Law Commons^™

Uncertainty, Reliance, Preliminary Negotiations And The Hold Up Problem, Juliet P. Kostritsky

Juliet P Kostritsky

Recently, two scholars, Alan Schwartz and Robert Scott, have cast doubt on the conventional view that courts would find liability and award reliance damages in precontractual cases that resembled the famous Hoffman v. Red Owl case. They have argued that courts deny recovery for reliance in cases involving precontractual preliminary negotiation but regularly grant reliance recovery following a preliminary agreement. They identify a pattern or sequence in which success is likely and then provide an analytical framework to justify liability. When parties reach a preliminary agreement that also includes an agreement that they both invest simultaneously and one party strategically …

The Fax As Valid Evidence In Argentine Law, Felipe Eduardo Zabalza, Leandro Javier Caputo

Felipe Eduardo Zabalza

Under Argentine law, the facsimile transmission (fax) is not acceptable under certain circumstances. A recent decision in “Flowtex France S.R.L. v. Flowtex Servicios Urbanos S.A.”, handed down by the National Court of Appeals on Commercial Matters, Chamber A, stated that “a simple photocopy of a fax is not enough proof of the existence of a loan contract”.

As background to this matter, the Argentine court ruled in an international case regarding a loan made by a French company to an Argentine company, with particular consideration of the facsimile as valid evidence in commercial proceedings.

Adhesion Contracts And The Twenty First Century Consumer, Leon E. Trakman

Leon E Trakman Dean

Ecommerce has transformed the law of contract. Consumers are increasingly subject to myriads of conditions in shrink-wrap, box-wrap, click-wrap and browse-wrap contracts. Opening software wrapping or clicking “I agree” in a dialog box on a computer subjects the user to a series of onerous conditions that restrict end use and limit the supplier’s liability. These developments are counterbalance by the growth of new market-savvy classes of consumers who are willing and able to sue brand name producers in class and other actions. Faced with these Twenty First Century developments, courts struggle to find middle ground between regulating mass transactions in …

Clicking And Cringing, Nancy Kim

Nancy Kim

Shrinkwrap, clickwrap and browsewrap licenses have complicated contract law by introducing non-traditional methods of contracting to govern the use of software. The retention of the underlying intellectual property by the licensor, and the malleable qualities of software, give rise to the ability and the need to set parameters of use. The courts have tended to defer to the ownership rights of licensors by claiming that there is valid contract formation, even in “rolling contract” situations. Some commentators have argued that existing contract law doctrines – such as unconscionability and good faith – are sufficient to address digital-era contracting dilemmas. While …

The Hidden Harm Of Law And Economics, Daniel Cohen

Daniel Cohen

The paper deals with the adverse psychodynamic consequences to an individual and to society, immediately and in the long run, of dissolving individual responsibility for fault as in the doctrine of Law and economics.

On Mutual Mistakes, Daniel Cohen

Daniel Cohen

Herein we reconsider what has for over a century been a judicial inconsistency inspiring mostly dismissive scorn. We find a classical disparity in judicial reasoning to have a surprising hidden profundity and we identify it as a sincere though unintentional attempt of erstwhile courts to perform what would today be seem as an admirable effort of social policy making. We shall examine a curious pair of seemingly inconsistent rulings from a century ago and conclude that they are actually consistent with the principles of Law and Economics as understood today, although they were at that time uncomfortably incongruous. The only …

The Inevitable Demise Of The Implied Employment Contract, Jonathan W. Fineman

Jonathan W. Fineman

The Inevitable Demise of the Implied Employment Contract By Jonathan Fineman Abstract This article examines the consequences of the courts’ decision in the early 1980s to apply implied contract doctrine to employment relationships. Although courts did not use the rhetoric of “norms” popular in academic discourse today, their actions were in fact an attempt to enforce workplace norms, specifically the voluntary system of job protection policies employers devised in order to increase worker loyalty and productivity. I explore a question not previously addressed in-depth in the literature: what happened when courts began giving job security practices the force of law? …

Large-Scale Disasters Attacking The American Dream: How To Protect And Empower Homeowners And Lenders, Matthew D. Ekins

Matthew D Ekins

The 2005 hurricane season reminded the world that such catastrophes can and do occur anywhere at anytime. Recovery efforts continue long after tides recede and after-shocks cease. In the context of Hurricane Katrina, this article examines the homeowner-lender relationship to determine risks natural disasters pose to the mortgage industry, likely repercussions a fallout in the mortgage industry may have on the health of the general economy, and what preventative steps have been and may be taken to prevent further economic suffering in a post-catastrophe environment.

