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Rethinking the Nineteenth-Century Employment Contract, Again

Published online by Cambridge University Press:  28 October 2011

John Fabian Witt
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Extract

Legal historians have turned with renewed energy in recent years to the project of fleshing out the myriad rules by which the common law of the free labor employment contract structured social relations in nineteenth-century America. Of course, labor relations have always been prominent in the literature. The German sociological tradition has long taught us to see in the legal protection of property rights a source of coercive power over the working classes. And for decades now, historians have studied the great nineteenth-century labor conspiracy cases, which generated leading cases and opinions by judges such as Shaw and Holmes. But there is a new wrinkle in recent accounts of nineteenth-century labor law. Much of the law of property, contract, and tort bears a relatively self-evident (though still too infrequently remarked on) relation to the relative bargaining power of the parties to an employment contract. Property rules, along with a whole host of attendant tort doctrines such as nuisance and trespass, allocate resources among parties. As Robert Hale observed long ago, property rules set the coercive power of A to exclude B from those resources that belong to A, whether A be a prospective employee excluding an employer from the employee's labor power, or an employer excluding a would-be employee from the means of production. In similar fashion, rules of contract and tort that define the weapons that parties may deploy in competition or bargaining also shape the relative bargaining power of social actors. Thus, doctrines of duress, fraud, unconscionability, and adequacy of consideration, and the law of labor conspiracies and competition all create immutable background rules (or sometimes inalienable entitlements) that have considerable impact on bargaining power. In Halean language, we might say that the law of duress, for example, coercively precludes the strong from forcing the weak to consent to a particular deal, or that the doctrine of fraud coercively precludes the slick from outfoxing the dupes.

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Notes and Commentary
Information
Law and History Review , Volume 18 , Issue 3 , Fall 2000 , pp. 627 - 657
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Copyright © the American Society for Legal History, Inc. 2000

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References

1. See especially Orren, Karen, Belated Feudalism: Labor, the Law, and Liberal Development in the United States (New York: Cambridge University Press, 1991)Google Scholar; Tomlins, Christopher L., Law, Labor, and Ideology in the Early American Republic (New York: Cambridge University Press, 1993)CrossRefGoogle Scholar; Tomlins, Christopher L., “Subordination, Authority, Law: Subjects in Labor History,” International Labor and Working Class History 47 (1995): 56–90.CrossRefGoogle Scholar Other important new studies of the nineteenth-century employment contract include Labor Law in America: Historical and Critical Essays, ed. Tomlins, Christopher L. and King, Andrew J. (Baltimore: Johns Hopkins University Press, 1992)Google Scholar; Steinfeld, Robert J., The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350–1870 (Chapel Hill: University of North Carolina Press, 1991)Google Scholar; McCurdy, Charles W., “The ‘Liberty of Contract’ Regime in American Law,” in The State and Freedom of Contract, ed. Scheiber, Harry N. (Stanford: Stanford University Press, 1998), 161–97Google Scholar; Arthur F. McEvoy, “Freedom of Contract, Labor, and the Administrative State,” in The State and Freedom of Contract, 198–235; Fisk, Catherine L., “Removing the ‘Fuel of Interest’ from the ‘Fire of Genius’: Law and the Employee-Inventor, 1830–1930,” University of Chicago Law Review 65 (1998): 1127–1198.CrossRefGoogle Scholar Since this essay asks questions about doctrines such as the fellow servant rule, the entire contract rule, and others, of course, it implicates a now long-standing literature on the common law of contract and tort. See, e.g., Friedman, Lawrence M., A History of American Law, 2d ed. (New York: Simon and Schuster, 1985)Google Scholar; Horwitz, Morton, The Transformation of American Law, 1780–1860 (Cambridge: Harvard University Press, 1977).Google Scholar

2. See Hale, Robert, “Coercion and Distribution in a Supposedly Non-Coercive State,” Political Science Quarterly 38 (1923): 470–94CrossRefGoogle Scholar; Fried, Barbara, The Progressive Assault on Laissez Faire: Robert Hale and the First Law and Economics Movement (Cambridge: Harvard University Press, 1998).Google Scholar Cf. Hurst, James Willard, Law and Economic Growth: The Legal History of the Lumber Industry in Wisconsin, 1836–1915 (Cambridge: Harvard University Press, 1964), 286Google Scholar (noting that in addition to direct allocation of resources, “official decision making also affected the allocation and use of resources at a second remove, by official determination of standards of conduct or of the range of available, legally defined and recognized procedures and instruments, within the framework of which market operations might go on”).

