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Full-Text Articles in Law

The Devil Made Me Do It: The Corporate Purchase Of Insurance, Victor P. Goldberg Jan 2009

The Devil Made Me Do It: The Corporate Purchase Of Insurance, Victor P. Goldberg

Faculty Scholarship

Despite the fact that public corporations ought to be risk neutral, they often carry insurance. This note first considers why insurance (or, more precisely, the package of services provided by insurance companies) might create value, regardless of the risk preferences of managers, shareholders, or other corporate stakeholders. One motive is that their contractual counter parties-buyers, lessors, and lenders – require that they carry insurance. Two explanations for why the requirement might be value enhancing are proposed.


The Correspondence Of Contract And Promise, Jody S. Kraus Jan 2009

The Correspondence Of Contract And Promise, Jody S. Kraus

Faculty Scholarship

Correspondence accounts of the relationship between contract and promise hold either that contract law is justified to the extent it enforces a corresponding moral responsibility for a promise or unjustified to the extent it undermines promissory morality by refusing to enforce a corresponding moral responsibility for a promise. In this Article, I claim that contract scholars have mistakenly presumed that they can assess the correspondence between contract and promise without first providing a theory of self-imposed moral responsibility that explains and justifies the promise principle. I argue that any plausible theory of self-imposed moral responsibility is inconsistent with a strong ...


Contract Design And The Structure Of Contractual Intent, Jody S. Kraus, Robert E. Scott Jan 2009

Contract Design And The Structure Of Contractual Intent, Jody S. Kraus, Robert E. Scott

Faculty Scholarship

Modern contract law is governed by a two-stage adjudicative regime – an inheritance of the centuries-old conflict between law and equity. Under this regime, formal contract terms are treated as prima facie provisions that courts can override by invoking equitable doctrines so as to substantially "correct" the parties' contract by realigning it with their contractual intent. This ex post judicial determination of the contractual obligation serves as a fallback mechanism for vindicating the parties' contractual intent whenever the formal contract terms fall short of achieving the parties' purposes. Honoring the contractual intent of the parties is thus the central objective of ...


Contracting For Innovation: Vertical Disintegration And Interfirm Collaboration, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott Jan 2009

Contracting For Innovation: Vertical Disintegration And Interfirm Collaboration, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott

Faculty Scholarship

Rapidly innovating industries are not behaving the way theory expects. Conventional industrial organization theory predicts that, when parties in a supply chain have to make transaction-specific investments, the risk of opportunism will drive them away from contracts and toward vertical integration. Despite the conventional theory, however, contemporary practice is moving in the other direction. Instead of vertical integration, we observe vertical disintegration in a significant number of industries, as producers recognize that they cannot themselves maintain cutting-edge technology in every field required for the success of their products. In doing this, the parties are developing forms of contracting beyond the ...


Ascertaining The Parties' Intentions In Arbitral Design, George A. Bermann Jan 2009

Ascertaining The Parties' Intentions In Arbitral Design, George A. Bermann

Faculty Scholarship

Supreme Court case law teaches us that the federal interest in arbitration does not consist of enforcing agreements to arbitrate according to some sort of abstract or ideal arbitral model, but rather according to the particular arbitral model upon which the parties had agreed. This body of law is driven by the same notions of party autonomy that underlie the law of arbitration generally. That parties may agree to forego access to national courts in favor of arbitration is an initial manifestation of that attitude. By logical extension, the parties also enjoy extraordinary latitude in determining the features that "their ...


In (Partial) Defense Of Strict Liability In Contract, Robert E. Scott Jan 2009

In (Partial) Defense Of Strict Liability In Contract, Robert E. Scott

Faculty Scholarship

Many scholars believe that notions of fault should and do pervade contract doctrine. Notwithstanding the normative and positive arguments in favor of a fault-based analysis of particular contract doctrines, I argue that contract liability is strict liability at its core. This core regime is based on two key prongs: (1) the promisor is liable to the promisee for breach, and that liability is unaffected by the promisor's exercise of due care or failure to take efficient precautions; and (2) the promisor's liability is unaffected by the fact that the promisee, prior to the breach, has failed to take ...


