Abstract
Excerpted From: Carliss Chatman, 1981, 82 Washington and Lee Law Review 1655 (2026) (516 Footnotes) (Full Document)
The persistent racial wealth gap is difficult to address because of three intervening forces: the preservation of white economic comfort as a condition precedent to contracting, the inferior personhood status of Black persons, and the role the government plays in reinforcing these norms through facially neutral racialized barriers to contracting. Although the belief in the invisible hand which will eventually lead contracting parties to maximize contract gains and minimize losses guides contract law and policy, American capitalism is impacted by another stronger invisible force--a belief in the inferior social and legal personhood status of Black persons. The government, on its face, has declared disparate legal status to be unconstitutional, and inequitable contracting to be illegal, while states, counties, municipalities, courts, administrative agencies, and legislative bodies have failed to enforce these policies and simultaneously advanced policies that continue to separate and oppress. Because the government advances many racialized measures that appear facially neutral, private actors do the same, returning to racialized metrics using socially acceptable dog whistles. The personhood status and facially neutral racialized barriers to entry combine to maintain white economic comfort-- defined in this Article as the elimination of economic competition and threats from non-white persons in spaces perceived to be reserved for white persons. What remains is a system that prioritizes white supremacy in contracting, while being hostile to remedial measures, to the system’s detriment.
Often, people racialized as Black simply know that they are experiencing disparate treatment based on their race --but we also know that the lived experience is not enough to establish a cause of action. There are many examples of this phenomenon in the American economy, but perhaps none is as salient for analyzing how a facially neutral arms-length contract negotiation may still produce a racialized outcome in contract performance and enforcement as the status of Black players and coaches in the National Football League (NFL). The success of Black quarterbacks and coaches in the NFL is a new phenomenon. Many agree that this long overdue development was delayed by the racist belief that Black people do not have the mental acuity to lead a team. Even in this modern era when Black quarterbacks are regularly drafted, receive record-breaking compensation packages, and lead teams well into the post-season including the Super Bowl, Black quarterbacks continue to face contract negotiations, conditions, and enforcements that are tainted by unspoken race -based bias. As with other areas of the law dealing with race , these NFL players have little recourse. Black quarterbacks represent the inferior contracting status of Black people, which is also evidence of an inferior personhood status, which in turn imposes the requirement of satisfying the condition precedent imposed by white supremacy--white economic comfort.
The deterioration of the contractual relationship between Russell Wilson and the Denver Broncos demonstrates a situation when most Black people perceive the type of discrimination that is always dismissed by the courts for lack of but-for causation, and by public opinion as making everything about race . In March of 2024, only two seasons into a five-year contract, the Denver Broncos released Russell Wilson from the team. This decision came at a cost: The team faced a “ dead money” penalty of $85 million, tying up capital for future trades and drafting, and under the contract they were required to pay Wilson’s guaranteed salary even if he is not on the Broncos roster. This agreement between Wilson and the Broncos was worth $245 million, including $165 million guaranteed. It was the biggest Broncos contract and the third most lucrative in the NFL, far outpacing the Broncos contract with Peyton Manning, deemed by some to be one of the greatest quarterbacks ever. In comparison, the Manning contract was a five-year, $96 million contract with a $40 million guarantee.
When the Broncos signed Wilson, he was a hot commodity who could only be acquired at a significant cost. On September 1, 2022, Wilson had two seasons remaining on his agreement with the Seattle Seahawks which the Broncos also had to guarantee, thus placing him on the team payroll through the 2028 season. Wilson was in his tenth season with the Seahawks at the time, having led the team to two Super Bowls, including its first Super Bowl victory and being named to the Pro Bowl nine times. Seattle was only moved to release Wilson when the Broncos made a compelling offer which included multiple first-round draft picks. At the news conference where the deal was announced, Wilson said his “ goal is to be able to finish [his] career [in Denver].” Initially, the Broncos celebrated Russell Wilson, including General Manager George Paton who praised Wilson’s work ethic, leadership, and championship mentality in the months following the trade.
Cutting Wilson was a major financial setback, but it was not a surprise given how much the relationship between Wilson, the team, and his coach deteriorated. Wilson, who was once deemed one of the greatest dual-threat quarterbacks of all time, 27 put up career lows in several performance metrics by week thirteen of the 2022 season.
