Law Commons^™

Limiting Overall Hospital Costs By Capping Out-Of-Network Rates, David Orentlicher, Kyra Morgan, Barak Richman

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Contract theory offers a simple and wildly effective solution to surprise bills: Hospital admissions contracts are contracts with open price terms, which contract law imputes with market rates. This solution not only obviated the costly, time-consuming, and complicated (and still unimplemented) legislative fix in the No Surprises Act, but it also is a superior solution since it introduces superior incentives to disclose, compete, and economize.

Using data from the Nevada Department of Health and Turquoise Health, this paper explores the theory and empirics of employing contract law's solution to hospital surprise bills and its superiority over other legislative interventions.

Time’S Up: Against Shortening Statutes Of Limitation By Employment Contract, Meredith R. Miller

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Employers are increasingly adding clauses to contracts with employees that purport to shorten the statutes of limitation for employees to pursue claims against their employers (“SOL Clauses”). SOL Clauses are being imposed on employees in various stages of the contracting process. They have turned up in job applications, offer letters, arbitration clauses, employment agreements and employee handbooks. Where they have been enforced by the courts, the justification has been a prioritization of “freedom of contract” over any other policy concerns. This Article argues that, in the employment context, “freedom of contract” should not be prioritized over other competing concerns, which …

A Philosophy Of Contract Law For Artificial Intelligence: Shared Intentionality, John Linarelli

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This is a chapter for the forthcoming book, Contracting and Contract Law in the Age of Artificial Intelligence, edited by Martin Ebers, Cristina Poncibò, and Mimi Zou, to be published by Hart Publishing. The aim of this chapter is to offer a general theory of contract law to account for the inclusion of artificial intelligence in contract practices. Artificial intelligence brings out that what makes contract law a distinctive form of legal obligation is shared intentionality. I refer to this insight as the shared intentionality thesis. Shared intentionality is the psychological capacity of one agent to share and pursue a …

Systemic Risk Of Contract, Tal Kastner

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Complexity and uncertainty define our world, now more than ever. Scholars and practitioners have celebrated modular contract design as an especially effective tool to manage these challenges. Modularity divides complex structures into relatively discrete, independent components with simple connections. The benefits of this fundamental drafting approach are intuitive. Lawyers divide contracts into sections and provisions to make them easier to understand and reduce uncertainty. Dealmakers constructing complex transactions use portable agreements as building blocks to reduce drafting costs and enable innovation. Little attention, however, has been paid to the risks introduced by modularity in contracts. This Article demonstrates how this …

Rejecting Word Worship: An Integrative Approach To Judicial Construction Of Insurance Policies, Jeffrey W. Stempel, Erik S. Knutsen

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Litigation over insurance coverage is really a quest for meaning: Does the insurance policy cover the loss at issue? Construing the insurance policy, courts are attempting to give legal effect to what the document purports to command. But what were the intentions and expectations of insurer and insured? Do those intentions even matter? Or is only the written text of the policy relevant to the coverage result? Courts approaching these questions typically frame the interpretative choice as one of strict textualism versus a more contextual, functionalist approach.

In many, perhaps even most situations, text and context align to create an …

What Is The Meaning Of "Plain Meaning", Jeffrey W. Stempel

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The American approach to construing texts (statutes, regulations, contracts and documents generally) stresses decision through determining the “plain meaning” of the document based on the court’s reading of the text. Where the court finds plain meaning on the face of text, it generally refuses to consider additional contextual information or extrinsic evidence of meaning.

