prior probability

Thus far, we have surveyed the work of moral theorists to solve the breaking bad problem, i.e. to figure out what the moral status of an illicit promise is. What if we were to take a different approach, however, one informed by the common law? It turns out the common law has developed quite a sophisticated and nuanced body of principles and doctrines in response to a wide variety of ethical dilemmas and moral puzzles that have occupied the attention of so many moral theorists. Simply put, whether we are in the realm of promises, or in the realm of intentional harms like fraud or deceit, or in the realm of justification, such as the classic defenses of necessity and excuse, one cannot help but notice a significant overlap between moral philosophy and the common law. To put it in colloquial terms, perhaps moral philosophers could learn a thing or two from the common law.

With this broad overlap in mind, let us return to our particular puzzle regarding the moral status of “bad” or illicit promises. Specifically, how could the common law inform our analysis of the breaking bad problem? One possibility is to draw a distinction between void and voidable illicit promises. Generally speaking, a voidable contract can be enforced at the option of one of the parties. Contracts tainted by mistake, duress, or even fraud, for example, are voidable at the option of the innocent party. A void contract, by contrast, does not produce any legal effects. Either way, the key to this distinction is the location of the harm caused by an illicit promise. Where does the harm fall? Consider the law of illegal bargains. Common law courts have developed a sophisticated body of legal principles and judicial doctrines in this area. In brief, courts have generally classified illicit agreements into two broad categories: (i) those that are immoral or mala in se, and (ii) those that are merely illegal or mala prohibita. A promise involving some form of moral turpitude is malum in se and is void, while a promise in violation of a commercial statute or an economic regulation is merely malum prohibitum and is usually treated as “voidable” by the innocent party.

With this common law background in mind, we could thus picture a continuum in which non-morally objectionable promises occupy one end of the moral spectrum, totally immoral or mala in se promises fall on the other end of the moral spectrum, and so-called “voidable” promises fall somewhere in the middle of the spectrum. In other words, just as the common law recognizes different degrees of contract validity by distinguishing between void and voidable illegal bargains, we could similarly allow for different degrees of promissory duties depending on the type of harm caused. Alternatively, we could ask a different question. Instead of trying to quantify the level of harm, we could ask about the location of the harm: who is harmed when an illicit promise is made? On this view, “bad” or illicit promises would fall into one of four general categories: (i) promises that harm the promisor, i.e. the person making the promise; (ii) promises that harm the promisee, i.e. the person receiving the promise; (iii) promises that harm both the promisee and the promissor; and (iv) and promises that harm a third party. The point of this fourfold classification scheme is to help us distinguish between void and voidable illicit promises

Notice that my common law approach to illicit promises does not ask us to quantify the amount of harm to be caused or estimate the probability that the harm will even occur; instead, it only asks us to determine where (on whom) the harm of an illicit promise will fall. We could thus formulate this framework in the form of a question: when someone makes an illicit promise, whom does the promise harm? Here, then, is my common law solution to the breaking bad problem. Promises in which the harm is external, such as any promise to harm a third party, must be considered void ab initio, i.e. promises with no moral standing or moral force. At the same time, promises in which the harm is internal are voidable, i.e. promises in which no third party is harmed but either the promisor or the promisee or both will be harmed. In these cases of purely internal harm, the party to be harmed could exercise a “moral veto” over the illicit promise. In other words, the moral status of the voidable promise should depend on the wishes of the party to be harmed. I will apply this solution to some examples of illicit promises in my next few posts.

Void versus voidable agreements.

Degrees of harm (image credit: Kenzie Amsden).

In my previous post, I described one possible solution to the breaking bad problem: deny that an immoral promise is a promise. I also explained why such a philosophical solution does not work. Why not? Because a promise is a promise, regardless of its content. In this post, I will consider another possible solution. Some moral philosophers, most notably Margaret Gilbert as well as James Altham, are willing to concede that an illicit promise is, in fact, a promise, but they argue that such a promise does not generate a morally binding obligation on the promisor (the person making the illicit promise). Alas, this solution also borders on sophistry. Why? Because a promise, by definition, is something that is supposed to be binding. Philosophers like Altham and Gilbert want to have their cake and eat it too!

