Law Commons^™

Lowering The Stakes Of The Employment Contract, Aditi Bagchi

Faculty Scholarship

Every country has to make hard choices about the distribution of entitlements. But employers control the entitlements that individual Americans enjoy to a far greater extent than those in other rich democracies. In this Essay, I argue that, in the absence of the political consensus necessary to deliver state solutions to political questions, employers here are assigned an exaggerated role in employees’ lives. Government incentives for and directives to employers have become a strategy of political deflection. The effect has been to raise the stakes of employment well beyond the scope of those terms and conditions that relate to attracting …

Why The Corporation Locks In Financial Capital But The Partnership Does Not, Richard Squire

Faculty Scholarship

Each partner in an at-will partnership can obtain a cash payout of his interest at any time. The corporation, by contrast, locks in shareholder capital, denying general payout rights to shareholders unless the charter states otherwise. What explains this difference? This Article argues that partner payout rights reduce the costs of two other characteristics of the partnership: the non-transferability of partner control rights, and the possibility for partnerships to be formed inadvertently. While these characteristics serve valuable functions, they can introduce a bilateral-monopoly problem and a special freezeout hazard unless each partner can force the firm to cash out his …

Would Reasonable People Endorse A ‘Content-Neutral’ Law Of Contract?, Aditi Bagchi

Faculty Scholarship

This essay raises two challenges to Peter Benson’s compelling new account of contract law. First, I argue that Benson’s use of the concept of reasonableness goes beyond the Rawlsian account to require that we impute to others a capacity to transcend their contingent circumstances in the context of contractual choice. In fact, our choices in contract are driven by external contingencies and it is only reasonable to take those constrains on other people’s choices into account. Second, I contest Benson’s related claim that contract law should be, and largely is, content-neutral. I argue to the contrary that the justice of …

Lying And Cheating, Or Self-Help And Civil-Disobedience?, Aditi Bagchi

Faculty Scholarship

May poor sellers lie to rich buyers? This article argues that, under limited circumstances, sellers may indeed have a license to lie about their goods. Where sellers are losers under unjust background institutions and they reasonably believe that buyers have more than they would under just institutions, lies that result in de minimum transfers can be regarded as a kind of self-help. More generally, what we owe each other in our interpersonal interactions depends on the institutional backdrop. Consumer contract law, including its enforcement regimes, should recognize the social and political contingency of sellers’ obligations to buyers. In other contexts, …

Interpreting Contracts In A Regulatory State, Aditi Bagchi

Faculty Scholarship

Some scholars would limit courts to the text of written agreements when interpreting contracts on the theory that parties meant what they said, and said what they meant. Other scholars would have courts take into account the factual context surrounding contract formation. Both sides of this debate assume that contract interpretation is largely limited to reconstructing contracting parties’ intentions.

This assumption is mistaken. Since the overturning of Lochner v New York, contracting parties no longer have exclusive authority over contracts. State authority to regulate contract came at the expense of unbridled private authority. A more limited conception of contracting …

Contract Creep, Tal Kastner, Ethan J. Leib

Faculty Scholarship

Scholars and judges think they can address the multiple purposes and values of contract law by developing different doctrinal regimes for different transaction types. They think if we develop one track of contract doctrine for sophisticated parties and another for consumers, we can build a better world of contract: protecting private ordering for sophisticated parties and protecting consumers’ needs all at once. Given the growing enthusiasm for laying down these separate tracks and developing their infrastructures, this Article brings a necessary reality check to this endeavor by highlighting for scholars and judges how doctrine in contract law functions in fact: …

Voluntary Obligation And Contract, Aditi Bagchi

Faculty Scholarship

Absent mistake or misrepresentation, most scholars assume that parties who agree to contract do so voluntarily. Scholars tend further to regard that choice as an important exercise in moral agency. Hanoch Dagan and Michael Heller are right to question the quality of our choices. Where the fundamental contours of the transaction are legally determined, parties have little opportunity to exercise autonomous choice over the terms on which they deal with others. To the extent that our choices in contract do not reflect our individual moral constitutions — our values, virtues, vices, the set of reasons we reject and the set …

The Political Morality Of Convergence In Contract, Aditi Bagchi

Faculty Scholarship

One of the most interesting recent developments in contract law has been an academic and political effort to integrate private law. The proposed Common European Sales Law was ultimately withdrawn, and a series of setbacks, including the British referendum to exit the EU, has recast the politics of convergence. But it remains an objective for many European scholars. This essay considers the wisdom of convergence on a single law of transactions from the perspective of philosophical contract theory. The essay proceeds by disaggregating the rights at stake in contract law. It characterises the formal right to contract and describes its …

Contract And The Problem Of Fickle People, Aditi Bagchi

Faculty Scholarship

No abstract provided.

