When private parties perform contracts, the public bears some of the costs. But what happens when society confronts unexpected contractual risks? During the COVID-19 pandemic, completing particular con­tracts—such as following through with weddings, conferences, and other large gatherings—will greatly increase the risk of rapidly spreading disease. A close reading of past cases illustrates that when social hazards sharply increase after formation, courts have sometimes rejected, re­formed, and reinterpreted contracts so that parties who breach to reduce external harms are not left holding the bag. We describe these cases as a sort of contractual anticanon: where social, and not private, ends are the focus of contract judges.

This Essay builds on that observation in making two contributions. Theoretically, it characterizes contracts as bargains that always implicitly involve the public. Law has three tools at hand to govern contract’s social cost: delineating subject matter about which parties can bargain, interacting with parties as a regulator, and, finally, interpreting and reforming in court. Post hoc consideration of social costs is the least well known, and most unsettled, mode of governing contract externalities. We ground that technique in its history as a specialized application of the law of contract public policy. Practically, this Essay advises parties negotiating whether and how to perform to consider the public’s health, since history teaches that, at least some of the time, courts will too.

The full text of this Essay can be found by clicking the PDF link to the left.


In September of 1916, the Connecticut Fair Association breached its contractual obligation to “promote and manage a baby show” where “babies were in some manner to be exhibited.” 1 Hanford v. Conn. Fair Ass’n, 103 A. 838, 838 (Conn. 1918). Hanford is a case that used to appear in many contract casebooks, but today is rarely studied or taught. At least seven casebooks used to include the case. See George L. Clark, Cases on Contracts 150–51 (1954); William F. Elliot, Cumulative Supplement to the Commentaries on the Law of Contracts 479 n.8 (1923); Henry Wilbur Humble & Roy Fielding Wrigley, Selected Cases on Contracts 712–14 (1927); Walter H.E. Jaeger, Law of Contracts 618 (1953); 5 William Herbert Page, The Law of Contracts 4778 n.1 (2d ed. 1921); Harold Shepherd & Harry H. Wellington, Contracts and Contract Remedies: Cases and Materials 695–98 (4th ed. 1957); 3 Samuel Williston, The Law of Contracts 3293 n.48, 3298 n.70 (1920). But of the modern books, only Murray currently does. See John Edward Murray, Jr., Contracts: Cases and Materials 603 (6th ed. 2006). This is certain to change. Walter Hanford, who was to have supplied the infants for the show, sued. 2 Hanford, 103 A. at 838. You may ask: What is the point of a baby show? From a 1933 newspaper—reporting on an exhibition by the same firm—the answer is to crown, among others, the fattest baby, best brother and sister, and, of course, overall best baby. See New Rochelle Child Crowned the Best Westchester Baby, Irvington Gazette, June 23, 1933, at 8.

Ordinarily, Hanford v. Connecticut Fair Ass’n would have been a straightforward breach of contract case. 3 In those pre–World War I years, contract law was formalist and advocated straight-ahead interpretative doctrines with few excuses. See 2 Williston, supra note 1, at 1157–278 (reviewing contemporary rules for the interpretation and construction of contracts and the parol evidence rule); Jennifer Camero, Mission Impracticable: The Impossibility of Commercial Impracticability, 13 U.N.H. L. Rev. 1, 2–4 (2015) (reviewing limited origins of impracticability doctrine for commercial parties). But 1916 was no normal year: New York City saw its first cluster of poliomyelitis, a virus that mostly affected children, often paralyzing or killing them. 4 Whatever Happened to Polio?, Smithsonian Nat’l Museum of Am. Hist. Behring Ctr., [] (last visited Oct. 28, 2020).

Indeed, the disease was “so widespread and so serious as to make assemblies of children . . . highly dangerous to the health of the children of the community, and by reason  of  said  facts it  was  contrary  to  public  policy  to  hold  a  baby  show  of  the nature.” 5 Hanford, 103 A. at 838. The Association breached the contract—allegedly—to slow the spread of the fearsome virus.

Nevertheless, Hanford, suing for damages, had a seemingly easy case: The Association’s performance was neither impossible nor impracticable. Moreover, the contract  was  clear:  The  defendant’s  obligation  to   pay  was  “absolute  and unqualified.” 6 Id. at 839. In other words, even if it breached the contract to further the public’s interest, the Association still owed Hanford money.

In a passage with special resonance in 2021, the court disagreed. It would neither

require the performance [n]or award damages for a breach of a contract in which the public have so great an interest as the preservation of health, if the health is in fact endangered, no more than it would require one to be performed the tendency of which was immoral, or which interfered with the right of [everyone] to earn a livelihood by a lawful occupation . . . . The baby show . . . would be highly dangerous to health, and this is just what the parties have agreed to promote and carry out for their mutual profit. 7 Id. Notably, the Hanford court stated that were the plaintiff to show that gathering babies posed no health risks—social distancing, 1916-style—it could still potentially recover damages. Id.

