Law Commons^™

Contractually Adopted Fiduciary Duty, D. Gordon Smith

Faculty Scholarship

The Delaware Supreme Court recently referred to “contractually adopted fiduciary duties.” Although some commentators, including Larry Ribstein, view fiduciary duties as a type of contract term, the notion of contractually adopted fiduciary duties is incoherent. The need to opt in to fiduciary duties would arise in only two circumstances: (1) fiduciary relationships that do not invoke fiduciary duties without contractual authorization, and (2) nonfiduciary relationships in which the parties wish to invoke fiduciary duties that would otherwise be absent. The first category of relationships does not exist, as courts impose fiduciary duties when the structure of a relationship indicates that …

Qu'ils Mangent Des Contrats: Rethinking Justice In Eu Contract Law, Daniela Caruso

Faculty Scholarship

The concern for justice in the context of EU contract law was central to a scholarly initiative that led, in 2004, to the publication of a Social Justice Manifesto. The Manifesto had the explicit goal of steering the Commission’s harmonization agenda away from purely neoliberal goals and towards a socially conscious law of private exchange. Contract law would be designed at the EU level so as to become (or remain, depending on the baseline of each member state) palatable to weaker parties. Today, in the many parts of Europe devastated by rising poverty, dire unemployment rates, and collapsing social safety …

The Baby And The Bath Water: The American Critique Of European Contract Law, Daniela Caruso

Faculty Scholarship

This paper aims to contribute to a larger research agenda concerning the possibility of meaningful transatlantic dialogue about private-law reform. Both the European Union and the United States regulate private autonomy extensively. In spite of contextual similarities, there are several barriers making dialogue among legal scholars difficult. In particular, the conversation about social justice, an important element of private law reform within the European Union, is now quite marginal in American contract law scholarship. In U.S. legal academia, social justice is a matter for moral philosophers, development economists, and constitutionalists. Against this background, this paper takes a close look at …

From Lord Coke To Internet Privacy: The Past, Present, And Future Of Electronic Contracting, Juliet M. Moringiello, William L. Reynolds

Faculty Scholarship

Contract law is applied countless times every day, in every manner of transaction large or small. Rarely are those transactions reflected in an agreement produced by a lawyer; quite the contrary, almost all contracts are concluded by persons with no legal training and often by persons who do not have a great deal of education. In recent years, moreover, technological advances have provided novel methods of creating contracts. Those facts present practitioners of contract law with an interesting conundrum: The law must be sensible and stable if parties are to have confidence in the security of their arrangements; but contract …

Love And Contracts In Don Quixote, Martha M. Ertman

Faculty Scholarship

Viewing love as a contract seems, initially, like mistaking windmills for giants, or a peasant girl for a grand lady. This chapter seeks, like Don Quixote, to convince readers to suspend their practiced views of everyday relationships in order to see them in a new light. What seems crazy at first glance may come to look as good, and sometimes better, than the more conventional view. As a law professor, I usually write about love and contracts by focusing on legal opinions and statutes, and recently I have added real-life stories from books and newspapers, as well as my …

The Wonder-Clause, Anna Gelpern, Mitu Gulati

Faculty Scholarship

The Greek debt crisis prompted EU officials to embark on a radical reconstruction of the European sovereign debt markets. Prominently featured in this reconstruction was a set of contract provisions called Collective Action Clauses, or CACs. CACs are supposed to help governments and private creditors to renegotiate unsustainable debt contracts, and obviate the need for EU bailouts. But European sovereign debt contacts were already amenable to restructuring; adding CACs could make it harder. Why, then, promote CACs at all, and cast them in such a central role in the market reform initiative? Using interviews with participants in the initiative and …

Redefining Offer In Contract Law, Daniel P. O'Gorman

Faculty Scholarship

No abstract provided.

Forest Carbon (Redd+), Repairing International Trust, And Reciprocal Contractual Sovereignty, David Takacs

Faculty Scholarship

No abstract provided.

Cases And Controversies: Some Things To Do With Contracts Cases,, Charles L. Knapp

Faculty Scholarship

No abstract provided.