Despite the 2023-24 season not being a total disaster, ending with a record of six wins, five losses, the Broncos continued to treat Russell Wilson as a problem and attempted to shift the burden of his injuries back onto him, in breach of their agreement. When the Broncos entered into the contract with Wilson, they assumed the risk that his injuries may limit his performance, and that if injury occurred, they would pay the price of cutting him from the team. This burden shifting did not stop the Broncos from attempting, against the terms of the contract and the protections provided to players by the NFL Players Association (NFLPA), to force Wilson to give up his rights under the contract. The Broncos approached Wilson and told him the team may consider benching him if he did not move a March 17 date guaranteeing him $37 million for 2025. Per NFL rules, players may not be cut if they are injured and cannot pass a physical. Even if Wilson could not return to the Broncos, he would be owed his full salary. On November 4, 2023, NFLPA attorney Jeffrey Kessler sent a letter to the Broncos and NFL’s management counsel asserting any threat to bench Wilson after a refusal to adjust his contract “ will violate, among other things, the Collective Bargaining Agreement, Mr. Wilson’s Player Contract and New York law.” The letter also asserted the NFLPA “ was particularly concerned that the Broncos still intend to commit these violations under the guise of “ coaching decisions.” ’ 36 Kessler added in the letter that the union and Wilson “ reasonably anticipate arbitration and/or litigation against the Broncos and the Management Council, triggering your respective obligations to preserve potentially relevant documents.”
The Broncos were undeterred by the NFLPA’s warnings. When the Broncos lost to the Houston Texans on December 16, 2023, Head Coach Sean Payton criticized Wilson on the side lines. Ten days later, Payton informed Wilson that he would be benched for the final two games of the season in favor of backup Jarrett Stidham. Wilson served as the secondary quarterback for the first time in his career. On December 29, 2023, Wilson acknowledged publicly that he was threatened by team leadership: “ [T]hey came up to me during the bye week, beginning of the bye week, Monday or Tuesday, and told me that if I didn’t change my contract, my injury guarantee, that I’d be benched for the rest of the year.” Coach Payton continued to claim that Wilson was benched for football reasons and that he was not privy to any conversations between Wilson and the Broncos front office. On March 4, 2024, the Broncos announced their intention to release Wilson and take on an $85 million dead money charge against their salary cap over the next two years, the largest dead cap in NFL history.
The breakdown of the relationship between Wilson and the Broncos feels like it is about more than just football, but typically the reason behind contract failures is not the law’s concern. The American system of capitalism embraces freedom of contract, and a part of that freedom is the freedom to break contracts, even when doing so is impractical. We do not force parties to throw good money after bad, or to stay in a deal when it is more beneficial to break the deal, pay remedies, and enter into a better contract. This principle includes the concept of efficient breach, which occurs when one party breaches a contract because paying damages is economically more advantageous than fulfilling the contract. It is based on the idea of minimizing total economic loss. If breaching the contract and paying damages costs less than performing the contract, it can be considered efficient because it maximizes the net economic benefit. Generally, we deem a breach to be efficient if damages for breach are calculable and not excessively punitive, the non-breaching party can reasonably find a substitute for the breached contract, and both parties could potentially benefit because the breaching party avoids a loss greater than the damages paid while the non-breaching party receives compensation and has the potential to cover or replace the contract. Even when the breaching party miscalculates, a breach may still be considered efficient because post-breach there are three parties satisfied--the new contracting party and the parties to the prior deal--which is deemed a net positive for the market.
In contract law we also do not define value for parties. Value can be objectively measured in dollars, and it can also include soft subjective factors like feelings, risk avoidance, and comfort. Ultimately, while we must measure a remedy for breach in dollars, we rarely place a dollar value on the utility of contracting. Yet, enforcement of 1981 requires us to do so. Russell Wilson was able to cover by signing a one-year contract with the Pittsburgh Steelers for the veteran’s minimum salary of $1.21 million, and Denver will be required to pay him the balance of his guaranteed salary, $39 million, making him whole as if Denver had honored the deal. Objectively, it is difficult to see the efficiency in taking the largest dead money penalty in NFL history and paying a quarterback to play for another team. Going beyond the dollar value to possible subjective reasoning, it is hard to argue that the decision is just about business, or for the long-term good of the team, when it will have a lasting impact on the team’s ability to recruit top players in the future. Poor-performing teams receive more favorable draft picks, but teams will need to be able to pay the new players. When contracts are inefficient in their formation and performance due to race , it rarely has the clear economic disparity found in the Wilson/Broncos arrangement. The claim that it is just a football decision is enough to deflect from the idea that race is a factor, and there is certainly insufficient evidence to prove race is the but-for reason for taking the largest dead money penalty in NFL history and refusing to give a senior and in-demand quarterback an opportunity to recover from injury.
