Law Commons^™

Uncertainty, Reliance, Preliminary Negotiations And The Hold Up Problem, Juliet P. Kostritsky

Juliet P Kostritsky

Recently, two scholars, Alan Schwartz and Robert Scott, have cast doubt on the conventional view that courts would find liability and award reliance damages in precontractual cases that resembled the famous Hoffman v. Red Owl case. They have argued that courts deny recovery for reliance in cases involving precontractual preliminary negotiation but regularly grant reliance recovery following a preliminary agreement. They identify a pattern or sequence in which success is likely and then provide an analytical framework to justify liability. When parties reach a preliminary agreement that also includes an agreement that they both invest simultaneously and one party strategically …

How To Repair Unconscionable Contracts, Omri Ben-Shahar

Law & Economics Working Papers Archive: 2003-2009

Several doctrines of contract law allow courts to strike down excessively one-sided terms. A large literature explored which terms should be viewed as excessive, but a related question is often ignored—what provision should replace the vacated excessive term? This paper begins by suggesting that there are three competing criteria for a replacement provision: (1) the most reasonable term; (2) a punitive term, strongly unfavorable to the overreaching party; and (3) the maximally tolerable term. The paper explores in depth the third criterion—the maximally tolerable term—under which the excessive term is reduced merely to the highest level that the law considers …

The Fax As Valid Evidence In Argentine Law, Felipe Eduardo Zabalza, Leandro Javier Caputo

Felipe Eduardo Zabalza

Under Argentine law, the facsimile transmission (fax) is not acceptable under certain circumstances. A recent decision in “Flowtex France S.R.L. v. Flowtex Servicios Urbanos S.A.”, handed down by the National Court of Appeals on Commercial Matters, Chamber A, stated that “a simple photocopy of a fax is not enough proof of the existence of a loan contract”.

As background to this matter, the Argentine court ruled in an international case regarding a loan made by a French company to an Argentine company, with particular consideration of the facsimile as valid evidence in commercial proceedings.

Adhesion Contracts And The Twenty First Century Consumer, Leon E. Trakman

Leon E Trakman Dean

Ecommerce has transformed the law of contract. Consumers are increasingly subject to myriads of conditions in shrink-wrap, box-wrap, click-wrap and browse-wrap contracts. Opening software wrapping or clicking “I agree” in a dialog box on a computer subjects the user to a series of onerous conditions that restrict end use and limit the supplier’s liability. These developments are counterbalance by the growth of new market-savvy classes of consumers who are willing and able to sue brand name producers in class and other actions. Faced with these Twenty First Century developments, courts struggle to find middle ground between regulating mass transactions in …

Using The Unidroit Principles To Fill Gaps In The Cisg, John Y. Gotanda

Working Paper Series

The United Nations Convention on the International Sale of Goods (CISG) sets forth only a basic framework for the recovery of damages, thereby giving a court of tribunal broad authority to determine an aggrieved party’s loss based on circumstances of the particular case. Unfortunately, the lack of specificity has resulted in much litigation, and seemingly conflicting results. To remedy this problem, some have argued that the gaps in the CISG damages provisions should be filled with the UNIDROIT Principles of International Commercial Contracts. In this paper, I argue that the gap-filling rules of CISG preclude the UNIDROIT Principles from being …

Restating Restitution: A Study In Contemporary Common Law Conceptualism, Chaim Saiman

Chaim Saiman

The ALI’s Restatement (Third) of Restitution provides one of the most interesting expressions of contemporary legal conceptualism. This paper explores the theory and practice of post-realist conceptualism through a review and critique of the Restatement. At the theoretical level, the paper develops a typology of different forms of conceptualism, and shows that the Restatement has more in common with the high formalism of the nineteenth century than with contemporary modes of private law discourse. At the level of substantive doctrine, the paper explains why labels in fact make a difference, and assesses which recoveries are more (and less) likely under …

Bribes V. Bombs: A Study In Coasean Warfare, Gideon Parchomovsky, Peter Siegelman

All Faculty Scholarship

The use of bribes to co-opt an enemy’s forces can be a more effective way to wage war than the conventional use of force: Relative to bombs, bribes can save lives and resources, and preserve civic institutions. This essay evaluates the efficacy and normative desirability of selectively substituting bribes for bombs as a means of warfare. We show how inter-country disparities in wealth, differences in military strength, the organization of the bribing and recipient forces, uncertainty about the outcome of the conflict, and communications technology can contribute to the efficacy of bribes. We discuss methods for enforcing bargains struck between …