There is no general public health exception to contract enforce­ment—but the court found one. 8 To be sure, there are many cases in which sickness was held to discharge perfor­mance of a personal services contract. See, e.g., Ryan v. Dayton, 25 Conn. 188, 188 (1856) (excuse for missing work); Wolfe v. Howes, 20 N.Y. 197, 197 (1859) (quantum meruit available for work performed); Green v. Gilbert, 21 Wis. 395, 400 (1867) (excuse for nonperformance of personal service contracts). There are also cases where markets disrupted by local sickness result in prices that are distorted, and contracts later are found unenforceable. See, e.g., Kirkland v. Tex. Express Co., 57 Miss. 316, 320 (1879) (setting the contract aside when the price was set during a yellow fever epidemic and no longer reflected fair market value). But there is no free-floating rule that contracts must make society healthier or that contracts that hurt society’s health cannot be enforced. And while the cases on how to adjudicate excuse based on public health risks are rare, 9 In discussing a set of cases requiring schools to pay teachers who were displaced by various diseases that had closed schools, Corbin comments:
[Such] decisions may be justified on the ground that the community is better able to carry the financial risk than is the individual teacher. Furthermore, even though the school district is legally justified in closing the schools, the closure is for the benefit of the community at large and not just for the school or the individual teacher.
14 Arthur Linton Corbin & Joseph M. Perillo, Corbin on Contracts § 77.7 (rev. ed. 2020).
Hanford is not the only example of its kind. Cases considering public health distortions of ordinary contractual doctrine have resulted from nearly every epidemic of the last two centuries. 10 See, e.g., Lakeman v. Pollard, 43 Me. 463, 463–64 (1857) (awarding quantum meruit for a laborer who left work during a cholera outbreak); Dynamic Mach. Works, Inc. v. Mach. & Elec. Consultants, Inc., 831 N.E.2d 875, 877 (Mass. 2005) (discussing whether a delay by a seller is an excusable reason for a buyer to retract from a contract during the SARS epidemic); Kirkland, 57 Miss. at 320 (nullifying a contract made during a yellow fever outbreak); Sullivan v. Knauth, 115 N.E. 460, 461–62 (N.Y. 1917) (holding that the possibility of forgery was not a defense when a bank cashed lost travelers checks while the traveler was quarantined during a yellow fever outbreak); Tong Chi Ying v. Shum Ping Kuen Benson, DCCJ 3566/2004 121–25 (D.C. Sept. 24, 2010) (Legal Reference System) (H.K.) (denying extra damages for a breach of lease contract during SARS, though the parties were urged to compromise).

Hanford and other cases excusing, reinterpreting, and reforming performance obligations on public policy grounds show how the public’s interest interacts with private contracting. On a daily basis, private parties enter into contracts—to use a website, lease an apartment, host a family reunion, or merge two companies into one. And while seats at the con­tract-negotiation table are primarily occupied by the contracting parties themselves, one spot is always implicitly reserved for another party: the public.

Others  have  written  compellingly about  the  impact  of  the public  on  private contracts. 11 A classic citation is Morris R. Cohen, The Basis of Contract, 46 Harv. L. Rev. 553, 562 (1933) (arguing that contract law is a branch of public law, as it defines those circum­stances where private parties can enlist the state’s enforcement powers). For more modern treatments, see, for example, Victor Fleischer, Regulatory Arbitrage, 89 Tex. L. Rev. 227, 231–32 (2010) (describing how private parties to acquisition agreements modify their deals to account for regulatory treatment); Robert H. Mnookin & Lewis Kornhauser, Bargaining in the Shadow of the Law: The Case of Divorce, 88 Yale L.J. 950, 952–56 (1979) (describing the role that laws, regulations, and courts play in private divorce settlements); Cathy Hwang & Matthew Jennejohn, Contractual Depth 3 (June 20, 2020) (unpublished manuscript) (on file with the Columbia Law Review) (describing how contracts between private parties are written with regulators as an intended audience).   Scholars  have  described  divorce  as  a  “bargain  in  the shadow  of  the law,” 12 Mnookin & Kornhauser, supra note 11, at 968. for instance, and a corporate acquisition as a deal with “three parties . . . at the . . . table: the buyer, the seller, and the government.” 13 Fleischer, supra note 11, at 238. This Essay adds an important twist to that literature and updates it for the current pandemic climate. It focuses on the ways that private law’s contracts become public law’s charges.