This problem is not unique to professional sports. In the media industry, Byron Allen--one of the most successful Black media owners in the country--was forced to litigate all the way to the Supreme Court after Comcast refused to carry his networks. Despite presenting a pattern of racial exclusion in the industry, Allen’s 1981 claim was dismissed for failure to meet the but-for causation standard. The Court accepted Comcast’s race -neutral justifications without discovery, underscoring the impossibility of proving intent under 1981--even when the market outcomes are racially stratified. Together, the Wilson and Allen examples demonstrate how race -based contracting inequities are not only pervasive but also doctrinally insulated from redress under current law.
Racism is economically inefficient, yet, in many contracts, whiteness is a condition precedent to a free market bargained-for exchange. Racialized contracting, however, is not a deadweight loss. Those who discriminate have assigned some degree of value to the privilege of contracting with Black people if and when they choose, and that value offsets any losses derived from choosing a deal that prioritizes whiteness but is otherwise less valuable when looking only at the four corners of the contract. These personal benefits give the discriminating party the outcome they desire--but it causes harm to the economy as a whole as non-white persons are completely excluded from some markets and engaged in others in a way that is less than optimal. In essence, white supremacy allows parties to engage in rent-seeking, passing the costs of inefficient contracting onto the government which helps to ensure that Black citizens remain in a subordinate place for the sake of white economic comfort.
One may question how such racially -motivated bias in contracting continues more than 150 years after the matter was addressed by Congress. The Contracts Clause of 42 U.S.C. § 1981 provides that “ [a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts ... as is enjoyed by white citizens.” While this language is quite clear, the interpretation and operation of the statute is made difficult by the interpretation and application of the Act by the courts. Discrimination in contracting is treated as a tort, with the but-for causation that applies to all tort claims, but not all contracts are equal and thus not all torts about contractual relationships can be treated the same. For example, employment laws, insurance codes, and consumer protection laws demonstrate that there are some situations in which the imbalance of power or informational asymmetries require legislation to rebalance and make contracting fair. But 1981 addresses contracts generally. When starting with the presumption that parties have equal bargaining power and are optimizing value as they negotiate, it is virtually impossible to prove that a single cause motivated the contract decision. Yet, when interpreting 1981, courts have referred to the but-for causation applied to torts generally--even though similar discrimination statues apply a more lenient standard of proof.
If the economic comfort of white persons is a prerequisite to a good deal, losing money to have a quarterback who fulfills that condition can be perceived to offset the cost of breach. 1981, in theory, should eliminate satisfaction of the condition of white economic comfort because it limits the freedom of contract of Black citizens. Yet, because 1981 goes to the intentions of the parties, it is difficult to pinpoint precisely when and how a violation of the law occurs. When tort norms are applied to an amorphous duty like the one imposed by 1981, proving the requisite causation is impossible. As a result, the condition precedent of white economic comfort combines with the perception of inferior personhood to limit or eliminate Black freedom of contract without remedy under the law.
1981 allows us to ask what was it about Wilson that would make an otherwise rational economic actor, a multi-billion-dollar NFL franchise, 76 behave so irrationally? Was his performance and skill so intolerable that the team simply could not abide his presence? The history of Black quarterbacks in the NFL, and of Black people in leadership positions in the United States generally, tells us it may be about race . And yet, we have only one recent example of NFL quarterbacks successfully challenging racially motivated decision-making as more than just “ football-based” decisions. A court has never declared an NFL contract or terms of an NFL contract to be void because it was intended to deviate from the contracting rights afforded to white citizens. We know that race motivates contractual relationships between athletes and teams, business founders and start-up funders, and even the everyday employer-employee relationship. But we cannot invade the hearts and minds of contracting parties to prove that considering race has a harmful outcome, nor can we properly measure or compensate the micro-harm faced by Black persons as they endure such harm when it occurs. 1981 is noble in theory, but contract law causes it to fall apart in application.