Notwithstanding its status as the dominant approach to interpretation, the plain meaning concept has not been well defined or operationalized. Despite judicial confidence in the plain meaning approach, courts have wisely been willing to sidestep it and eschew the rather clear facial meaning of text when …

How To Make A Dead Armadillo: Consumer Contracts And The Perils Of Compromise, Jeffrey W. Stempel

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The ALI's proposed Restatement of the Law, Consumer Contracts ("RLCC") has managed to alarm both corporate America and consumer advocates, including half the nation's attorneys general. To some extent, the RLCC is yet another victim of the nation's increasing polarization and the rise of partisanship within the legal profession. But the RLCC suffers from self-inflicted wounds through questionable endorsement of problematic case law on contract formation as well as its goal of a well-intentioned but flawed "Grand Bargain" that arguably seized a middle ground disliked, for different reasons, by both consumer and business advocates. The RL CC stepped into this …

Should I Stay Or Should I Go: Student Housing, Remote Instruction, Campus Policies And Covid-19, Patricia E. Salkin, Pamela Ko

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In March 2020, as the world scrambled to understand and address myriad public health and economic challenges unfolding from the novel coronavirus labeled COVID-19, higher education was forced into a tailspin. This article examines the legal and policy challenges that result from, among other issues, the congregate housing situations existing for on- and off-campus housing at colleges and universities. The legal issues demonstrate federalism at work and include; at the federal level, regulations and guidance from the White House, the Center for Disease Control (CDC) and the U.S. Department of Education; at the State level from gubernatorial executive orders, state …

Advanced Artificial Intelligence And Contract, John Linarelli

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The aim of this article is to inquire whether contract law can operate in a state of affairs in which artificial general intelligence (AGI) exists and has the cognitive abilities to interact with humans to exchange promises or otherwise engage in the sorts of exchanges typically governed by contract law. AGI is a long way off but its emergence may be sudden and come in the lifetimes of some people alive today. How might contract law adapt to a situation in which at least one of the contract parties could, from the standpoint of capacity to engage in promising and …

Law And The Blockchain, Usha Rodrigues

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All contracts are necessarily incomplete. The inefficiencies of bargaining over every contingency, coupled with humans’ innate bounded rationality, mean that contracts cannot anticipate and address every potential eventuality. One role of law is to fill gaps in incomplete contracts with default rules. The blockchain is a distributed ledger that allows the cryptographic recording of transactions and permits “smart” contracts that self-execute automatically if their conditions are met. Because humans code the contracts of the blockchain, gaps in these contracts will arise. Yet in the world of “smart contracting” on the blockchain, there is no place for the law to step …

Contract Creep, Tal Kastner, Ethan J. Leib

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Scholars and judges think they can address the multiple purposes and values of contract law by developing different doctrinal regimes for different transaction types. They think if we develop one track of contract doctrine for sophisticated parties and another for consumers, we can build a better world of contract: protecting private ordering for sophisticated parties and protecting consumers’ needs all at once. Given the growing enthusiasm for laying down these separate tracks and developing their infrastructures, this Article brings a necessary reality check to this endeavor by highlighting for scholars and judges how doctrine in contract law functions in fact: …

Defining Law, Tal Kastner

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Commenting on Chaim Saiman’s book, Halakhah: The Rabbinic Idea of Law, this essay views the difficulty of defining halakha as indicative of the universal challenge of defining the bounds of what constitutes “law.” Considering the dynamic of contingent norms, social context, history, and narrative that shapes the meaning of law, it focuses on a series of decisions by a federal district court judge in connection with the case of Bayless v. United States (1996) involving the sufficiency of reasonable suspicion to justify a police stop. Tracing the slippage in this case between holding and dicta, among other sources of authority …

Notes From A Quiet Corner: User Concerns About Reinsurance Arbitration – And Attendant Lessons For Selection Of Dispute Resolution Forums And Methods, Jeffrey W. Stempel

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Arbitration between insurers and reinsurers – those who insure insurance companies – should logically run as smoothly as any arbitration process. Like the traditional commercial arbitration that drove enactment of the Federal Arbitration Act, reinsurance arbitration involves experienced actors in a confined industry in which the parties should be constructively aware of the rules, norms, customs and practices of the industry. But in spite of this, reinsurance arbitration experiences consistent problems of which the participants complain. This article reviews the complaints and exams possible solutions – including the possibility of arbitrating less and litigating more. Although these possible solutions would …

Redefining Roles And Duties Of The Transactional Lawyer: A Narrative Approach, Lori D. Johnson

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Today’s transactional lawyers perform myriad tasks for their clients, including structuring, drafting, conceptualizing, negotiating, and executing the complex, risky, and often cutting-edge transactions their clients bring to the table. On the other side of that table, often sits another team of sophisticated transactional lawyers. These opposing counsel are armed for battle over every nuance, every word, every representation, every deliverable, and every obligation their client is poised to undertake or agree to. Therefore, modern transactional lawyers must behave as advocates and explore new modes of persuasion. As a response, scholars have begun to propose that transactional lawyers employ methods of …

Opinion & Dissent: Magic Words, Lori D. Johnson

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No abstract provided.