Clicking And Cringing, Nancy Kim

Nancy Kim

Shrinkwrap, clickwrap and browsewrap licenses have complicated contract law by introducing non-traditional methods of contracting to govern the use of software. The retention of the underlying intellectual property by the licensor, and the malleable qualities of software, give rise to the ability and the need to set parameters of use. The courts have tended to defer to the ownership rights of licensors by claiming that there is valid contract formation, even in “rolling contract” situations. Some commentators have argued that existing contract law doctrines – such as unconscionability and good faith – are sufficient to address digital-era contracting dilemmas. While …

The Hidden Harm Of Law And Economics, Daniel Cohen

Daniel Cohen

The paper deals with the adverse psychodynamic consequences to an individual and to society, immediately and in the long run, of dissolving individual responsibility for fault as in the doctrine of Law and economics.

On Mutual Mistakes, Daniel Cohen

Daniel Cohen

Herein we reconsider what has for over a century been a judicial inconsistency inspiring mostly dismissive scorn. We find a classical disparity in judicial reasoning to have a surprising hidden profundity and we identify it as a sincere though unintentional attempt of erstwhile courts to perform what would today be seem as an admirable effort of social policy making. We shall examine a curious pair of seemingly inconsistent rulings from a century ago and conclude that they are actually consistent with the principles of Law and Economics as understood today, although they were at that time uncomfortably incongruous. The only …

The Inevitable Demise Of The Implied Employment Contract, Jonathan W. Fineman

Jonathan W. Fineman

The Inevitable Demise of the Implied Employment Contract By Jonathan Fineman Abstract This article examines the consequences of the courts’ decision in the early 1980s to apply implied contract doctrine to employment relationships. Although courts did not use the rhetoric of “norms” popular in academic discourse today, their actions were in fact an attempt to enforce workplace norms, specifically the voluntary system of job protection policies employers devised in order to increase worker loyalty and productivity. I explore a question not previously addressed in-depth in the literature: what happened when courts began giving job security practices the force of law? …

Large-Scale Disasters Attacking The American Dream: How To Protect And Empower Homeowners And Lenders, Matthew D. Ekins

Matthew D Ekins

The 2005 hurricane season reminded the world that such catastrophes can and do occur anywhere at anytime. Recovery efforts continue long after tides recede and after-shocks cease. In the context of Hurricane Katrina, this article examines the homeowner-lender relationship to determine risks natural disasters pose to the mortgage industry, likely repercussions a fallout in the mortgage industry may have on the health of the general economy, and what preventative steps have been and may be taken to prevent further economic suffering in a post-catastrophe environment.

Usury Law, Payday Loans, And Statutory Sleight Of Hand: An Empirical Analysis Of American Credit Pricing Limits, Christopher L. Peterson

Christopher L Peterson

In the Western intellectual tradition usury law has historically been the foremost bulwark shielding consumers from harsh credit practices. In the past, the United States commitment to usury law has been deep and consistent. However, the recent rapid growth of the “payday” loan industry belies this longstanding American tradition. In order to understand the evolution of American usury law, this paper presents a systemic empirical analysis of all fifty state usury laws in two time periods: 1965 and the present. The highest permissible price of a typical payday loan authorized under each state’s usury law was calculated. These prices were …

License To Sue?, Lorelei Ritchie De Larena

Lorelei Ritchie de Larena

Courts, commentators and practitioners have for too long viewed intellectual property law as a discrete discipline, without putting it into the proper theoretical context of general jurisprudence. Intellectual property law cannot and must not exist on its own, outside the normative framework of overlapping legal institutions. Even within the rubric of intellectual property, courts have overlooked the potential for cross-applying relevant doctrines between patent, copyright, and trademark law. Certainly, when intellectual property disputes touch on other disciplines, such as civil procedure, contract, or tort law, courts have tended to overlook their synergies, focusing instead on only one of several important …

Declaring Force Majeure: Veracity Or Sham?, Leon E. Trakman

Leon E Trakman Dean

The widespread practice by large scale producers, like Exxon Mobil and BP of declaring force majeure has created enormous legal and contractual problems. The practice is used, not only to respond to devastating disasters like Hurricane Katrina, but also to defects in pipelines amounting to little more than wear and tear The result is that customers are left waiting for goods or forced to pay higher prices until their suppliers decide to lift their declarations and resume performance. This article challenges such declarations, arguing that they often fail to comply with both the law set out in article 2-615 of …