3. The contracts literature has dedicated considerable attention to the question of default rules in recent years. See, e.g., “Symposium on Default Rules and Contractual Consent,” Southern California Interdisciplinary Law Journal 3 (1993): 1–144.

4. As Ian Ayres has pointed out to me, default terms in other contexts may not require a prior contract to take effect (e.g., intestacy rules).

5. Legal scholars generally view bargaining power as an unpersuasive account of contract terms in contemporary contractual relations. Instead, the contours of such relations are said to turn on their parties' relative valuations of particular arrangements and their willingness to pay for those arrangements. At most, on this view, bargaining power explains the distribution of the surpluses generated by a transaction. See Kennedy, Duncan, “Distributive and Paternalist Motives in Contract and Tort Law, with Special Reference to Compulsory Terms and Unequal Bargaining Power,” Maryland Law Review 41 (1982): 563–658Google Scholar; Ayres, Ian and Schwab, Stewart, “The Employment Contract,” The Kansas Journal of Law and Public Policy 8 (Spring 1999): 71–89.Google Scholar In the nineteenth-century employment contract, however, at least two factors made bargaining power quite important. First, workers were frequently too poor to “buy” terms, even if they might have valued them more highly than employers. Second, and more important, as a matter of practice employers (and employees, too, for that matter) rarely engaged in the “sale” of contract terms, even when it might have been rational in today's economic theory for them to have done so. Such employers operated along the lines sketched out by institutional economists early in the twentieth centry, setting basic ground rules for their employment practices and then pursuing profits within the framework of those ground rules, even when it might have been more profitable to depart from them. (The occurence of such failures of the managerial imagination, as we might style them, should hardly be surprising since we see them still today. See, e.g., Donohue, John J. III, “Opting for the British Rule, Or If Posner and Shavell Can't Remember the Coase Theorem, Who Will?” Harvard Law Review 104 (1991): 1093–1119Google Scholar [observing that parties to legal disputes fail to enter into deals that could often be efficient].) The frequent refusal to engage in transactions over employment terms does not, however, cut against the importance of the distinction between default rules and immutable rules. One of the central points of this essay is to show that the common law default rules of the labor relation had considerably less influence on the construction of employer ground rules than recent accounts suggest.

6. See Forbath, William E., Law and the Shaping of the American Labor Movement (Cambridge: Harvard University Press, 1991), 134–35.Google Scholar As Forbath explains, the effects of labor injunctions and judicial review of labor legislation were twofold. On the one hand, labor law created incentives for particular kinds of rational strategic behavior by workers. On the other hand, at a deeper level American labor law not only rewarded particular strategies, but also changed the labor movement's underlying ideological outlook.

7. For these arguments, see Stanley, Amy Dru, From Bondage to Contract: Wage Labor, Marriage, and the Market in the Age of Slave Emancipation (New York: Cambridge University Press, 1998)CrossRefGoogle Scholar, and Steinfeld, The Invention of Free Labor, respectively.

8. Tomlins, Law, Labor, and Ideology, xv, 270 (“[I]t was law rather than nature or capita) that would make the employers the masters and their employees the servants”); Orren, Belated Feudalism, 81.

9. See Hayward v. Leonard, 24 Mass. (7 Pick.) 181 (1828); see also Horwitz, Transformation of American Law, 186–88.

10. See Orren, Belated Feudalism; Tomlins, Law, Labor, and Ideology; Holt, Wythe, “Recovery by the Worker Who Quits: A Comparison of Mainstream, Legal Realist, and Critical Legal Studies Approaches to a Problem of Nineteenth-Century Contract Law,” Wisconsin Law Review (1986): 677–732Google Scholar; see also Horwitz, Transformation of American Law.

