Law Commons^™

Is There Force In Force Majeure After Covid-19 Or In The Freedom To Negotiate Risk?, Sara Lazarevic

University of Miami Inter-American Law Review

This note explores the impact COVID–19 has had on contracting parties who have attempted to implicate force majeure provisions. An inquiry of recent cases reveals varying degrees of success and tension when parties turn towards force majeure text. This Note analyzes common law alternatives, discusses the implication of force majeure clauses as applied under Mexican and American law, highlights the implications that have played out in recent court decisions, and discusses post–pandemic implications that could affect how parties conduct cross–border transactions in the future.

Contractual Stakeholderism, Kishanthi Parella

Scholarly Articles

In 2019, the Business Roundtable announced its commitment to all corporate stakeholders—consumers, employees, suppliers, and communities—and not just shareholders. This announcement has reawakened an old debate over corporate social responsibility. Stakeholderism advocates argue that corporate leaders must consider the interests of the various stakeholders impacted by corporate decision-making. Stakeholderism critics challenge this view, expressing concerns that stakeholderism will magnify managerial agency costs, chill regulation, risk inauthenticity, and lead to impractical solutions.

This Article proposes “contractual stakeholderism” to operationalize stakeholderism in accordance with the views of its advocates but in a way that is attentive to the concerns of its critics. …

Protecting Third Parties In Contracts, Kishanthi Parella

Scholarly Articles

Corporations routinely impose externalities on a broad range of non-shareholders, as illustrated by several unsuccessful lawsuits against corporations involving forced labor, human trafficking, child labor, and environmental harms in global supply chains. Lack of legal accountability subsequently translates into low legal risk for corporate misconduct, which reduces the likelihood of prevention. Corporate misconduct toward non-shareholders arises from a fundamental inconsistency within contract law regarding the status of third parties: On the one hand, we know that it takes a community to contract. Contracting parties often rely on multiple third parties—not signatories to the contract—to play important roles in facilitating exchange, …

The Social Cost Of Contract, David A. Hoffman, Cathy Hwang

All Faculty Scholarship

When private parties perform contracts, the public bears some of the costs. But what happens when society confronts unexpected contractual risks? During the COVID-19 pandemic, completing particular contracts—such as following through with weddings, conferences, and other large gatherings—will greatly increase the risk of rapidly spreading disease. A close reading of past cases illustrates that when social hazards sharply increase after formation, courts have sometimes rejected, reformed, and reinterpreted contracts so that parties who breach to reduce external harms are not left holding the bag.

This Essay builds on that observation in making two contributions. Theoretically, it characterizes contracts as bargains …

A Bargaining Dynamic Transaction Cost Approach To Understanding Framework Contracts, Juliet P. Kostritsky

Faculty Publications

This Article takes a different approach. It draws on the literature of these scholars but suggests that another way to understand the arrangements parties enter into in a variety of settings to purchase or sell goods or to innovate on a product or drug can best be understood in terms of a bargaining dynamic that looks at how the private interests of the parties are turned into joint interests in the agreement reached. It is a mistake to talk about the form of a contract without first understanding the bargaining needs and positions of the parties and how those needs …

In Defense Of The Restatement Of Liability Insurance Law, Tom Baker, Kyle D. Logue

All Faculty Scholarship

For most non-contractual legal claims for damages that are brought against individuals or firms, there is some form of liability insurance coverage. The Restatement of the Law Liability Insurance is the American Law Institute’s first effort to “restate” the common law governing such liability insurance policies, and we are the reporters. In a recent essay funded by the insurance industry, Yale Law Professor George Priest launched a strident critique of the Restatement project, arguing that the rules adopted in the Restatement:

(a) are radically contrary to existing case law,

(b) have a naïve “pro-policyholder” bias that ignores basic economic insights …

Waive Goodbye To Appellate Review Of Plea Bargaining: Specific Performance Of Appellate Waiver Provisions Should Be Limited To Extraordinary Circumstances, Holly P. Pratesi

Brooklyn Law Review

In the federal criminal justice system, plea bargaining remains the predominant method for disposing of cases. An important provision in most plea agreements consists of the waiver of the defendant’s right to appeal the conviction or sentence. This note explores the constitutional, contractual, and policy implications of a recent Third Circuit decision that would allow specific performance as a remedy where a defendant’s only breach of the plea agreement consists of filing an appeal arguably precluded by an appellate waiver provision. This note argues that the approach taken by the Third Circuit in United States v. Erwin could effectively preclude …