The Ethics Of Non-Traditional Contract Drafting, Lori D. Johnson

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A new generation of contract drafters faces increasing commentary advising them to change traditional contract terms into plain language constructions. Yet, traditional, tested terms have consistent meanings, and when these meanings benefit client objectives, advocates should consider retaining them. This article posits that failing to do so can impact a lawyer’s ethical obligations. Specifically, an attorney’s duties of competence, allocation of authority, diligence, and communication under the Model Rules of Professional Conduct require careful thought about modernizing tested contract terms. These duties require the ethical drafter to research whether the use of a traditional, tested term advances a client goal …

Hurrah For The Consumer Financial Protection Bureau: Consumer Arbitration As A Poster Child For Regulation, Jean R. Sternlight

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Drawing on economic, psychological and philosophical considerations, this Essay considers whether consumers should be "free" to "agree" to contractually trade their opportunity to litigate in a class action for the opportunity to bring an arbitration claim against a company. The Essay suggests that by looking at the CFPB's regulation through these three lenses, one sees that the regulation is desirable—even a poster child—for the potential value of regulation when market forces are not sufficient to protect individual or public interests.

Contracting Trademark Fame?, Leah Chan Grinvald

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Contracts abound in today's highly digitized society. Did you snap a pic and upload it to Instagram? You entered into a contract. Did you check your friends' statuses on Facebook? Yep, you also entered into a contract. Did you know you entered into a contract or even if you were aware of this fact, did you know the terms to which you agreed? Probably not. But despite this, we are all obligated by these contracts, so long as we are somehow made aware that we could read the terms at some point if we had the inclination to do so. …

Say The Magic Word: A Rhetorical Analysis Of Contract Drafting Choices, Lori D. Johnson

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Drafters of complex contracts often face a thorny dilemma – determining whether to retain “magic words” included in form documents, especially when considering the advice of current contract style scholars advocating for the removal of all traditional contract prose. But the drafter need not remove all terms that serve as elegant shorthand for more convoluted legal concepts, particularly where the inclusion of the term advances client interests. The application of rhetorical criticism – the analysis of methods of communicating ideas – to drafters’ use of the term “time is of the essence” sheds light on the dominant motivations of drafters …

Getting Paid In The Naked Economy, Meredith R. Miller

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“It’s the end of work as we know it,” reports consulting firm Accenture in a paper about the “rise of the extended workforce.” (Gartside, Silverstone, Farley & Cantrell, Trends Reshaping the Future of HR: The Rise of the Extended Workforce, at 3 (Accenture 2013). The report predicts that, “[i]n the future, organizations’ competitive success will hinge on...workers who aren’t employees at all.” The legal nature of employment is changing and has been changing for quite some time; fewer and fewer workers are “employees.”

It is not new or novel to recognize that, from a legal perspective, there are many benefits …

Concept And Contract In The Future Of International Law, John Linarelli

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This is an article written for a symposium on Joel Trachtman’s book, The Future of International Law. I first deal with the contractarian features of Trachtman’s approach to understanding international law. Using the tools of new institutional economics and constitutional economics, Trachtman seeks to describe the features of an international legal system. This is positive political theory or at least relates substantially to the methods of positive political theory. I explore a different approach, one connecting to normative political theory. In its ambitious sense, my approach would see international law as a form of moral argument, but in its modest …

Enhancing The Socially Instrumental Role Of Insurance: The Opportunity And Challenge Presented By The Ali Restatement Position On Breach Of The Duty To Defend, Jeffrey W. Stempel