The Broken Promise Of Efficient Breach: Sacrificing Certainty For False Efficiency, Irma S. Russell

Irma S. Russell

THE BROKEN PROMISE OF EFFICIENT BREACH: SACRIFICING CERTAINTY FOR FALSE EFFICIENCY explores the foundational principles of contract law and economics as a way of assessing the failure of efficient breach theory to effectively describe or critique the damages principles of contract law. Important scholarship has criticized the efficient breach theory on numerous grounds, but to date the scholarship has not explored the fundamental attribute of contract law that I identify here: the transfer of the economic right to reallocate resources efficiently. Economics starts from the fundamental proposition that economic actors have the right to efficiently allocate their resources at all …

Bond Defaults And The Dilemma Of The Indenture Trustee , Steven L. Schwarcz, Gregory M. Sergi

Steven L Schwarcz

This article, attached for your review, rethinks the standard of care for trustees of public bonds. The present standard is intolerably vague, generating cost and inefficiency in the public bond markets. Yet bondholder governance is increasingly recognized as a critical component of the larger realm of corporate governance, and indeed more than eighty percent of capital market financing raised by U.S. corporations now occurs through public bond offerings. This article examines how that standard of care should be modified to make indenture trustees more effective.

The Employment Termination Equity Act: Finding A Compromise Between Employment At-Will And Just Cause , Nicole B. Porter

Nicole B. Porter

Many scholars have criticized the harshness of the employment at-will presumption, whereby an employer can terminate an employee for good reason, bad reason, or no reason at all. Unlike other scholarship; however, this proposal adopts a novel approach to the problem of the at-will presumption. Instead of suggesting that the at-will presumption should be replaced with a just cause standard, this article suggests a compromise statute, which I call the Employment Termination Equity Act (ETEA). Under ETEA, employers would be free to terminate unproductive or poorly performing employees, without having the difficult burden of proving just cause. However, certain enumerated …

Dangers Of Deference To Form Arbitration Provisions, Amy J. Schmitz

Faculty Publications

This Article is part of my larger project exploring what I call "contracting culture," which borrows from legal realism and relational contract theory by considering contextual factors such as negotiators' relations, understandings, and values. As part of this project, I am pursuing various threads, including empirical studies of how contracting realities impact arbitration. In this Article, however, I focus on how these realities in business to consumer contracts combine with the Federal Arbitration Act and formulaic contract law to foster dangerous deference to form arbitration provisions. The Article then invites procedural reforms and offers suggestions for regulations aimed to temper …

Introduction: Private Ordering In A Globalizing World: Still Searching For The Basics Of Contract, Peer Zumbansen

Indiana Journal of Global Legal Studies

Governing Contracts - Public and Private Perspectives, Symposium. Osgoode Hall Law School, Toronto, November 9-10, 2006

The Law Of Society: Governance Through Contract, Peter Zumbansen

Indiana Journal of Global Legal Studies

This paper focuses on contract law as a central field in contemporary regulatory practice. In recent years, "governance by contract" has emerged as the central concept in the context of privatization, domestic and transnational commercial relations, and law-and-development projects. Meanwhile, as a result of the neo-formalist attack on contract law, "governance of contract" through contract adjudication, consumer protection law, and judicial intervention into private law relations has come under severe pressure. Building on early historical critique of the formalist foundations of an allegedly private law of the market, the paper assesses the current justifications for contractual governance and posits that …

The Making Of Transnational Contract Law, Graf-Peter Calliess

Indiana Journal of Global Legal Studies

The definition and creation of contract law is entrenched in a common understanding of the strong role of the modern state in the administration of justice. This article argues that this understanding is currently subject to a fundamental transformation as a result of the increasing demand for legal certainty in cross-border transactions. Traditional concepts of private international law, mainly the law of conflicts and multilateral treaty harmonization, have proven unable to keep pace with globalization, allowing private actors to step in and gain a dominant position in providing legal services to international commerce. The resulting privatization of lawmaking leads to …

Consumer Protection And Social Methods Of Continental And Anglo-American Contract Law And The Transnational Outlook, Andreas Maurer

