Contracts Commons^™

From British Westinghouse To The New Flamenco: Misunderstanding Mitigation, Victor P. Goldberg

Faculty Scholarship

Both the venerable British Westinghouse decision and the current New Flamenco case have been analyzed in terms of mitigation. Properly understood, in neither is mitigation relevant. Although in the former, the House of Lords came to the right result, the replacement of the substandard turbines with new superior ones was not to mitigate damages — the buyer would have installed the new turbines even had the Westinghouse turbines met the contractual specifications. Even if Westinghouse’s failure accelerated the replacement (which it almost certainly did not) it would have been a mistake to compensate the buyer for the cost of the …

Variation In Boilerplate: Rational Design Or Random Mutation?, Stephen J. Choi, G. Mitu Gulati, Robert E. Scott

Faculty Scholarship

Standard contract doctrine presumes that sophisticated parties choose their terminology carefully because they want courts or counterparts to understand what they intended. The implication of this “Rational Design” model of rational behavior is that courts should pay careful attention to the precise phrasing of contracts. Using a study of the sovereign bond market, we examine the Rational Design model as applied to standard-form contracting. In NML v. Argentina, federal courts in New York attached importance to the precise phrasing of the boilerplate contracts at issue. The industry promptly condemned the decision for a supposedly erroneous interpretation of a variant of …

The Pricing Of Non-Price Terms In Sovereign Bonds: The Case Of The Greek Guarantees, Stephen J. Choi, Mitu Gulati

Faculty Scholarship

In March 2012, Greece conducted one of the biggest and most brutal sovereign debt restructurings ever, asking holders of Greek government bonds to take net present value haircuts of near 80 percent. Greece forced acquiescence to its terms from a large number of its bonds by using a variety of legal strong-arm tactics. With the vast majority of Greek bonds, the tactics worked. There were, however, thirty-six bonds guaranteed by the Greek state, which, because of the weakness of the underlying companies, were effectively obligations of the Greek state. Yet, on these thirty six bonds, even though Greece desperately needed …

25 Years, Where Are We Now? Global Trade & Sovereign Debt, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

Contract Development In A Matching Market: The Case Of Kidney Exchange, Kimberly D. Krawiec, Wenhao Liu, Marc L. Melcher

Faculty Scholarship

We analyze a new transplant innovation — Advanced Donation, referred to by some as a kidney “gift certificate,” “layaway plan,” or “voucher — as a case study offering insights on both market and contract development. Advanced Donation provides an unusual window into the evolution of the exchange of a single good — a kidney for transplantation — from gift, to simple barter, to exchange with a temporal separation of obligations that relies solely on trust and reputational constraints for enforcement, to a complex matching market in which the parties rely, at least in part, on formal contract to define and …

Contracts, Persons And Property: A Tribute To Margaret Jane Radin, Ruth L. Okediji

Michigan Telecommunications & Technology Law Review

In 2011, the United States was only just beginning to emerge from what some claimed to be the most significant economic crisis since the Great Depression. The devastation wrought by unregulated subprime mortgages unfolded as a political, legal, financial and social tragedy. Millions of homeowners had purchased homes for amounts they most certainly could not afford, with terms and conditions written on documents they even more certainly had never read. Many of those most severely affected were, as one might expect, racial minorities and underrepresented groups, but plenty of other members of society were also caught in the intricately woven …

With Marriage On The Decline And Cohabitation On The Rise, What About Marital Rights For Unmarried Partners?, Lawrence W. Waggoner

Articles

This article draws attention to a cultural shift in the formation of families that has been and is taking place in this country and in the developed world. Part I uses recent government data to trace the decline of marriage and the rise of cohabitation in the United States. Between 2000 and 2010, the population grew by 9.71 %, but the husband and wife households only grew by 3.7%, while the unmarried couple households grew by 41.4%. A counter-intuitive finding is that the early 21st century data show little correlation between the marriage rate and economic conditions. Because of the …

The Moral Hazard Of Contract Drafting, Eric A. Zacks

Florida State University Law Review

This Article identifies and examines the principal-agent problem as it arises in the context of contract preparation. The economic agency relationship, as it may be understood to exist for contract drafting, provides a superior framework for understanding and reforming the inability of the non-drafting party (the principal) to control the drafting party (the agent). As an economic agent, the drafting party faces a moral hazard when preparing the contract because of the differing interests of the parties as well as the information and control asymmetries that exists. For example, the use of standard form contracts in consumer transactions is an …

Buying Time In Spain: The Spanish Law Of Installment Sales, John M. Steadman

Georgia Journal of International & Comparative Law

No abstract provided.

