Law Commons^™

Contracts Scholarship Beyond Materialisierung, Daniela Caruso

Faculty Scholarship

This comment aims to show how Klaus Eller's paper on ‘The Political Economy of Tenancy Contract Law’¹ raises the stakes of private law scholarship and contributes to the larger project of remodeling legal institutions in a progressive direction. The comment starts by contextualising the rapid spread of the Law and Political Economy (LPE) movement; illustrates through examples the generative impact of LPE on contemporary contracts scholarship; and highlights two strands of Eller’s original contribution to such literature: a welcome reflection on the value and limits of Materialisierung, and a radical widening of the private law inquiry to include …

Waivers, Keith N. Hylton

Faculty Scholarship

Waiver contracts are agreements in which one party promises not to sue the other for injuries that occur during their contractual relationship. Waivers are controversial in the consumer context, especially when presented in standard form, take-it-or-leave-it contracts. The law on waivers appears muddled, with no consistent doctrine or policy among the courts on enforceability. The aim of this paper is to offer a consistent set of policies that can form the foundation of a consistent set of doctrines, leading ultimately to a more apparently consistent treatment of waivers in the courts. The most basic piece of this paper’s framework is …

Consumer Law As An Axis Of Economic Inequality, Daniel Markovits, Barak D. Richman, Rory Van Loo

Faculty Scholarship

In the standard paradigm of consumer law, a voluntary transaction is supposed to be welfare enhancing for each of the parties involved. We challenge this foundational presumption and ask to what extent many common consumer contracts are in fact extractive despite resulting from voluntary exchanges. With inequality growing throughout the world, to a degree that threatens the stability of both the economies and governments of even the wealthiest nations, we ask this fundamental question in an effort to identify root causes of inequality and to mark some guideposts for the articles that follow. Taken together, our speculations suggest that the …

Understanding University Fee Litigation: A Few Lessons About The Perils Of Imprudence For Higher Ed Plan Sponsors, Maria O'Brien, Calvin Utter

Faculty Scholarship

Beginning in August 2016, a series of class action lawsuits were filed on behalf of participants and beneficiaries of 403(b) employee retirement plans sponsored by major American colleges and universities. These plans are regulated by the 1974 Employee Retirement Income Security Act (“ERISA”), which sets minimum standards to protect the participants and beneficiaries of voluntarily established retirement and health plans. The allegations in the several lawsuits have centered primarily around breaches of fiduciary duties by those charged with administering the plan.

These cases are all class action lawsuits brought on behalf of the participants and beneficiaries of the plans in …

A Common-Sense Defense Of Janus: Forthcoming Changes In The Public Sector, Maria O'Brien

Faculty Scholarship

Many scholars and others have, for some time now, been calling attention to the alarming growth in post-employment and other benefits for unionized employees in the public sector. ¹⁷ A fairly well-understood phenomenon is thought to explain the inability of state and local governments to resist outsized demands from their public unions. As ¹⁸ Is and others ¹⁹ have argued, the central problem with public sector unions is that they find it easy to capture their employers (taxpayers) in ways that private sector unions cannot. The role played by often eager and feckless elected officials in this process has also …

Rise Of The Digital Regulator, Rory Van Loo

Faculty Scholarship

The administrative state is leveraging algorithms to influence individuals’ private decisions. Agencies have begun to write rules to shape for-profit websites such as Expedia and have launched their own online tools such as the Consumer Financial Protection Bureau’s mortgage calculator. These digital intermediaries aim to guide people toward better schools, healthier food, and more savings. But enthusiasm for this regulatory paradigm rests on two questionable assumptions. First, digital intermediaries effectively police consumer markets. Second, they require minimal government involvement. Instead, some for-profit online advisers such as travel websites have become what many mortgage brokers were before the 2008 financial crisis. …

A Story Of Three Bank-Regulatory Legal Systems: Contract, Financial Management Regulation, And Fiduciary Law, Tamar Frankel

Faculty Scholarship

How should banks be regulated to avoid their failure? Banks must control the risks they take with depositors' money. If depositors lose their trust in their banks, and demand their money, the banks will fail. This article describes three legal bank regulatory systems: Contract with depositors (U.S.); a mix of contract and trust law, but going towards trust (Japan), and a full trust-fiduciary law regulating banks (Israel). The article concludes that bank regulation, which limits the banks' risks and conflicts of interest, helps create trustworthy banks that serve their country best.