Contract Interpretation Redux, Alan Schwartz, Robert E. Scott Jan 2009

Contract Interpretation Redux, Alan Schwartz, Robert E. Scott

Faculty Scholarship

Contract interpretation remains the largest single source of contract litigation between business firms. In part this is because contract interpretation issues are difficult, but it also reflects a deep divide between textualist and contextualist theories of interpretation. While a strong majority of U.S. courts continue to follow the traditional, "formalist" approach to contract interpretation, some courts and most commentators prefer the "contextualist" interpretive principles as exemplified by the Uniform Commercial Code and the Second Restatement. In 2003, we published an article that set out a theory of contract interpretation to govern agreements between business firms. In that article, we ...


Personal Sovereignty And Normative Power Skepticism, Jody S. Kraus Jan 2009

Personal Sovereignty And Normative Power Skepticism, Jody S. Kraus

Faculty Scholarship

In "The Correspondence of Contract and Promise," I claim that contract scholars have mistakenly presumed that they can assess the correspondence between contract and promise without first providing a theory of self-imposed moral responsibility that explains and justifies the promise principle. To illustrate the dependence of correspondence accounts of contract law on a theory of self-imposed moral responsibility, I demonstrate how a "personal sovereignty" account of individual autonomy explains how and why, contrary to existing correspondence theories, promissory responsibility corresponds to the rights and duties recognized by contract. Personal sovereignty recognizes the fundamental right of individuals not only to choose ...


Contract Design And The Structure Of Contractual Intent, Jody S. Kraus, Robert E. Scott Jan 2009

Contract Design And The Structure Of Contractual Intent, Jody S. Kraus, Robert E. Scott

Faculty Scholarship

Modern contract law is governed by a two-stage adjudicative regime – an inheritance of the centuries-old conflict between law and equity. Under this regime, formal contract terms are treated as prima facie provisions that courts can override by invoking equitable doctrines so as to substantially “correct” the parties’ contract by realigning it with their contractual intent. This ex post judicial determination of the contractual obligation serves as a fallback mechanism for vindicating the parties’ contractual intent whenever the formal contract terms fall short of achieving the parties’ purposes. Honoring the contractual intent of the parties is thus the central objective of ...


Contracts, Orphan Works, And Copyright Norms: What Role For Berne And Trips?, Jane C. Ginsburg Jan 2009

Contracts, Orphan Works, And Copyright Norms: What Role For Berne And Trips?, Jane C. Ginsburg

Faculty Scholarship

This Chapter addresses the extremes of private ordering, and the extent to which the principal multilateral copyright instruments, the Berne Convention and the TRIPs Accord, limit the range of State responses to the problems encountered at the far ends of the copyright-contract spectrum. At one end, we encounter private ordering at its most aggressive, in which private parties enter into agreements (or, more likely, the stronger party coerces the weaker parties, who may be mass market consumers) to protect subject matter or rights excluded from the ambit of copyright's exclusivity. At the other end, the difficulties arise not from ...


The Correspondence Of Contract And Promise, Jody S. Kraus Jan 2009

The Correspondence Of Contract And Promise, Jody S. Kraus

Faculty Scholarship

Correspondence accounts of the relationship between contract and promise hold either that contract law is justified to the extent it enforces a corresponding moral responsibility for a promise or unjustified to the extent it undermines promissory morality by refusing to enforce a corresponding moral responsibility for a promise. In this Article, I claim that contract scholars have mistakenly presumed that they can assess the correspondence between contract and promise without first providing a theory of self-imposed moral responsibility that explains and justifies the promise principle. I argue that any plausible theory of self-imposed moral responsibility is inconsistent with a strong ...


Excuse Doctrine: The Eisenberg Uncertainty Principle, Victor P. Goldberg Jan 2009

Excuse Doctrine: The Eisenberg Uncertainty Principle, Victor P. Goldberg

Faculty Scholarship

Professor Mel Eisenberg argued in a recent paper for an expansion of the excuse doctrines. He argues that performance should be excused in those instances when parties tacitly assume that a given kind of circumstance will not occur during the contract time (the shared-assumption test). In addition, he argues that there should be a partial excuse when a change in prices would be sufficiently large to leave the promisor with a loss significantly greater than would have reasonably been expected (the bounded-risk test). This paper questions his first proposition by re-examining the Coronation cases and Taylor v Caldwell. His bounded-risk ...