Law Commons^™

Stipulated Damages, Super-Strict Liability, And Mitigation In Contract Law, Saul Levmore

Michigan Law Review

The remedy of expectancy damages in contract law is conventionally described as strict liability for breach. Parties sometimes stipulate damages in advance, and may agree that the damages they stipulate shall be the exclusive remedy for breach. They may do so because of their conviction that they can, even in advance, assess damages with greater accuracy than courts, and they may be wary of litigation costs associated with the postbreach determination of expectancy damages. This Article advances two claims. First, that the familiar expectation remedy is correctly understood to involve elements of fault. There is litigation over the question of …

Foreword: Fault In American Contract Law, Omri Ben-Shahar, Ariel Porat

Michigan Law Review

The basic rule of liability in tort law is fault. The basic rule of liability in contract law is no fault. This is perhaps one of the most striking divides within private law, the most important difference between the law of voluntary and nonvoluntary obligations. It is this fault line (speaking equivocally) that the present Symposium explores. Is it a real divide-two opposite branches of liability within private law-or is it merely a rhetorical myth? How can it be justified? As law-and-economics scholars, this fault/no-fault divide between contract and tort is all the more puzzling. In law and economics, legal …

Fault In Contract Law, Eric A. Posner

Michigan Law Review

A promisor is strictly liable for breaching a contract, according to the standard account. However, a negligence-based system of contract law can be given an economic interpretation, and this Article shows that such a system is in some respects more attractive than the strict-liability system. This may explain why, as a brief discussion of cases shows, negligence ideas continue to play a role in contract decisions.

The Fault That Lies Within Our Contract Law, George M. Cohen

Michigan Law Review

Scholars and courts typically describe and defend American contract law as a system of strict liability, or liability without fault. Strict liability generally means that the reason for nonperformance does not matter in determining whether a contracting party breached. Strict liability also permeates the doctrines of contract damages, under which the reason for the breach does not matter in determining the measure of damages, and the doctrines of contract formation, under which the reason for failing to contract does not matter In my Article, I take issue with the strict liability paradigm, as I have in my prior work on …

Let Us Never Blame A Contract Breaker, Richard A. Posner

Michigan Law Review

Holmes famously proposed a "no fault" theory of contract law: a contract is an option to perform or pay, and a "breach" is therefore not a wrongful act, but merely triggers the duty to pay liquidated or other damages. I elaborate the Holmesian theory, arguing that fault terminology in contract law, such as "good faith," should be given pragmatic economic interpretations, rather than be conceived of in moral terms. I further argue that contract doctrines should normally be alterable only on the basis of empirical investigations.

A Comparative Fault Defense In Contract Law, Ariel Porat

Michigan Law Review

This Article calls for the recognition of a comparative fault defense in contract law. Part I sets the framework for this defense and suggests the situations in which it should apply. These situations are sorted under two headings: cases of noncooperation and cases of overreliance. Part II unfolds the main argument for recognizing the defense and recommends applying the defense only in cases where cooperation or avoidance of overreliance is low cost.

An Information Theory Of Willful Breach, Oren Bar-Gill, Omri Ben-Shahar

Michigan Law Review

Should willful breach be sanctioned more severely than inadvertent breach? Strikingly, there is sharp disagreement on this matter within American legal doctrine, in legal theory, and in comparative law. Within law-and-economics, the standard answer is "no "-breach should be subject to strict liability. Fault should not raise the magnitude of liability in the same way that no fault does not immune the breaching party from liability. In this paper, we develop an alternative law-and-economics account, which justifies supercompensatory damages for willful breach. Willful breach, we argue, reveals information about the "true nature" of the breaching party-that he is more likely …

The Emerging Article 2: Remedies For Breach Of The Contract For Sale, Richard E. Speidel, James J. White

Other Publications

Article 2, Sales is being revised by a Drafting Committee of the National Conference of Commissioners on Uniform State Laws. To date, the Drafting Committee has held eight meetings and two more are scheduled for early 1995 . The first reading of revised Article 2 occurred at the annual meeting of NCCUSL in August, 1994. A target completion date for the Article 2 project is August, 1996 .

The Tort Of Bad Faith In First-Party Insurance Transactions: Refining The Standard Of Culpability And Reformulating The Remedies By Statute, Roger C. Henderson

University of Michigan Journal of Law Reform

This Article explores the common-law and statutory background of the tort of bad faith in first-party insurance situations analyzes the varying standards of culpability that have been developed by the courts and suggests a uniform statutory solution to the problems created by the varying standards. The statute also tailors the remedies more closely to the particular type of insurer wrongdoing. The proposed remedies recognize the dual nature of the insurer-insured relationship, that is, one based upon contract and tort concepts. Such a statute would eliminate many of the ambiguities and other deficiencies in the common law of those states that …

Contracts - Damages - Punitive Damages Awarded For Breach Accompanied By Fraudulent Act, Theodore G. Koerner

Michigan Law Review

Defendants contracted to purchase a crop of alfalfa from plaintiff, harvesting and processing to be done by defendants and payment to be ascertained according to the processed weight of the alfalfa. When defendants harvested the entire crop but failed to pay for the major part of it, plaintiff brought action for breach of contract. In addition to the non-payment, plaintiff alleged fraud on defendants' part in falsifying weight records and in otherwise scheming to cheat and defraud him. On defendants' appeal from a judgment including both compensatory and punitive damages, held, affirmed. Although punitive damages are not ordinarily recoverable …

Agency - Liability Of Principal For Termination Of Agents Employment, William G. Mateer S.Ed.