The Way We Pay Now: Understanding And Evaluating Performance-Based Executive Pay, David I. Walker

Faculty Scholarship

Over the last ten years, performance-based equity pay, and particularly performance shares, have displaced stock options as the primary instrument for compensating executives of large, public companies in the U.S. This article examines that transformation, analyzing the structure and incentive properties of these newly important instruments and evaluating the benefits and risks from an investor’s perspective. Notable observations include the following: Although technically “stock” instruments, performance shares mimic the incentive characteristics of options. But performance shares avoid the tax, accounting, and other constraints that have led to uniform grants of non-indexed, at the money options. Performance share plans can be …

After Tackett: Incomplete Contracts For Post-Employment Healthcare, Maria O'Brien

Faculty Scholarship

This paper examines the recent U.S. Supreme Court retiree health care decision in Tackett v. M & G Polymers and focuses, in particular, on the ostensibly odd silence with respect to a critical contract term — whether the parties in fact agreed that these benefits were vested. Although the union in Tackett insisted these welfare benefits were clearly intended to vest and the employer now asserts they can be modified at any time, the collective bargaining agreement and supporting documents are ambiguous on this question. This paper examines how and why this “silence” persisted for so many decades and concludes …

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 …

Chain-Link Confidentiality, Woodrow Hartzog

Faculty Scholarship

Disclosing personal information online often feels like losing control over one’s data forever; but this loss is not inevitable. This essay proposes a “chain-link confidentiality” approach to protecting online privacy. One of the most difficult challenges to guarding privacy in the digital age is the protection of information once it is exposed to other people. A chain-link confidentiality regime would contractually link the disclosure of personal information to obligations to protect that information as the information moves downstream. The system would focus on the relationships not only between the discloser of information and the initial recipient, but also between the …

Private Regulation Of Consumer Arbitration, Christopher R. Drahozal, Samantha Zyontz

Faculty Scholarship

Arbitration providers, such as the American Arbitration Association ("AAA') and JAMS, have promulgated due process protocols to regulate the fairness of consumer and employment arbitration agreements. A common criticism of these due process protocols, however, has been that they lack an enforcement mechanism. While arbitration providers state that they enforce the protocols by refusing to administer cases in which the arbitration agreement materially fails to comply with the relevant protocol, the private nature of arbitral dispute resolution makes it difficult to verify whether providers in fact refuse to administer such cases.

This Article reports the results of the first empirical …

Website Design As Contract, Woodrow Hartzog

Faculty Scholarship

Few website users actually read or rely upon terms of use or privacy policies. Yet users regularly take advantage of and rely upon website design features like privacy settings. To reconcile the disparity between boilerplate legalese and website design, this article develops a theory of website design as contract. The ability to choose privacy settings, un-tag photos, and delete information is part of the negotiation between websites and users regarding their privacy. Yet courts invariably recognize only the boilerplate terms when analyzing online agreements. In this article, I propose that if significant website features are incorporated into the terms of …

The New Price To Play: Are Passive Online Media Users Bound By Terms Of Use, Woodrow Hartzog

Faculty Scholarship

When individuals turn on the television, listen to the radio, or purchase newspapers, they are not forming contractual relationships. Yet, almost without exception, online readers, viewers and listeners are required to enter into "terms of use" contracts. These ubiquitous agreements are generally unfavorable for the user in areas of intellectual property rights and privacy. In addition, the terms often restrict users' behavior and their ability to litigate any disputes with a Web site. In analyzing the implications of contracts for Web site users, this article examines whether courts have recognized a distinction between online consumers, interactive users, and "passive media …

Contract Law And Distribution In The Age Of Welfare Reform, Daniela Caruso

Faculty Scholarship

This Article tracks the ongoing adaptation of U.S. contract law to the 1990s’ contraction of the welfare state. Some courts strive to compensate for the shortage of welfare services and to pursue redistributive goals. This Article provides examples of this trend and then analyzes the non-linear relation between doctrines, judicial redistribution, and welfare politics in both case law and scholarship. Finally, this Article discusses the role of socially sensitive judicial discourse in light of contemporary welfare politics and explains its continuing importance.

