Consider three transactions: (1) federal legislation passed by Congress; (2) an order of judgment in a private lawsuit; and (3) a contractual arrangement between private parties. If one were asked to rank those transactions in order of the potential impact they should have on public and social policy, they would probably appear in the order that they are listed. Intuition, experience, and plain common sense might likely lead to the conclusion that legislation has the greatest impact on public policy, private agreements the least,' and final judgments in litigation somewhere in between. Democratic principles provide very good reasons for this ordering. On matters of public policy lawmaking, the legislative process is supposed to provide citizens with the participatory and representative clout guaranteed by the Constitution. Slightly farther down the continuum, the outcome of litigation, while still a matter between private parties, is governed by laws publicly enacted and by judges who are bound to use and interpret those laws. Alternatively, private agreements have none of these restrictions. Although principles of contract law prevent agreements that baldly subvert existing laws or mores, beyond the scope of that restriction, they represent a free-for-all. Parties will (and according to efficiency principles, should) bargain for the most advantageous agreement and tend to think little about the costs to society at large.
Charles C. Sipos,
The Disappearing Settlement: The Contractual Regulation of Smith & Wesson Firearms,
55 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol55/iss4/5