Law And Economic Exploitation In An Anti-Classification Age, Hila Keren

Florida State University Law Review

Does our legal system permit the economic exploitation of extreme vulnerability? Focusing on predatory housing loans—a thriving business at the dawn of the twenty-first century—this Article argues that the answer in most cases is yes. Under an individualistic neoliberal paradigm, borrowers are held liable for their contracts, even if they were targeted with predatory practices. Further, borrowers’ attempts to resort to antidiscrimination law, and frame their exploitation as “reverse redlining,” have offered no real answer. An important yet undertheorized explanation for this problem is the impact of the Supreme Court’s anti-classification jurisprudence on lower courts. In an anti-classification age, even …

A Crib Sheet For Contracts Profs, Victor P. Goldberg

Faculty Scholarship

Over the last two decades I have been digging into the facts on a number of contracts cases, many of them featured in casebooks. I have collected the material in two books; one appeared in 2006 and the other is hot off the presses. This brief paper provides a roadmap for professors who might want more depth on the cases than is provided in the decisions or the casebooks. A recurring theme in the two books is that parties designing their contractual relationships must deal with change. This shows up in the manner in which they price the option to …

Ex Ante Choice Of Jury Waiver Clauses In Mergers, Darius Palia, Robert E. Scott

Faculty Scholarship

This paper examines empirically why sophisticated parties in some merger and acquisition deals choose to waive their right to jury trials and some do not. We examine merger agreements for a large sample of 276 deals for the 11-year period 2001 to 2011. We exclude private company deals and those where the choice of forum and law is Delaware. First, we find that 48.2% of the deals have jury waiver clauses. Second, we find that deals in which New York is chosen as the governing law and forum state are more likely to include a jury waiver clause. No other …

Liquidity, Systemic Risk, And The Bankruptcy Treatment Of Financial Contracts, Rizwaan J. Mokal

Brooklyn Journal of Corporate, Financial & Commercial Law

No abstract provided.

Reservations And The Cisg: The Borderland Of Uniform International Sales Law And Treaty Law After Thirty-Five Years, Ulrich G. Schroeter

Brooklyn Journal of International Law

No abstract provided.

Concept And Contract In The Future Of International Law, John Linarelli

Scholarly Works

This is an article written for a symposium on Joel Trachtman’s book, The Future of International Law. I first deal with the contractarian features of Trachtman’s approach to understanding international law. Using the tools of new institutional economics and constitutional economics, Trachtman seeks to describe the features of an international legal system. This is positive political theory or at least relates substantially to the methods of positive political theory. I explore a different approach, one connecting to normative political theory. In its ambitious sense, my approach would see international law as a form of moral argument, but in its modest …

Human Equity? Regulating The New Income Share Agreements, Shu-Yi Oei, Diane Ring

Faculty Scholarship

A controversial new financing phenomenon has recently emerged. New "income share agreements" (''ISAs'') enable an individual to raise funds by pledging a percentage of her future earnings to investors for a certain number of years. These contracts, which have been offered by entities such as Fantex, Upstart, Pave, and Lumni, raise important questions for the legal system: Are they a form of modern-day indentured servitude or an innovative breakthrough in human financing? How should they be treated under the law?

This Article comprehensively addresses the public policy and legal issues raised by ISAs and articulates an analytical approach to evaluating …

Fundamentals Of Contracting By And With Indian Tribes, Michael P. O'Connell

American Indian Law Journal

No abstract provided.

Common Capital: A Thought Experiment In Cross-Border Resolution, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

Cross-border bank resolution efforts focus on burden-sharing between bank owners, private creditors and the public. There is little talk of burden-sharing among governments, despite the rich history of governments trying to stick one another with the cost of financial conglomerate failures. There is an unspoken fear that acknowledging the need to allocate losses among governments would undermine post-crisis pledges of No More Bailouts. This symposium essay argues for making government stakes in private financial firms more transparent, and for using the contingent public share as a key to loss allocation among governments in cross-border banking crises.

Rationality's Reach, Adam B. Badawi

Michigan Law Review

Economic analysis and the rational actor model have dominated contracts scholarship for at least a generation. In the past fifteen years or so, however, a group of behaviorists has challenged the ability of the rational choice model to account for consumer behavior. These behaviorists are not trying to dismantle the entire enterprise. They generally accept the fundamentals of economic analysis but argue that the rational actor model can be improved by incorporating evidence of decisionmaking flaws that people exhibit. Oren Bar-Gill has been one of the foremost and influential proponents of a behaviorist take on contracts, and his recent book, …

