Law Commons^™

The Reasonable Certainty Requirement In Lost Profits Litigation: What It Really Means, Robert M. Lloyd

Robert M Lloyd

This article explains the factors courts consider when determining whether to award damages for lost profits. It contains an extensive review of the case law.

Don't Bet On It: Casino's Contractual Duty To Stop Compulsive Gamblers From Gambling, Irina Slavina

Chicago-Kent Law Review

To address the problem of compulsive gambling, most states with commercial casinos have enacted statewide self-exclusion programs—a mechanism by which patrons petition to be physically removed from a casino if they are discovered on the premises. The casinos in the remaining states voluntarily instituted facility-based programs to assist problem gamblers in fighting their addiction.

But besides having any intended effect, these programs provided gamblers with a new ground for lawsuits—breach of contract. This note argues that neither states nor individual casinos should be liable to self-excluded patrons for breach of contract, even if they enter a casino and lose money …

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.

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 …

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.

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.

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 …

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 …

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 …

Cleaning Up Lake River, Victor P. Goldberg

Faculty Scholarship

A casebook favorite for exploring the liquid dated damage/penalty clause distinction is Lake River Corp. v. Carborundum Co. in which Judge Posner found a minimum quantity clause to be an unenforceable penalty clause. In this paper I argue that the case was framed improperly. Had the litigators recognized that the contract afforded one party an option, the result should have been different. The contract was for the provision of a service – setting aside capacity – which was valuable to the buyer and costly for the seller to provide. The primary purpose of the minimum quantity clause was the pricing …

Zapata Retold: Attorneys' Fees Are (Still) Not Governed By The Cisg, Harry Flechtner, Joseph Lookofsky

Articles

In this work, the authors reiterate and expand on their conclusion that the question of reimbursement for attorney fees incurred in the course of litigating a claim under the United Nations Sales Convention (CISG) is beyond the scope of the CISG, and is governed by domestic law. As discussed in the paper, this conclusion is in line with a recent CISG Advisory Council Opinion (Advisory Council Opinion No. 6) dealing with the calculation of damages under Article 74 of the CISG. We argue that relegating to domestic law the question of recovering attorney fees incurred during litigation over a CISG …

Comment: On Contractual Defaults And Experimental Law And Economics, Avishalom Tor

Journal Articles

It is possible that contract default rules, whose relevance is contingent upon parties' agreement to contract, differ from other default states. Parties therefore might not perceive contingent contractual defaults as relevant reference points. Ironically, however, Sloof, Oosterbeek and Sonnemans' (SOS) "default contract" applied inevitably whenever proposed and whenever Respondents rejected a non-default proposal, bearing greater resemblance to a legal right than to a contractual default. Thus, the contingency of typical contractual defaults cannot account for the No Bias Finding. Other aspects of the SOS experimental design, on the other hand, may explain the No Bias Finding.

New Rules For Promissory Fraud, Gregory Klass, Ian Ayres

Georgetown Law Faculty Publications and Other Works

This article summarizes the authors’ recommended reforms to the law of promissory fraud. These recommendations are presented as a Draft Prestatement of the Law of Insincere Promising. The basic propositions of the Prestatement are taken, with some modification, from the authors’ book, Insincere Promises: The Law of Misrepresented Intent (2005). This article adds extensive comments, in the style of the Restatements, and a prose introduction identifying three reforms we deem most important. First, courts should drop their insistence that every promise represents an intent to perform, and treat that representation instead as a default. Second, courts faced with claims of …

The Law And Economics Of Contracts, Benjamin E. Hermalin, Avery W. Katz, Richard Craswell

Faculty Scholarship

This paper, which will appear as a chapter in the forthcoming Handbook of Law and Economics (A.M. Polinsky & S. Shavell, eds.), surveys major issues arising in the economic analysis of contract law. It begins with an introductory discussion of scope and methodology, and then addresses four topic areas that correspond to the major doctrinal divisions of the law of contracts. These areas include freedom of contract (i.e., the scope of private power to create binding obligations), formation of contracts (both the procedural mechanics of exchange, and rules that govern pre-contractual behavior), contract interpretation (what consequences follow when agreements are …

Damages For Mental Distress And Other Intangible Loss In A Commercial Context, Shannon O'Byrne

Dalhousie Law Journal

As a general rule, contracts law does not permit an award of general damages for mental distress or other intangible loss. There are several rationales for this, including: plaintiffs are to bear their disappointment or upset with mental fortitude; without the rule, courts would be awash in litigation since every breach of contract brings with it some degree of emotional distress; without the rule, plaintiffs may fabricate or exaggerate the degree of their upset; and the rule simply reflects the lack of foreseeability of such loss under Hadley v. Baxendale. Notwithstanding the general rule, courts have awarded mental distress in …

Whiten V. Pilot Ins. Co.: The Unofficial Death Of The Independent Wrong Requirement And Official Birth Of Punitive Damages In Contract, Yehuda Adar Dr.

