I am grateful to Peter Jaffey, Dan Priel, Victor Tadros, Charlie Webb and participants in the Contracts Section of the 2011 American Association of Law Schools Annual Meeting for their comments on a draft of the paper. I am also grateful to participants in staff seminars in Warwick Law School and Brunel Law School for their responses to an earlier version of the paper's basic idea.

1. The locus classicus for it is Kronman, Anthony T, “Contract Law and Distributive Justice”(1980) 89 Yale LJ 472 CrossRefGoogle Scholar. For criticisms of Kronman’s account, see: Benson, Peter, “Abstract Right and the Possibility of a Non-Distributive Conception of Contract: Hegel and Contemporary Contract Theory” (1989) 10 Cardozo LR 1077 at 1121ffGoogle Scholar; Lucy, William, “Contract as a Mechanism of Distributive Justice” (1989) 9 Oxford J Legal Stud 132 CrossRefGoogle Scholar; Trebilcock, Michael, The Limits of Freedom of Contract (Cambridge, MA: Harvard University Press, 1993) at 82–91 Google ScholarPubMed; Dare, Tim, “Kronman on Contract: A Study in the Relation Between Substance and Procedure in Normative and Legal Theory” (1994) 7 Can JL & Juris 331 Google Scholar; Kramer, Matthew H & Simmonds, Nigel E, “Getting the Rabbit Out of the Hat: A Critique of Anthony Kronman’s Theory of Contracts” (1996) 55 Cambridge LJ 358 CrossRefGoogle Scholar; Smith, Stephen A, Contract Theory (Oxford: Oxford University Press, 2004) at 137-38Google Scholar; Hevia, Martin, “Kronman on Contract Law and Distributive Justice” (2007) 23 J Contract L 105 Google Scholar.

2. Rawls, John, A Theory of Justice, revised ed (Cambridge, MA: Harvard University Press, 1999) at para 8Google Scholar. Rawls’s particular way of appealing to this contractualist idea was famously based on the mechanism of the ‘original position’. I appeal to a different version of contractualism, drawing on TM Scanlon’s work, towards the end of the present section.

3. Here is a recent example of a definition of distributive justice that makes no mention of the role of the basic structure: ‘distributive justice is that domain of justice concerned with the distribution of benefits and burdens among members of a given group, who enjoy the relevant benefits and shoulder the relevant burdens either simply owing to their membership in that group, or in accordance with some measure of entitlement which applies to them in virtue of their membership,’ Klimchuk, Dennis, “On the Autonomy of Corrective Justice” (2003) 23 Oxford J Legal Stud 49 at 50CrossRefGoogle Scholar. Klimchuk’s definition would include in the domain of distributive justice the distribution of a birthday cake amongst family members.

4. Here I am broadly following Julius, AJ, “Basic Structure and the Value of Equality” (2003) 31 Phil & Pub Affairs 321 at 330CrossRefGoogle Scholar, who defines the basic structure as ‘a distribution of the population over types and an assignment of situations to types that are together reproduced by the distribution of actions they induce’, where situations are the list of factors relevant in the explanation of how an agent behaves in conditions of intentional interaction and types are groups of people in similar situations. See also Scanlon, TM, What We Owe To Each Other (Cambridge, MA: Harvard University Press, 1998) at 244 Google Scholar: ‘The “basic structure” of society is its legal, political, and economic framework, the function of which is to define the rights and liberties of citizens and to determine a range of social positions to which different powers and economic rewards are attached.’

5. Kordana, Kevin A & Tabachnik, David H, “Rawls and Contract Law” (2005) 73 Geo Wash LR 598 Google Scholar discuss at length the ‘narrow’ and the ‘broad’ conception of the basic structure in Rawls’s work and demonstrate, first, that Rawls’s writings prevaricate between this narrow and a broader view of the basic structure and, second, that the broader view is compelling for those who accept Rawls’s two principles of justice. As my argument will not rely on Rawls’s principles of justice or take extended issue with his conception of the basic structure, their arguments will be only occasionally available to me.