11. See Karsten, Peter, Heart Versus Head: Judge-Made Law in Nineteenth-Century America (Chapel Hill: University of North Carolina Press, 1997), 162Google Scholar; Montgomery, David, Citizen Worker (New York: Cambridge University Press, 1993), 42.Google Scholar

12. See Walker v. Cronin, 107 Mass. 555 (1871); Comment [Nockleby, John], “Tortious Interference with Contractual Relations in the Nineteenth Century: The Transformation of Property, Contract, and Tort,” Harvard Law Review 93 (1980): 1510–39.Google Scholar Orren suggests that the doctrine of tortious interference was wholly nonreciprocal and that employees were unable to sue third parties for interference with their employment contracts. Orren, Belated Feudalism, 99–100. With respect to third parties engaged in business relations with employers, this appears to have been true: The at-will doctrine meant that employees could not bring a tortious interference action against, for example, an advisor who persuaded an employer to close a particular firm or division of a firm. This would not necessarily have precluded an employee from bringing an action for tortious interference against, for example, a third party who maliciously provided gossip about the employee to an employer to the employee's detriment. But the apparent absence of any reported cases on the issue speaks volumes.

13. See Comment, “Tortious Interference,” 1528. In the case of Carew v. Rutherford, 106 Mass. 1 (1870), a master stonecutter successfully sued a journeymen stonecutter union for inducing “a great number” of his workmen to leave him, even though they were employed at will. See Carew, 106 Mass, at 13. In at least one earlier case, the same court had rejected an employer's enticement claim on the ground that the employees had not been under a contractual obligation creating duties beyond at-will employment. See Boston Glass Manufactory v. Binney, 21 Mass. 425 (1827).

14. Sproul v. Hemmingway, 31 Mass. 1, 1 (1833); see Tomlins, Law, Labor, and Ideology, 225.

15. Singer v. McCormick, 4 Watts & Serg. 265, 266–67 (Pa. 1842); Lantry v. Parks, 8 Cow. 63, 64 (N.Y. 1827).

16. See Friedman, Lawrence and Ladinsky, Jack, “Social Change and the Law of Industrial Accidents,” Columbia Law Review 67 (1967): 50–82CrossRefGoogle Scholar; Witt, John Fabian, Note, “The Transformation of Work and the Law of Workplace Accidents, 1842–1910,” Yale Law Journal 107 (1998): 1467–1502.CrossRefGoogle ScholarPubMed

17. Farwell v. Boston & Worcester R.R., 45 Mass. (4 Met.) 49, 57, 64 (1842). The first American work accident case decided by an appellate court was actually Murray v. South Carolina R.R., 26 S.C.L. (1 McMull.) 385 (S.C. 1841), but the Farwell case, authored by Lemuel Shaw, quickly became the foundational decision.

18. Bradbury, Harry B., Bradbury's Workmen's Compensation and State Insurance Law of the United States (New York: Banks Law Publishing Co., 1912), xiii.Google Scholar Employees were increasingly allowed to recover for injuries from work accidents arising out of the negligence of superiors in the workplace (the “vice-principal” rule) or the negligence of employees in different departments of the firm (the “different department” rule).

19. See Report to the Legislature of the State of New York by the Commission Appointed under Chapter 518 of the Laws of 1909 to Inquire into the Question of Employers' Liability and Other Matters: First Report, March 19, 1910 (Albany: J. B. Lyon, 1910), 20.

20. The standard economic analysis holds that if employees value the opportunity to recover from their employers for the cost of work accidents more than that opportunity will cost employers, the parties to the labor contract will bargain to that result; similarly, if employees value the opportunity to recover from their employers for the cost of work accidents less than that opportunity will cost employers, the parties will reach an agreement that leaves the cost of work injuries in the hands of the employees. The default rule set by the law of contracts will have no effect on the final allocation of the risk.

21. In the context of immutable rules, sophisticated approaches to economic analysis hold that distributive effects are highly contingent on the structure of particular markets and particular demand curves. It is less clear that default rules are subject to the same contingencies. See, e.g., Craswell, Richard, “Passing On the Costs of Legal Rules: Efficiency and Distribution in Buyer-Seller Relationships,” Stanford Law Review 43 (1991): 361–64CrossRefGoogle Scholar (noting that the contingency of the distributive effects of immutable rules applies to default rules only if we assume that the default terms will remain in place).