Usury Law, Payday Loans, And Statutory Sleight Of Hand: An Empirical Analysis Of American Credit Pricing Limits, Christopher L. Peterson

Christopher L Peterson

In the Western intellectual tradition usury law has historically been the foremost bulwark shielding consumers from harsh credit practices. In the past, the United States commitment to usury law has been deep and consistent. However, the recent rapid growth of the “payday” loan industry belies this longstanding American tradition. In order to understand the evolution of American usury law, this paper presents a systemic empirical analysis of all fifty state usury laws in two time periods: 1965 and the present. The highest permissible price of a typical payday loan authorized under each state’s usury law was calculated. These prices were …

License To Sue?, Lorelei Ritchie De Larena

Lorelei Ritchie de Larena

Courts, commentators and practitioners have for too long viewed intellectual property law as a discrete discipline, without putting it into the proper theoretical context of general jurisprudence. Intellectual property law cannot and must not exist on its own, outside the normative framework of overlapping legal institutions. Even within the rubric of intellectual property, courts have overlooked the potential for cross-applying relevant doctrines between patent, copyright, and trademark law. Certainly, when intellectual property disputes touch on other disciplines, such as civil procedure, contract, or tort law, courts have tended to overlook their synergies, focusing instead on only one of several important …

Declaring Force Majeure: Veracity Or Sham?, Leon E. Trakman

Leon E Trakman Dean

The widespread practice by large scale producers, like Exxon Mobil and BP of declaring force majeure has created enormous legal and contractual problems. The practice is used, not only to respond to devastating disasters like Hurricane Katrina, but also to defects in pipelines amounting to little more than wear and tear The result is that customers are left waiting for goods or forced to pay higher prices until their suppliers decide to lift their declarations and resume performance. This article challenges such declarations, arguing that they often fail to comply with both the law set out in article 2-615 of …

The Broken Promise Of Efficient Breach: Sacrificing Certainty For False Efficiency, Irma S. Russell

Irma S. Russell

THE BROKEN PROMISE OF EFFICIENT BREACH: SACRIFICING CERTAINTY FOR FALSE EFFICIENCY explores the foundational principles of contract law and economics as a way of assessing the failure of efficient breach theory to effectively describe or critique the damages principles of contract law. Important scholarship has criticized the efficient breach theory on numerous grounds, but to date the scholarship has not explored the fundamental attribute of contract law that I identify here: the transfer of the economic right to reallocate resources efficiently. Economics starts from the fundamental proposition that economic actors have the right to efficiently allocate their resources at all …

Bond Defaults And The Dilemma Of The Indenture Trustee , Steven L. Schwarcz, Gregory M. Sergi

Steven L Schwarcz

This article, attached for your review, rethinks the standard of care for trustees of public bonds. The present standard is intolerably vague, generating cost and inefficiency in the public bond markets. Yet bondholder governance is increasingly recognized as a critical component of the larger realm of corporate governance, and indeed more than eighty percent of capital market financing raised by U.S. corporations now occurs through public bond offerings. This article examines how that standard of care should be modified to make indenture trustees more effective.

The Employment Termination Equity Act: Finding A Compromise Between Employment At-Will And Just Cause , Nicole B. Porter

Nicole B. Porter

Many scholars have criticized the harshness of the employment at-will presumption, whereby an employer can terminate an employee for good reason, bad reason, or no reason at all. Unlike other scholarship; however, this proposal adopts a novel approach to the problem of the at-will presumption. Instead of suggesting that the at-will presumption should be replaced with a just cause standard, this article suggests a compromise statute, which I call the Employment Termination Equity Act (ETEA). Under ETEA, employers would be free to terminate unproductive or poorly performing employees, without having the difficult burden of proving just cause. However, certain enumerated …

Contract Rights And Remedies, And The Divergence Between Law And Morality, Brian H. Bix

Brian H. Bix

There is an ongoing debate in the philosophical and jurisprudential literature regarding the nature and possibility of Contract theory. On one hand are those who argue (or assume) that there is, or should be, a single, general, universal theory of Contract Law, one applicable to all jurisdictions and all times. On the other hand are those who assert that Contract theory should be localized to particular times and places, perhaps even with different theories for different types of agreements. This article considers one facet of this debate: evaluating the relevance of the fact that the remedies available for breach of …

Overcoming Chad’S Oil Curse: The African Union Convention On Preventing And Combating Corruption As A Framework For Securing Foreign Investments, Jennifer L. Akre