6. Ripstein, Arthur, “Public Order and Private Justice” (2006) 92 Va LR 1391 at 1395ffGoogle Scholar offers a conception of the basic structure premised on the Kantian idea that ‘people are required to forbear from interfering with one another’ and that ‘[p]rovided they do so, the only grounds of co-operation are voluntary’ (at 1407-08). The notion of ‘forbearing from interfering with one another’ seems to me to suggest that if everyone has their fair share and everyone stays out of each other’s way, except when voluntarily transacting with them, any resulting distribution will be just. That would not be correct; the very idea of a basic social structure is precisely the higher-order explanation of how iterated interaction across members of a community across time and subject-matter may impact on other agents’ transactional options even when those agents have never transacted directly with one another. See Julius, supra note 4 at 328ff.

7. Cf Murphy, Liam B, “Institutions and the Demands of Justice” (1999) 27 Phil & Pub Affairs 251 at 258CrossRefGoogle Scholar.

8. See Seligman, Matthew, “Luck, Leverage and Equality: A Bargaining Problem for Luck Egalitarians” (2007) 35 Phil & Pub Affairs 266 CrossRefGoogle Scholar.

9. Scanlon, supra note 4 at ch 5.

10. For that view see Cohen, GA, “Where the Action Is: On the Site of Distributive Justice” (1997) 26 Phil & Pub Affairs 3 CrossRefGoogle Scholar; Murphy, supra note 7.

11. That is why the relevant statutory regimes provide protections to consumers, employees and insurance holders, rather than, say, chess players or Randy Newman fans. The reason is that the former classes of agents are placed at considerable structural bargaining disadvantage while the latter classes are not.

12. Although the issue is incidental to my present argument, I believe that Kronman was mistaken in arguing that those who exclude social structural considerations from the range of contract law are libertarians about social justice. The point is made well by Lucy and by Kramer & Simmonds, supra note 1.

13. Cf Lucy, William, Philosophy of Private Law (Oxford: Oxford University Press, 2007) at 340 Google Scholar: ‘While it might be undeniable that both a legal system tout court and particular liability decisions within such a system have distributive effects, it could well be maintained that neither are intended to have such effects. So, while undoubtedly distributive in outcome, both legal systems and particular liability decisions within them are not distributive in intent: legal systems are not designed, nor particular liability decisions made, with a particular distributive pattern in mind.”

14. Smith, supra note 1 at 137: ‘[T]he value of distributive justice … is a weak basis on which to justify, or even to criticize, contract law generally … [C]ontract law is a poor tool for altering existing distributions of wealth. Contract law rules can affect the distribution of wealth only insofar as people agree to make contracts’; Chen-Wishart, Mindy, Contract Law, 3d ed (Oxford: Oxford University Press, 2010) at 28 Google Scholar: ‘Distributive contract law rules … can be neutralised by the parties changing other terms of subsequent contracts. Strongly distributive contract rules will make parties more reluctant to contract with the protected group’; Gordley, James, “Contract Law in the Aristotelian Tradition” in Benson, Peter, ed, The Theory of Contract Law: New Essays (Cambridge: Cambridge University Press, 2001) at 308 Google Scholar: ‘if the distribution of wealth is unjust, it should be changed by a social decision, rather than by individuals who go about redistributing wealth on their own, and by a centrally made decision, rather than transaction by transaction.’

15. Kronman, supra note 1 at 478-80.

16. I discuss whether greater purchasing power is preferable to greater bargaining power in the latter part of subsection (b).

17. Kordana & Tabachnik call this the ‘narrow view’ of the basic structure, supra note 5 at 599. See also Lucy, supra note 13 at 350-57.