Yehuda Adar Dr.

Three years have passed since the Supreme Court of Canada rendered its controversial decision in Whiten v. Pilot Insurance Co. In that case, the Court affirmed an almost unprecedented punitive damage award by a jury of one million dollars against an insurance company. More importantly, the Whiten decision appears to be the first attempt by the Supreme Court to construct a comprehensive set of rules and principles in light of which punitive damages cases should be decided in the future. While the extraordinary monetary sanction upheld by the Court has attracted much attention in legal and commercial circles, it seems …

Promissory Fraud Without Breach, Gregory Klass, Ian Ayres

Georgetown Law Faculty Publications and Other Works

This Article, in keeping with the theme of this Symposium, explores the possibility of promissory fraud liability where there is no breach of contract. It is well known that mere breach of contract is not sufficient to make out a claim of promissory fraud. This rule makes eminent sense, for a promisor who initially intended to perform may have later changed her mind. Here we pose the converse question: is it possible to have promissory fraud liability without a breach?

Could Fair Use Equal Breach Of Contract?: An Analysis Of Informational Web Site User Agreements And Their Restrictive Copyright Provisions, Matthew D. Walden

Washington and Lee Law Review

No abstract provided.

Bloomer Girl Revisited Or How To Frame An Unmade Picture, Victor P. Goldberg

Faculty Scholarship

Nearly all contracts casebooks feature the saga of Shirley MacLaine's suit against Twentieth Century Fox arising from the cancellation of the proposed film Bloomer Girl. None really get the story right. To be fair, none try. The case is a vehicle for exploring the obligation of the victim of the breach of an employment contract to take alternative employment. If MacLaine refused an offer of alternative employment that was not "different and inferior," her failure to mitigate would mean that the earnings she would have received would be offset against the damages; so, asked the court, was the alternative …

Should The Doctrine Of Lost Volume Seller Be Retained? A Response To Professor Breen, Daniel W. Matthews

University of Miami Law Review

No abstract provided.

The Lost Volume Seller And Lost Profits Under U.C.C. § 2-708(2): A Conceptual And Linguistic Critique, John M. Breen

University of Miami Law Review

No abstract provided.

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 .

Recovery For Pure Economic Loss In Tort: Another Look At Robins Dry Dock V. Flint, Victor P. Goldberg

Faculty Scholarship

In Robins Dry Dock and Repair Co. v. Flint, the Supreme Court laid down the general proposition that claims for pure economic loss are not recoverable in tort. Although courts have sometimes ignored or distinguished Robins, its holding is still a central feature of tort law. In a recent en bane decision regarding claims by those injured by a chemical spill in the Mississippi River, the Fifth Circuit engaged in an extensive debate over the continued vitality of Robins and concluded (despite five dissenters) that it remained good law.

The Robins rule is overbroad, lumping together a number of …

Contract Modification And "Self-Help Specific Performance": A Reaction To Professor Narasimhan, Robert A. Hillman

Cornell Law Faculty Publications

No abstract provided.

The Decline Of The Contract Market Damage Model, James J. White

Articles

In law school every American lawyer learns that the conventional measure of damages for breach of a sales contract is the difference between the contract price and the market price. Even before these rules were embodied in the Uniform Sales Act and the Uniform Commercial Code (UCC), they were a staple of Anglo-American common law. They remain the rules with which a court would determine damage liability not only for the sale of goods, but also for the sale of real estate and securities.

Court Adjustment Of Long-Term Contracts: An Analysis Under Modern Contract Law, Robert A. Hillman

Cornell Law Faculty Publications

No abstract provided.

Bad Faith In First Party Insurance Contracts—What's Next, Paula J. Casey

University of Arkansas at Little Rock Law Review

No abstract provided.

The Efficiency Of Specific Performance: Toward A Unified Theory Of Contract Remedies, Thomas S. Ulen

Michigan Law Review

The purpose of this essay is to begin the development of an integrated theory of contract remedies by delineating the circumstances under which courts should simply enforce a stipulated remedy clause or grant relief to the innocent party in the form of damages or specific performance. The conclusion, in brief, is that in the absence of stipulated remedies in the contract that survive scrutiny on the usual formation defenses, specific performance is more likely than any form of money damages to achieve efficiency in the exchange and breach of reciprocal promises. If specific performance is the routine remedy for breach, …

Breach Of Contract, Damage Measures, And Economic Efficiency, Robert L. Birmingham

Articles by Maurer Faculty

No abstract provided.

Damage Measures And Economic Rationality: The Geometry Of Contract Law, Robert L. Birmingham

Articles by Maurer Faculty

The question of damage measures presented by the conscious decision of a promisor to breach a losing contract raises one of the most perplexing conceptual problems in contract law. Recognizing the present inability of the courts rationally to resolve the problem, as illustrated by the opposing decisions in Groves v. John Wunder Company and Peevyhouse v. Garland Coal and Mining Company, the author undertakes to examine the premises of contract law with afresh perspective-economic analysis.