Gifts, Bargains, and Form

It is a truism of Anglo-American law that there is a difference between gifts and bargains, between donative transfers and contractual exchanges. Donative transfers, it is said, carry out benevolent urges in the context, usually, of the family, whereas contractual exchanges carry out self-interested aims in the context, usually, of the market. Following this reasoning, gifts and bargains are subject to divergent legal requirements. With respect to gifts, where the primary legal goal is to effectuate donative intent, formalities are said to be required to put that intent beyond question. In contrast, with regard to contracts, where the primary legal goal is protection of expectations and security of transactions, consideration is said to be required to mark off those promises customarily understood, in a market economy, to be binding. There are, however, reasons to question the notion that there is a "fit" between the nature of gifts and bargains and the legal requirements applicable to them. First, it rests on assumptions about human behavior in giving and bargaining which are at odds with conventional views of the contexts in which such transfers are ordinarily said to arise. Despite the benevolent motives and family settings usually associated with gifts, the accepted justification of donative formality assumes that, in giving, people are fundamentally unreliable and deceitful. Despite the self-interested alms and arm's length relationships usually associated with bargains, the accepted justification of the consideration doctrine assumes that, in business, people are trusting and trustworthy. These justifications turn the world topsy-turvy. We are to be suspected when we give, relied on when we trade. Second, the notion of "fit" requires that gifts and bargains be truly different transactions. The now-accepted legal definition of a gift as a transfer without consideration is designed to assure that any particular transaction can be placed on one and only one side of the gift/bargain line. Yet there is nothing inevitable about this definition, which developed late in the life of the common law and which has never been used in the civil law. Indeed, the definition contrasts sharply with non-lawyers' understandings of gifts. Anthropological, sociological and psychological studies of gifts all suggest that gifts and bargains are alike exchanges, differing only in that bargains involve the exchange of commodities, while gifts may involve the exchange of noncommodities such as status, obligation, "psychic reward" or the like. The "purely" one-sided donative transfer is not part of the "reality" non-legal social scientists have studied. This essay argues that that the presumed dichotomy between gifts and bargains is less a reflection of real differences than it is a construct, depicting individuals whose urges to give are sharply differentiated from their urges to trade and a world in which self-interested gain is more important and more frequent than other-oriented beneficence. The essay questions the justifications which have traditionally been offered to explain the formalities of gift-giving, justifications which rely on the ritual, evidentiary, protective and channeling functions of form. It also questions whether it is accurate to define gifts as nonbargains. If gifts and contracts are alike exchanges, then the disparaging discussions of gifts in the contracts context may be read to reflect a view that market exchanges are more significant than other exchanges. This view ignores the possibility that not all wealth consists of commodities. In the end, the use of intent-defeating formalities in an area of law ostensibly committed to the effectuation of intent may express an underlying ambivalence about the true "worth" of gifts in a society organized around commodities markets.