18. Rawls, John, Political Liberalism (New York: Columbia University Press, 1996) at 267 Google Scholar: ‘there are no feasible and practicable rules that it is sensible to impose on individuals that can prevent the erosion of background justice. This is because the rules governing agreements and individual transactions cannot be too complex, or require too much information to be correctly applied; nor should they enjoin individuals to engage in bargaining with many widely scattered third parties, since this would impose excessive transaction costs.’

19. Cf Nagel, Thomas, Equality and Partiality (New York: Oxford University Press, 1991) at 86 Google Scholar: ‘What we need is an institutional structure which will evoke the requisite partition of motives, allowing everyone to be publicly egalitarian and privately partial.’ Note that the partiality reason would apply even in a Coasian world of zero transaction costs; Nagel’s point is precisely that partiality matters even when impartiality would be costless.

20. Rawls, supra note 18 at 268 [emphasis added]. On Rawls’s conception of this division of labour, see Scheffer, Samuel, “Egalitarian Liberalism as Moral Pluralism” in Scheffer, Samuel & Munoz-Dardé, Véronique, “The Division of Moral Labour” (2005) Supplementary vol 79 Proceedings Aristotelian Soc 229 Google Scholar.

21. I discuss one such kind of account in subsection (c) below.

22. Kaplow, Louis & Shavell, Steven, “Why the Legal System is Less Efficient than the Income Tax in Redistributing Income” (1994) 23 J Legal Stud 667 CrossRefGoogle Scholar; Schwartz, Alan & Scott, Robert E, “Contract Theory and the Limits of Contract Law” (2003) 113 Yale LJ 541 CrossRefGoogle Scholar.

23. Schwartz & Scott, ibid at 677: ‘[I]t is appropriate for economic analysis of legal rules to focus on efficiency and to ignore the distribution of income in offering normative judgments.’ Kaplow and Shavell’s distinction between ‘tax rules’ and ‘legal rules’ may not be very precise, as tax rules always take the form of laws, but this does not impact on the substance of their thesis.

24. Such redistribution does not need to take the form of taxation. It can occur in the form of lower consumer prices.

25. Cf Kronman, supra note 1 at 508-10; Kordana & Tabachnik, supra note 5 at 617-18.

26. Cf Zimmerman, David, “Coercive Wage Offers” (1981) 10 Phil & Pub Affairs 121 at 138ffGoogle Scholar in the context of employment contracts.

27. Lewinsohn-Zamir, Daphna, “In Defense of Redistribution Through Private Law” (2006) 91 Minn LR 326 Google Scholar arrives at a similar conclusion through a different route. She argues that the economic argument against doing social justice through private law fails if we start, first, from an objective conception of an individual’s well-being and, second, from an account of consequences that includes information about the impact of the way in which some good is secured on the well-being of the individual who receives it.

28. Bigwood, Rick, Exploitative Contracts (Oxford: Oxford University Press, 2003) at 114ff Google Scholar.

29. Cf Weinrib, Ernest J, The Idea of Private Law (Cambridge, MA: Harvard University Press, 1995) at 74 Google Scholar: ‘Admixing distributive considerations into the corrective framework of private law precludes the relationship [between transacting agents] from attaining the coherence of either corrective or distributive justice.’

30. Rick Bigwood, supra note 28 at 118.

31. Cf Mulcahy, Linda & Tillotson, John, Contract Law in Perspective, 4th ed (London: Routledge—Cavendish, 2004) at 5 Google Scholar: ‘As regards contracts of employment, a mass of modern legislation and voluntary codes and practices has virtually removed the general principles of contract law from the employment arena. In broad terms, the general principles of contract law may be regarded today as foundations which are necessary in some areas, such as commercial law, but have become largely irrelevant in others, such as labour law.’