Efficient Breach, Gregory Klass

Georgetown Law Faculty Publications and Other Works

The theory of efficient breach is the best known, and the most controversial, product of nearly half a century of economic analysis of contract law. In its simplest form, which is the one that dominates the legal imagination, the theory argues that expectation damages are good because they allow, even encourage, a party to breach when performance becomes inefficient, thereby increasing social welfare. Many noneconomists assume the theory is well supported by principles of neoclassical economics. Thus critics commonly focus on the theory’s moral failings, or on problems with the neoclassical approach more generally. But today no economic thinker defends …

Introduction To Philosophical Foundations Of Contract Law, Gregory Klass

Georgetown Law Faculty Publications and Other Works

This Introduction to Philosophical Foundations of Contract Law (Gregory Klass, George Letsas & Prince Saprai eds., Oxford University Press, forthcoming) describes the field of contract theory and locates the essays in the volume within that field. The volume includes chapters from Aditi Bagchi, Randy Barnett, Lisa Bernstein, Mindy Chen-Wishart, Charles Fried, Avery Katz, Dori Kimel, Gregory Klass, George Letsas and Prince Saprai, Daniel Markovits, Liam Murphy, David Owens, J.E. Penner, Margaret Jane Radin, Joseph Raz, Stephen Smith, and Charlie Webb.

Protecting Reliance, Victor P. Goldberg

Faculty Scholarship

Reliance plays a central role in contract law and scholarship. One party relies on the other's promised performance, its statements, or its anticipated entry into a formal agreement. Saying that reliance is important, however, says nothing about what we should do about it. The focus of this Essay is on the many ways that parties choose to protect reliance. The relationship between what parties do and what contract doctrine cares about is tenuous at best. Contract performance takes place over time, and the nature of the parties 'future obligations can be deferred to take into account changing circumstances. Reliance matters …

A Nihilistic View Of The Efficient Breach, Jeffrey L. Harrison

UF Law Faculty Publications

This article began as a reaction to an article by Daniel Makovits and Alan Schwartz in the Virginia Law Review, “The Myth of the Efficient Breach. . . .” In their article they offer what they call “new defenses” of the expectation interest as a contract remedy. Much of their analysis has been anticipated by others. Plus, in my view the law and economics concepts they seem to rely on lost their legitimacy years ago. Their article was the catalyst for this broader examination of forty years of writing about the efficient breach and an assessment of where it has …

Reclaim This! Getting Credit Seller Rights In Bankruptcy Right, Lawrence Ponoroff

University of Richmond Law Review

No abstract provided.

Penalty Default Licenses: A Case For Uncertainty, Kristelia A. García

Publications

Research on the statutory license for certain types of copyright-protected content has revealed an unlikely symbiosis between uncertainty and efficiency. Contrary to received wisdom, which tells us that in order to increase efficiency, we must increase stability, this Article suggests that uncertainty can actually be used to increase efficiency in the marketplace. In the music industry, the battle over terrestrial performance rights--that is, the right of a copyright holder to collect royalties for plays of a sound recording on terrestrial radio--has raged for decades. In June 2012, in a deal that circumvented the statutory license for sound recordings for the …

Fair Or Foul? Major League Baseball's Use Of A Tortious Interference Lawsuit As A Means Of Investigation, Michael S. Beck

Cardozo Arts & Entertainment Law Journal

No abstract provided.

State Contract Law And Debt Contracts, Colleen Honigsberg, Sharon Katz, Gil Sadka

Ira M. Millstein Center for Global Markets and Corporate Ownership

This paper examines the relationship between debt contracts and state contract law. We first develop an index to evaluate whether each state’s law is favorable or unfavorable to lenders. We then analyze how the contract terms, the frequency of covenant violations, and the repercussions of covenant violations vary across states. We find that cash collateral is most likely to be used when the contract is governed by law that is favorable to debtors and that out-of-state borrowers who use favorable law pay higher yield spreads. In addition, when the law is favorable to lenders, there are significantly fewer covenant violations, …

The Granting Clause And Intellectual Property Rights Management In Open-Source Software Licensing, Vikrant N. Vasudeva

IP Theory

No abstract provided.

Goodwill U: School Name Change & Trademark Law, Alexandra J. Roberts

IP Theory

No abstract provided.

Who Wants To Watch? A Comment On The New International Paradigm Of Financial Consumer Market Regulation, Toni Williams

Seattle University Law Review

This Article explores the capacity of the G20’s model of financial consumer protection to reconfigure relationships between financial firms and consumers, focusing in particular on the market conduct of financial firms. Although this Article does not focus directly on Adolf A. Berle’s work, it does engage with some of his enduring concerns about economic relations between corporations, regulators, and individuals; the socialcontext of those economic relations; and the role of law and legal regulation in shaping market relations. More specifically, this Article considers new international regulatory principles related to corporate social responsibility— a recurring theme of Berle’s work11—in the somewhat …