Marriage and Contract

Law & Economics
Family law: Marriage & contract

Contents

Part 1. 1. Introduction to Family law in France. 2. Conditions for Marriage between two persons. 3. Obligations out of Marriage.
Part 2. 1. New law & Economics 2. Formation and dissolution of marriage 3. Law & Economics explanation in Contract law
Part 3. 1. Gay marriage 2. Freedom of establishing Contract

Introduction: There is multiple definition of “family” reflecting the immense diversity of this fundamental social and legal institution. The family is characterized variously as a biological relationship (parent and child, brother and sister), as a voluntary legal undertaking (registered partnership; adoption), or as a religious and social contract (marriage). Despite a widespread increase in cohabitation and other forms of non-marital union in France, marriage remains a valued institution: but if we will see statistics it is obvious that compared to previous years number of marriage is decreasing, for example if we will see statistics from bottom to top it will look like this:
1970yy- 393,700
1980yy- 334,400
2000yy- 297,922
2006yy- 268,100 registered marriages.
Marriage in France is governed by Title V (Articles 144-228) of the Civil Code.[1] Family Structures and Economic Outcomes: Employment and Income. Married-couple families generate the most income, on average. Young married men are more likely to be in the labour force, employed, and working a full-time job than their non married counterparts. Cohabiting men have less stable employment histories than single and married men. Married families generally earn higher incomes than stepfamilies, cohabiting families, divorced families, separated families, and single-parent families. According to one study, married couples had a median household income twice that of divorced households and four times the household income of separated households. Net Worth. Intact, married families have the greatest net worth. A family's net worth is the value of all its assets minus any liabilities it holds. Married households' net worth is attributable to more than simply having two adults in the household: a longer-term economic outlook, thrift, and greater head-of-household earning ability (the marriage premium) all contribute to greater household net worth. Poverty and Welfare. Poverty rates are significantly higher among cohabiting families and single-parent families than among married families. Over one third of single mothers live in poverty. Nearly 60 percent of non-teenage single mothers rely on food stamps or cash welfare payments. Child Economic Mobility and Well-Being. Children in married, two-parent families enjoy more economic well-being than children in any other family structure. Children in cohabiting families enjoy less economic well-being than children in married families, but more than children in single-parent families. The children of married parents also enjoy relatively strong upward mobility. By contrast, divorce is correlated with downward mobility. A non-intact family background increases by over 50 percent a boy's odds of ending up in the lowest socioeconomic level.[2]

Married Families:
Married men enjoy an income increase called the "marriage premium." Married families also tend to save more, have higher net worth, and enjoy greater net worth growth from year to year. Furthermore, the presence of both parents at home is strongly beneficial for children, giving both parents myriad more options in devising their income and parenting strategies, resulting in increased economic well-being.

Remarried Families:
Remarriage may improve women's incomes after divorce, though men who remarry after divorce have, on average, less net worth than continuously-married men. Many remarried spouses choose to keep money in separate accounts rather than pooling all their resources. Poverty is reduced by 66 percent among children whose divorced mothers remarry.

Divorced Families:
The income decline that follows divorce, particularly among women, is well documented. Divorcing or separating mothers are 2.83 times more likely to be in poverty than those who remain married. Following a divorce, the parent with custody of the children experiences a 52 percent drop in his or her family income. The children of divorced mothers are less likely to earn incomes in the top third of the income distribution, regardless of where in the income distribution their parents' income fell.

Single-Parent Families:
Single parents have a particularly difficult economic situation. Single mothers over age 20 more closely resemble teenage single mothers than they resemble married mothers their own age when their children are born. Single mothers have less net worth than married parents, single fathers, and stepfamilies; their net worth is comparable only to cohabiting couples. Over one third of single mothers live in poverty. Children in single parent households have less family income and are more likely to be poor than children in married-parent households.

Cohabiting Families:

Cohabiting households generally have larger incomes than single-parent households but smaller incomes than married-parent households. Cohabiting women work more hours as their partner's income increases because they deliberately avoid an agreement to totally pool their incomes. Cohabiters who live together for less than four years are not likely to pool their incomes. Older cohabiters who have never been married have, on average, 78 percent less net worth than those in intact families. Furthermore, cohabiters have the lowest net worth growth of all family structures, comparable to that of widows and widowers.