32. Cohen, Gerald, “Facts and Principles” (2003) 31 Phil & Pub Affairs 211 at 214CrossRefGoogle Scholar.

33. I follow Pamela Hieronymi in using the notion of a reason to denote a ‘consideration that bears on a question’ rather than a consideration that ‘counts in favour of’ some action or belief. Hieronymi, Pamela, “The Wrong Kind of Reason” (2005) 102 J Phil 437 CrossRefGoogle Scholar. Hieronymi’s formulation has the advantage of avoiding persistent difficulties with the explanation of why considerations that count in favour of an action or belief in some contexts do not do so in others.

34. Cf Coleman, Jules L, Risks and Wrongs (New York: Cambridge University Press, 1992) at 305 Google Scholar: ‘If sustaining or protecting a less than fully just distribution of wealth or resources can sometimes be a matter of justice, it cannot be a matter of distributive justice. Then what sort of justice is it that permits, if it does not explicitly endorse, distributive injustice? The answer is, corrective justice.’

35. What about an agent’s own cognitive faws and mistakes? I think that we should ask: is the cause of the faw structural (e.g., the consumer could not get all the details of a transaction in a complex market product right because the business context did not allow him or her enough time to do so) or non-structural (the buyer just didn’t bother to check whether the painting was a real Schiele).

36. In Coleman’s terminology, we might say that whereas the focus of structure-sensitive reasons is ‘global’, in the sense that those reasons relate to the moral health of the basic structure of a society as a whole, the focus of structure-insensitive reasons is ‘local’, in the sense that those relate to the moral rights of parties to discrete transactions. Coleman, supra note 34 at 355. Stephen Perry makes a similar point by contrasting the ‘dynamic’ perspective of distributive justice with the ‘static’ perspective of corrective justice. Perry, Stephen, “On the Relationship between Distributive and Corrective Justice” in Horder, Jeremy, ed, Oxford Essays in Jurisprudence, 4th series (Oxford: Oxford University Press, 2000) at 246 Google Scholar.

37. In that regard, it is interesting that both Peter Benson and Jules Coleman have elsewhere drawn attention to the fact that schemes of social justice must be sensitive to certain prior norms of moral permissibility. Benson, Peter, “The Basis of Corrective Justice and its Relation to Distributive Justice” (1992) 77 Iowa LR 515 Google Scholar; Coleman, Jules L, “The Practice of Corrective Justice” in Owen, David G, ed, Philosophical Foundations of Tort Law (Oxford: Oxford University Press, 1995) at 66–67 Google Scholar.

38. See Kronman’s discussion of how contract law comes under the difference principle, supra note 1; Kordana & Tabachnik, supra note 5.

39. The staunchest of those is probably Weinrib’s conception of corrective justice as the normative basis of private law. Ernest Weinrib, supra note 29.

40. For versions of the latter view, see Melvin Eisenberg, “The Theory of Contracts” in Benson, supra note 14 at 262-64; Lucy, supra note 13 at 382-86.

41. Fried, Charles, Contract as Promise: A Theory of Contractual Obligation (Cambridge, MA: Harvard University Press, 1981)Google Scholar; Seana Shiffrin, Valentine, “The Divergence of Contract and Promise” (2007) 120 Harv LR 708 Google Scholar; Raz, Joseph, “Promises in Morality and Law” (1982) 95 Harv LR 916 at 933CrossRefGoogle Scholar.

42. Bridgeman, Curtis, “Reconciling Strict Liability with Corrective Justice in Contract Law” (2007) 75 Fordham LR 3013 Google Scholar; Waddams, Stephen, “Breach of Contract and the Concept of Wrongdoing” (2000) 12 Supreme Court LR 1 Google Scholar.

43. Markovits, Daniel, “Contract and Collaboration” (2004) 113 Yale LJ 1417 CrossRefGoogle Scholar; Kraus, Jody S, “The Correspondence of Contract and Promise” (2009) 109 Colum LR 1603 Google Scholar; Kimel, Dori, From Promise to Contract: Towards a Liberal Theory of Contract (Oxford: Hart, 2003) at 72ff.Google Scholar