Contracts Commons^™

To Compete Or Noncompete: Lessons On The Impact Of Unenforceable Noncompete Agreements In The Entertainment Industry, Guy Mannick

Washington and Lee Journal of Civil Rights and Social Justice

Economic and legal literature has increasingly focused on how the American legal system fails workers. One way it does so is through employee noncompetition agreements (“NCA” or “noncompete”) that limit a worker’s ability to join another company, often for better compensation and/or more responsibility. Some states enforce NCAs if they are reasonable in scope, geography, and duration; others either prohibit their application to certain types of workers or (as in California) outright prohibit them in most circumstances. More narrowly, new empirical literature about the behavioral effects of unenforceable noncompete agreements raises new questions about the behavioral impact on workers.

This …

1981, Carliss Chatman

Washington and Lee Law Review

42 U.S.C. § 1981 should have solved a pervasive problem in American capitalism—when white economic interests do not converge with the contract rights of Black people, they are excluded from the market in a way that causes systemic harm. This Article proposes that the failure to enforce 1981 in the past may render it more harmful than beneficial in the present climate of retrenchment. The realities of racism combine with the lack of economic interest convergence to make combatting contract inequality on a contract-by-contract basis legally precarious, nearly impossible to properly evaluate, and difficult to economically incentivize. This is in …

Arbitrary Consent To Arbitration, Charity J. Fort

Washington and Lee Law Review

In the one-hundred-year period since the enactment of the Federal Arbitration Act of 1925 (the Act), arbitration in the U.S. has become a battlefield embroiled in a multitude of contract law doctrines and competing arbitration jurisprudence concerning what rights can be contracted away. This battlefield has become particularly grisly with regards to the increased use of arbitration clauses in contracts with adhesive qualities between business entities and consumers. This Article seeks to confront and lay the foundations for resolving a concern raised by many arbitration scholars: scholars who argue that the use of arbitration clauses in contracts of adhesion is …

Global Supply Chain Resilience In Emerging Technologies: A Case Study Of Bitcoin Mining, Kishanthi Parella, Carla L. Reyes

Scholarly Articles

The United States has put into motion bold plans in critical and emerging technologies to bolster its national and economic security.  For example, the federal government created a national bitcoin strategic reserve and a stockpile of other cryptocurrency; while several states have committed to or are considering similar goals.  However, the security of these reserves is dependent on two types of supply chains within the Bitcoin mining industry: analogue supply chains, relating to the physical components needed for Bitcoin mining, and data supply chains, relating to the complex and layered logistical network of actors that create input into …

Risk, Reimagined: The Untold Story Of Liability Laddering In Modern Commercial Dealmaking, Carrie Stanton

Scholarly Articles

In commercial contracting, bargaining parties regularly allocate risk in various ways, including contractual limitations of liability. However, it can be difficult to appropriately apportion responsibility for high-risk contingencies such as data breach. A seller may be unwilling to accept uncapped liability for a contingency whose cost could exceed the expected value of the transaction. Conversely, a buyer may be unwilling to live with only a general damages cap established as a rough-and-ready compromise for more ordinary contingencies. To surmount this impasse, which typically arises toward the end of a negotiation, deal lawyers have begun to craft elevated dollar caps, or …

The Small Business Dilemma, Rachel G. Ngo Ntomp

Washington and Lee Law Review

Small businesses face a unique and challenging dilemma in today’s business landscape. On the one hand, they are typically and rightfully considered the more powerful party in their contractual relations with consumers, thus prompting a need to protect consumers against unfair contractual terms. On the other hand, when engaging with larger businesses, small businesses typically find themselves in the position of the weaker, more vulnerable party, possibly in need of greater protection themselves from unfair terms. This Article addresses the inherent dilemma faced by small businesses and argues that the prevailing perception of businesses as sophisticated and experienced, based exclusively …

From Anti-Bds To Anti-Esg: The Next Generation Of Boycotting The “Boycott” Is Only Slightly Less Problematic, Kali Venable

Washington and Lee Law Review

In response to an explosion in Environmental, Social, Governance (“ESG”), state lawmakers are enacting statutes to penalize companies that “boycott” industries they seek to protect. This Note first explains how we got here. To do so, it explains how lawmakers used statutes aimed at suppressing the Boycott, Divestment, and Sanctions (“BDS”) movement against Israel as templates for anti-ESG boycott laws. Further, this Note examines the rise of ESG and the subsequent anti-ESG movement that led to the enactment of state anti-ESG boycott laws pertaining to public contracts.