Contracts flourish when the externalities they create—which are inevitable—are acceptable to the public. 14 The law and economics analysis of social costs, from which this Essay’s title was drawn, obviously considers contracts to be in some sense a solution to externalities, not a cause. R.H. Coase, The Problem of Social Cost, 3 J.L. & Econ. 1, 15–16 (1960). A similarly titled essay by Brishen Rogers, The Social Costs of Uber, 82 U. Chi. L. Rev. Dialogue 85, 86 (2015), untangles the net social welfare of the ride-sharing app Uber. The government monitors that acceptability through three main mechanisms: limits on the subject of contracts, regulatory intervention, and the contract-enforcement process in courts. If a contract survives the scrutiny of the first two types of gatekeeping, the third usually offers only superficial review: Courts almost always enforce contracts even when they create third-party harms. 15 See Steven Shavell, On the Writing and the Interpretation of Contracts, 22 J.L. Econ. & Org. 289, 290 (2006) (observing how courts actively interpret contracts to ensure that they are enforceable). Though exceedingly rare, courts will sometimes decline to enforce contracts as written. But those circumstances are narrowly drawn—the relatively disfavored defenses of unconscionability, public policy, duress, mistake, and the like. With the exception of public policy, none focuses on broader social consequences.

Contract enforcement remains the norm today. Corporate lawyers, for instance, have rushed to assure their clients that their contracts will be enforced as written, even in the current pandemic. 16 Law firm guidance has become so voluminous that Stanford University’s Rock Center for Corporate Governance has collected all the law firm guidance in a searchable database. Since the end of January 2020, law firms have produced more than 200 memos addressing contract breach, renegotiation, and other issues related to the pandemic. See COVID-19 Memo Database, Stan. L. Sch., [] (last visited Mar. 10, 2021). In a client alert, law firm Willkie Farr & Gallagher noted that courts tend to “construe force majeure provisions narrowly”—thereby suggesting that parties could not expect to back out of contracts using force majeure clauses. 17 Tariq Mundiya, Sameer Advani, Todd G. Cosenza, Jeffrey B. Korn, Wesley R. Powell & Shaimaa M. Hussein, Willkie Farr & Gallagher LLP, Precedent in Unprecedented Times: Contractual Performance and Defenses in the Age of COVID-19, at 2–3 (2020), [] (defining force majeure as “a contract provision that excuses a party’s nonperformance when an ‘act of God’ or some other extraordinary event prevents a party from fulfilling its obligations”). Law firms Sidley Austin and White & Case offered similar advice. 18 Mark Clarke, Markus Burianski, Christian M. Theissen, Maximilian Clasmeier & James Hart, Suspending Contractual Performance in Response to the Coronavirus Outbreak, White & Case LLP (Feb. 18, 2020), [] (warning clients not to simply cease performance because an incorrect assertion of force majeure “may amount to a breach (or anticipatory breach) of the contract” and “[d]epending upon the severity of that breach, the aggrieved counterparty could be entitled to claim damages or even to terminate the contract”); COVID-19 and the Impact on English Law Governed Contracts—Force Majeure and Frustration, Sidley Austin LLP (Mar. 16, 2020),–force-majeure-and-frustration [] (advising clients that both force majeure clauses and common law defenses “have a high bar to success”). Meanwhile, other major law firms have also advised their clients that the increased cost of performing a contract does not excuse contract performance, 19 John A. Trenor & Hyun-Soo Lim, WilmerHale, Revisiting Force Majeure and Dispute Resolution Clauses in Light of the Recent Outbreak of the Coronavirus 2–5 (2020), (on file with the Columbia Law Review) (noting that “a mere increase in the price of supplies or labor, by itself” is insufficient to free parties from their contractual obligations); Wai Ming Yap, Joel Seow & Gina Ng, Can Companies Invoke the Force Majeure Clause in the Context of COVID-19?, Morgan Lewis (Feb. 26, 2020), [] (reminding clients that they generally will not be excused from performance “simply because performing . . . contractual obligations has now become more expensive, onerous, or time-consuming”). with some noting that pandemics may not be considered unforeseeable. 20 Yap et al., supra note 19. Advising clients who are entering into cross-border transactions poses a distinct set of problems, as civil law, for instance, expressly incorporates public rules into the question of whether there has been a force majeure event. See Yas Banifatemi, Daniel Reich, Ilija Mitrev Penusliski & Pierre Viguier, Force Majeure and Imprévision Under French Law, Shearman & Sterling (Mar. 26, 2020), []. In other words, the COVID-19 pandemic poses no special problems for contract law, at least according to its most sophisticated practitioners. 21 To date, even the most astute and thoughtful scholarly commentary on COVID and contract accords with these practitioners’ analysis. See, e.g., Andrew A. Schwartz, Contract and Covid, 73 Stan. L. Rev. Online 48, 54–58 (2020) (analyzing the role of standard impracticability, impossibility, and force majeure doctrine to the likely outcome of COVID-related disputes).