When evaluating the deal, many focus on the recent improvements of the Broncos following Wilson’s departure, and his marked decline after he joined the team. But, when analyzing contracts and parties’ rights and responsibilities under that contract, we do not shift responsibility based on the outcomes. Instead, contracts are interpreted at the time of the deal. The fact that Wilson properly shifted the risk of taking on a new role so late in his career does not impose a burden upon him to waive those contract rights simply because the contingency he contracted for came to fruition. Wilson is not a widget with an implied warranty of merchantability or fitness for a particular purpose; he is a person who negotiated in good faith to provide his services. The assumption that, regardless of contract terms, a Black party will assume the risk of contract failure for the good of the team reflects inequalities in bargaining power. In addition to the inherent bargaining imbalance between team owners and players, the implied condition of white economic comfort requires Black persons to forego bargained-for rights in fulfillment of that condition.
The NFL, and other sports franchises, are a case study in the attitudes that Americans have about Black people, and how Americans contract with Black people. It is an example of how the undercurrent of racist attitudes and notions are allowed to dominate contract decisions while failing to provide the remedy Congress intended for inequitable contracting in 1981. Racism is allowed to persist as a motivation for every contractual relationship between white citizens and non-white persons, impacting the entire economic existence of those persons when choosing to discriminate is beneficial to white citizens. All that is required is to avoid saying the quiet parts out loud, using only the socially acceptable dog whistles. For the victims of systemic inequitable contracting, these harms that evade legal liability prevent the realization of true freedom of contract, full economic participation, and the equal personhood status that is represented by economic rights.
This case study proves that in America, and in every economy that subscribes to presumptions about people based on race , rational economic decisions are only made when there is economic interest convergence. Fundamental contract fairness for Black persons must benefit white citizens, otherwise it does not occur. Derrick Bell’s theory of interest convergence posits that social change for minority groups occurs when their interests align with the majority. While Brown v. Board of Education 84 represents social interest convergence, it also represents economic interest convergence and is heralded for motivating complete public integration. The economics of Brown and the civil rights movement reflect both the market at the time and the legal justifications for integration forced upon the courts and Congress by the earliest civil rights decisions. How could America maintain its status as a global economic leader, and compete with Communist regimes for ideological domination, when such a large portion of its workforce was undereducated, rendering them incapable of optimal productivity based only on their race ? Jim Crow laws, however, prioritized white economic comfort and allowed it to persist nationally as a condition precedent to contracting because the Supreme Court, in Plessy v. Ferguson 87 and the Civil Rights Cases , 88 held that such comfort could not be restricted by Congress and was worthy of state protection. As a result, the Commerce Clause and its market-based justifications becomes the foundation for civil rights legislation. Thus, while an end to Jim Crow was the correct moral decision and would have been the correct decision decades earlier, it did not happen without a parallel economic benefit so great that it was worth sacrificing white economic comfort. A focus on the market impact of racism has a two-fold flaw--the primary flaw being that it continues the legacy of reducing the value of Black persons, their personhood, and their freedom to their pecuniary interest. In addition, as Professor Cary Martin Shelby notes, racism can hide that our economic interests converge--and this failure to see, blocked solely by racism , leads to systemic harm. When the government helps to reinforce those blinders through both explicit barriers to entry in the form of Jim Crow and the facially neutral barriers that persist today, it further delays the convergence of economic interests and continues the focus on white economic comfort at the expense of Black personhood.
In Part I, this Article analyzes the misapplication of 1981 from the Civil Rights Cases of 1883 through Comcast Corp. v. National Ass’n of African American -Owned Media 93 and possibly going forward in litigation that seeks to weaponize 1981 to invalidate remedial measures. In Part II, this Article then explains the concept of economic interest convergence from slavery through the civil rights movement, highlighting that it is ultimately the interests of white citizens that determine the contract status of Black persons. Finally, in Part III, this Article contemplates whether 1981 can be a tool for good in the shadow of the economic disparities between Black and white Americans , facilitated by state-sanctioned and sponsored discrimination by all branches of government, that make it economically rational behavior to engage in some race -based decisions that negatively impact Black people. This Article concludes that 1981 does not work in its current interpretation to guarantee Black freedom of contract and may never be a viable option.