By analyzing the mixed outcomes of recent First Amendment challenges to anti-BDS laws …

Illegal Contracts And Agreements: A New Standard For Prostitution And Marijuana Agreements, Doug Rendleman

Washington and Lee Law Review

Agreements exchanging sex for money and those involving marijuana may encounter illegality defenses in court. Granting a legal remedy for breach of an agreement that exchanges seriously illegal consideration would lower the court’s public standing and endanger its legitimacy. On the other hand, the spectacle of a buyer claiming its own illegality to escape paying its seller troubles courts.

Lord Mansfield stated the illegality defense in Holman v. Johnson: “No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.” Yet he rejected the illegality defense in that case …

Crypto-Counterfeiting, Joshua Fairfield

Scholarly Articles

The current crypto winter has given rise to a range of legal challenges. One of the most important sets of legal challenges goes to the heart of cryptocurrency. Cryptocurrency was intended to be non-duplicatable at will, that is, not to be counterfeitable. Blockchain technology is supposed to prevent token counterfeiting through a combination of game theory and cryptography that prevents normal users from simply ordering the system to generate more tokens for their benefit.

The difficulty is that blockchain software is still software. People in charge can order and program the software to generate many more tokens for those individuals’ …

Beyond Trade Secrecy: Confidentiality Agreements That Act Like Noncompetes, Camilla A. Hrdy, Christopher B. Seaman

Scholarly Articles

There is a substantial literature on noncompete agreements and their adverse impact on employee mobility and innovation. But a far more common restraint in employment contracts has been underexplored: confidentiality agreements, sometimes called nondisclosure agreements (NDAs). A confidentiality agreement is not a blanket prohibition on competition. Rather, it is simply a promise not to use or disclose specific information. Confidentiality agreements encompass trade secrets, as defined by state and federal laws, but confidentiality agreements almost always go beyond trade secrecy, encompassing any information the employer imparted to the employee in confidence.

Despite widespread use, confidentiality agreements have received little attention. …

Using State And Local Governments’ Purchasing Power To Combat Wage Theft, Courtlyn G. Roser-Jones

Washington and Lee Law Review

Regulatory efforts to curb wage theft are failing. And for good reason: these laws generally empower individual workers to pursue their rights when employers neglect to pay them what they are owed and deter employers with substantial penalties. But the vast majority of workers do not take formal action against their employers. So, when the penalties for committing wage theft are almost entirely triggered by claims workers do not bring, they do not deter employer behavior. Instead, because the likelihood of being penalized at all is so low, some employers make profit-maximizing decisions to commit wage theft on a large …

Mitigating The Legal Challenges Associated With Blockchain Smart Contracts: The Potential Of Hybrid On-Chain/Off-Chain Contracts, Niloufer Selvadurai

Washington and Lee Law Review

Tantamount with the increasing application of blockchain technologies around the world, the use of blockchain-based smart contracts has rapidly risen. In a “smart contract,” computer protocols automatically facilitate, verify, and enforce arrangements made between parties on a blockchain. Such smart contracts offer a variety of commercial benefits, notably immutability and increased efficiency facilitated by removing the need for a trusted intermediary. However, as discussed in recent legal scholarship, it is difficult for smart contracts to uphold certain fundamental principles of contract law. Translating concepts of individual intention and responsibility into the decentralized space of blockchain is problematic. Aggregating such individual …

Digital Property Cycles, Joshua Fairfield

Washington and Lee Law Review

The present downturn in non-fungible token (“NFT”) markets is no cause for immediate alarm. There have been multiple cycles in both the legal and media focus on digital intangible property, and these cycles will recur. The cycles are easily explainable: demand for intangible property is constant, even increasing. The legal regimes governing ownership of these assets are unstable and poorly suited to satisfying the preferences of buyers and sellers. The combination of demand and poor legal regulation gives rise to the climate of fraud that has come to characterize NFTs, but it has nothing to do with the value of …

Changing The Game: The Emergence Of Nil Contracts In Collegiate Athletics And The Continued Efficacy Of Title Ix, Leeden Rukstalis

Washington and Lee Journal of Civil Rights and Social Justice

On June 30, 2021, the National Collegiate Athletic Association (“NCAA”) suspended a 115-year prohibition on college athletes’ ability to profit from the use of their names, images, and likenesses (“NIL”). Historically, NCAA eligibility was determined by an athlete’s amateur status. Student athletes forewent compensation to preserve a line between professional and college sports. Today, the NCAA’s novel NIL policy recognizes an athlete’s right to publicity and allows them to share in the billions of dollars it generates every year. According to estimates, college athletes earned $917 million in the first year of NIL activity. By 2023, the NIL market is …

Teaching Slavery In Commercial Law, Carliss N. Chatman

Scholarly Articles

Public status shapes private ordering. Personhood status, conferred or acknowledged by the state, determines whether one is a party to or the object of a contract. For much of our nation’s history, the law deemed all persons of African descent to have a limited status, if given personhood at all. The property and partial personhood status of African-Americans, combined with standards developed to facilitate the growth of the international commodities market for products including cotton, contributed to the current beliefs of business investors and even how communities of color are still governed and supported. The impact of that shift in …