Conditions for contracting marriage: In principle right to marry is fundamental freedom protected by international law. There are also certain limitations like: age, 144 article of civil code, is 18 years old for both girl and boy, since it is deemed this is age when person is considered to be mature. In the case of exception parental consent is required. Also marriage between relatives is prohibited (articles 161-163 of the code). There might be exception, if relatives are not related biologically or 164 article of code allows President of Republic to authorize marriage between relatives by marriage in direct lineage where the person who created the relationship is deceased. Marriage is strictly monogamous institution. Bigamy is a criminal offence rendering the 2nd marriage void and imposing 1 year custodial sentence and fine 45 000 Euro on the bigamist. Polygamous marriage conducted in other countries under religious and cultural regimes like Islamic- are recognized only to a limited extent in France. Also France doesn’t recognize marriage between same-sex couples, unlike countries such as Belgium, Netherlands, Spain. However a transsexual can marry a partner of the opposite sex to his/her postoperative gender.
Marriage in France is only recognized on completion of a civil ceremony, which is proceeded into the local town hall (no marriage detached from religious ceremony). Ceremony is a public event so there must be at least 2 and at most 4 witnesses.
Obligations arising out of marriage: Under the code, marriage gives rise to a number of spousal obligations are summed up by (212-226 articles) as comprising mutual fidelity, support and assistance, in substance this entails a duty to cohabit, as well as joint responsibility for financial and moral directions of family, as well as educational and future welfare of children and parental (203-211) obligations. Financial contributions to the household must be equal and proportionate to their respective incomes and may comprise contributions in kind. According to article 215 of the Civil Code, any disposal of matrimonial property (sale of house) must be concluded by joint consent. [3]Spouses may conclude contracts on an individual basis relating to matters of household maintenance or their children’s education. However couples are jointly responsible for any debts incurred in the process. Exception might be if it was manifestly excessive or in bad faith by third party.

The economic approach to law

Until 1960, economic analysis of law was virtually synonymous with antitrust economics, although there had been some economic work on tax law, corporate law, patent law, contract law.
The new Law & Economics began with Guido Calabresi’s first article on torts and Ronald Coase’s article on social cost. These were first modern attempts to apply economic analysis systematically to areas of law that do not regulate avowedly economic relationships. One can find earlier glimmerings on economic approach to problems of accident and nuisance law that Calabresi and Coase discussed, especially in the work of Pigou, which provided a foil for Coase; Coase’s article introduced Coase Theorem, which established a framework fir analyzing the assignment of property rights and liability in economic terms.[4] This opened a vast field of legal doctrine to fruitful economic analysis. An important, although for a time neglected, feature of Coase’s article was its implications for the positive economic analysis of legal doctrine. Coase suggested that the English law of nuisance had an implicit economic logic. Later writers generalized this insight and argued that many of the doctrines and institutions of the legal system are best understood and explained as efforts to promote the efficient allocation of resources. List of founders of “new” law of economics would be incomplete without Gary Becker. Becker’s insistence on the relevance of economics to a surprising range of non-market behaviour ( including charity, love, and addiction), as well as his specific contributions to the economic analysis of crime, racial discrimination and marriage/divorce, opened to economic analysis large areas of the legal system not reached by Calabresi’s and Coase’s studies of property rights and liability rules.

Formation and dissolution of marriage, page 146 Commercial partnerships are voluntary contractual associations, and so up to a point, are marriages. The “marriage market” is an apt metaphor for the elaborate process of search by which individuals seek marital partners with whom to form productive households. The marriage market is rational, for example, bright men tend to marry bright women; an agricultural analogy will reveal why. Suppose there are 2 farms and the soil of one is (untreated) twice as productive as the soil of the other (untreated). A chemical will double the yield of whichever farm it is applied to, but there is only enough chemical for one farm. Should it be applied to the farm between the two farms? (Half a chemical will increase the output of a farm by 50%). Or should it all be applied to the farm with a better soil? The last. Suppose the output of the farm with the richer soil is (before treatment with the chemical) 2, and the output of the other farm 1. if the chemical is applied all to the poorer farm, the total output of the two farms will be 4 (2+2); if applied half and half, 4 (3+1); nut if applied all to the better farm, 5 (4+1). [5]Coming a little closer to home, we would also expect that law firms that had the best partners would hire the best associates to work with them, that the best judges would have the best law clerks, that law schools with best students would have the best teachers and the business firms in thriving markets would have better executives on average than firms in declining ones. And so in marriage as well if the positive qualities of spouses are related multiplicatively as in the farm, law firm, law clerk, law school and corporate examples and not just additively. Might the proper analogy of marriage instead be the international trade in unlike commodities-say, wheat for aircraft, where there is no presumption that the best of the one is being exchanged for the best of the other, the second best for the second best, and so on? These good are not used together; so the potential multiplicative effect, which might in the marriage example include the production of children of superior intelligence or beauty, is missing. Another reason for “positive assorted” mating of humans, besides the potential multiplicative effect of the parents’ qualities, is that it reduces friction and therefore transaction costs, within household. Despite of resemblance of marriage to a business partnership, the marital relationship is not, or at least was not before no-fault divorce- an unalloyed example of free-market principles. Three features in particular: First, the parties are not free to set the term of the contract or even to terminate the contract by mutual consent; the term is life, subject to termination for cause. Today either party can divorce at will- that is what “no fault” divorce means, but I am describing traditional marriage law and marriages for a term fixed in advance, such as five years are still forbidden. Second, the sanction for breach is more severe than in the case of regular contract. If the husband abandons the wife, he not only must continue to support her (which is analogous to his to pay damages) but also may not marry anyone else. It is as if a contract breaker could be enjoined from making a substitute contract for the one he had broken, for the rest of his life. If spouses have a dispute during the course of the marriage the courts will not intervene to settle the dispute even if the spouses have signed contract allocating rights and duties that one spouse alleges has been broken; the spouses will be compelled to work it out for themselves.

