Contracts Commons^™

Individualized Injunctions And No-Modification Terms: Challenging "Anti-Reform" Provisions In Arbitration Clauses, Myriam E. Gilles

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The Supreme Court’s recent decisions in AT&T Mobility v. Concepcion and American Express v. Italian Colors have considered only whether class actions for monetary damages may be barred by arbitration clauses requiring individual adjudication. The Justices have not examined the enforceability of arbitration clauses or arbitral rules which explicitly prohibit claimants from seeking or arbitrators from granting broad injunctive relief in an individual dispute. I term these "anti-reform" provisions because they broadly prohibit an individual arbitral claimant from seeking to end a practice, change a rule, or enjoin an act that causes injury to itself and to similarly-situated non-parties. This …

The Anomaly Of Entrapment, Jessica A. Roth

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Now in our second decade after 9/11, we are firmly in the prevention era of law enforcement. Faced with the unacceptable consequences of identifying threats too late, government agents are moving aggressively to identify potential terrorists before they strike. Undercover agents and confidential informants necessarily play a large role in such efforts. As a result of such operations, we have seen a number of cases brought to trial in the federal courts in which defendants have asserted the entrapment defense. To date, the defense has not succeeded. However, as a consequence of these cases, the United States Supreme Court may …

Duty In The Litigation-Investment Agreement: The Choice Between Tort And Contract Norms When The Deal Breaks Down, Anthony J. Sebok, W. Bradley Wendel

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The article proposes a framework for regulating commercial litigation investment by drawing analogies to existing legal norms in similar economic activities. It argues that contract law, rather than tort law, is better suited to address the risks and challenges inherent in this growing market. The analysis emphasizes the importance of aligning legal norms with the economic realities of litigation investment, particularly in the commercial sector, where the stakes and dynamics differ significantly from consumer litigation. The authors advocate for a regulatory approach that balances protection against opportunism with the need to maintain efficient outcomes.

A Presumptively Better Approach To Arbitrability, John A. E. Pottow, Jacob Brege, Tara J. Hawley

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One of the most complex problems in the arbitration field is the question of who decides disputes over the scope of an arbitrator's purported authority. Courts in Canada and the United States have taken different approaches to this fundamental question of "arbitrability" that necessarily arises when one party disputes the contractual validity of the underlying "container" contract carrying the arbitration clause. If arbitration is a creature of contract, and contract is a product of consensual agreement, then any dispute that impugns the underlying consent of the parties to the container contract implicates the arbitration agreement itself (i.e., no contract, no …

Asking The First Question: Reframing Bivens After Minneci, Alexander A. Reinert, Lumen N. Mulligan

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In Minneci v. Pollard, decided in January 2012, the Supreme Court refused to recognize a Bivens v. Six Unknown Federal Narcotics Agents suit against employees of a privately run federal prison because state tort law provided an alternative remedy, thereby adding a federalism twist to what had been strictly a separation-of-powers debate. In this Article, we show why this new state-law focus is misguided. We first trace the Court’s prior alternative-remedies-to-Bivens holdings, illustrating that this history is one narrowly focused on separation of powers at the federal level. Minneci’s break with this tradition raises several concerns. On a …

After Class: Aggregate Litigation In The Wake Of At&T; Mobility V Concepcion, Myriam E. Gilles, Gary Friedman

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Class actions are on the ropes. Courts in recent years have ramped up the standards governing the certification of damages classes and created new standing requirements for consumer class actions. Most recently, in Wal-Mart v Dukes, the Supreme Court articulated a new and highly restrictive interpretation of the commonality requirement of Rule 23(a). But all of this pales in comparison to the Court's April 2011 decision in AT&T Mobility v Concepcion, broadly validating arbitration provisions containing class action waivers. The precise reach of Concepcion warrants close scrutiny. Our analysis suggests that following Concepcion, some plaintiffs will be able to successfully …

Warranties In The Box, James J. White

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Thousands of times each day, a buyer opens a box that contains a new computer or other electronic device. There he finds written material including an express "Limited Warranty." Sometimes the box has come by FedEx directly from the manufacturer; other times the buyer has carried it home from a retail merchant. Despite the fact that it is standard practice for the manufacturer to include a limited written express warranty on the sale of such products,' and despite the fact that both the manufacturer and the buyer believe that warranty to be legally enforceable, the law on its enforceability is …

Conditions And Covenants In License Contracts: Tales From A Test Of The Artistic License, Robert W. Gomulkiewicz

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Pity the poor Artistic License version 1.0 (ALv1). The Free Software Foundation criticizes the license as “too vague” with some passages “too clever for their own good.” The Open Source Initiative suggests that it has been “superseded.” ALv1’s authors at the Perl Foundation even acknowledge its flaws.

