Wednesday, December 14, 2011

The Value of a Contract

There's something that's fundamentally wrong going on out there these days.  It appears to be having increasing impact on society in general and the United states in particular; and has to do with the the concept of a contract.  

Now a contract is an agreement between two or more parties to do (or not do) something, usually as part of some kind of exchange.  Because such agreements can have something to do with both goods and services, they also become central to the definition of property; which includes not only the things that a person possesses, but the labor and freedom used to create them.  Because contracts have to do with property, they by extension have a great deal to do with liberty, as one of the central liberties is that which allows us to own or dispose of our goods and labors as we see fit.  A legally binding contract is so foundational that it's one of the few things that's recognized internationally, even in places where basic standards of the rule of law and liberty do not exist.

Once upon a time in fact, it was held that a person's word was their bond and sufficient pledge to be considered a legal contract.  Well, that used to be that case anyway. This is less the case these days, when contracts are almost always written, and grow ever longer as they simultaneously grow unenforceable.  Let's take a look at the chain of failure in the concept of a contracts in sports:

Athletes going to college on scholarship enter into an agreement to play a sport at an institution of higher education in exchange for room, board, expenses, and what passes for a college education these days (at least in theory).  Along with this, they are provided with specialized training and the exposure required to move them on into the pro ranks when that agreement is complete. While the agreements are set to last for four years, they are rarely fulfilled; as athletes find that they cannot resist the urge to cash in on the fame and fortune that such training has provided.

It's hard to blame them however, when the coaches who signed them to these agreements similarly abandon their own written contracts with the university to run a sports program, ditch their current employers, and the walk out on the players who committed to them in order to accept the first better offer that comes along.  In some twisted form of payback perhaps, the coaches often abrogate the agreement with the athletes before they can do it themselves; both sides abandoning their given word in order to bolt for cash.

The next step in the process allows both versions of oath breakers to truly enter the professional ranks, where this time they sign a truly legally binding agreement to provide a service for a fee.  Signing such legal documents in the presence of agents and lawyers representing both sides however, doesn't end the hypocrisy. Apparently even these contracts are easily set aside by a player having an especially good season or a coach approaching the end of a commitment.  Both now demand to renegotiate such agreements whether they are legally eligible to do so or not; content to violate their oath under threat that their job performance will suffer.

Government has learned a valuable lesson from this behavior, and while ostensibly being the arbiter of the law where contracts are concerned, it now contributes to the increasingly ineffectual nature of such legally binding agreements.  Seeking to serve those in elective office rather than the rule of law it was instituted to protect, it become increasingly more intrusive where contracts are concerned. 

And we see government itself (or its agencies) willing to ignore the letter of legal contracts to achieve what it perceives to be a desired end.  It directly or indirectly threatens one party in such an agreement (like Boeing) in favor of another (the Machinist union) in effect dictating where and how such a company will do business.  (The fact that the government is one of the largest customers of Boeing had nothing to do with its surrender, I'm sure.)

Boeing is not the first place (even recently) where government intrusion has rejected legally binding agreements in favor of 'approved' ones.  During the bankruptcy settlement of GM and Chrysler, bond holders who by definition hold first call on the assets, were passed over in violation of obligation clearly established in bankruptcy law (and tradition) to a group whose claim to recompense was far less.  Once again, a union (the United Auto Workers) was awarded what it was not legally eligible to receive at the discretion of the government which was financing the bail out of the companies involved (a bailout which Congress in fact voted against).    

Not wanting to limit itself to one segment of the economy in which it can ignore contractual obligation, government has gone on recently to establish that it can step in between an individual who signed a contract to borrow money to buy a home and the company that loaned them that money for this purchase.  The government now apparently believes that it's alright to ignore this legal contract and force financial institutions to renegotiate such agreements because the value of property is now well below the value of the loan.

The fundamental question called into question is whether this is indeed a nation governed by the rule of law as we were taught and as the Founders once believed?  If so, what happens when respect for such laws no longer exists by the very government put in place to protect them?  If such legally binding agreements can be so casually disregarded by the government itself, to whom can citizens turn for redress of ills suffered?  What about the social contract between citizens of the United States and their government defined and limited by the contract known as the Constitution?  If government is allowed to abrogate lesser agreements without apparent challenge, how long will it be before the greater likewise becomes all but meaningless?

This is far more even, than the so-called 'living Constitution' that we've heard of, that allows government to claim the right to reinterpret this document after viewing it in a modern light, rather than use the Amendment process designed for such situations.  This is the thinking that casually confiscates the fundamental rights of citizens guaranteed in the first ten of those Amendments by passing unconstitutional legislation like 'The Patriot Act'.  This is the thinking that, as we speak, allows Congress to weigh the benefits of being able to use the military within the borders of the United States to arrest and detain US citizens indefinitely without the requirement of ever going before a judge (A bill known as the 'National Defense Authorization Act' which violates both the legal principle of habeus corpus and the Posse Cumitatus Act of 1878).  This is an elemental change in our interpretation of the law of the land in this country is bound to have dire long-term consequences.

Society may have begun the mischief and misbehavior by allowing the degeneration of the concept of a contracts, and by extension the rule of law that goes with them, treating their oaths (oral and written) as something of little or no value. It's government however that will in the end determine whether this moral lapse will into future misery, if not outright tyranny, for the citizens of this country.

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