Legal Entities As Transferable Bundles Of Contracts, Kenneth Ayotte, Henry Hansmann

Kenneth Ayotte

The large, modern business corporation is frequently organized as a complex cluster of hundreds of corporate subsidiaries under the common control of a single corporate parent. Our Article provides new theory and supportive evidence to help explain this structure. We focus, in particular on the advantages of subsidiary entities in providing the option to transfer some or all of the firm's contractual rights and obligations in the future. The theory not only sheds light on corporate subsidiaries but also illuminates a basic function of all types of legal entities, from partnerships to nonprofit corporations. We show that when, as is …

Duty In The Litigation-Investment Agreement: The Choice Between Tort And Contract Norms When The Deal Breaks Down, Anthony J. Sebok, W. Bradley Wendel

Vanderbilt Law Review

This Article begins by describing the market for investment in commercial litigationA Litigation-investment transactions share features of existing economic relationships, such as commercial lending, liability insurance, contingent fee-financed representation, and venture capital, but none of these existing practices furnishes a suitable analogy for regulating litigation investment. Like third-party insurance, litigation investment is a way to manage the risk associated with litigation while bringing to bear the particular subject matter expertise of a risk-neutral institutional actor. Insurance companies and litigation investors may be systematically in a better position to reduce the risk of litigation, either through risk pooling or information-cost advantages. …

Navigating Through The Fog Of Cloud Computing Contracts, T. Noble Foster

T. Noble Foster

This paper explores legal issues associated with cloud computing, provides analysis and commentary on typical clauses found in contracts offered by well-known cloud service providers, and identifies strategies to mitigate the risk of exposure to cloud-based legal claims in the critical areas of data security, privacy, and confidentiality. While current research offers numerous case studies, viewpoints, and technical descriptions of cloud processes, our research provides a close examination of the language used in cloud contract terms. Analysis of these contract terms supports the finding that most standard cloud computing contracts are unevenly balanced in favor of the cloud service provider. …

Legal Entities As Transferable Bundles Of Contracts, Kenneth Ayotte, Henry Hansmann

Michigan Law Review

The large, modern business corporation is frequently organized as a complex cluster of hundreds of corporate subsidiaries under the common control of a single corporate parent. Our Article provides new theory and supportive evidence to help explain this structure. We focus, in particular on the advantages of subsidiary entities in providing the option to transfer some or all of the firm's contractual rights and obligations in the future. The theory not only sheds light on corporate subsidiaries but also illuminates a basic function of all types of legal entities, from partnerships to nonprofit corporations. We show that when, as is …

Regulation By Liability Insurance: From Auto To Lawyers Professional Liability, Tom Baker, Rick Swedloff

All Faculty Scholarship

Liability insurers use a variety of tools to address adverse selection and moral hazard in insurance relationships. These tools can act on insureds in a manner that can be understood as regulation. We identify seven categories of such regulatory activities: risk-based pricing, underwriting, contract design, claims management, loss prevention services, research and education, and engagement with public regulators. We describe these activities in general terms and then draw upon prior literature to explore them in the context of five areas of liability and corresponding insurance: shareholder liability, auto liability, gun liability, medical professional liability, and lawyers’ professional liability. The goal …

Managing Moral Risk: The Case Of Contract, Aditi Bagchi

All Faculty Scholarship

The concept of moral luck describes how the moral character of our actions seems to depend on factors outside our control. Implications of moral luck have been extensively explored in criminal law and tort law, but there is no literature on moral luck in contract law. I show that contract is an especially illuminating domain for the study of moral luck because it highlights that moral luck is not just a dark cloud over morality and the law to bemoan or ignore. We anticipate moral luck, i.e., we manage our moral risk, when we take into account the possibility that …

Determining If Mandatory Arbitration Is “Fair”: Asymmetrically Held Information And The Role Of Mandatory Arbitration In Modulating Uninsurable Contract Risks, Paul B. Marrow

NYLS Law Review

No abstract provided.