In short, the problem with both solutions we have seen thus far boils down to this: there are two competing moral principles in direct conflict with each other whenever someone makes an illegal or immoral promise: (i) the general obligation to keep one’s promises, and (ii) the general moral obligation to avoid harming others. To say that such promises are not morally binding or that “bad” promises are not promises simply begs the question we are trying to answer: Is there any way to reconcile these competing moral claims? Some philosophers would have us weigh the obligation generated by a promise against the obligation to avoid harm. In the words of Vera Peetz, for example, “the obligation to keep a promise may, of course, be over-ruled by some stronger obligation.” But this conclusion begs the question of what makes any given moral obligation stronger or weaker in the first place. After all, the breaking of a promise can be seen as a harmful act; how does one weigh such competing harms?

Is there a solution to the breaking bad problem? If there is, our philosopher friends have yet to find one. What if, however, we were to take a different approach–one informed by the common law? Common law courts have developed a sophisticated body of legal principles and judicial doctrines to deal with the problem of illegal bargains, so I shall turn to the common law tradition in my next few posts.

In my previous post I explained why illicit promises generate a moral paradox: promises are supposed to be morally binding, but what about a promise to perform an illegal or immoral act? Broadly speaking, moral philosophers have offered two plausible escape routes to this dilemma. One solution is simply to deny that an immoral promise is a promise. The other is to concede that an immoral promise is, in fact, a promise, but not a morally obligatory or binding one. Neither solution, however, really works. Let’s take a look at the first solution first. Some moral theorists have defined valid promises in such a way as to exclude promises to perform immoral or illegal acts. On this view of promising, a wicked or immoral promise is not morally binding or obligatory because such a promise is not really a promise in the moral sense. In particular, this line of argument focuses on whether a promisor has a moral or legal right to perform the promised act. Simply put, if one does not have a right to perform X (where X is some immoral or wicked act), then a promise to do X is a defective promise.
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Illicit promises–like a promise to obstruct justice or Shylock’s pound-of-flesh pact in The Merchant of Venice or the usurious loan agreement at the center of the Buckeye Check Cashing case or the other examples in our previous post–pose a contradiction or moral paradox. The paradox is this: If bare promises are morally binding, a position subscribed to by most, but not all, moral philosophers, then an immoral or illegal promise poses a potential “moral antinomy” (see image below): the moral obligation to perform an immoral or illegal action.

The contradiction that occurs in the domain of illicit promises thus consists of the moral dilemma between moral duty D (the general moral obligation to keep one’s promises) and duty D’ (the general moral obligation not to harm others or commit wrongful acts). How do moral philosophers solve this dilemma? We shall see two possible philosophical solutions in my next post. Spoiler alert: both of these philosophical solutions are going to be unsatisfactory.

Image credit: Carneades.org

Let’s resume our legal and moral analyses of illicit promises, shall we? Why are such promises worth studying? Although the idea of an illicit promise may sound esoteric, exotic even, such promises are not infrequent, especially given the increase in federal and state criminal laws as well as evolving and expanding conceptions of morality. On pp. 3-4 of my work in progress “Breaking Bad Promises” (footnotes omitted), I mention the following recent examples, including the 2019 college admissions scandal, acts of alleged collusion between Donald J. Trump and foreign officials, and Robert Kraft’s massage parlor visits: Continue reading →

I am interrupting my series of blog posts on “illicit promises” to share with you this short video (see below) featuring Charles Fried, who has taught contract law at Harvard Law School for many years. Professor Fried put together an online version of his contracts course called “Contract Law: From Trust to Promise to Contract.” I highly recommend his eight-week course. Enjoy!

