My Latest Legal Thesis on Reprehensible Contractual Conducts

On May 30, 2022, Oxford University Press (OUP)'s latest volume of Asian Contract Law series was published. It is Volume IV of Studies in the Contract Laws of Asia on Invalidity. As far as I know, this volume took 5 years from the initial drafts to publication. A total of 13 Asian jurisdictions participated in this volume that specifically deals with the problematic contractual behaviors of erroneous belief (fraud, mistake) and reprehensible conducts (duress, unconscionability and unfair exploitation). These problematic contractual behaviors render the contract invalid, so the title of this volume. I am one of the two contributors from South Korea to this volume, writing on how Korean contract law deals with reprehensible contractual conducts and what could be the suggestions for other jurisdictions. I received my free copy of this volume recently.

Front cover of Volume IV on Invalidity, Studies in The Contract Laws of Asia, OUP

In Chapter 13, the chapter that I wrote, I addressed the theme of oppression in contract. The contract law devices that can deal with oppressive behaviors in contract include the legal concepts of duress, conscionability and unfair exploitation, and the more modern systems have developed fair trade regulations which are equally important as, and even more powerful and effective than, the other traditional devices in fighting oppressive conducts in contract.

In this Chapter, I began with the discussion on 'economic duress', arguing that the concept of duress in the Common Law jurisdictions made a theoretically unstable turn by intentionally adopting the factors of degree, as manifested in the Restatement (Second) on Contracts. This novel theoretical approach in the Restatement (Second) on Contracts discarded what could be the 19th century psychological relic of 'fear' from the concept of duress in favor of some objectively sounding new element 'no reasonable alternative', and more importantly, diluted the traditional element 'illegality' by replacing it with 'impropriety'. The design of the new definition of duress may look technical on surface, but this new theoretical approach was made with a specific aim to make duress a matter of 'degree', so that duress can be found by the best discretion of the court who administers this 'degree' in some reprehensive behaviors that would not be considered duress under the traditional approach.

Chapter 13 of Volume IV

Certainly, this new approach was designed with the reformist intention in mind, to combat such wretched situations where the weak are oppressed at the power and resources of the strong by way of contract. The reformists wanted a system in which the law of the traditional duress should be relaxed so as to be applied more generally and frequently.

However, a good intention does not always lead to a good result. This was also the case of the new duress. For certain reasons, the new duress has been found very anemic to combat oppressive conducts that it was intended to combat, and more seriously, the new duress was theoretically unstable, so much that most of the courts have shown a discernible tendency not to entertain its theory and when the courts did entertain it, they were so haphazard in applying this new duress that the theorists even lament the lack of consistency and identifiable principles in application. This has been called "the crisis of identity" in duress.

My thesis in Chapter 13 analyzes that causes of such irregularities of the new duress, and suggests that the duress is not an appropriate place to handle the diverse situations of oppression in contract, as such situations have mostly been identified by the term 'economic duress'. Tersely speaking, my thesis is practically that the term 'economic duress' itself is a problematic coinage. It is because the concept of duress inherently presupposes our underlying perception of 'freedom'. Literally, duress is the antithesis of freedom. Unless we live in a state of nature where no legal rights and obligations pertain, the notion and extent of our freedom is invariably influenced by the notion and extent of our rights. And when one have a right to do a thing, the result of the exercise of that right, if it was not exercised in violation of another's rights, should be tolerated by the system of law, because such is the concept of right and our perception of freedom.

Editors of Volume IV

Therefore, when a reformist tries to expand the notion of duress in order to fight oppression, he invariably infringes upon the existing area of freedom. And this is precisely why the new duress does not work effectively in every jurisdiction where it is adopted. The new duress tries to liquidate our fortified concept of freedom and rights, and while the intention is appreciated, such result is something that the courts find it very hard to entertain. That a justifiable exercise of a right does not constitute duress is one of the most important axioms governing the field of duress, and the new duress is lame to dismantle this strong sense of freedom under which we live our life.

For example, in a jurisdiction where the absolute right of the employer to dismiss the employee is established by virtue of the legal principle of 'employment at will', it is futile to fight oppressive conducts of employers with the concept of duress, because exercise of a legal right cannot constitute duress in the first place. In this case, a reformist's time and efforts should be spent in reforming the employment law itself, not in reforming the duress. The new duress is a red herring. Try to reform the substantive law itself rather than the law of duress. This is what I wanted to argue in Chapter 13.

Also in Chapter 13, I showed that the more powerful and effective legal devices to combat oppressions in contract are what have been known as the law of unconscionability and unfair exploitation (unfair exploitation in the Civil Law is analogous to unconscionability in the Common Law) and the regulatory system for fair trade. Especially, I argued that the laws of unconscionability and unfair exploitation, which have been regarded as a guardian power of the state (courts), actually enforce the very foundational presupposition of our system of freedom, that no one should be restricted in his/her freedom unless through his/her free, unhindered, informed consent given in an agreement on an equal-to-equal basis.

I wrote the chapters in Volumes I, III, and IV of this series of the books on the contract laws of Asia, and this volume IV was especially memorable to me, as it gave me a rare chance to examine the fundamental assumptions of contract and contract law, which are usually taken for granted, on freedom, rights, oppression, and consent.