Law Commons^™

Contract Customization, Sex, And Islamic Law, Rabea N. Benhalim

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Common law has historically deemed marriage and sex outside the right to contract. Yet, couples increasingly use contracts to provide legal rights to the unmarried in a variety of contexts ranging from same-sex relationships to surrogacy. Islamic law, on the other hand, has always conceived of marriage and sexual relationships as exclusively under the realm of contract law governed by private actors. This Article brings Islamic law into the larger conversation on the use of contracts for sexual and relationship agreements. It further proposes that Islamic law has something to offer Muslims and non-Muslims alike by empowering individuals to use …

Frustration, The Mac Clause, And Covid-19, Andrew A. Schwartz

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COVID-19's impact on business has been exasperating—but is it Frustrating? The Frustration doctrine of contract law excuses a party from its contractual obligations when an extraordinary event completely undermines the principal purpose of making the deal. This doctrine has long been a marginal player in contract litigation, as parties rarely invoked it—and usually lost when they did.

The COVID-19 pandemic, however, is precisely the type of extraordinary event that Frustration was designed to address, and the courts have been inundated over the past year by a wave of colorable Frustration claims. This timely Article describes the Frustration doctrine and explores …

Getting Real About Procedure: Changing How We Think, Write And Teach About American Civil Procedure, Suzette M. Malveaux

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No abstract provided.

Contracts As Systems, Spencer Williams

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A contract is much more complex than its individual terms would suggest. Yet contract scholars have traditionally taken a reductionist approach to the study of contracts. According to "contractual reductionism," a contract can be understood through each of its constituent terms. Recent scholarship, however, has begun to challenge contractual reductionism's term-by-term view of contracts. Building on this work, this Article provides the first application of complex systems theory to contracts, arguing that a contract is a complex system that is greater than the sum of its terms. A complex system is composed of many components that interact in a nontrivial …

Super-Statutory Contracting, Kristelia García

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The conventional wisdom is that property rules induce more—and more efficient—contracting, and that when faced with rigid property rules, intellectual property owners will contract into more flexible liability rules. A series of recent, private copyright deals show some intellectual property owners doing just the opposite: faced with statutory liability rules, they are contracting for more protection than that dictated by law, something this Article calls “super-statutory contracting”—either by opting for a stronger, more tailored liability rule, or by contracting into property rule protection. Through a series of deal analyses, this Article explores this counterintuitive phenomenon, and updates seminal thinking on …

Contracts And Covid-19, Andrew A. Schwartz

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No abstract provided.

Predictive Contracting, Spencer Williams

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This Article examines how contract drafters can use data on contract outcomes to inform contract design. Building on recent developments in contract data collection and analysis, the Article proposes “predictive contracting,” a new method of contracting in which contract drafters can design contracts using a technology system that helps predict the connections between contract terms and outcomes. Predictive contracting will be powered by machine learning and draw on contract data obtained from integrated contract management systems, natural language processing, and computable contracts. The Article makes both theoretical and practical contributions to the contracts literature. On a theoretical level, predictive contracting …

From The Courtroom To The Classroom: How A Litigator Became A Transactional Drafting Professor, Amy Bauer

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No abstract provided.

The Case For American Muslim Arbitration, Rabea Benhalim

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This Article advocates for the creation of Muslim arbitral tribunals in the United States. These tribunals would better meet the needs of American Muslims, who currently bring their religious disputes to informal forums that lack transparency. Particularly problematic, these existing forums often apply legal precedent developed in majority-Muslim nations, without taking into consideration the changed circumstances of Muslim living as minorities in the United States. These interpretations of Islamic law can have especially negative impacts on women. American Muslim arbitration tribunals offer the potential to correct these inadequacies. Furthermore, a new arbitral system could better meet the needs of sophisticated …

Pluralism Applied: A Concordant Approach To Selecting Contract Rules, Samuel Ernst

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Contract rules can be justified by utilitarian theories (such as efficiency theory), which are concerned with promoting rules that enhance societal wealth and utility. Contract rules can also be justified by rights-based theories (such as promissory and reliance theories), which are concerned with protecting the contractual freedom and interests of the individual parties to the contract. Or, contract rules can be analyzed through the lenses of a host of other theories, including critical legal theory, bargain theory, and so on. Because no single, unitary theory can ever explain the complex body of laws and societal conventions surrounding contracts, the best …

The Evolution Of Entrepreneurial Finance: A New Typology, J. Brad Bernthal

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There has been an explosion in new types of startup finance instruments. Whereas twenty years ago preferred stock dominated the field, startup companies and investors now use at least eight different instruments—six of which have only become widely used in the last decade. Legal scholars have yet to reflect upon the proliferation of instrument types in the aggregate. Notably missing is a way to organize instruments into a common framework that highlights their similarities and differences.