Michigan Law Review

In the summer of 1949, appellant entered into an oral contract for an indefinite time with the appellee whereby the former was granted an exclusive wholesale distributorship of appellee's farm and garden equipment. A four-year period followed in which appellant increased the number of dealers in appellee's product from four or five in 1949 to over one hundred in 1953. In the latter part of 1952 appellant contemplated an enlargement of its facilities which would require it to enter upon a fifteen-year lease. Since the lessor desired some assurances as to the duration of appellant's franchise, appellant wrote to appellee …

Corporations - Officers And Directors - Liability For Inducing A Corporation To Breach Its Contracts, William H. Leighner

Michigan Law Review

Plaintiff real estate company brought suit against the directors of a corporation and other third persons for an alleged conspiracy to induce the corporation to breach its contract with plaintiff. The complaint alleged that the corporation had entered into an agreement whereby plaintiff was to procure a purchaser for certain premises owned by the corporation and that plaintiff had found a purchaser; that before a written offer could be obtained, the corporation contracted to sell to another broker who was to be used as a conduit to transfer title to the purchaser found by the plaintiff, and who was to …

Rationale Of Valuation Of Foreign Money Obligations, Charles Evan

Michigan Law Review

What then should a creditor of a foreign money obligation collect where there was a delay in payment? When are damages for depreciation of foreign money recoverable? As of what time and in what currency are they to be computed? How is the value of a foreign money obligation to be measured where no damages may be had? The answers to these and other incidental questions require a thorough analysis of certain features peculiar to the law of money.

It is the purpose of this article to clarify these problems, to sum up the primary principles by which they are …

Abstracts, Katharine Loomis

Michigan Law Review

The abstracts consist merely of summaries of the facts and holdings of recent cases and are distinguished from the notes by the absence of discussion.

Landlord And Tenant - Covenant By Landlord To Repair - Liability Ex Contractu For Personal Injuries Of The Tenant's Wife, Reid J. Hatfield

Michigan Law Review

One of the terms under which certain premises were leased to plaintiff's husband was a covenant by the defendant lessor to keep the premises in repair. Defendant neglected to repair two of the porch steps, although often requested by plaintiff to do so, and because of their defective condition plaintiff fell and was hurt. She brought suit on two counts; in tort for negligence, and on the contract for its breach. Held, an action in tort would not lie, and, although this was a proper case for an action ex contractu, recovery was denied because the consequences were avoidable …

Damages - Mental Anguish - Recovery Denied For Mental Anguish Arising Out Of Negligent Injury To Personal Property, Robert M. Warren

Michigan Law Review

Plaintiff placed an order with defendant pharmacist to have a rare photograph of plaintiff's deceased mother reproduced, the work to be done by defendant corporation. When the original picture was returned to plaintiff, it was stained, cracked, and otherwise disfigured, by reason of which plaintiff claimed he was caused physical and mental anguish. Held, plaintiff's recovery is limited to nominal damages. Furlan v. Rayon Photo Works, Inc.., 171 Misc. 839, 12 N. Y. S. (2d) 921 (1939).

Municipal Corporations - Liability For Misrepresentation, Arthur A. Greene Jr.

Michigan Law Review

The plaintiff contracted with the defendant to construct a sewer 8,553 feet in length. The specifications supplied by the county engineer indicated that the construction could be carried on under "free air conditions." In fact, the plaintiff was forced to use compressed air for 6,142 feet. The contract stipulated that the county would pay $30 additional per foot where the plaintiff found it more convenient to use compressed air, not to exceed 600 feet. The use of compressed air increased the cost of construction to the plaintiff to the extent of $497,521.25. Held, that the county was liable for …

Torts - Action In Deceit For Promise Made With No Intent To Perform - Effect Of Unenforceability Of Contract Under Statute Of Frauds, Fred C. Newman

Michigan Law Review

Undertaking to state a cause of action sounding in tort, plaintiff alleged that defendant never intended to perform an oral contract for certain manufacturing and selling rights, but that, on the contrary, defendant's fraudulent purpose was to reap the benefits of plaintiff's investigation as to the value of the said manufacturing and selling rights without cost to defendant. Plaintiff, in reliance upon the oral contract, incurred expenses in connection with his investigation as to the value of the said selling rights and in preparation to take advantage of his contract. The contract itself was unenforceable because it was within the …

Torts - Liability Of Landlord To Tenant For Disrepair, Michigan Law Review

Michigan Law Review

A landlord made an oral, month-to-month lease of premises to one Harris, who occupied the premises as a beauty shop in which he employed his wife. Both at the time of the letting and subsequently, an agent of the landlord agreed to repair a defective cellar stairway, but failed to do so. The lessee's wife was injured by the collapse of the stairway; thereupon, the tenant and his wife sued the landlord. A verdict was directed against the tenant and judgment non obstante veredicto was entered against the wife. The wife appealed. Held, even assuming the wife not contributorily …

Banks And Banking--Damages--Liability Of Bank To Depositor For Wrongful Dishonor Of Check

Michigan Law Review

In an action by a creditor against his debtor for the non-payment of the debt, the ordinary measure of damages for non-performance of the contract is the sum of money itself with interest at the legal rate from the time it was due. Tradition has it that the relation between bank and depositor is that of debtor and creditor. Clearly, it is a contractual relationship. The contract, however, is not merely to pay the creditor but also to pay, on his behalf, such third persons as he may designate. It is not an adequate description to say, merely, that the …