How Well Do We Treat Each Other In Contract?, Aditi Bagchi

Faculty Scholarship

One of the important contributions of Nathan Oman’s new book is to draw focus onto the quality of the relationships enabled by contract. He claims that contract, by supporting markets, cultivates certain virtues; helps facilitate cooperation among people with diverse commitments; and produces the wealth that may fuel interpersonal and social justice. These claims are all plausible, though subject to individual challenge. However, there is an alternative story to tell about the kinds of relationships that arise from markets i.e., a story about domination. The experience of domination is driven in part by the necessity, inequality, and competition enjoined by …

Contra Proferentem And The Role Of The Jury In Contract Interpretation, Ethan J. Leib, Steve Thel

Faculty Scholarship

Revisiting Bill Whitford’s work on the role of the jury in contract interpretation and his work on consumer form contracting inspired us to take a careful look at a doctrine of contract interpretation that is usually thought to help consumers in interpretive battles with those who draft their contracts unilaterally. But we found that contra proferentem -- the canon that requires construing or interpreting a contract against the drafter when ambiguities arise -- is more confusing than we expected. What we have done here is lay out some of the complexities of the doctrine, focusing on its broader application outside …

Intentions, Compliance, And Fiduciary Obligations, Stephen R. Galoob, Ethan J. Leib

Faculty Scholarship

This essay investigates the structure of fiduciary obligations, specifically the obligation of loyalty. Fiduciary obligations differ from promissory obligations with respect to the possibility of “accidental compliance.” Promissory obligations can be satis- fied through behavior that conforms to a promise, even if that behavior is done for inappropriate reasons. By contrast, fiduciary loyalty necessarily has an intentional dimension, one that prevents satisfaction through accidental compliance. The intentional dimension of fiduciary loyalty is best described by what we call the “shaping” account. This account both explains the conscientiousness that loyalty demands and improves on other accounts of the intentional dimension of …

Must Licenses Be Contracts? Consent And Notice In Intellectual Property, Mark R. Patterson

Faculty Scholarship

Intellectual property owners often seek to provide access to their patented or copyrighted works while at the same time imposing restrictions on that access. One example of this approach is “field-of-use” licensing in patent law, which permits licensees to use the patented invention but only in certain ways. Another is open-source licensing in copyright law, where copyright owners typically require licensees that incorporate open-source software in other products to license those other products on an open-source basis as well. Surprisingly, though, the legal requirements for granting restricted access are unclear. The source of the lack of clarity is the ill-defined …

The Statutory Ucc: Interpretative License And Duty Under Article 2, Nicholas J. Johnson

Faculty Scholarship

No abstract provided.

The Unenforceable Corrupt Contract: Corruption And Nineteenth Century Contract Law, Zephyr Teachout

Faculty Scholarship

This paper explores the 19th century practice of courts refusing to enforce "corrupt" contracts as against public policy.

You Do Have To Keep Your Promises: A Disgorgement Theory Of Contract Remedies, Steve Thel, Peter Siegelman

Faculty Scholarship

Contract law is generally understood to require no more of a person who breaches a contract than to give the injured promisee the "benefit of the bargain." The law is thus assumed to permit a promise-breaker to keep any profit remaining from breach, after putting the victim in the position he would have been in had the promise been performed. This conventional description is radically wrong: across a wide range of circumstances, standard contract doctrines actually do require people to keep their promises, or to disgorge their entire profit from breach if they do not. Rather than protecting the expectation …

Standardization Of Standard-Form Contracts: Competition And Contract Implications, Mark R. Patterson

Faculty Scholarship

Standard-form contracts are a common feature of commercial relationships because they offer the advantage of lower transaction costs. This advantage of standard contracts is increased when there is a second layer of standardization under which multiple firms agree on a standard contract. Trade associations and similar entities often effect standardization of this kind through collective agreement on a standard contract, sometimes under the aegis of state actors. Multifirm contract standardization can provide not only the usual transaction-cost advantages of standard-form contracts, but also increased competition among firms, because a standard contract makes comparison among firms’ offerings easier. But standardization among …

Contracts And Friendships, Ethan J. Leib

Faculty Scholarship

This Article aims to give the relational theory of contract new life, sharpening some of its claims against its competitors by refracting its theory of relational contracts through an analogy to friendship. In drawing the analogy between friendships and relational contracts and revealing their morphological similarities, this Article offers a provocative window into friendship's contractual structure--and into relational contracts' approximation of friendships. The analogy developed here is poised to replace the “relational contract as marriage” model prevalent among relationalists. This new model is more honest to relational contract theory and to marriage--and helps relational contract theory produce some new insights, …