Jennifer L Akre

This comment addresses the issue of corruption in Africa, particularly with regard to Chad’s “partial expropriation” of foreign oil companies in the summer of 2006. It argues Chad violated principles of customary international law and key provisions of the African Union Convention on Preventing and Combating Corruption by unilaterally altering the regulatory scheme of the Chad-Cameroon Pipeline Project. The comment contends that such partial expropriations essentially amount to extortion, and therefore fall under the purview of regional anti-corruption agreements like the AU Corruption Convention. It will focus on the Convention as a possible solution for addressing scenarios like the one …

The Play's The Thing: A Theory Of Taxing Virtual Worlds, Bryan T. Camp

Bryan T Camp

The Play’s The Thing: A Theory of Taxing Virtual Worlds: Bryan T. Camp Abstract Taxation is shadow life. As our culture monetizes more and more life activities, the shadow grows. This article looks at the potential tax issues arising from a new life activity: online role-playing games in virtual worlds. Currently, some 12 million people regularly play such games and the number is growing. Exploring the reach of the Tax Code into virtual world transactions not only responds to the potentially practical needs of millions of U.S. taxpayers, it also permits a reevaluation of core principles of income tax as …

Re-Evaluating Declaratory Judgment Jurisdiction In Intellectual Property Disputes, Lorelei Ritchie De Larena

Lorelei Ritchie de Larena

The Declaratory Judgment Act of 1934 was quickly tagged by the U.S. Supreme Court as a simple procedural measure. Whether simple or procedural, the addition of the declaratory judgment option has dramatically increased the rights of would-be defendants. This is of special interest in patent law, where without the ability to initiate legal action, an alleged infringer would typically have no recourse but to either drop a lucrative business and lose a massive investment, or to languish in legal limbo while potentially accruing liability for treble damages. The option of a mirror-image lawsuit removes the patentee’s ability to unilaterally decide …

The Broken Promise Of Efficient Breach Theory: Sacrificing Certainty Of Obligation For False Efficiency, Irma S. Russell

Irma S. Russell

The Broken Promise of Efficient Breach Theory: Sacrificing Certainty of Obligation for False Efficiency explores the foundational principles of contract law and economics as a way of assessing the failure of efficient breach theory to effectively describe or critique the damages principles of contract law. Important scholarship has criticized the efficient breach theory on numerous grounds, but to date the scholarship has not explored the fundamental attribute of contract law that I identify here: the transfer of the economic right to reallocate resources efficiently. Economics starts from the fundamental proposition that economic actors have the right to efficiently allocate their …

Arbitrating Human Rights, Roger P. Alford

Roger P. Alford

Currently domestic human rights litigation against corporations appears to be a proxy fight in which the accomplice is pursued while the principal evades punishment. Typically the principal malfeasor—the sovereign—is immune from suit because of foreign sovereign immunity. But corporations can be found liable for aiding and abetting those violations. This article suggests a solution to this problem, drawing on principles from contract law and arbitration. If a corporation is found liable for aiding and abetting sovereign abuse, it may invoke contractual provisions in the agreement with the sovereign to arbitrate the question of shared responsibility. While the victims may not …

Legal Consciousness And Contractual Obligations., Kojo Yelpaala

Kojo Yelpaala

Legal Consciousness and Contractual Obligations Kojo Yelpaala Professor Law Pacific/McGeorge School of Law ABSTRACT The Article on “Legal Consciousness and Contractual Obligations” will explore and offer an explanation of the origins of the moral foundations for contractual obligations beyond conventional analysis. Building on themes and threads across many disciplines and theories, it seeks to identify and locate certain unities and common elements that explain human consciousness in exchange relations across cultures. It does so by excavating the roots, tracking the evolution, and anatomizing the dynamics of the master narrative of the "contract" - the oath, the promise, the agreement, the …

Online Privacy Policies: Contracting Away Control Over Personal Information?, Allyson W. Haynes

Allyson Haynes Stuart

Individuals disclose personal information to websites in the course of everyday transactions. The treatment of that personal information is of great importance, as highlighted by the recent spate of data breaches and the surge in identity theft. When websites share such personal information with third parties, the threat of its use for illegal purposes increases. The current law allows website companies to protect themselves from liability for sharing or selling visitors’ personal information to third parties by focusing on disclosures in privacy policies, not on substantive treatment of personal information. Because of the low likelihood that a visitor will read …

Rethinking Contractual Restrictions On Fair Use: Preemption And The Structure Of Copyright Policymaking, Viva R. Moffat

Viva R. Moffat

Rethinking Contractual Restrictions on Fair Use: Preemption and the Structure of Copyright Policymaking

Viva R. Moffat

Abstract

Online contracts proliferate and govern nearly every commercial transaction and most of the ways in which the modern consumer interacts with the world. Issues surrounding “contracting around” the Copyright Act have been simmering for years. In this article, I survey numerous online contracts, and I conclude that these issues have only become more acute: nearly every website and every good or service sold online comes with a contract attached, and virtually every one of those contracts contains a limitation on fair use.