What Default Rules Teach Us About Corporations; What Understanding Corporations Teaches Us About Default Rules, Tamar Frankel

Faculty Scholarship

This Article addresses corporate law's default rules, which allow corporations to waive their directors' liability for damages based on a breach of their fiduciary duty of care. Most large publicly held corporations have adopted such a waiver in their articles of association. This Article suggests that courts should limit the range of the waivers to the circumstances that existed when the voters voted and to the information they received before they voted. This Article distinguishes between public contracts (legislation) and private contracts (commercial transactions) and the default rules that apply to each. The Article shows that courts view corporations and …

What Default Rules Teach Us About Corporations; What Understanding Corporations Teaches Us About Default Rules, Tamar Frankel

Faculty Scholarship

This Essay addresses corporate law's Default Rules, which allow corporations to waive their directors' liability for damages for breach of their fiduciary duty of care. Most large corporations have adopted such a waiver. This Essay distinguishes Private Contracts from Public Contracts. Public Contracts include legislation, referendums, and votes on specific outcomes, such as union members' votes on the contracts that their representatives agreed upon with management. This Essay shows that the courts view corporations and corporate articles as Public Contracts. In some Public Contracts gap-filling rules limit the scope of the Public Contracts to the information that the voters received …

An Essay On The Challenges Of Drafting A Uniform Law Of Software Contracting, Maureen A. O'Rourke

Faculty Scholarship

This Essay, originally presented at Lewis & Clark Law School’s 2006 Distinguished Intellectual Property Visitor lecture, discusses the challenges involved in developing a uniform law of software contracting. Technology and the law have developed since 1995, when the first efforts to codify such a law began. These earlier efforts were largely unsuccessful, and substantial uncertainty still exists in transactions involving software. In this Essay, Dean O’Rourke discusses the American Law Institute’s Principles project that seeks to identify approaches courts could use in adjudicating disputes involving software agreements. The challenges of developing the Principles include the same theoretical, practical and political …

Introduction, David J. Seipp

Faculty Scholarship

Have we come to bury Lochner, or to praise it? Lochner v. New York,' decided 100 years ago, gave its name to an era in which judges struck down popular statutes that regulated hours, wages, and conditions of work, on grounds that such labor regulations violated a constitutional liberty of contract. After 1937, Lochnerism and Lochnerizing were more or less uniformly condemned by judges and law professors alike. Recently, some scholars have tried to resurrect the Lochner approach, presumably as a way to render much of the twentieth-century regulatory state unconstitutional.

Medical Malpractice And Contract Disclosure: An Equilibrium Model Of The Effects Of Legal Rules On Behavior In Health Care Markets, Kathryn Zeiler

Faculty Scholarship

This paper develops a theoretical model of how specific legal rules affect the types of contracts managed care organizations ("MCOs") use to compensate physicians. In addition, the analysis provides insights into how physician treatment decisions and the rate of medical malpractice lawsuits react to different legal rules. In particular, the model predicts that outcomes in jurisdictions forcing MCOs to disclose physician contract terms to patients differ from those that do not. Contracts vary depending on the disclosure rule and how treatment costs relate to expected damages and litigation costs. Moreover, the model predicts that jurisdictions forcing contract disclosure observe higher …

Footnote Draft Of Render Copyright Unto Caesar - 2004, Wendy J. Gordon

Scholarship Chronologically

This essay, however, does not press any particular agenda; rather, it tries to make our thinking about the topic more flexible. It is my hope that some conduct-specific rule as was adopted in the defamation context will eventually be adopted for intellectual property. Copyright law cannot continue forever closing its eyes and hoping its house will stop being haunted.