Boba Fett, Bounty Hunters, And The Supreme Court’S Viking River Decision: A New Hope, Imre S. Szalai

Washington and Lee Law Review Online

The United States Supreme Court recently issued a fractured decision in Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (June 15, 2022), a classic David v. Goliath clash between a worker and employer. Can arbitration agreements be used to eliminate group or representative actions brought against employers, where the plaintiff worker is serving as a bounty hunter for the State? Although the majority clearly holds that a worker’s individual claims must be sent to arbitration pursuant to a predispute arbitration agreement, the splintered opinions leave some uncertainty regarding what happens to the representative claims of the other …

Mass Arbitration 2.0, Andrew B. Nissensohn

Washington and Lee Law Review

Over the past four decades, corporate interests, in concert with the Supreme Court, have surgically dismantled the American civil litigation system. Enacted nearly a century ago, the Federal Arbitration Act (FAA) was once a procedural law mandating that federal courts enforce arbitration agreements between sophisticated parties with equal bargaining power. Through death by a thousand cuts, corporate interests shielded themselves from nearly all methods of en masse dispute resolution. These interests weaponized the FAA into a “one size fits all” means to compel potential litigants with unequal bargaining power into arbitration. The so-called “Arbitration Revolution” is the subject of much …

Contractual Stakeholderism, Kishanthi Parella

Scholarly Articles

In 2019, the Business Roundtable announced its commitment to all corporate stakeholders—consumers, employees, suppliers, and communities—and not just shareholders. This announcement has reawakened an old debate over corporate social responsibility. Stakeholderism advocates argue that corporate leaders must consider the interests of the various stakeholders impacted by corporate decision-making. Stakeholderism critics challenge this view, expressing concerns that stakeholderism will magnify managerial agency costs, chill regulation, risk inauthenticity, and lead to impractical solutions.

This Article proposes “contractual stakeholderism” to operationalize stakeholderism in accordance with the views of its advocates but in a way that is attentive to the concerns of its critics. …

Governing The Interface Between Natural And Formal Language In Smart Contracts, Joshua A.T. Fairfield, Niloufer Selvadurai

Scholarly Articles

Much of the confusion about the proper regulation of smart contracts stems from the fact that both code and law are expressed in language. Natural (human) and formal (computer) languages are profoundly different, however. Natural language in the form of a true legal contract expresses human meaning and expectation. Code simply acts, and when code acts contrary to the understanding of the parties to a contract, courts must have a theoretical and legal basis in order to intervene--which this Article provides.

Present scholarship on the governance of smart contracts centers on logistical problems relating to the effects of automation on …

Making An Offer That Can't Be Refused: The Need For Reform In The Rules Governing Informed Consent And Doctor-Patient Agreements, Timothy C. Macdonnell

Scholarly Articles

On a daily basis, throughout the country, patients are required to sign informed consent forms regarding the care they receive from their doctors. Informed consent forms are an important part of ensuring patients are making an intelligent, autonomous decision regarding their healthcare based on the facts related to their particular situation. However, frequently these consent forms contain what amount to contract-like terms that require patients to permit doctors to substitute other healthcare providers to care for the patient under the doctor’s supervision (substituted caregiver terms). Often these terms are presented to patients on the eve of surgery and on a …

Whiteness As Contract, Marissa Jackson Sow

Washington and Lee Law Review

2020 forced scholars, policymakers, and activists alike to grapple with the impact of “twin pandemics”—the COVID-19 pandemic, which has devastated Black and Indigenous communities, and the scourge of structural and physical state violence against those same communities—on American society. As atrocious acts of anti-Black violence and harassment by law enforcement officers and white civilians are captured on recording devices, the gap between Black people’s human and civil rights and their living conditions has become readily apparent. Less visible human rights abuses camouflaged as private commercial matters, and thus out of the reach of the state, are also increasingly exposed as …

Creating Cryptolaw For The Uniform Commercial Code, Carla L. Reyes

Washington and Lee Law Review

A contract generally only binds its parties. Security agreements, which create a security interest in specific personal property, stand out as a glaring exception to this rule. Under certain conditions, security interests not only bind the creditor and debtor, but also third-party creditors seeking to lend against the same collateral. To receive this extraordinary benefit, creditors must put the world on notice, usually by filing a financing statement with the state in which the debtor is located. Unfortunately, the Uniform Commercial Code (U.C.C.) Article 9 filing system fails to provide actual notice to interested parties and introduces risk of heavy …