This Article makes four contributions. First, it catalogues the variety of startup investment forms. I describe novel instruments, such as revenue-based financing, which remain …

Venture Capital Contract Design: An Empirical Analysis Of The Connection Between Bargaining Power And Venture Financing Contract Terms, Spencer Williams

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This Article presents an empirical analysis of the connection between bargaining power and contract design using an original dataset of over 5,500 equity and debt venture financings from 2004–2015. Using the total supply of venture capital in the U.S. as a measure of relative bargaining power between entrepreneurs and investors, this Article finds that venture capital supply has a statistically significant relationship with price and non-price terms in both equity and debt financings. These results contradict one of three theoretical accounts of bargaining power and support the other two.

Who Needs Contracts? Generalized Exchange Within Investment Accelerators, Brad Bernthal

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This Article investigates why an expert volunteers on behalf of startups that participate in a novel type of small venture capital (“VC”) fund known as a mentor-driven investment accelerator (“MDIA”). A MDIA organizes a pool of seasoned individuals – called “mentors” – to help new companies. An obvi- ous organizational strategy would be to contract with mentors. Mentors in- stead voluntarily assist. Legal studies of norm-based exchanges do not explain what this Article calls the “mentorship conundrum”—i.e., the puzzling moti- vation of a mentor to volunteer within otherwise for-profit environments. This Article is the first to bridge the insights of …

"Make Him An Offer He Can't Refuse"-- Mezzanatto Waivers As Lynchpin Of Prosecutorial Overreach, Christopher B. Mueller

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Plea bargaining is the dominant means of disposing of criminal charges in the United States, in both state and federal courts. This administrative mechanism has become a system that is grossly abusive of individual rights, leading to many well-known maladies of the criminal justice system, which include overcharging, overincarceration, convictions on charges that would likely fail at trial, and even conviction of “factually innocent” persons. Instrumental in the abuses of plea bargaining is the so-called Mezzanatto waiver, which takes its name from a 1995 Supreme Court decision that approved the practice of getting defendants to agree that anything they say …

Robots In The Home: What Will We Have Agreed To?, Margot E. Kaminski

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A new technology can expose the cracks in legal doctrine. Sometimes a technology resists analogy. Sometimes, through analogies, it reveals inconsistencies in the law, or basic flaws in framing, or in the fit between different parts of the legal system. This Essay addresses robots in the home, and what they reveal about U.S. privacy law. Household robots might not themselves uproot U.S. privacy law, but they will reveal its inconsistencies, and show where it is most likely to fracture. Just as drones are serving as a legislative “privacy catalyst” — encouraging the enactment of new privacy laws as people realize …

Arbitration And The Contract Exchange, Andrew A. Schwartz

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A contract exchange, defined as an organized marketplace for the creation or trading of specific contracts, provides benefits to its members as well as the public at large. But legal disputes can arise on contract exchanges, just as they do anywhere else, and those disputes can be litigated, mediated, arbitrated, or resolved in some other way. This Essay claims that arbitration, rather than litigation, is a particularly useful and appropriate means for resolving exchange-related disputes, and that this is true not only for traditional contract exchanges, like the Chicago Board of Trade, but also for online "consumer contract exchanges," such …

Penalty Default Licenses: A Case For Uncertainty, Kristelia A. García

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Research on the statutory license for certain types of copyright-protected content has revealed an unlikely symbiosis between uncertainty and efficiency. Contrary to received wisdom, which tells us that in order to increase efficiency, we must increase stability, this Article suggests that uncertainty can actually be used to increase efficiency in the marketplace. In the music industry, the battle over terrestrial performance rights--that is, the right of a copyright holder to collect royalties for plays of a sound recording on terrestrial radio--has raged for decades. In June 2012, in a deal that circumvented the statutory license for sound recordings for the …

Prostitution 3.0?, Scott R. Peppet

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This Article presents an entirely novel approach to prostitution reform focused on incremental market improvement facilitated by information law and policy. Empirical evidence from the economics and sociology of sex work shows that new, Internet-enabled, indoor forms of prostitution may be healthier, less violent, and more rewarding than traditional street prostitution. This Article argues that these existing "Prostitution 2.0" innovations have not yet improved sex markets sufficiently to warrant legalization. It suggests that creating a new "Prostitution 3.0" that solves the remaining problems of disease, violence, and coercion in prostitution markets is possible, but would require removing legal barriers to …

Contract As Pattern Language, Erik F. Gerding

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Christopher Alexander’s architectural theory of a "pattern language" influenced the development of object-oriented computer programming. This pattern language framework also explains the design of legal contracts. Moreover, the pattern language rubric explains how legal agreements interlock to create complex transactions and how transactions interconnect to create markets. This pattern language framework helps account for evidence, including from the global financial crisis, of failures in modern contract design.