22. On the effects of default rules in the employment contract, see Millon, David, “Default Rules, Wealth Distribution, and Corporate Law Reform: Employment at Will versus Job Security,” University of Pennsylvania Law Review 146 (1998): 975–1041.CrossRefGoogle Scholar

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25. See Montgomery, David, Workers' Control in America (New York: Cambridge University Press, 1979), 15–27.Google Scholar For a vivid description of workplace practices in the late nineteenth-century coal mines that focuses on workers' control over the production process, see Brody, David, Workers in Industrial America (New York: Oxford University Press, 1980), 3–4Google Scholar; see also Whiteside, James, Regulating Danger: The Struggle for Mine Safety in the Rocky Mountain Coal Industry (Lincoln: University of Nebraska Press, 1990), 43–14.Google Scholar

26. See Marx, Karl, Capital (1867; Harmondsworth: Penguin Books, 1970), 1:275.Google Scholar

27. Waltershausen, August Sartorius von, The Workers' Movement in the United States, 1879–1885, ed. Montgomery, David and Linden, Marcel van der (New York: Cambridge University Press, 1998), 198.Google Scholar This Marxian theory of charging employers “for the care of their victims” via increases in wage levels resembles in certain respects the contemporary law and economics theory that parties to contracts will freely contract around liability rules so long as transaction costs are sufficiently low. See Coase, Ronald H., “The Problem of Social Cost,” Journal of Law and Economics 3 (1960): 1–44.CrossRefGoogle Scholar The Marxian approach goes one step beyond the law-and-economics theory by positing an account of the construction of the parties' preferences.

28. See Asher, Robert, “The Limits of Big Business Paternalism: Relief for Injured Workers in the Years Before Workmen's Compensation,” in Dying for Work (Bloomington: Indiana University Press, 1987), ed. Rosner, David and Markowitz, Gerald, 19, 21–23Google Scholar; Epstein, Richard A., “The Historical Origins and Economic Structure of Workers' Compensation,” Georgia Law Review 16 (1982): 793–94Google Scholar; Willoughby, William Franklin, Workingmen's Insurance (New York: Thomas Y. Crowell, 1898), 284–318.Google Scholar

29. Compare Mitchell v. Pennsylvania RR., 1 Am. L. Reg. 717 (1853) (upholding accident suit waiver provision in company accident compensation plan) and Western & Atlantic RR. v. Bishop, 50 Ga. 465 (1873) (same), with Lake Shore & Mich. Southern Ry. v. Spangler, 44 Ohio 471 (1886) (refusing to enforce similar provision), and Little Rock & Fort Smith Ry. v. Eubanks, 48 Ark. 460 (1886) (same). See generally McCurdy, “The ‘Liberty of Contract’ Regime,” 173–79; Fishback, Price V. and Kantor, Shawn Everett, “The Adoption of Workers' Compensation in the United States, 1900–1930,” Journal of Law and Economics 41 (1998): 305–41.CrossRefGoogle Scholar

30. See Fisk, “Removing the ‘Fuel of Interest.’” For a case holding that an agreement to assign ownership of particular inventions to the employer implicitly reserved the ownership of unmentioned inventions to the employee, see Dice v. Joliet Mfg. Co., 11 111. App. (11 Bradw.) 109, aff'd, 105 I11. 649 (1878).

31. Yellow-dog contracts might also be said to have represented attempts to contract out of a default rule that permitted union membership among employees. So long as the employment relationships in question were at-will employment, however, it is not clear whether the yellow-dog contracts represented a substantive change in the terms of the bargain or an element in a campaign of propaganda and legitimation.

32. See Montgomery, David, Beyond Equality (New York: Knopf, 1967), 303–21.Google Scholar I am aware of no evidence that employers in quantum meruit jurisdictions contracted into the entire contract rule. But it is not clear that they could have, given the bar on penalty terms. It is also difficult to find clear evidence of employees contracting around the entire contract rule, but here agreements governing the timing of payment may well have substituted for quantum meruit terms.

33. See The Labor Movement: The Problem of To-Day, ed. McNeill, George E. (Boston: A. M. Bridgman, 1887).Google Scholar

34. Ibid., 455.

35. See Opdycke, Sandra, “George Edwin McNeill,” in American National Biography (New York: Oxford University Press, 1999), ed. Garraty, John A. and Carnes, Mark C., 15:170–71.Google Scholar

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38. For a good discussion of this problem, see ibid.

39. On this point, see Goetz, Charles J. and Scott, Robert E., “The Limits of Expanded Choice: An Analysis of the Interactions between Express and Implied Contract Terms,” California Law Review 73 (1985): 261–322.CrossRefGoogle Scholar

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41. See, e.g., Posner, Richard A., “A Theory of Negligence,” Journal of Legal Studies 1 (1972): 29–96.CrossRefGoogle Scholar

42. Consider, for example, the default rules of work accident law. While employees may have been the cheapest cost avoiders in the shops of early nineteenth-century artisan craftsmen, employers were probably better accident cost avoiders in workplaces such as the large manufacturing and railroad establishments that were already springing up in America in the 1830s and 1840s, as the law of work accidents was being created. See Epstein, “Historical Origins,” 784–85. Yet it is only in the late 1860s that American firms began to contract around the common law rules by creating accident funds, and even then the practice of opting out of the employment contract default remained rare. See Asher, “The Limits of Big Business Paternalism.”