In my previous post, I restated the facts in the Buckeye Check Cashing case. A consumer was challenging the legality of his payday loans under state law, but the loan documents he signed contained a mandatory arbitration clause. So, how was this case decided? After the consumer sued the lender, Buckeye petitioned the trial judge to compel arbitration. The judge, however, denied Buckeye’s motion, holding that it (the court) would have to decide first whether the payday loans Buckeye made were illegal under state law. The lender then appealed to the Court of Appeals of Florida for the Fourth District. When the court of appeal reversed the trial court and held that the question of the contract’s legality should be decided by the arbitrator, the consumer appealed to the Florida Supreme Court. The state supreme court then reversed the court of appeals, resting its decision on common law grounds. Specifically, because illegal agreements are void under Florida law, the Florida Supreme Court reasoned that sending the dispute to an arbitrator would “breathe life” into an illegal contract. The lender appealed to the Supreme Court of the United States (SCOTUS).

Although SCOTUS’s appellate jurisdiction is discretionary–about 99% of all cases appealed to SCOTUS are denied outright–SCOTUS agreed to hear this case, and Justice Antonin Scalia, writing for a seven justice majority (see image below), ended up ruling in favor of the lender. (Justice Alito recused himself, as he was not yet a confirmed justice when the case was argued, and Justice Thomas dissented.) For my part, the most contentious aspect of Justice Scalia’s opinion was his analysis of the meaning of the word “contract.” The consumer had emphasized the plain meaning of the word “contract” in the text of the Federal Arbitration Act (FAA) and argued that an illegal agreement that is void under state law is not a legally-enforceable “contract” under the FAA. In other words, the FAA should apply only to arbitration clauses located within enforceable “contracts,” not to arbitration clauses located in illegal agreements. Justice Scalia, however, brushed aside this common law argument. Instead, what mattered to the majority was whether the plaintiff in the Buckeye case was challenging the legality of the loan documents he signed or the legality of the arbitration clause in those documents: because the plaintiff was challenging the legality of the loan—not the legality of the arbitration clause itself—the arbitrator would get to decide whether the loan was legal under state law.

In any case (pun intended), Buckeye Check Cashing, Inc. v. Cardegna raises an even deeper and more delicate question about the moral status of usurious loans. Even if such loans are illegal under state law, doesn’t the borrower still have a moral obligation to repay his payday loans? I will sketch a potential solution to this difficult moral dilemma in my next few posts.

Image credit: oyez.org

I have been blogging off and on about so-called “illicit promises”–defined broadly as solemn promises to commit immoral or illegal acts. In a previous post, for example, we revisited one of the most famous fictional illicit promises of all time: the quasi-Faustian “pound-of-flesh” pact in William Shakespeare’s comedy The Merchant of Venice. In Shakespeare’s play, the character of Shylock agrees to loan a large sum to Bassanio; in return, Bassanio’s best friend Antonio agrees to guarantee the repayment of the loan and gives Shylock the right to take a pound of his (Antonio’s) flesh in the event of default. This illicit promise thus raises two key questions: (i) why isn’t such a promise morally or legally binding? and (ii) who should get decide whether a promise is “illicit” in the first place? Imagine if Shylock had inserted an arbitration clause into his loan agreement with Antonio and Bassonio!

Such a scenario is not hard to imagine at all. Consider, for example, the leading case of Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006). In that case, the plaintiff brought a class action lawsuit in a Florida state court alleging that his payday loans were illegal under Florida law. The defendant, Buckeye Check Cashing, would provide cash advances to its customers, but instead of charging an interest rate, the lender charged a “service fee” for assuming the risk of these cash advances. The plaintiff, however, claimed that Buckeye’s cash advances were disguised loans and that the lender charged usurious interest rates, often over 300% per annum, in violation of Florida law. (Under the relevant Florida law at the time, it was a third-degree felony to charge any interest rate over 45% per annum.)

