Legal Promise and Psychological Contract

This Essay argues that the “psychological contract”—the parties’ respective, subjective, idiosyncratic understandings of their contractual obligations to one another—is important and predictable. The common law of contract tells us how to discern the legal promise. By contrast, the “psychological contract” describes how the parties themselves understand their agreements, an inquiry that refers to the legal rules but also relies heavily on evidence from behavioral decision research: psychology, experimental economics, and empirical legal scholarship. The goal of this argument is to uncover the coherent structure of empirical contracts findings. This analysis pulls out the common mechanisms underlying a broad range of behavioral findings and offers a framework for predicting behavioral effects in real-world decisions. Contracts scholars have always done a lot of talking about promising. Is a contractual agreement the same thing as a promise?1 Is it wrong to break a contractual promise?2 Is the contract a promise to perform or a promise to either perform or pay