Constraints On Private Benefits Of Control: Ex Ante Control Mechanisms Versus Ex Post Transaction Review, Ronald J. Gilson, Alan Schwartz

Faculty Scholarship

We ask how to regulate pecuniary private benefit consumption. These benefits can compensate controlling shareholders for monitoring managers and investing effort in implementing projects. Controlling shareholders may consume excessive benefits, however. We argue (a) ex post judicial review of controlled transactions dominates ex ante restrictions on the controlled structures: the latter eliminate efficiencies along with abuses of the controlled company form; (b) controlling shareholders should be permitted to contract with investors over private benefit levels. Both work with better courts. Hence, we recommend creating a European-level corporate court, whose jurisdiction parties can invoke by contract.

A Precedent Built On Sand: Norcon V. Niagra Mohawk, Victor P. Goldberg

Faculty Scholarship

Under the common law, a contracting party could only demand assurance of performance if the other party was insolvent. If a party had reasonable grounds for insecurity, the UCC Section 2-609 allowed it to demand adequate assurance even if the counterparty were solvent. The Restatement (Second) adopted the same rule for non-goods. In NorCon v. Niagara Mohawk the New York court extended the adequate assurance doctrine for some non-goods contracts. Although the decision seems to imply that there is some relation between the NorCon facts and its conclusion as to the law, there is none. Relying primarily on material available …

How Markets Work: The Lawyer’S Version, Mitu Gulati, W. Mark C. Weidemaier

Faculty Scholarship

In this article, we combine two sources of data to shed light on the nature of transactional legal work. The first consists of stories about contracts that circulate widely among elite transactional lawyers. Surprisingly, the stories portray lawyers as ineffective market actors who are uninterested in designing superior contracts, who follow rather than lead industry standards, and who depend on governments and other outside actors to spur innovation and correct mistakes. We juxtapose these stories against a dataset of sovereign bond contracts produced by these same lawyers. While the stories suggest that lawyers do not compete or design innovative contracts, …

Consideration For A Price: Using The Contract Price To Interpret Ambiguous Contract Terms, Donald J. Smythe

Faculty Scholarship

No abstract provided.

Visualization: Seeing Contracts For What They Are, And What They Could Become, Thomas Barton, Gerlinde Berger-Walliser, Helena Haapio

Faculty Scholarship

Commercial contract users read their contract documents infrequently, and understand them inadequately. The disincentives may be several: contract language may be too technical and too long; contracts may be organized around ensuring or avoiding legal liability rather than providing guidance toward performing contractual responsibilities; or contracts may rarely include frameworks that would prompt the parties to explore new opportunities. For whatever reason, the neglect by users of contractual documents can lead not only to unpleasant surprises in the performance or enforcement of particular contractual duties, but also to chronic underuse of contracts as potential instruments for planning, innovation, commercial relationship-building …

Innovating Contract Practices: Merging Contract Design With Information Design, Stefania Passera, Helena Haapio, Thomas D. Barton

Faculty Scholarship

The work and expertise of contracts professionals are vital to the operations of modern organizations and the global economy. Strategic planning as well as everyday transactions can be conceived, developed, secured, and implemented through contractual relationships. This accelerating importance and functionality of contracts is not matched, however, by their traditional format or drafting process. Indeed, their mission-critical value is not fully appreciated by decision makers. Many opportunities offered by contracts remain unexplored if contracts are seen merely as legal tools needed only in case a dispute arises. A fresh approach to contracts and contracting is called for.

Drawing on the …

Freedom Of Contracts, Hanoch Dagan, Michael Heller

Faculty Scholarship

“Freedom of contracts” has two components: (1) the familiar freedom to bargain for terms within a contract and (2) the long-neglected freedom to choose from among contract types. Theories built on the first freedom have reached an impasse; attention to the second points toward a long-elusive goal, a liberal and general theory of contract law. This theory is liberal because it develops an appealing conception of contractual autonomy grounded in the actual diversity of contract types. It is general because it explains how contract values – utility, community, and autonomy – properly relate to each other across contract types. Finally, …

Contract And Innovation: The Limited Role Of Generalist Courts In The Evolution Of Novel Contractual Forms, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott

Faculty Scholarship

In developing a contractual response to changes in the economic environment, parties choose the method by which their innovation will be adapted to the particulars of their context. These choices are driven centrally by the thickness of the relevant market – the number of actors who see themselves as facing similar circumstances – and the uncertainty related to that market. In turn, the parties' choice of method will shape how generalist courts can best support the parties' innovation and the novel regimes they envision. In this Article, we argue that contractual innovation does not come to courts incrementally, but instead …