October 15, 2014

Should abstract justice displace contract law?

By Wen Fa Attorney

The Texas Supreme Court is currently considering one of the most important contract cases in recent years. In Plains v. Torch (our shortened name, for the sake of convenience), two oil companies dispute the rightful owner of a 43 million dollar award that one of the parties (Plains) obtained from the federal government. Both parties argue vigorously about the meaning of the contract, but both agree that the contract should decide the winner of the dispute. Yet the lower court sent this case to a jury so that jurors could consider an equitable “money-had-and-received” claim, and distribute 43 million dollars guided not by the words of the contract, but by vague philosophical notions of “good conscience” and “abstract justice.”

Pacific Legal Foundation filed an amicus brief today asking the Texas Supreme Court to decide this contract claim by looking at the contract itself. A contrary interpretation that uses abstract justice to decide contract cases would demolish the expectation interests of the parties and is not a tenable rule for law or commerce. The freedom of contract is the right of any person to form a mutually beneficial agreement with anyone else. And that right should not be limited by a single quote from a single philosopher–or even twenty quotes from twenty philosophers.

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