terms, especially under Korean Law.

Volume III of The Studies in the Contract Laws of Asia, Oxford University Press

In fact, Chapter 13 of Volume IV published in May 2022 on regulations of reprehensible conducts (see the previous post: https://www.atyartnsound.com/post/my-latest-legal-thesis-on-reprehensible-contractual-conducts-in-korea) and Chapter 11 of Volume III are a pair, where Chapter 13 of Volume IV finally made some sort of conclusions on the discussion of a theme started by Chapter 11 of Volume III.

Here in Chapter 11 of this book, I tried to show how the problems of fairness are conceived and tackled in contract law, particularly by taking the examples of the Korean law. Needless to say, fairness is a big topic, and it would be fortunate to start and wrap up any discussion of fairness in one chapter with the limitation of 10,000 to 12,000 words. It would be particularly so when you are dealing with fairness not as a problem relating to a specific issue, but as a conceptual framework of contract law as a whole of a jurisdiction.

So I began with enlisting the legal devices of Korean contract law which can be called upon to address the problems of fairness. The Civil Codes contains such devices as the regulation of unfair exploitation, the control by the 'Social Order', the control by the mandatory provisions, and the control by the Good Faith principle. The other devices include the regulations of adhesive contracts (also known as the standard contracts), the protection of consumers, and the regulatory systems against unfair trade practices.

I did not like to write an omnibus style chapter on the contractual regulations under Korean law. Rather, I tried to string all these discussions with a single thread that is our quest for the meaning of fairness in contract law. But, this was never a quest to positively establish the meaning of fairness in law. Instead, the project that I undertook in Chapter 11 was to unhinge the discussion of fairness from the conventional bias in the legal circle, especially in Korea.

Chapter 11 of Volume III

As a matter of contract law in Korea, fairness has been perceived as a correcting principle to the doctrine of freedom of contract. The doctrine of freedom of contract, also known as the doctrine of party autonomy, is the backbone of contract law, of course. But, the Korean contract law traditions, in the course of their learning of the German legal traditions, began to see more problems than not in the dogma of freedom of contract. Inspired by the German traditions, they began to develop a certain idea of communal cures to that evil known as laissez-faire. They found their solace in the German idea of fairness. Understood as such, fairness should be an antithesis to the free market, a correction to the anarchy of individual powers unhindered by the communal stewardship. The Korean legal traditions pushed the notion of fairness to the position of the overarching principle in contract law, in the name of 'social welfare', to which even the principle of freedom of contract must be subordinate. This has been the mainstream scholarly position in Korea for decades.

So, it has been the common practice in the scholarly writings and debates in Korea, that whenever the topic of fairness is brought up in the context of contract law, the principle of fairness should exist to 'protect the socially and economically weak party' of the two. As I said in the chapter, this has almost been a 'mantra' in the discourse of contract law.

My project in Chapter 11 was to deconstruct this bias. I showed in Chapter 11 that the concept of fairness is so diverse in law and in practice, actually, that there is nowhere, not even in a single locus in the system of contract law, any legitimate ground that can be alluded to in order to support the dogma of social welfare over freedom of contract. True, fairness acts in various places of contract law through the multiple legal devices. But, in the majority of cases, fairness is actually called upon in order to enforce the traditional individualistic ideal of freedom of contract, not to enforce a communal ideal of social welfare. The courts never agree that their functioning in equity takes precedence over the general law of freedom of contract. To the contrary, while the courts are very much mindful of appearance of fairness in contracts, the courts are adamant that freedom of contract is the principle and its restrictions are exceptions. Indeed, the courts see to it that fairness is only a 'cure' but should not be an upheaval. The only legal devices that have manifest aims of 'protecting the socially and economically weak' are various legislations, for example, for protection of consumers and for protection of the trade order of the market. But, such legislations are very clearly circumscribed in their range of application; they never claim their general dominance over the contract law principles.

Throughout the chapter, I had to proceed on the assumption that there might be certain concrete notion of fairness that we all share. But, by the end of the chapter, the only conclusion that I was able to make is that: "it is more appropriate to suggest that fairness aims to look after the very basic premises of contract law and displays constant diligence in heeding society's sense of justice that changes with time."

It was like I began with a sense of fairness, but ended up with a far unclear sense of fairness. And actually, that is what a deconstruction is.

Jacque Derrida says:

What we ... call the erasure of concepts should mark the places of that meditation to come. For example, the value of transcendental arche must make its necessity felt before letting itself be erased. The concept of arche-trace must accede to both that necessity and that erasure. It is in fact contradictory and unacceptable within the logic of identity. The trace is not only the disappearance of origin, it would say here ... that the origin did not even disappear ....