But in addition to the usury issue and the legality of the contract, Buckeye Check Cashing also presented a novel procedural twist. You see, the lender had inserted a broadly-worded arbitration clause into its cash advance forms, providing for mandatory binding arbitration of the “validity, enforceability, or scope of the Arbitration Provision or the entire Agreement.” Could a payday lender thus use an arbitration clause to preempt state courts from deciding the legal status of its loan agreements? Given that the plaintiff was challenging the legality of the loan agreement under state law, is the arbitration clause even enforceable? [To be continued …]

Image credit: Scripps Media

Updated (9/26): I am interrupting my series of posts on illicit promises to place a bet on whether President Donald J. Trump will be impeached before 12/31/19. According to this report by Ben Winck, for example, the odds of President Trump’s impeachment have soared on one popular betting website (predictit.org), rising as high as $0.62 after House Speaker Nancy Pelosi made her symbolic announcement yesterday. Since each bet is made against a single dollar, bettors collectively believe there is a 62% likelihood that Trump will be impeached in the House.

Is this a good bet? A simple majority in the House is sufficient to impeach President Trump, although a two-thirds super-majority in the Senate is required to actually remove him from office. (See chart below.) According to this headcount in Politico (updated 9/26), 208 221 members of the House now support impeachment or an impeachment inquiry. But even if Trump is impeached by the House before the end of this year, will Senator Mitch McConnell “pull a Merrick Garland” and refuse to convene a trial? After all, the next presidential election is just 13 months away …

“Checks & Balances”

When is an illicit promise morally or legally binding? Perhaps the most famous fictional illicit promise of all time is the one that appears in William Shakespeare’s Merchant of Venice. (I am indebted to my friend and colleague Nate Oman, who has explored the historical and commercial  contexts of Shylock’s immortal pound-of-flesh pact at length in his book The Dignity of Commerce: Markets and the Moral Foundations of Contract Law (University of Chicago Press 2016). Also, as an important aside, although the character of Shylock the moneylender can be portrayed in a negative or stereotypical light, at the same time, Shylock’s motives and actions can also be seen in a more sympathetic light. In the words of the great Jewish actor Jacob Adler, who played the role of Shylock on the stage, Antonio is “far from the chivalrous gentleman he is made to appear. He has insulted [Shylock] and spat on him, yet he comes with hypocritical politeness to borrow money of him.” Jacob Adler, A Life on the Stage (Applause Books 1999), p. 345. Also, Portia’s plea for mercy can be seen as empty cheap talk. After all, she herself shows little mercy toward Shylock and ends up resorting to trickery and deception in court to defeat Shylock’s contract. Worse yet, from a due process perspective, the procedures used in Shylock’s case at the end of the play are a mockery of justice, with Portia, a party with an interest in the outcome of the case, acting as Shylock’s judge.)

In Shakespeare’s Elizabethan morality tale, which is set in the Republic of Venice during the Late Middle Ages, the character of Shylock agrees to loan a large sum of ducats to Bassanio without interest in exchange for the legal right to take a pound of Antonio’s flesh in the event of default. Assuming Shakespeare’s Shylock was acting immorally when he insisted on this dramatic penalty clause, the immortal pound-of-flesh pact in The Merchant of Venice illustrates the internal tension between our deep moral intuitions and the mercenary mercantile logic of the Rialto in Shakespeare’s play. As Nate Oman has noted, our moral intuitions and sense of fair play tell us Shylock’s pound-of-flesh pact should not be enforced in the interest of individual justice, but at the same time, the free flow of commerce and the greater good–the integrity of Venetian trade in future deals–demands that all voluntary bargains be enforced. To paraphrase Prince Hamlet: to enforce or not to enforce, that is the question! Simply put, although this fictional agreement was the product of one playwright’s literary imagination, it dramatically illustrates the problem of illicit promises. Specifically, what is the moral and legal status of such a monstrous promise? After all, the parties voluntarily and knowingly consented to these terms, however heinous. Now, what if Shylock and Bassanio had inserted an arbitration clause into their loan agreement? I will consider that very possibility in my next blog post.