Wilfulness Versus Expectation: A Promise-Based Defense Of Wilfull Breach Doctrine, Steve Thel, Peter Siegelman

Faculty Scholarship

Willful breach doctrine should be a major embarrassment to contract law. If the default remedy for breach is expectation damages designed to put the injured promisee in the position she would have been in if the contract had been performed, then the promisor's behavior-the reason for the breach-looks to be irrelevant in assessing damages. And yet the cases are full of references to "willful" breaches, which seem often to be treated more harshly than ordinary ones based on the promisor's bad/willful conduct. Our explanation is that willful breaches are best understood as those that should be prevented or deterred because …

Friends As Fiduciaries, Ethan J. Leib

Faculty Scholarship

This Article argues that the law of fiduciary duties provides a good framework for friends to understand their duties to one another better, gives courts a useful set of rhetorical and analytical tools to employ when they are forced to entertain disputes that arise between close friends, and, finally, can help direct courts to furnish betrayed friends certain kinds of remedies that are most appropriate for achieving justice within that dispute context. This is not the first Article to make an effort to expand the reach of the fiduciary concept into new sorts of relationships that are not always considered …

Friendship & The Law, Ethan J. Leib

Faculty Scholarship

This Article's central argument is that the law needs to do a better job of recognizing, protecting, respecting, and promoting friendships. The law gives pride of place to other statuses--family and special professional relationships are obvious ones--but the status of the friend is rarely relevant to legal decisionmaking and public policymaking in a consistent way. After defining the concept of the friend, I offer a normative argument for why the law should promote a public policy of friendship facilitation and for why the law ignores friendships only at its peril. I highlight how the law already finds friendship relevant in …

On Collaboration, Organizations, And Conciliation In The General Theory Of Contract, Ethan J. Leib

Faculty Scholarship

Daniel Markovits's Contract and Collaboration is a thought-provoking and ground-breaking inquiry into the ethics of contract. It argues that the philosophical foundation of contract may be found in what Markovits calls the collaborative view: a principle of forming respectful communities of collaboration where contractors treat each other as ends in themselves and refrain from treating each other as mere instrumentalities. Markovits acknowledges that there are three prototypical forms of contracts: (1) person-to-person; (2) person-to-organization; and (3) organization-to-organization. He is refreshingly honest in arguing that his theory of contract only addresses Type (1) contracts. I wish to argue here that this …

Boundaries Of Extracompensatory Relief For Abusive Breach Of Contract, The , Nicholas J. Johnson

Faculty Scholarship

The idea of extracompensatory damages for abusive breach of contract presents a fundamental conflict. Contract doctrine aims to facilitate exchanges. Extracompensatory damages are disincentives. These aims are essentially irreconcilable. And traditionally the goal of facilitating exchanges has trumped any interest in punishing bad conduct. But there is a lingering sense that sometimes a proportionate response to bad conduct surrounding breach requires more than the traditional measure of damages. At the edges of contract doctrine, two notable experiments manifest the sense that some breaches demand more than compensatory damages. One, the failed California experiment with bad faith breach, permitted the plaintiff …

Union Lawyer's Obligations To Bargaining Unit Members: A Case Study Of The Interdependence Of Legal Ethics And Substantive Law, The Symposium: The Lawyer's Duties And Liabilities To Third Parties, Russell G. Pearce

Faculty Scholarship

One of the largest groups of purported nonclients to whom lawyers might have obligations are members of bargaining units represented by unions. Despite the much publicized decline of labor unions, they have almost 16.4 million members. In addition, many workers are members of bargaining units represented by labor unions, but are not union members. The relationship of union lawyers to these millions of bargaining unit members, whether members of the union or not, is unclear. An examination of how this relationship influences and is influenced by labor law offers a fascinating case study of the synergy between the substantive law …

Enforcement Provisions Of The Civil Rights Act Of 1866: A Legislative History In Light Of Runyon V. Mccrary, The Review Essay And Comments: Reconstructing Reconstruction, Robert J. Kaczorowski

Faculty Scholarship

The purpose of this Comment is to examine the history of the enactment and early enforcement of the Civil Rights Act of 1866 from the perspective of the remedies Congress sought to provide to meet the problems that necessitated the legislation. Its main foci are the statute's enforcement provisions and their early implementation, an aspect of the history of the statute that has not been fully considered in relation to section one, the provision that has received the most scholarly attention. The occasion of this study is the Supreme Court's reconsideration of Runyon v. McCrary' in Patterson v. McLean Credit …