Contract law adds strength to the fabric of our society. Hundreds of years of case law and documents such as the Uniform Commercial Code reflect our collective values and conceptions of fairness. On a large scale, contract law is especially important because it governs vital cogs in the world economy. As the borders of our realm expand, so will our economy, and the law of contracts will have to adapt to fit the challenges of the new frontier.
We will begin by exploring the concept of a "meeting of the minds" which is one of the basic requirements of contract law. Later posts will explore other problems, such as consideration, bilateral v. unilateral contracts, remedies and defenses.
In order for a contract to form, there must be a "meeting of the minds". This requirement, also referred to as "mutual assent," is met when there is a valid offer and acceptance. In order for a party to create a set of legally enforceable promises (AKA a contract), they must both intend to be legally bound, and they must be in agreement about the terms of the agreement. The concept sounds deceptively simple.
To illustrate potential problems with this requirement, I would like to pose a hypothetical situation:
Hans is the seller of the most delicious ice cream made from the milk of a very special breed of cow. The cows can only survive on his home planet of Tastia, orbiting the star Proxima Centauri. Kalell, who lives in Chicago, has been dying to taste some of that ice cream ever since he was a little kid. As successful doctor, he can finally afford the ridiculous shipping and handling charges that come with interplanetary deliveries. Assuming he has to order directly from Hans, how should Kalell go about forming a binding contract for the sale of the ice cream? Kalell and Hans are separated by 4.2 light years.
The transaction is problematic on its face. Einstein tells us that information cannot travel faster than the speed of light. That means that Kalell's order would reach Hans in 4.2 years. How can they come to an agreement as to the price and flavor of the iced cream when their negotiations take so long? Hans could not likely keep his prices the same for long enough to support an advertisement on Earth. Fluctuations in the supply and demand of energy, cows, flavoring, and other commodities would almost definitely change the price over the course of 4-8 years, the time it would take for Hans to communicate the price and for the buyer to transmit payment.
This is not an entirely new concept to mankind. Before there were telephones, airplanes, and the Internet, men were confronted with a nearly identical problem. How did people in past centuries buy goods from far away places? Journeymen.
A valid offer gives the recipient of that offer the power to create a legally binding contract by accepting. It also must be sufficiently specific in its terms. This is nearly impossible without somewhat rapid communication. Instead of one large contract for the sale of goods, interstellar trade will likely involve a series of smaller contracts made by intermediaries.
Long ago, when a boy wanted to learn a trade, he would usually get himself an apprenticeship with a local master. Once he gained sufficient proficiency in his trade, the master would send him out into the world as a journeyman. Because the master could not just list his products on the Internet, he would send out an agent who would sell his goods with the ability to negotiate changing prices as required by fluctuating market demands. This journeyman would leave with a supply of the product or raw materials to make the product. He would, hopefully, return with proceeds of the sales, and give the Master a portion of it.
One can foresee a similar situation with regard to interplanetary commerce. A spacecraft could leave Hans's home planet of Tastia with no specific orders, but with the ingredients available to make many different kinds of iced cream. It would travel from planet to planet selling his goods for the highest price he could get at any given planet. Hans's interests could be protected by strict rules about the lowest price he will accept, but leave the journeyman spacecraft to enter into individual contracts with distribute rs on each planet.
A chain of journeyman spacecrafts would produce a sense of stability for buyer and seller. Hans would be able to ship his product immediately. He would dictate the price of his commodity based on the cost of producing it at the time the ship leaves port. Hans could keep prices secret on his home planet, so that the commodity would carry this information to it's destination. In this way, market information would effectively travel as fast as the goods. Assuming Kalell lives on a planet with weekly shipments of iced cream from Hans's journeymen, he would perceive changes in the market price of the product at the same rate that they changed on Hans's home planet. He would always know how much he could buy the product for, and would be able to enter into a binding contract with the journeyman, who's proximity to Kalell would allow appropriate negotiations and a meeting of the minds.
Without faster-than-light communication, a system such as this would be necessary for any commerce between parties separated by extremely large distances. This is more of a economic solution to a contract problem, rather than any drastic changes in the law of contracts itself. It is especially attractive because it avoides the largest problem of all: if communications take years to reach a party, how could you ever enforce a contract between parties separated by such a vast distance? Service of process, preliminary motions, and travel to an equidistant trial venue would take so long that it would be impractical to ever take someone to court. If a contract is not enforceable, it has lost any meaning whatsoever.
There are changes that could be made to the law as well. The Universal Commercial Code (UCC) governs many rules of offer and acceptance with regard to the sale of goods. This Code has adapted the law of contracts to more easily facilitate trade. For instance, the UCC allows parties to make a binding contract without reaching an exact price. Interstellar commerce will likely require even more relaxed rules with regard to contracts. Parties separated by shorter distances, perhaps one light year, could utilize a more relaxed contract scheme by which parties could connect prices and conditions to other factors. One can foresee a trade relationship in which the price of a commodity on one planet would have an inverse relationship with the price of that same commodity on the other planet. By utilizing this zero-sum relationship, one could affix the cost or terms of a contract to some other, predictable commodity that would ensure fair dealings.
Whether one takes an economic approach to this problem or a contract law approach, it is clear that the current relationship often available between the manufacturer of a product and the purchaser will have to undergo some significant changes. A meeting of the minds is not possible in the traditional sense, but the goals of this element of contract law can be achieved with some creative, out-of-the-box thinking.
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