43. See, e.g., Licht, Walter, Working for the Railroad: The Organization of Work in the Nineteenth Century (Princeton: Princeton University Press, 1983)Google Scholar (describing work rules and employment contracts on the railroads).

44. Of course, in practice nineteenth-century employers were likely to collude with one another as mini-cartels in the labor market so as to prevent precisely this kind of inter-firm competition. For Just one early example of employer confederation, see the transcript of the Philadelphia Cordwainers' Case, in Documentary History of American Industrial Society, ed. Commons, John R. and Gilmore, Eugene A. (Cleveland: Arthur H. Clark, 1910), 3:59, 113–24.Google Scholar Yet if the employer power was grounded in anticompetitive trade practices, then the default terms of the labor contract were doing little work in the construction of employment relations. Instead, if employer power was the result of labor market cartels, then the background rules of commercial competition (or the failure to enforce such background rules) were the source of employer power. As with employer circumvention of the eight-hour-day rule, employers' cartels acted much like business firms today whose contracts of adhesion (whether for consumer goods and services, insurance, or revolving credit) seek to disclaim otherwise implied warranties. They simply decided to remake the terms of the employment relation without regard to the default terms. On twentieth-century firms contracting around default terms in standard form consumer contracts, see Macaulay, Stewart, “Private Legislation and the Duty to Read – Business Run by IBM Machine, the Law of Contracts and Credit Cards,” Vanderbilt Law Review 19 (1966): 1051–1121.Google Scholar

45. Karen Orren observes the theoretical possibility of contracting around the defaults only once, and she immediately dismisses it as irrelevant, suggesting that it was “almost never the case” that employers and employees contracted around the rules of nineteenth-century employment law. See Orren, Belated Feudalism, 80.1 think that this is an exaggeration, as the employment practices discussed in the previous section indicate. But the more salient point is that contracting out did happen (however rarely) and theoretically could have happened considerably more often. Given this underlying fact, accounts of nineteenth-century labor law must explain the mechanism by which default rules became social practices.

46. See Marx, Capital, 1:784; Weber, Max, Economy and Society (Berkeley: University of California Press, 1978), 2:730Google Scholar (arguing that the shift to a regime of free contractual ordering formally represents a decrease in coercion, but contending that the extent to which members of a community are able to exercise that formal freedom cannot “be simply deduced from the content of the law” but rather depends “entirely upon the concrete economic order and especially upon the property distribution”).

47. See Weber, Economy and Society, 2:684 and 740 n.61.

48. Thus Tomlins at one point insists that “the common law incidents of [employer] authority” were “nonnegotiable.” Tomlins, Law, Labor, and Ideology, 230. As we have seen here, however, the terms and conditions of employment were negotiated.

49. Tomlins, “Subordination, Authority, Law,” 63, Law, Labor, and Ideology, 223–31, and “Subordination, Authority, Law,” 77.

50. Tomlins, Law, Labor, and Ideology, 34. In Tomlins's words, law is “the primary site upon which authoritative social relations are constituted.” See Tomlins, “Subordination, Authority, Law,” 56; see also Tomlins, Law, Labor, and Ideology, 19–34.

51. See Hartog, Hendrik, “Pigs and Positivism,” Wisconsin Law Review (1985): 899–935Google Scholar, and “Marital Exits and Marital Expectations in Nineteenth-Century America,” Georgetown Law Journal 80 (1991): 95–129; see also Johnson, Walter, “Inconsistency, Contradiction, and Complete Confusion: The Everyday Life of the Law of Slavery,” Law and Social Inquiry 22 (1997): 405–33.CrossRefGoogle Scholar Another recent source of insight on the gap between legal rules and social practice has been in the areas of property and tort. See Ellickson, Robert, Order without Law. How Neighbors Settle Disputes (Cambridge: Harvard University Press, 1991).Google Scholar But there is also a long tradition of discussing the persistence of extralegal practices and norms in contracting behavior in, for example, the work of Stewart Macaulay. See his “Non-Contractual Relations in Business: A Preliminary Study,” American Sociological Review 28 (1963): 55–67. For a different (though to my mind overstated) take on the disjuncture between common law rules and social practices, see Epstein, Richard A., “The Social Consequences of Common Law Rules,” Harvard Law Review 95 (1982): 1717–51.CrossRefGoogle Scholar

