In Defense of the Contract at Will

Abstract

In the remainder of this paper, I examine the arguments that can be made for and against the contract at will. I hope to show that it is adopted not because it allows the employer to exploit the employee, but rather because over a very broad range of circumstances it works to the mutual benefit of both parties, where the benefits are measured, as ever, at the time of the contract's formation and not at the time of dispute. To justify this result, I examine the contract in light of the three dominant standards that have emerged as the test of the soundness of any legal doctrine: intrinsic fairness, effects upon utility or wealth, and distributional consequences. I conclude that the first two tests point strongly to the maintenance of the at-will rule, while the third, if it offers any guidance at all, points in the same direction.