1981 does not work in its current interpretation to guarantee Black freedom of contract. The absence of solutions in this Article is due to the difficulty in crafting legislation that would both maintain the principles of free market capitalism while also forcing parties to contract without racial bias. To successfully utilize 1981 to eradicate racist contracting would require implementing a standard that includes rebuttable presumptions--e.g., that certain contract outcomes are always racially biased--and to allow parties to survive a motion to dismiss when race is merely a factor and not the but-for cause. This solution contradicts the norms of private law, and, unlike reforms specific to education or labor and employment, it contradicts those norms for all contractual relationships generally.
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Civil rights are rooted in the economics of racism , which necessarily implicates the contract rights of all persons; therefore, the forces that perpetuate the inferior contract status of Black persons must be addressed. Inferior personhood status and white economic comfort as a condition precedent combine to hinder Black freedom of contract, which is further restricted by the perpetuation of facially neutral racialized barriers designed and promoted by public laws. To fix centuries of racist notions about the economic value of Black people and Black lives requires more than a single statute mandating equality in contracting. Without the intervention of the Supreme Court and the retrenchment following Reconstruction, 1981 could have facilitated an end to the prioritization of white economic comfort and a change in the beliefs of white citizens which could have, in turn, facilitated the full integration of Black people into the economy on equal footing as parties to agreements instead of as objects of agreements. But 1981 does not exist in a vacuum and cannot work without additional measures to eradicate the macro-economic impact of systemic racism . 1981 standing alone, as with many other measures aimed at repairing racial disparities in America, is ineffective without acknowledgment of the harms of systemic racism and concerted efforts to remedy that harm.
1981 does not work in its current interpretation to guarantee Black freedom of contract. The absence of solutions in this Article is due to the difficulty in crafting legislation that would both maintain the principles of free market capitalism while also forcing parties to contract without racial bias. To successfully utilize 1981 to eradicate racist contracting would require implementing a standard that includes rebuttable presumptions--e.g., that certain contract outcomes are always racially biased--and to allow parties to survive a motion to dismiss when race is merely a factor and not the but-for cause. This solution contradicts the norms of private law, and, unlike reforms specific to education or labor and employment, it contradicts those norms for all contractual relationships generally.
Contracts are enforced with social norms more than in the courts, so our willingness to find a defense valid, our interpretation of who is worthy of a contract, and our determinations as a society on what is unconscionable and voidable, are all based on our sense of fairness and of who we deem to be a person worthy of serving as a contract counter-party. The failure of the Reconstruction Amendments and multiple iterations of civil rights legislation leave us to question what can be done to fix an economy that has believed for generations that contracting with people in an unfair manner based purely on race is acceptable, even when it ultimately harms the entire system. Legislation like 1981 cannot be the answer standing alone as the only legislation to explicitly acknowledge the white supremacy problem in a system that allows that same white supremacy to influence its interpretation and enforcement.
The race problem cannot be resolved by looking at individual contracts as they fail in negotiations or result in inequitable performance or enforcement and deciding if race is the primary cause of the decision-making. No government agency is tasked with setting standards for private contracting, nor is there guidance from any agency on what actions meet the strenuous but-for standard. Shifting the responsibility to contract equally to private parties, then shifting the burden of proving the inherent racism that influences many interactions is real to the party facing the harm does nothing to address the underlying problem. A nation rooted in capitalism cannot force parties to contract when they do not desire to do so for the greater good. Instead, the freedom of contract of Black persons, and the resulting economic disparities resulting from the lack of freedom to contract, must be addressed with a macroeconomic system-level solution. The impossibility of reconciling free market capitalism with a generalized contract mandate supports the need for remedial measures in the form of preferences and incentives. These measures maintain free will while adding incentives for equity.
Professor of Law, Southern Methodist University Dedman School of Law; Faculty Affiliate, Samuel DuBois Cook Center at Duke University; Academic Fellow, Center for Retail Investors & Corporate Inclusion. B.A., Duke University, J.D., University of Texas at Austin School of Law.