We disagree. Sometimes, private parties’ performance of their contracts greatly increases the negative externalities borne by the public, in ways no one contemplated when the contract was formed. In the past, when the public’s share of the burden has increased dramatically, particu­larly in the case of disease, courts have declined to enforce contracts as written. Instead, courts have sometimes reformed contracts to ensure that the burden borne by society is acceptable. 22 See infra section II.A (explaining how courts have sometimes excused performance in light of third-party risk).

The COVID-19 pandemic is another moment when ordinary con­tracts have become extraordinarily risky for the public. 23 For other works in the rapidly growing tradition of “COVID and Contract,” see Jonathan C. Lipson, Contracting COVID: Private Order and Public Good (Temple Univ. Legal Stud. Rsch. Paper No. 2020-21), (on file with the Columbia Law Review) [hereinafter Lipson, Contracting COVID]. Gatherings—which some contracting parties have not canceled due to a fear of lost deposits, for instance—have caused clusters of viral spread in many communities. Now-infamous examples include a corporate conference  in  Massachusetts, 24 Farah Stockman & Kim Barker, How a Premier U.S. Drug Company Became a Virus ‘Super Spreader’, N.Y. Times (Apr. 12, 2020), (on file with the Columbia Law Review).   a  funeral  and subsequent  birthday  party  in Chicago, 25 Robin Goist, ‘Super-Spreader’ Attending Funeral, Party in Chicago Resulted in 16 Coronavirus Cases, and Three Deaths, CDC Says, (Apr. 9, 2020), []. a church service in Daegu, South Korea, 26 Youjin Shin, Bonnie Berkowitz & Min Joo Kim, How a South Korean Church Helped Fuel the Spread of the Coronavirus, Wash. Post (Mar. 25, 2020), https://www.wash (on file with the Columbia Law Review).
and a choir practice in Washington State, 27 Richard Read, A Choir Decided to Go Ahead with Rehearsal. Now Dozens of Members Have COVID-19 and Two Are Dead, L.A. Times (Mar. 29, 2020), (on file with the Columbia Law Review). which have all been identified as events that caused widespread disease. Contracts for future performance—like the residential housing agreements signed by many college students over the summer of 2020—brought people together into close proximity and spread disease. 28 See, e.g., Charlotte West, Colleges Are Telling Students They Won’t Get Housing Refunds if Campuses Close Again for Coronavirus, (July 9, 2020), [].

This Essay makes two contributions to the literature. 29 For other examples of COVID-19 and contract papers, see Hanoch Dagan & Ohad Somech, When Contract’s Basic Assumptions Fail, Canadian J.L. & Juris. (forthcoming 2021) (manuscript at 26–34), (on file with the Columbia Law Review); Ian Ayres, Corona and Contract, Balkinization (Mar. 23, 2020), [] (arguing that consumers should pay some cancellation costs in light of public health benefits that might accrue). The first is theoretical. Building on literatures in contracts, contract design, and other fields, it shows how the public participates in private contracting. It focuses particularly on the final gatekeeping function of courts, which usually enforce—but can reform—contracts. We suggest that the limited cases in this area can be understood as advancing a special defense to obligation, denying obligation due to public policy based on increased social costs. This defense is distinct from ordinary public policy analysis because it arises postformation, and differs from impracticability and frustration doctrines because the costs it relates to are public, and not private.

The second contribution is practical. In extraordinary times, courts sometimes do not enforce contracts as written in an effort to protect public health. Instead, courts turn to half-loaf and compromise solutions, in­cluding contract reformation and more equitable damage remedies. When deciding whether to perform contracts—or to hold counterparties to performance—parties should realize that previous courts can and have embraced compromise, rather than rote enforcement. Newly dominant modes of dispute resolution make such solutions more likely than ever.

The remainder of this Essay proceeds as follows. Part I shows how the public influences private contracts through three main mechanisms: ex ante definition of legally permissible subject matter for private bargains, regulation, and contract interpretation. Part II focuses on the contract interpretation piece. It shows that in response to contracts that increase the public’s risks, courts have sometimes reformed, rather than enforced, contracts. Public health crises, like the current pandemic, are particularly salient in this set of cases: Courts excuse performance or reach for interpretations that align with equitable solutions. Part III discusses implications, including remedies for breach. In the modern litigation environment, which is dominated by mass adjudication through nontraditional tribunals, courts are unlikely to take a textual approach to enforcing contracts breached during pandemic times. Instead, they will likely dole out rough justice through arbitration and like fora that promote com­promise, all but ensuring that breachers will not be held to the specific damages of any particular individual contract.