Wednesday, March 08, 2006


The Problem of an Implicit Contract

I have previously mentioned the issues and problems of implicit contracts. Specifically, from this post:

Is it a violation of the Libertarian ethic to cheat on your significant other? Since marriage is an explicit contract, I am mostly concerned with individuals who are dating. There would, at least in many cultures, be an implict contract involved with dating -- one implying fidelity or at least limiting any attempts as polyamorous activities. Since it is dating though, there are risks involved with this activity and should all infidelities on the part of a 'significant other' be considered an assumed risk? I suppose if this sort of issue is never talked about, there can only be limited expectations, but there likely still exists an implict contract -- even if it is one-directional. How do we resolve that and is one party deserving of restitution in the case of infidelity?

This also has to deal with the issue of the implicit contract that I stated from Walter Block's lecture (the post).

Getting to my point, in the news the other day, there was some problems at Disney. A Disney employee named Elizabeth Sunde accussed four other male employees of a "gang rape". Here's the initial news. Then it was found out that she was a willing participant in the activity, as evidenced by videotape. More on that.

So, here's the issue: What obligation does an individual have to another by breaking an implict contract. What if she actually did want to stop at any point in time during the sexual activity, does she have an obligation to continue to "fulfill" the implicit contract of finishing the services?

A general approach to an implicit contract says that she would have to continue since she would be in violation of that contractual obligation, or she would be forced to give some alternative compensation/restitution to make those other four individuals "whole" again.

Is there a problem with this? Any takers?

Maybe the lesson here should be: Don't make implicit contracts with people you don't trust.

The Prisoner's Dilemma teaches that individuals will "cheat" in the absence of either explicit enforcement (contract) or complete trust.
Well, what about the lifesaver who makes an implicit contract with the individuals on the beach that he will rescue the drowning individual. I am not sure how much choice an individual has in that case. Obviously you would never go to that beach again, with people like that (could be a life guard or ordinary person) who would renege on that implicit contract.

Still though, there seems to be problems. I can not put my finger on it at the moment...
So, I, as a good swimmer, make an implicit contract to save drowning children of negligent parents? In dangerous waters? At great personal risk?

Where does it end? I'm not sure it is an implicit contract. Certainly, I'd jump in to save a friend or family member. But me being there shouldn't excuse risky behavior.

Maybe that makes me heartless, but there it is.
By you jumping into the water in attempts to save them, you are creating an implicit contract with the individuals on the shore. You have no obligation to rescue them at all (other than moral), but as soon as you make that effort, you can not simply stop and change your mind and head back to shore, without breaching that implicit contract. Because as soon as you attempt to save them, other implicit contracts were not taken (i.e. no one else jumped in, cause you are a good swimmer).

You have no obligation to the individual taking the risky behavior (and their risk is not excused, cause you were never obliged to save them in the first place). However, you do have the contractual obligation to the individuals on the beach, with whom you created that implicit contract. The issue is that, as a result of their contract with you, they did not try to gain those lifesaving skills from other individuals and they should likely be given restitution for your breach of contract.
I don't like this example at all. What if the people on shore just think you're a good swimmer and you go in can't save the drowning swimmer? Do you have to pay compensation then, although you did your best and no one helped? Of course not.
Of course, you don't like that example -- it's tough. If you fulfill your end of the contract, i.e. attempt to rescue them then your implicit contract was fulfilled, irrespective of whether or not you were able to save them.

The problem is, that you can't just stop and say no, unless perhaps it puts you or anyone else at risk (theoretically you would have decided that before you jumped in the water and made the initial attempt).

Also, I am not fully sure how liberal or extensive the implicit contract is supposed to be. In some states they have the "good samaritan" laws that do not put any risk or responsibility on anyone attempting to assist another in need. Other states hold that person fully liable for any wrong doing (like if someone dies while you are trying to give them CPR or if you do save them and break their sternum).
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