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The American Law Institute (ALI), in its current draft of the Restatement of the Law of Liability Insurance , has adopted the position that a liability insurer in breach of its duty to defend, but not acting in bad faith, forfeits the right to dispute coverage of the resulting judgment or reasonable, noncollusive settlement in a lawsuit. The ALI view is the minority rule in the courts in that most make bad faith a prerequisite for loss of a coverage defense but presumably will spur re-examination of the issue in many states. Unsurprisingly, insurers have opposed the ALI position with …

“Sticky” Arbitration Clauses? The Use Of Arbitration Clauses After Concepcion And Amex, Peter B. Rutledge, Christopher R. Drahozal

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We present the results of the first empirical study of the extent to which businesses have switched to arbitration after AT&T Mobility LLC v. Concepcion. The Supreme Court’s decision in Concepcion led commentators to predict that every business soon would use an arbitration clause, coupled with a class arbitration waiver, in their standard form contracts to avoid the risk of class actions. We examine two samples of franchise agreements: one sample in which we track changes in arbitration clauses since 1999, and a broader sample focusing on changes since 2011, immediately before Concepcion was decided. Our central finding is consistent …

Rediscovering The Sawyer Solution: Bundling Risk For Protection And Profit, Jeffrey W. Stempel

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No abstract provided.

Mandating Precontractual Disclosure, Eric H. Franklin

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Parties negotiating an arm's-length contract are generally not required to disclose facts to one another. Although this default rule is supported by both centuries of common law and freedom of contract principles, courts and legislatures treat certain transactions differently. This is particularly true in circumstances in which the default rule results in an unacceptable harm suffered by a broad group of persons. In such cases, lawmakers have acted to impose precontractual disclosure obligations. These decisions and statutes are largely reactive: A harm is identified in a certain transaction's precontractual period and disclosure is mandated to rectify the harm. These reactive …

Effective Contract Drafting: Indentifying The Building Blocks Of Contracts, Lori D. Johnson

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No abstract provided.

Contract And Dispossession, Deborah W. Post

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This Essay, part of a collection of essays on the same theme, argues that contract law has become an instrument of oppression and dispossession rather than liberation. Having offered a critique, the challenge then is to consider whether it is possible to restore the liberatory potential of contract. The symposium, Post-Marxism, Post-Racialism & Other Fables of the Dispossession, was an invitation to consider the contemporary relevance of Marxist theory.

There are two reference points in this cultural critique. One is the importance of social position in a jurisprudence that embraces objectivity; the uncritical and unreflective reliance on hegemonic social …

Sale Of Goods Contract Not To Be Performed Within A Year: Is The Uniform Commercial Code Statute Of Frauds Provision Exclusive?, Sidney Kwestel

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No abstract provided.

Stoney Road Out Of Eden: The Struggle To Recover Insurance For Armenian Genocide Deaths And Its Implications For The Future Of State Authority, Contract Rights, And Human Rights, Jeffrey W. Stempel, Sarig Armenian, David Mcclure

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The Armenian Genocide during the waning days of the Ottoman Empire continues to represent one of history’s underappreciated atrocities. Comparatively few people even know about the 1.5 million deaths or the government-sponsored extermination attempt that provided Hitler with a blueprint for the Nazi Holocaust. Unlike the Holocaust, however, there was never any accounting demanded of those responsible for the Armenian Genocide. In the aftermath of both tragedies, insurers seized upon the resulting disarray and victimization to deny life insurance benefits owed as a result of the killings. American-based litigation to vindicate rights under the Armenian polices faced substantial legal and …

The Diminishing Returns Of Incentive Pay In Executive Compensation Contracts, Gregg D. Polsky, Andrew Lund

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For the past 30 years, the conventional wisdom has been that executive compensation packages should include very large proportions of incentive pay. This incentive pay orthodoxy has become so firmly entrenched that the current debates about executive compensation simply take it as a given. We argue, however, that in light of evolving corporate governance mechanisms, the marginal net benefit of incentive-laden pay packages is both smaller than appreciated and getting smaller over time. As a result, the assumption that higher proportions of incentive pay are beneficial is no longer warranted.

A number of corporate governance mechanisms have evolved to duplicate …