Law Commons^™

Nonparty Interests In Contract Law, Omri Ben-Shahar, David A. Hoffman, Cathy Hwang

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Contract law has one overarching goal: to advance the legitimate interests of the contracting parties. For the most part, scholars, judges, and parties embrace this party primacy norm, recognizing only a few exceptions, such as mandatory rules that bar enforcement of agreements that harm others. This Article describes a distinct species of previously unnoticed contract law rules that advance nonparty interests, which it calls “nonparty defaults."

In doing so, this Article makes three contributions to the contract law literature. First, it identifies nonparty defaults as a judicial technique. It shows how courts deviate from the party primary norm with surprising …

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

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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 …

Contract Consideration And Behavior, David A. Hoffman, Zev. J. Eigen

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Contract recitals are ubiquitous. Yet, we have a thin understanding of how individuals behave with respect to these doctrinally important relics. Most jurists follow Lon Fuller in concluding that when read, contract recitals accomplish their purpose: to caution against inconsiderate contractual obligation. Notwithstanding the foundational role that this assumption has played in doctrinal and theoretical debates, it has not been tested. This Article offers what we believe to be the first experimental evidence of the effects of formal recitals of contract obligation — and, importantly too, disclaimers of contractual obligation — on individual behavior. In a series of online experiments, …

Transferring Trust: Reciprocity Norms And Assignment Of Contract, Tess Wilkinson-Ryan

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This paper presents four experiments testing the prediction that assignment of contract rights erodes the moral obligation to perform. The first three studies used an experimental laboratory game designed to model contractual exchange. Players in the games were less selfish with a previously-generous partner than with third-party player who had purchased the right to the original partner’s expected return. The fourth study used a web-based questionnaire, and found that subjects reported that they would require less financial incentive to breach an assigned contract than a contract held by the original promisee. The results of these four experiments provide support for …

Unequal Promises, Aditi Bagchi

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This essay explores the nature and implications of a type of inequality that is widespread but largely ignored. Promises deliver important ethical value, and commercial promises, because they are our most common experience of promise with strangers, are of special value. But not all commercial promises generate that value equally. This paper makes the following claims: (1) while some retail promises are promises either to deliver a good or service, or to pay some compensation, other retail promises are simple promises to deliver a good or service; (2) retail promises in high-end markets are more likely to have the simple …

When Selling Your Personal Name Mark Extends To Selling Your Soul, Yvette Joy Liebesman

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Identifying one’s business with one’s personal name has long been a practice in the United States. As Personal Name Marks have become increasingly commodified, however, bargaining and deal-making has led more and more to transfers of rights which had previously been considered to be closely tied to the individual as a private person. This article posits that freedom of contract doctrine should not allow the complete alienation of all aspects of one’s name, but rather there should be limitations on how far parties may bargain, so that the purchaser cannot acquire the right to control the seller’s private activities. This …

The Myth Of Equality In The Employment Relation, Aditi Bagchi

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Although it is widely understood that employers and employees are not equally situated, we fail adequately to account for this inequality in the law governing their relationship. We can best understand this inequality in terms of status, which encompasses one’s level of income, leisure and discretion. For a variety of misguided reasons, contract law has been historically highly resistant to the introduction of status-based principles. Courts have preferred to characterize the unfavorable circumstances that many employees face as the product of unequal bargaining power. But bargaining power disparity does not capture the moral problem raised by inequality in the employment …

The Best Puffery Article Ever, David A. Hoffman

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This Article provides the first extensive legal treatment of an important defense in the law of fraud and contracts: puffery. Legal authorities commonly say they make decisions about whether defendants should be able to utter exaggerated, optimistic, lies based on assumptions about buyer behavior, concluding that consumers do not rely on such speech. However, as the Article shows, such analyses are proxies for a deeper analytical question: does the speech encourage or discourage a type of consumption activity that the court deems welfare maximizing? The Article presents a novel constitutional analysis of puffery doctrine that focuses on the meaning of …