Indiana Journal of Global Legal Studies

Debates over the content of recent EU directives and U.S. statutory amendments related to consumer protection highlight the importance of such regulation. Criticism calling for a return to freedom of contract in both regions reflects a tension between social ideals related to equality between private parties, and a deep distrust of state intervention and market regulation. With the rise of private sources for transnational commercial standards and practices, there is an opportunity for states to facilitate selfregulation in lieu of producing public substantive regulations. This approach seems to satisfy a well-established need for consumer protection without exacerbating government intervention in …

Changing Contract Lenses: Unexpected Supervening Events In English, New Zealand, U.S., Japanese, And International Sales Law And Practice, Luke Nottage

Indiana Journal of Global Legal Studies

This article compares differences in the reasoning underlying contractual relationships between English and New Zealand law and U.S. and Japanese law. It then builds upon an existing framework by adding the notion of didactic formality to identify another important contrast between the laws of these countries. It also discusses how CISG and UPICC fit in to this spectrum. The article concludes by questioning "strong convergence" theory in commercial law worldwide.

Governing Contracts – Public and Private Perspectives, Symposium. Osgoode Hall Law School, Toronto, November 9-10, 2006

The Failure Of Economic Interpretations Of The Law Of Contact Damages, Nathan B. Oman

Faculty Publications

The law of contracts is complex but remarkably stable. What we lack is a widely accepted interpretation of that law as embodying a coherent set of normative choices. Some scholars have suggested that either economic efficiency or personal autonomy provide unifying principles of contract law. These two approaches, however, seem incommensurable, which suggests that we must reject at least one of them in order to have a coherent theory. This Article dissents from this view and has a simple thesis: Economic accounts of the current doctrine governing contract damages have failed, but efficiency arguments remain key to any adequate theory …

Law, Ethics, And International Finance, Lee C. Buchheit

Law and Contemporary Problems

Cross-border financial flows can have dramatic effects on the recipients of the money--for good or for ill. This is particularly true in countries whose economies and capital markets are underdeveloped. Moreover, ethical questions about who should receive cross-border financing, in what amounts, for what purposes, and on what conditions have long engaged the attention of international financial institutions such as World Bank, the International Monetary Fund, and the regional development banks. Here, Buchheit analyzes a difficult area where law and ethics have not yet found a happy coexistence--the problem of odious debts.

Contract Rights And Remedies, And The Divergence Between Law And Morality, Brian H. Bix

Brian H. Bix

There is an ongoing debate in the philosophical and jurisprudential literature regarding the nature and possibility of Contract theory. On one hand are those who argue (or assume) that there is, or should be, a single, general, universal theory of Contract Law, one applicable to all jurisdictions and all times. On the other hand are those who assert that Contract theory should be localized to particular times and places, perhaps even with different theories for different types of agreements. This article considers one facet of this debate: evaluating the relevance of the fact that the remedies available for breach of …

Lessons From Florida: Swing Low, Sweet Charity, Michael Flynn

Faculty Scholarship

No abstract provided.

Overcoming Chad’S Oil Curse: The African Union Convention On Preventing And Combating Corruption As A Framework For Securing Foreign Investments, Jennifer L. Akre

Jennifer L Akre

This comment addresses the issue of corruption in Africa, particularly with regard to Chad’s “partial expropriation” of foreign oil companies in the summer of 2006. It argues Chad violated principles of customary international law and key provisions of the African Union Convention on Preventing and Combating Corruption by unilaterally altering the regulatory scheme of the Chad-Cameroon Pipeline Project. The comment contends that such partial expropriations essentially amount to extortion, and therefore fall under the purview of regional anti-corruption agreements like the AU Corruption Convention. It will focus on the Convention as a possible solution for addressing scenarios like the one …

The Play's The Thing: A Theory Of Taxing Virtual Worlds, Bryan T. Camp

Bryan T Camp

The Play’s The Thing: A Theory of Taxing Virtual Worlds: Bryan T. Camp Abstract Taxation is shadow life. As our culture monetizes more and more life activities, the shadow grows. This article looks at the potential tax issues arising from a new life activity: online role-playing games in virtual worlds. Currently, some 12 million people regularly play such games and the number is growing. Exploring the reach of the Tax Code into virtual world transactions not only responds to the potentially practical needs of millions of U.S. taxpayers, it also permits a reevaluation of core principles of income tax as …