Most …

On Mutual Mistakes, Daniel Cohen

Daniel Cohen

Herein we reconsider what has for over a century been a judicial inconsistency inspiring mostly dismissive scorn. We find a classical disparity in judicial reasoning to have a surprising hidden profundity and we identify it as a sincere though unintentional attempt of erstwhile courts to perform what would today be seen as an admirable effort of social policy making. We shall examine a curious pair of seemingly inconsistent rulings from a century ago and conclude that they are actually consistent with the principles of Law and Economics as understood today, although they were at that time uncomfortably incongruous. The only …

On Mutual Mistakes, Daniel Cohen

Daniel Cohen

Herein we reconsider what has for over a century been a judicial inconsistency inspiring mostly dismissive scorn. We find a classical disparity in judicial reasoning to have a surprising hidden profundity and we identify it as a sincere though unintentional attempt of erstwhile courts to perform what would today be seen as an admirable effort of social policy making. We shall examine a curious pair of seemingly inconsistent rulings from a century ago and conclude that they are actually consistent with the principles of Law and Economics as understood today, although they were at that time uncomfortably incongruous. The only …

A Revised Economic Theory Of Disclosure Duties And Break-Up Fees In Contract Law, Barak Medina, Ofer Grosskopf

Barak Medina

The economic analysis of contract law offers an influential argument against imposing a duty to disclose information and in support of guaranteeing reimbursement (“break-up fees”) for pre-contractual investments in acquiring information. According to the conventional wisdom, a negotiating party invests resources in information gathering on the basis of its expectation to extract the contractual surplus that the investment may generate. As a result, it is arguably essential to protect the investing party’s ability to benefit from its investment in gathering information. Such protection can be provided either by allowing non-disclosure of relevant information that was achieved through a deliberate effort, …

Law, Morality, And Economics: Integrating Moral Constraints With Economic Analysis Of Law , Barak Medina, Eyal Zamir

Barak Medina

Economic analysis of law is a powerful analytical methodology. However, as a purely consequentialist approach, which determines the desirability of acts and rules solely by assessing the goodness of their outcomes, standard cost-benefit analysis (CBA) is normatively objectionable. Thus, for example, it presumably approves the deliberate killing of one innocent person to save the lives of two, and the breaking of a promise whenever it would produce slightly more net benefit than keeping it.

Moderate deontology prioritizes such things as autonomy, basic liberties, truth telling, and promise keeping over the promotion of good outcomes. It holds that there are constraints …

Controlling Family Shareholders In Developing Countries: Anchoring Relational Exchange, Ronald J. Gilson

Ronald J. Gilson

The Law and Finance account of the ubiquity of controlling shareholders in developing markets is based on conditions in the capital market: poor shareholder protection law prevents controlling shareholders from parting with control out of fear of exploitation by a new controlling shareholder who acquires a controlling position in the market. This explanation, however, does not address why we observe any minority shareholders in such markets, or why controlling shareholders in developing markets are most often family-based. This paper looks at the impact of “bad law” on shareholder distribution in a very different way. Developing countries typically provide not only …

To Make Or To Buy: In-House Lawyering And Value Creation, Steven L. Schwarcz

Steven L Schwarcz

In recent years, companies have been shifting much of their transactional legal work from outside law firms to in-house lawyers, and some large companies now staff transactions almost exclusively in-house. Although this transformation redefines the very nature of the business lawyer, scholars have largely ignored it. This article seeks to remedy that omission, using empirical evidence as well as economic theory to help explain why in-house lawyers are taking over, and whether they are likely to continue to take over, these functions and roles of outside lawyers. The findings are surprising, suggesting that in-house lawyers may now be performing as …

The Economics Of Standardized Contracts, Enrico Baffi

enrico baffi

There are basically four characteristic features of mass contracting: the reduced negotiations, the dissemination of standard form contracts, the presence of abusive clauses and the recapitulation of the contract and its execution in a single act of stipulation. a) The reduction in negotiations is the result first of all of the costs that this activity requires and of the costs required to manage personalised contracts; secondly, this reduction is the consequence of the greater advantage of mass-produced goods compared to personalised goods; thirdly and lastly, it also derives from the limit of the range of possible clauses that can be …