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Full-Text Articles in Law
The Case Against Equity In American Contract Law, Jody S. Kraus, Robert E. Scott
The Case Against Equity In American Contract Law, Jody S. Kraus, Robert E. Scott
Faculty Scholarship
The American common law of contracts appears to direct courts to decide contract disputes by considering two opposing points of view: the ex ante perspective of the parties’ intent at the time of formation, and the ex post perspective of justice and fairness to the parties at the time of adjudication. Despite the black letter authority for both perspectives, the ex post perspective cannot withstand scrutiny. Contract doctrines taking the ex post perspective – such as the penalty, just compensation, and forfeiture doctrines – were created by equity in the early common law to police against abuses of the then …
Contract Design And The Shading Problem, Robert E. Scott
Contract Design And The Shading Problem, Robert E. Scott
Faculty Scholarship
Despite recent advances in our understanding of contracting behavior, economic contract theory has yet to identify the principal causes and effects of contract breach. In this Essay, I argue that opportunism is a primary explanation for why commercial parties deliberately breach their contracts. I develop a novel variation on opportunism that I identify as “shading;” a behavior that more accurately describes the vexing problems courts face in rooting out strategic behavior in contract litigation. I provide some empirical support for the claim that shading behavior is both pervasive in litigation over contract breach and extremely difficult for generalist courts to …
Text And Context: Contract Interpretation As Contract Design, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott
Text And Context: Contract Interpretation As Contract Design, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott
Faculty Scholarship
Contract interpretation remains the most important source of commercial litigation and the most contentious area of contemporary contract doctrine and scholarship. Two polar positions have competed for dominance in contract interpretation. In a textualist regime, generalist courts cannot consider context; in a contextualist regime, they must. Underlying this dispute are contrary assumptions about the prototypical contract each interpretive style addresses. For modern textualists, contracts are bespoke, between legally sophisticated parties who embed as much or as little of the contractual context as they wish in an integrated writing and prefer to protect their choices against judicial interference by an interpretive …
The Economics Of Form And Substance In Contract Interpretation, Avery W. Katz
The Economics Of Form And Substance In Contract Interpretation, Avery W. Katz
Faculty Scholarship
For over a century, legal commentators have debated the relative merits of formal and substantive approaches to the interpretation of contracts; in recent years, the debate has increasingly been conducted in the language of the economic approach to contract law. While this new wave of scholarship has been relatively successful in relating the traditional debates over formalism to specific transactional and institutional problems such as imperfect information, it has been less productive in terms of generating useful legal or policy recommendations. This Essay proposes a different approach: one that focuses on private rather than public legal decisionmakers as its primary …
The Relative Costs Of Incorporating Trade Usage Into Domestic Versus International Sales Contracts: Comments On Clayton Gillette, Institutional Design And International Usages Under The Cisg, Avery W. Katz
Faculty Scholarship
Clayton Gillette's paper on the use of trade usage in reported disputes arising under the United Nations Convention on Contracts for the International Sale of Goods ("CISG") presents a challenge to recent scholarly critiques of modern contractual interpretation. As Gillette explains, much recent writing by economically influenced US scholars in contracts and commercial law has argued in favor of more formalistic methods of interpretation, and against the overwhelming trend of the last half of the twentieth century: a trend toward a more contextual interpretative approach that takes into account a variety of evidence, including the business purpose of the transaction, …