|I'm impressed that everyone here is willing to put so much energy into discussing these issues, and that everyone has been able to keep the discussion focused (for the most part) on ideas rather than personalities. |
Maybe (maybe) it will help people understand each other's arguments if I provide some legal background, based on well-established Anglo-American law (not bureaucratic rule-making):
1) Fraud is basically telling someone one thing while doing or intending to do another, in order to induce the other fellow to do something for you. (For example, charging someone for a crane that you know you never actually had on the job.) Fraud is actionable, and it is also something that Rand viewed as a use of force that justified a response with force (preferably by the government, through the courts).
2) Breach of contract is failure to do something that you promised another person you would do in exchange for something from that other person. Fraud can be considered a very egregious type of breach of contract. But breach of contract also includes, for example, agreeing with someone that you'll fix her roof with asphalt shingles and then fixing it with tar paper instead. (It doesn't really matter whether the tar paper was an honest mistake.) Like fraud, breach of contract is actionable, and it is also something that Rand viewed as a use of force that justified a response with force.
3) There is a concept known as overreaching, which someone can use to get out of a contract under very limited circumstances. Historically, courts have very rarely allowed people to get out of contracts by arguing that the other fellow was overreaching. You basically need to show that the other fellow had so much domination over you that you were unable to decide for yourself. About the only time an "overreaching" argument succeeds is where the heirs of some feeble old lady show that her butler or neighbor or lawyer or accountant insinuated himself into her life so much that she was almost brainwashed into signing over all her property to him.
4) It is not overreaching, and a contract will be enforced, if the person who's trying to get out of it simply "paid too much," no matter how much too much. For several centuries, Anglo-American law has put the burden on each person to decide how much he's willing to pay, and arguing after the fact that you were in a hurry, were worried, were lacking information about the going rate, needed to protect your wife's health, etc., etc., will not by itself get you out of whatever you agreed to. It's up to you to judge whether you can or should enter into a given agreement.
5) There is also a concept known as duress, which is about as rarely found by courts as overreaching. This concept basically allows you to get out of a contract if you made the agreement only because there was a gun to your head. For example, if you're drowning and somebody happens by in a boat and says he'll throw you a line if you'll pay him $500, and you agree, no court is going to enforce that agreement. It was life or death for you. (But a court will require you to reimburse the guy for any associated out-of-pocket costs, such as if you rip some nice brass railing off his boat when you climb aboard.) On the other hand, it's not duress if you're just in a difficult situation.
Sorry for the length of this. These definitions don't answer the questions being debated here, but they may help people keep straight the different situations they're talking about. As I said, these are (simplified) concepts that have long existed in Anglo-American law, and I believe that they are objective and would need to be carried over into any Objectivist legal system.
(Edited by Jay Pastore on 9/06, 6:50am)