Contract theory, contends James Gordley, is in a bad way. We have “no generally recognized theory of contract” and “[m]any jurists are now pessimistic about the very possibility of discovering general principles or doctrines that can explain the rules of positive law or the results most people regard as fair” (pp. 230–231). The point is that the so-called “will theory” of contract, which takes the parties’ intentions as paramount, cannot account for many features of modern contract doctrine; in particular, it cannot account for the modern tendency to adjust contracts which seem “unbalanced” or “unconscionable” or “unreasonable”. Equally, though, we lack a theory of transactional fairness which would explain the basis on which the parties’ intentions are overridden in the interests of “reasonableness” or the like. How did we get into this mess?

According to Gordley, the formal features of modern contract doctrine—concepts such as consent, mistake, fraud, duress, and so on—have an ancient pedigree, stretching back to Aristotle and Aquinas. However, the moral philosophy of Aristotle and Aquinas, which once supplied the substance for these formal contractual concepts, has long since fallen from favour. Once the formal features of these ancient theories had been separated from their moral context, we were always likely to be in difficulty. And so we are. The modern inheritance is an emphasis on the parties’ intentions (selectively drawn from the stock of formal concepts) coupled with an interest in transactional fairness which lacks any coherent moral underpinning. Although Gordley’s study, as he puts it, “offers a diagnosis rather than a cure” (p. 231), the implication is that we cannot hope to rehabilitate contract theory without retrieving the lost moral dimensions of Aristotelian thinking.

Not surprisingly, the first phase of Gordley’s story starts with the moral philosophy of Aristotle and Aquinas, central to which is the concept of “virtue”. For these thinkers, to make a contract was to exercise either the virtue of liberality (gift) or the virtue of commutative justice (exchange). However, these virtues did not correspond to gift and exchange simpliciter; they were value-laden concepts. Liberality meant giving “to the right people, the right amounts, and at the right time”; while commutative justice meant exchanging things of equal value so that neither party would be unjustly enriched at the expense of the other. These ideas were taken up by the medieval jurists, particularly by Bartolus and Baldus. Although the medieval project was not to rewrite the Roman texts, the jurists of this period were astute to gloss the texts with Aristotelian ideas.

In the 16th century we reach a watershed, the so-called “Spanish synthesis”, in which the “late scholastics” (the Spanish natural law school, inspired by Vitoria but particularly through the work of Molina and Lessius) reorganized Roman law around concepts drawn from Aristotle and Aquinas. If the theories of the late scholastics explained the Roman texts, all well and good; however, the paramount concern was with theory. For example, the doctrine of causa was seen as expressing “the theoretically important idea that, by promising, one could perform acts of commutative justice or acts of liberality” (p. 78). In other words, where the virtues of liberality or commutative justice were exercised, one had “good reasons” for making and enforcing promises. To cut a long story short, out of the analysis of the late scholastics, three important ideas were to emerge, two thoroughly familiar, the third somewhat alien to modern jurists. The two familiar propositions were: that promises are binding in principle if made for a good causa and accepted; and that duress, mistake, and fraud can invalidate contractual consent. The less familiar idea concerned the content of contractual obligation. Here, the late scholastics developed the concept of equality of exchange, a concept as we have seen central to the Aristotelian tradition. For the late scholastics, the