Remedies as incentives: When a party fails to perform a contract, victim may ask to the court for remedy. Remedies fall in three general types. First, the contract may stipulate a remedy. Contract stipulates a remedy when it contains explicit terms prescribing what to do if someone breaches. For example, a construction contract may stipulate that the builder will pay 200$ per day for late completion of a building. Instead of stipulating a specific remedy, the contract may specify that disputes between the parties will be arbitrated by International chamber of commerce, which has its own rules about remedies. Because negotiating and drafting are costly, an efficient contract will not explicitly cover every contingency. In fact, most contracts do not specify remedies fro breach. When the contract omits a remedy, the court must supply one. The court may order the breaching party to pay money damages to the victim. In practice, each legal system prescribes damages as the remedy in some circumstances and specific performance as the remedy in other circumstances. Furthermore, the prescriptions largely overlap in many different legal systems. Presumably, the prescriptions overlap because different systems of law respond to the same economic logic. Common law and Civil law traditions both tend to specify the efficient remedy for breach of contract. Traditional marriage law is thus a puzzling amalgam of legal intrusiveness (in regard to the term of the contract and the sanctions for breach) and legal hands-off-ness. The explanation may be that the marriage “contract” affects no consenting third parties, the children of the marriage. Of course, even in a system of consensual divorce, parents who love their children will take costs to them of divorce into account in deciding whether to divorce, but unless they are completely selfless they will not fully internalize the costs to the children and thus may decide to divorce even thought the total costs to all concerned exceed the total benefits. It might seem that locking parents unto a miserable marriage, by making divorce impossible, would condemn the children to misery too. But this ignores the fact that forbidding divorce may induce more careful search for marriage partner in the first place. The more costly mistake is, the less likely it is to be committed and a mistake in choosing a spouse is more costly in a system that forbids divorce (or makes it very difficult), than in one that permits it. The lengthier the marital search, moreover, the higher the average age of spouses at marriage. And more mature, experienced people are less likely to make mistakes than greenhorns. So there is the curious paradox that making divorce more difficult may actually foster happy marriages. Furthermore, people who are locked into a relationship have a strong incentive to work out their differences, so there is less need for judicial remedies such as divorce.[6] So far as length and care of marital search are concerned, divorce at will, thought the opposite of prohibiting divorce, may have similar effects. The easier divorce is, the less the married state differs from the single, the less therefore the cost of postponing marriage, and so the lower the cost of a protracted premarital search, resulting in lengthier searches that might in turn lead to an actual reduction in the divorce rate of couples married after no-fault divorce replaced divorce for good cause. The fact that marital search is likely to be protracted under virtually any divorce regime may explain the law’s reluctance, so at variance with the corresponding rule of contract law, to recognize fraud as a ground for annulling a marriage, unless the fraud involves sex ( typically husband failed to disclose before marriage that he was impotent). The rule both reflects and encourages a courtship lengthy enough to enable each prospective spouse to unmask most of the deceptions by which people try to represent themselves in personal relationships as having better qualities and prospects than they really do. The greater the pre contractual search, the fewer legal remedies are necessary. But fraud as to sex not only strikes at the heart of the marriage contract, but was difficult to detect at a time when premarital sex was frowned on, as it still is in some circles, and dissolution of a childless marriage involves minimum social costs. The refusal of English law until well into 19th century to recognize any grounds for divorce may actually have protected the weaker spouse (wife) more effectively than allowing divorce for cause would have done. In a system that allows divorce for cause, a husband who wants “out” of the marriage will have an incentive to so mistreat his wife that she will be driven to sue for divorce, provided that alimony or other remedies would not visit the full costs of the mistreatment on him, as often they would not in a system in which litigation was slow, costly, and uncertain. But if the remedial difficulties can be overcome, then allowing divorce for cause makes economic sense, as it enables at least a rough comparison between the costs to the children of divorce and the cost to a wronged spouse of remaining married. Moreover, the traditional grounds of divorce, with one partial and very interesting exception (adultery), seem to have been limited to cases in which the husband’s misconduct was likely to hurt the children as well as the wife: cases of insanity, extreme cruelty and criminality. In law and Economics theory there is one particular idea about, contract law that is associated with, and arguably distinctive of, the economic analysis of contract law: The idea of “Efficient Breach”. The concept is that the law effectively gives the promisor the option whether to perform or pay damages- as payment of expectation damages is the near-universal remedial standard, with orders of specific performance allowed only in extraordinary cases and supracompensatory damages unavailable and penalty provisions unenforceable. [7]The reference of efficient breach means that the law can be seen as implicitly encouraging parties to breach their contracts when an alternative transaction would be so much more profitable that the original contracting party could be paid full expectation damages and the breaching party would still be better off.

