Contract Law’s Transferability Bias

Authors

Paul MacMahon, London School of Economics and Political ScienceFollow

Document Type

Article

Publication Date

4-15-2020

Publication Citation

95 Indiana Law Journal 485 (2020)

Abstract

When A makes a contract with B, it comes as no surprise that she is liable to B. If B can transfer her contractual rights to C, A is now liable to C. Parties in A’s position often have strong reasons to avoid being liable to suit by C. Contract law, however, seems determined to minimize and override these concerns. Under current doctrine on the assignment of contractual rights—the focus of this Article—the law often imposes its own preference for transferability on the parties. The law generally assumes that contractual rights are assignable, construes exceptions to that general rule narrowly, and renders it either impossible or extremely difficult for the parties to make rights nonassignable by agreement. After examining the range of techniques courts and legislators use to promote the transferability of contractual rights, the Article contends that these practices cannot be squared with contract law’s basic principles. The law’s pro-transferability policy appears to be based on an intuitive but dubious economic theory, which in turn is premised on an inaccurate vision of contracts as impersonal exchanges. The Article proposes reforms to make this aspect of contract law more faithful to the relationships it regulates and supports.

Recommended Citation

MacMahon, Paul (2020) "Contract Law’s Transferability Bias," Indiana Law Journal: Vol. 95: Iss. 2, Article 4.
Available at: https://www.repository.law.indiana.edu/ilj/vol95/iss2/4