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55. See Witt, Note, “The Transformation of Work.” On the erosion of worker control in the wake of workmen's compensation legislation, see Aldrich, Mark, Safety First (Baltimore: Johns Hopkins University Press, 1997).Google Scholar

56. See Kennedy, Duncan, A Critique of Adjudication: fin de siècle (Cambridge, Mass.: Harvard University Press, 1997), 251.Google Scholar

57. This, of course, is one of the basic insights of Gordon's, Robert W. now-classic essay, “Critical Legal Histories,” Stanford Law Review 36 (1984): 57–125.CrossRefGoogle Scholar

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60. Thanks to Gregory Mark for suggesting this point.

61. This is a problem particularly where Judges affirmed employer control in cases brought against employers by third parties.

62. See Hyde, Alan, “The Concept of Legitimation in the Sociology of Law,” Wisconsin Law Review (1983): 329–126.Google Scholar

63. See Jolls, Christine et al., “A Behavioral Approach to Law and Economics,” Stanford Law Review 50 (1998): 1471–1550CrossRefGoogle Scholar; Sunstein, Cass R., “Behavioral Analysis of Law,” University of Chicago Law Review 64 (1997): 1175–95CrossRefGoogle Scholar; Symposium, “The Legal Implications of Psychology: Human Behavior, Behavioral Economics, and the Law,” Vanderbilt Law Review 51 (1998): 1497–1788.

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66. See Johnson, Paul E., A Shopkeepers' Millennium: Society and Revivals in Rochester, New York, 1815–1837 (New York: Hill and Wang, 1978), 38–18Google Scholar; Prude, Jonathan, The Coming of Industrial Order: Town and Factory Life in Rural Massachusetts, 1810–1860 (New York: Cambridge University Press, 1983)Google Scholar; Montgomery, Beyond Equality; Tomlins, Law, Labor, and Ideology, 261–90; Brian Simpson, A. W., Leading Cases in the Common Law (Oxford: Clarendon Press, 1995), 100–34Google Scholar; Feinman, Jay M., “The Development of the Employment at Will Rule,” American Journal of Legal History 20 (1976): 118–35.CrossRefGoogle Scholar

67. See Ayres and Gertner, “Filling Gaps.” See also Kennedy, “Distributive and Paternalist Motives,” 595–96. Of course, in some instances policymakers may want parties to utilize informational asymmetries, especially when they are the product of the deliberate investment of resources into information gathering. See Kronman, Anthony T., “Mistake, Disclosure, Information, and the Law of Contracts,” Journal of Legal Studies 7 (1978): 1–34.CrossRefGoogle Scholar

68. On the development of rationalized managerial approaches to work accidents, see Sellers, Christopher C., Hazards of the Job: From Industrial Disease to Environmental Health Science (Chapel Hill: University of North Carolina Press, 1997).Google Scholar

69. See Hartog, “Marital Exits and Marital Expectations,” 95. As Hartog observes, the legal unenforceability of separately negotiated marriage contract terms such as separate maintenance agreements did not stop many women and men from creating such agreements. For two suggestive interpretations of the compulsory marital status regime, see Dubler, “Governing through Contract”; Siegel, Reva, “Home as Work: The First Woman's Rights Claims Concerning Wives' Household Labor, 1850–1880,” Yale Law Journal 103 (1994): 1073–1217.CrossRefGoogle Scholar

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71. See Kennedy, Duncan, “Form and Substance in Private Law Adjudication,” Harvard Law Review 89 (1976): 1685–1778, 1700.CrossRefGoogle Scholar

72. See Galanter, Marc, “Why the [Haves] Come out Ahead: Speculations on the Limits of Legal Change,” Law and Society Review 9 (1974): 95–160.CrossRefGoogle Scholar On the extent to which employees today remain unaware of the default rules governing their employment contracts and systematically overestimate the protections those contracts afford them, see Kim, Pauline T., “Bargaining With Imperfect Information: A Study of Worker Perceptions of Legal Protection in an At-Will World,” Cornell Law Review 83 (1997): 105–60.Google Scholar