The Economics Of Litigation And Arbitration: An Application To Franchise Contracts, Keith N. Hylton, Christopher R. Drahozal

Faculty Scholarship

If we define the deterrence benefits from contract enforcement as avoided harms net of avoidance costs, we should expect contracting parties to choose the dispute resolution forum that provides the greatest difference between deterrence benefits and dispute resolution costs for every type of dispute. We apply this general framework to franchise contracts and conduct an empirical analysis of the determinants of arbitration agreements among franchising parties. Although it is obvious that contracting parties have an incentive to choose arbitration in order to reduce dispute-resolution costs, there have been no studies of the importance of deterrence concerns. We examine the deterrence …

Secret Settlements And Practice Restrictions Aid Lawyer Cartels And Cause Other Harms, Susan P. Koniak, David Dana

Faculty Scholarship

In this article, the authors argue that the use of secrecy agreements and practice restrictions in settlement contracts should be prohibited not only by the ethics rules, but also by criminal and civil law. The authors begin by discrediting four arguments that are traditionally employed to support the use of secrecy agreements and practice restrictions. They then argue that the use of secrecy agreements and practice restrictions generate substantial costs, but do not secure any legitimate benefits that could not be attained by other, less costly means. The authors also explain how the problems caused by secrecy agreements and practice …

Common Law And Statutory Restrictions On Access: Contract, Trespass, And The Computer Fraud And Abuse Act, Maureen A. O'Rourke

Faculty Scholarship

Is copyright law relevant to the terms of access to information? Certainly, few would seriously contend that breaking into a locked filing cabinet to obtain access to a manuscript is not sanctionable, even if the intruder had some purpose that copyright law would applaud with respect to the information contained in the manuscript itself. Many instinctively believe that one must pay the asking price and respect the terms that accompany a copyrighted work or face the consequences under some set of laws like copyrights or contracts. In short, society likely generally believes that market forces regulate the conditions of access …

Review Of Why Things Bite Back: Technology And The Revenge Of Unintended Consequences By Edward Tenner, Jay D. Wexler

Faculty Scholarship

Historian of science Edward Tenner begins his book with a typical example of what he sees as the irony of modern life in a technological society. With the advent of electronic mail and inter-office networking, one would expect that the amount of paper used in offices would markedly decline, but in fact, notes Tenner, paper recycling bins are more full than ever before. People do indeed communicate through e-mail, but since they mistrust the permanence of electronic transmissions, they also back them up with an ever increasing amount of paper communication. In his typically amusing way, Tenner notes that when …

Text And Context In International Dispute Resolution, William W. Park

Faculty Scholarship

More than one thoughtful business manager has contemplated the prospect of litigation abroad in terms analogous to those used by the 19th century diarist quoted above. When an international venture goes awry, the dramatically disagreeable consequences can often include the "hometown justice" of the other side's national courts: unfamiliar procedures, perhaps a foreign language, and in some countries, a xenophobic or even corrupt judge.

Fiduciary Duties As Default Rules, Tamar Frankel

Faculty Scholarship

This Article consists of four parts. Part I draws a profile of fiduciary relationships. It also explains the different responses of fiduciary and contract rules to the different problems that the relationships pose regarding: (1) the right of one party to rely on the other and the specific duties of loyalty and care, which mirror these rights; and (2) the events that trigger the application of fiduciary rules. Finally, it compares contract with fiduciary rules. The reasons for the existence of fiduciary rules suggest that, when in conflict, they trump the rules governing other parallel relationships, including contracts.

Part II …

Enforcing Coasian Bribes For Non-Price Benefits: A New Role For Restitution, Wendy J. Gordon, Tamar Frankel

Faculty Scholarship

In Boomer v. Muir,¹ a subcontractor on a hydroelectric project continued to provide goods and services even though the value of the performance far exceeded the contract price. The general contractor, who was receiving these goods and services, breached the contract even though he was paying less than market price for them.²

In many states, a supplier in the subcontractor's position has among her options the choice of "rescission and restitution."³ That means the supplier may rescind the contract and seek, under the label of "restitution", payment set at market price (or at her cost)⁴ for …

The Legal Infrastructure Of Markets: The Role Of Contract And Property Law Essay, Tamar Frankel

Faculty Scholarship

Markets are social institutions that facilitate exchange transactions. Therefore, they require a regime of freedom to exchange-a contract regime. Markets can be made more efficient by reducing the transaction and information costs for market actors. Such a reduction can be effected by standardizing the products exchanged, the terms of the transactions, and the nature of the rights transferred. Information costs can be reduced by publicizing the transactions' and by using the services of intermediaries