Protecting Third Parties In Contracts, Kishanthi Parella

Scholarly Articles

Corporations routinely impose externalities on a broad range of non-shareholders, as illustrated by several unsuccessful lawsuits against corporations involving forced labor, human trafficking, child labor, and environmental harms in global supply chains. Lack of legal accountability subsequently translates into low legal risk for corporate misconduct, which reduces the likelihood of prevention. Corporate misconduct toward non-shareholders arises from a fundamental inconsistency within contract law regarding the status of third parties: On the one hand, we know that it takes a community to contract. Contracting parties often rely on multiple third parties—not signatories to the contract—to play important roles in facilitating exchange, …

Contract Design, Default Rules, And Delaware Corporate Law, Jeffrey Manns, Robert Anderson

Washington and Lee Law Review

Incomplete contract theory recognizes that contracts cannot be comprehensive and that state law necessarily has to fill in gaps when conflicts arise. The more complex the transaction, the more that lawyers face practical constraints that force them to limit the scope of drafting and broadly rely on legal defaults and open-ended terms to plug holes and address contingencies. In theory Delaware law serves as lawyers’ preferred jurisdiction and forum for merger and acquisition (M&A) transactions and other high-end corporate deals because of the state’s superior default rules for corporate law and its judiciary’s expertise in discerning the “hypothetical bargain” of …

A Commercial Law For Software Contracting, Michael L. Rustad, Elif Kavusturan

Washington and Lee Law Review

Since the 1980s, software is at the core of most modern organizations, most products and most services. Part II of this Article examines how the U.C.C. evolved as the primary source of law for the first generation of computer contracts during the mainframe computer era. Part III examines how courts have overextended U.C.C. Article 2, as the main source of law for software licensing, to the limits. Part IV argues that the ALI and the NCCUSL should propose a new Article 2B for software licensing. Part V recommends a new Article 2C for “software as a service.”

Reckoning Contract Damages: Valuation Of The Contract As An Asset, Victor P. Goldberg

Washington and Lee Law Review

No abstract provided.

Contracting Correctness: A Rubric For Analyzing Morality Clauses, Patricia SáNchez Abril, Nicholas Greene

Washington and Lee Law Review

Morality clauses give a contracting party the right to terminate if the other party behaves badly or embarrassingly. A curious product of twentieth-century Hollywood, these contract clauses have traditionally been used to control the antics of entertainers and athletes. The current politically-sensitive historical moment, combined with the internet’s ability to broadcast widely and permanently, has put everyone’s off-duty speech, conduct, and reputation under the microscope. Media reports detailing people’s digital falls from grace abound. For fear of negative association, businesses are more attuned than ever to the extracurricular acts of their agents and associates—and are increasingly binding them to morality …

Brief Of Restitution And Remedies Scholars As Amici Curiae In Support Of Respondent: Spokeo V. Robins, Doug Rendleman, Douglas Laycock, Mark P. Gergen

Scholarly Articles

Both consumer protection and restitution may be casualties in a collision with the constitutional law of standing.
/="/">
/="/">Spokeo collects information from the internet and publishes it; however, Spokeo neither verifies the facts nor confirms which same-named person it refers to. Robins alleges that Spokeo violated the Fair Credit Reporting Act by disseminating false information about him. He seeks class certification and up to $1,000 in statutory minimum damages instead of compensatory damages. Spokeo argues that Robins lacks standing because he suffered no “injury in fact,” no “concrete harm.”
/="/">
/="/">Statutory minimum recoveries for defendants’ violations of plaintiffs’ …

Customized Procedure In Theory And Reality, W. Mark C. Weidemaier

Washington and Lee Law Review

Contract theory has long posited that parties can maximize contract value by manipulating the procedural rules that will apply if there is a dispute. Beyond choosing a litigation or arbitration forum, parties can allocate costs and fees, alter pleading standards, adjust evidentiary and discovery rules, and customize nearly every aspect of the adjudication process. In time, this theoretical insight became a matter of faith. The assumption that contracts routinely alter procedural rules spawned debate over the normative implications of allowing parties to dictate procedure. Only recently have a few studies suggested that this debate may lack a firm empirical foundation. …

Disentangling Choice Of Law For Torts And Contracts, Rick Kirgis

Washington and Lee Law Review Online

In a federal system with state lines that are easily crossed, physically and electronically, legal disputes often raise choice-of-law issues. Common among those disputes are torts and contracts cases. The courts have taken a variety of approaches to these cases, leading to inconsistent results that depend largely on which forum the plaintiff selects. Judicial fairness and economy dictate, or should dictate, that the choice-of-law issues be resolvable consistently and without unnecessarily tying up the courts or imposing large litigation costs, if it can be done in a principled manner. This article shows how it could be done.