A pattern represents an encapsulated conceptual solution to a recurring design problem. Patterns save architects and designers from having to reinvent the wheel; they can use solutions that evolved over time to address …

Freedom Of Contract In An Augmented Reality: The Case Of Consumer Contracts, Scott R. Peppet

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This Article argues that freedom of contract will take on different meaning in a world in which new technology makes information about places, goods, people, firms, and contract terms available to contracting parties anywhere, at any time. In particular, our increasingly "augmented reality" calls into question leading justifications for distrusting consumer contracts and strengthens traditional understandings of freedom of contract. This is largely a descriptive and predictive argument: This Article aims to introduce contract law to these technologies and consider their most likely effects. It certainly has normative implications, however. Given that the vast majority of consumer contracting occurs in …

Computable Contracts, Harry Surden

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This Article explains how and why firms are representing certain contractual obligations as computer data. The reason is so that computers can read and process the substantive aspects of contractual obligations. The representation of contractual obligations in data instead of (or in addition to) the traditional written language form - what this Article calls "data-oriented contracting" - allows for the application of advanced computer processing abilities to substantive contractual obligations. Certain financial contracts exemplify this model. Equity option contracts are routinely represented not as contract documents written in ordinary language - but as data records intended to be processed by …

Old Enough To Fight, Old Enough To Swipe: A Critique Of The Infancy Rule In The Federal Credit Card Act, Andrew A. Schwartz

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In the 1960s and 1970s, American society came to the considered conclusion that if eighteen-year-olds can be drafted to fight and possibly die for their country, they should be treated as adults under the law. Thus, in 1971, the Twenty-Sixth Amendment to the United States Constitution, which lowered the voting age to eighteen from twenty one, was proposed and ratified in just three months, making it the fastest amendment in American history. The minimum age for federal and state jury service was also lowered to eighteen from twenty one. And, with regard to contract law, every state passed legislation reducing …

Consumer Contract Exchanges And The Problem Of Adhesion, Andrew A. Schwartz

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Businesses and sophisticated parties have long used "contract exchanges," like the Chicago Board of Trade, to obtain a fair price and protect themselves from market volatility. These contract exchanges have greatly benefited both their participants and the public at large, but participation was long limited to a wealthy few. A decade ago, however, Internet websites, including Hotwire and Priceline, brought the power of contract exchanges directly to consumers, allowing regular people to flex their collective bargaining power to obtain low prices on travel services. Even more recently, other such "consumer contract exchanges," including Prosper and MoneyAisle, have organized vibrant markets …

A Standard Clause Analysis Of The Frustration Doctrine And The Material Adverse Change Clause, Andrew A. Schwartz

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In the darkest depths of a corporate merger agreement lies the MAC clause, a term that permits the acquirer to walk away from a transaction if, between signing and closing, the target company experiences a "Material Adverse Change." Multibillion-dollar deals rise or fall based on the anticipated interpretation of a MAC clause, and invocation of the clause in a sensitive transaction could trigger the collapse of the global financial system. In short, the MAC clause is the most important contract term of our time. And yet--due to an almost total lack of case law--no one knows what it means.

In …

The Diverging Meaning Of Good Faith, Mark J. Loewenstein

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This article explores the meaning of "good faith" in the context of corporations and unincorporated entities. The courts, particularly in Delaware, have developed two different approaches. In the corporate arena, the courts are fashioning a notion of good faith that seems to require an examination of director motivations. In the unincorporated arena, good faith has a meaning grounded in contract law. These are two different concepts and reflect the fundamental differences between corporations and unincorporated entities, with the former based on fiduciary duties and the latter on contract. There are, however, indications that this "divergence" is starting to disappear, and …

Fiduciary Duties And Unincorporated Business Entities: In Defense Of The "Manifestly Unreasonable" Standard, Mark J. Loewenstein

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This article wades into the debate between contractarians and anti-contractarians over the extent to which statutes on unincorporated business entities should limit the ability of the participants in those entities to contract around fiduciary duties. Statutes enacted in the past several years provide considerable, but not complete, freedom to limit fiduciary duties. Contractarians argue that statutory limitations are inefficient and unnecessary, while anti-contractarians take the view that the statutes provide too much freedom of contract. This article stakes out a middle ground, arguing that the drafters of the statutes got it right and that in the absence of statutory limitations …

Lawyers' Bargaining Ethics, Contract, And Collaboration: The End Of The Legal Profession And The Beginning Of Professional Pluralism, Scott R. Peppet

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This Article combines contractarian economics and traditional ethical theory to argue for a radical revision of the legal profession's codes of ethics. That revision would end the legal profession as we know it-one profession, regulated by one set of ethical rules that apply to all lawyers regardless of circumstance. It would replace the existing uniform conception of the lawyer's role with a more heterogeneous profession in which lawyers and clients could contractually choose the ethical obligations under which they wanted to operate. This "contract model" of legal ethics, in which lawyers could opt in and out of various ethical constraints, …

Contract Formation In Imperfect Markets: Should We Use Mediators In Deals?, Scott R. Peppet

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This Article asks a simple question: Could third-party mediators be helpful in deals, just as they are in disputes? This Article makes a theoretical argument for such interventions, but also presents preliminary empirical evidence suggesting that transactional mediation may already be taking place.

Contractarian Economics And Mediation Ethics: The Case For Customizing Neutrality Through Contingent Fee Mediation, Scott R. Peppet

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No abstract provided.

Transactional Mediation: Using Mediators In Deals, Scott Peppet

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This article addresses whether third-party mediators could be helpful in deal-making, just as they are in resolving disputes. It makes a theoretical case for such use of mediators and presents preliminary evidence that transactional mediation already is taking place.