Gay marriage

Homosexual marriage is now authorized in a number of foreign countries, including Spain, Canada and Netherlands and in some states of USA, but it is still strongly opposed by most Americans. The opposition is based mainly on the idea of homosexual marriage, but John Stuart Mill argued in “on Liberty” that an individual has no legitimate interest in the activities of other people that don’t affect him except psychologically. Mill had in mind the indignation felt by English people at Mormon polygamy, occurring in Utah. But that’s not an economic argument, because there is no difference from a welfare-economics standpoint between physical and emotional harm, either one lowers the utility of the harmed person. Some of the opposition to homosexual marriage is based on fear that making homosexual relationships fully respectable by permitting such marriage will encourage homosexuality. Most people don’t want there children to become homosexuals, and this aversion is a factor in the utility calculus. However there are different ideas about homosexuality, like is it genetic or acquired. Basically if it is innate, it will not be affected by social acceptance. That is thought that orientation of others will not be affected, but none knows it for sure yet. Some of the benefits to homosexual couples from marriage impose no significant costs on others and thus are clear social gains if aversion costs are set to one side. For example, a married person doesn’t have to have a will in order to bequeath his property at death to his spouse. Other benefits to married couples impose costs on 3rd parties, example is social security spousal and survivor benefits, since they are not fully financed by the social security taxes paid by the person bestowing or obtaining benefits. But such redistributive effects are equally imposed by homosexual marriage, especially since homosexual marriages are unlikely to be significant fraction of all marriages.[8] Allowing homosexual marriage might confer broader social benefits. Forbidding homosexual marriage raises the cost of monogamous homosexual relationships, because marriage is a subsidy to monogamy. Also, intolerance of homosexuality, which allowing homosexual marriage might reduce, encourages male homosexuals to marry women, which increases the risk of spreading AIDS if the homosexual husband has homosexual sex on the side. The controversy over gay marriage brings to the fore the fundamental question why marriage should be legal status. One might think it is just religious or ceremonial status that would have no legal consequences, so that couples married or not, who wanted their relationship legally defined would make contracts on whatever terms they preferred, alimony and property settlement would be freely negotiable as well. For those people who did not want to negotiate a marriage contract, law could provide a default one size fits all solution- the conventional marital status embodied in state marriage statutes. That would reduce transaction costs for people content with the standard form. Law would have to decide; however, what contractual relationships are qualified for social security and other public benefits to which spouses are entitled under current law. Under contractual approach, gay marriage as an issue would disappear, because the state would not be being asked to “recognize”. No one thinks that homosexuals should be forbidden to make contracts.

References:

1. Principles of French law: Jhon bell, Sophie Boyron and Simon Whittaker.
2. Economic analysis of law, Richard A. Posner
3. Law and Economics, 3rd edition; Robert Cooter, Thomas Ulen
4. Theoretical Foundations of law & Economics, Edited by Mark D. White (Brian H. Bix)
5. Marriage and Economic Well Being: The Economy of the Family, Patrick F. Fagan, Andrew J. Kidd and Henry Potrykus

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[1] Principles of French law: Jhon bell, Sophie Boyron and Simon Whittaker. P243

[2] Marriage and Economic Well Being: The Economy of the Family, Patrick F. Fagan, Andrew J. Kidd and Henry Potrykus p12
[3] Principles of French law: Jhon bell, Sophie Boyron and Simon Whittaker. P246

[4] Economic analysis of law, Richard A. Posner, Page 25.
[5] Economic analysis of law, Richard A. Posner, Page 146
[6] law and Economics Robert Cooter, Thomas Ulen 3rd edition page 225
[7] Brian H. Bix ( Law and Economics explanation in contract law page 208). “Theoretical Foundations of law & Economics”.

[8] Economic analysis of law, Richard A. Posner page 165