Managing Risks Associated With The Jbcc(Principal Building Agreement) From Thesouth African Contractor’S Perspective, Ayman Ahmed Ezzat Othman, Nishani Harinarain

Architectural Engineering

Construction is a complex and risky business. It is a time-consuming process involving a multitude of organisations with different objectives and skills. In addition, increasing client expectations coupled with the technological development of materials and equipment made the construction industry subject to more risks than any other industry. Contracts are essential tools for organising the relationship between involved parties and managing associated risk. For years the South African construction industry had a very poor reputation in managing construction risks. In order to improve the image of the South African construction industry and to assist contractors to develop their proper risk …

To Err Is Human, Keith A. Rowley

Michigan Law Review

There are many kinds of mistakes. One kind-a rational, well-intended act or decision resulting in unanticipated, negative consequences-was the focus of Allan Farnsworth's previous foray into the realm of legal angst. Another kind-an act or decision prompted by an inaccurate, incomplete, or uninformed mental state and resulting in unanticipated, negative consequences- is the subject of the present book. Like its predecessor, Alleviating Mistakes does not confine itself to contract law, Farnsworth's home turf; it explores criminal, tort, restitution, and other areas of substantive law as well. As such, it paints on too large a canvas to capture its entirety in …

Performance Risk, Form Contracts And Ucita, Leo L. Clarke

Michigan Telecommunications & Technology Law Review

No scholarly commentator has suggested that the form contract rules provide a satisfactory answer to the commercial problem of performance risk. So, one might think that the dawn of the "information economy" would be a propitious time to implement a new doctrinal approach. Apparently not: the National Conference of Commissioners on Uniform State Laws (the "Conference") has promulgated a comprehensive commercial statute that fails to remedy or even modify the law of form contracts in purely commercial transactions. The Uniform Computer Information Transactions Act ("UCITA")--drafted to provide the background law for many of the most significant transactions in the information …

Replacing Strict Liability With A Contract-Based Products Liability Regime, Richard C. Ausness

Law Faculty Scholarly Articles

When strict products liability first appeared on the scene some thirty-five years ago, it was heralded as a boon to consumers whose claims to compensation had hitherto been frustrated by the law of sales. Warranty law, it was said, worked fairly well in purely "commercial" transactions, but tort law did a better job in cases where ordinary consumers suffered personal injuries or property damage from defective products. To be sure, defenders of warranty law pointed out that the newly-drafted Uniform Commercial Code (the "Code" or "U.C.C.") was much more consumer friendly than the old Uniform Sales Act. Nevertheless, the proponents …

Reconsidering Insurance For Punitive Damages, Tom Baker

All Faculty Scholarship

No abstract provided.

Concurrent Causation In Insurance Contracts, William Conant Brewer Jr.

Michigan Law Review

A great deal of work and thought has been devoted to concurrent causation problems in the field of torts. Less attention has been paid to the insurance cases, and no serious effort has been made to formulate the separate rules applicable to them. It is the thesis of this article that concurrent causation problems which arise under an insurance contract must be handled somewhat differently from those which arise in connection with tort litigation, and that the tendency to borrow rules of law from the larger tort field and apply them to the smaller volume of insurance cases can only …

Contracts-Impossibility-Effect Of Crop Failure On Middleman's Contract, John C. Walker

Michigan Law Review

Defendant, a produce dealer, offered to sell to plaintiff a specified quantity of Texas "New Crop U.S. 1 blackeye peas." When the original offer was made on June 13, 1947, plaintiff asked how defendant could be sure the peas would be ''No. 1.'' Defendant replied that because the locality of Dilley, Texas, had been unusually dry, the pea crop would be sold as dry ''blackeyes;" defendant also stated that he had already made a contract to purchase 7,000 bags of these "blackeyes" from a certain canning company. On June 16 the contract for 800 bags of peas was consummated, delivery …

Insurance - When Contracts For Contingent Performance Of Acts Other Than Payment Of Money Constitute Insurance, Charles W. Allen

Michigan Law Review

A recent case presents the many difficulties that confront the courts in determining whether a given contract is one of insurance. Plaintiff was a glazier. For a fixed payment he agreed with his customers that during a certain period he would repair and replace, if broken, their store-front glass. Penal proceedings were instituted against plaintiff for failure to comply with the insurance laws. He brought an action to enjoin prosecution of the proceedings. It was held that the contracts were not insurance contracts and that plaintiff was entitled to the injunction.