73. See Ayres, Ian, “Preliminary Thoughts on the Optimal Tailoring of Contractual Rules,” Southern California Interdisciplinary Law Journal 3 (1992): 1–18.Google Scholar

74. Kennedy, “Form and Substance,” 1701.

75. See Century Edition of the American Digest (St. Paul: West Publishing Co., 1902), vol. 34.

76. See Rose, Carol M., “Crystals and Mud in Property Law,” Stanford Law Review 40 (1988): 577–610CrossRefGoogle Scholar; see also Schuck, Peter H., “Legal Complexity: Some Causes, Consequences, and Cures,” Duke Law Journal 42 (1992): 1–52CrossRefGoogle Scholar; Weisberg, Robert, “Commercial Morality, the Merchant Character, and the History of the Voidable Preference,” Stanford Law Review 39 (1986): 3–138CrossRefGoogle Scholar (describing oscillation between hard-and-fast rules and messy standards in the law of bankruptcy).

77. See, e.g., Keyser v. Rehlberg, 41 P. 74 (Mont. 1895); Marsh v. Ruleson, 1 Wend. 514 (N.Y. 1828); Gates v. Davenport, 29 Barb. 160 (N.Y. 1859); Ellison v. Jones, 15 N.Y. Supp. 356 (N.Y. Sup. Ct. 1891); Dover v. Plemmons, 32 N.C. 23 (1848); Dayton v. Dean, 23 Conn. 99 (1854); Rice v. Dwight Mfg. Co., 56 Mass. (2 Cush.) 80 (1848). As Louise Wolcher has shown, courts repeatedly softened the potentially harsh rule of mitigation of damages in cases of employer breach—employees won litigation over the issue of mitigation in three fourths of the cases in her sample of nineteenth-century appellate cases. See Wolcher, Louise E., “The Privilege of Idleness: A Case Study of Capitalism and the Common Law in Nineteenth-Century America,” American Journal of Legal History 36 (1992): 237–325.CrossRefGoogle Scholar

78. See Friedman, Lawrence, Contract Law in America (Madison: University of Wisconsin Press, 1965)Google Scholar; Karsten, Heart Versus Head; Wolcher, “The Privilege of Idleness.”

79. See Friedman, Contract Law; Hurst, Law and Economic Growth; Feinman, “The Development of the Employment at Will Rule”; Wolcher, “The Privilege of Idleness.”

80. See Ayres, “Preliminary Thoughts” (arguing that unpredictable defaults will act as penalties against failing to contract around the default).

81. Daveny v. Shattuck, 9 Daly 66, 67–68 (N.Y. Ct. Common Pleas 1880).

82. For representative parol evidence rule cases, see McClanahan v. Keeble, 20 Tenn. (1 Humph.) 120 (1839); Wiley v. California Hosiery Co., 32 P. 522 (Cal. 1893); Hairy. Johnson, 35 111. App. 562 (1890); Partridge v. Phoenix Mut. Life Ins. Co., 82 U.S. (15 Wall.) 573 (1872); Holmes v. Stummel, 15 Ill. (5 Peck.) 412 (1854); Hogden v. Waldron, 9 N.H. 66 (1837). Eric Posner's recent work on the parol evidence rule lends theoretical support to the view that rigid readings of the parol evidence rule hurt parties with relatively high bargaining costs, and benefited parties with relatively low bargaining costs. See Posner, Eric A., “The Parol Evidence Rule, the Plain Meaning Rule, and the Principles of Contractual Interpretation,” University of Pennsylvania Law Review 146 (1998): 533–77.CrossRefGoogle Scholar (Economists will no doubt dispute the disparate impact of the parol evidence rule on the theory that so long as one party to a contract has low bargaining costs, market competition will allocate the benefits of bargaining to low- and high-cost bargainers alike. As I noted above, however, employer cartels were often successful in the nineteenth century in limiting competition over terms.)

83. For cases holding employers to have entered into contracts for a term instead of employment at will, see Lewis v. Newton, 67 N.W. 724 (Wis. 1896); Norton v. Cowell, 4 A. 408 (Md. 1886). For a parol evidence case decided against an employer, see Hooker v. Hyde, 21 N.W. 52 (Wis. 1884).

84. See Purcell, Edward A. Jr, Litigation and Inequality (New York: Oxford University Press, 1991).Google Scholar