Yet it is the ALv1, not the venerable GNU General Public License (GPL), which the Federal Circuit upheld in Jacobsen v. Katzer [535 F.3d 1373 (Fed. Cir. 2008)], establishing at long last that open source licenses are enforceable. Although that outcome received most of the headlines, the case’s greater significance lies elsewhere.

Jacobsen …

Selling It First, Stealing It Later: The Trouble With Trademarks In Corporate Transactions In Bankruptcy, Xuan-Thao Nguyen

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Why does AI get two bites of the “Apple” trademark? Should AI be allowed to grant the right to use the trademark “perpetual and exclusive” with the sale of the music division and steal it back for free, ten years later? This article is part of an ongoing and broader inquiry into the intersection of trademark, contract and bankruptcy laws. This article argues that recent bankruptcy decisional law, notably the In re Exide Technologies decision, misunderstands the “perpetual and exclusive” trademark transaction, deeming it as an ordinary “license” when it is truly an outright sale. This article explains that the …

On Logic In The Law: Something, But Not All, Susan Haack

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In 1880, when Oliver Wendell Holmes (later to be a Justice of the U.S. Supreme Court) criticized the "logical theology" of law articulated by Christopher Columbus Langdell (the first Dean of Harvard Law School), neither Holmes nor Langdell was aware of the revolution in logic that had begun, the year before, with Frege's Begriffsschrift. But there is an important element of truth in Holmes's insistence that a legal system cannot be adequately understood as a system of "axioms and corollaries"; and this element of truth is not obviated by the more powerful logical techniques that are now available.

Partially Odious Debts?, Omri Ben-Shahar, Mitu Gulati

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The despotic ruler of a poor nation borrows extensively from foreign creditors. He spends some of those funds on building statues of himself, others on buying arms for his brutal secret police, and he places the remainder in his personal bank accounts in Switzerland. The longer the despot stays in power, the poorer the nation becomes. Although the secret police are able to keep prodemocracy protests subdued by force for many years, eventually there is a popular revolt. The despot flees the scene with a few billion dollars of his illgotten gains. The populist regime that replaces the despot now …

The Use Of Mtas To Control Commercialization Of Stem Cell Diagnostics And Therapeutics, Sean O'Connor

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The recent focus on patents as a hindrance to stem cell research may turn out to be a red herring. The real culprits are material transfer agreements (MTAs), which govern the transfer of cell lines and other biological materials. The MTA’s primary purpose in life sciences research is to set contractual rights and obligations between parties where one party transfers biological materials to the other. For example, MTAs often focus on the physical handling, use, and distribution of the materials by the recipient, ensuring that the recipient complies with regulations for research involving humans or animals.

Although these interests are …

Boilerplate And Economic Power In Auto Manufacturing Contracts, Omri Ben-Shahar, James J. White

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This Article is structured as follows. Part I compares the terms and conditions in the purchase orders of the Original Equipment Manufacturers (OEMs) and highlights important differences in the substance of these boilerplate provisions. It argues that these differences cannot be easily reconciled with the prediction that sophisticated parties draft the most efficient boilerplate terms. Part II examines how these forms are drafted, how their terms are negotiated, and how the OEMs guard their terms from erosion. It provides some insight on how tailoring occurs and how the internal organization of a party to a deal affects the terms that …

On The Stickiness Of Default Rules, Omri Ben-Shahar, John A. E. Pottow

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It was once perceived, and still is commonly taught, that default rules in contract law must mimic efficient arrangements. Otherwise, these rules impose needless transaction costs upon parties who seek to opt out of them to reach more efficient positions. In settings where these costs are high, parties might find themselves "stuck" in a default, unable to reach the outcome that they prefer. The strong version of this account-that the only factor that can make an inefficient default rule stick is the direct cost of drafting a tailored provision-has been gradually reappraised. It is by now recognized that factors beyond …

Foreword [To Boilerplate: Foundations Of Market Contracts Symposium], Omri Ben-Shahar

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It is tempting to open this symposium with yet another "boilerplate" salute to the challenge that standard-form contracts pose for contract law doctrine. You may have seen many tributes to this fundamental problem. If I were to offer my own variation on this familiar introduction, I would have perhaps tried to come up with an original spin to induce you to read forward another paragraph or two. I would probably have talked about a major divide within contract law between the "law of negotiations" and "product regulation." The former is the body of doctrines that determine the legal consequences of …

Diverging Perspectives On Electronic Contracting In The U.S. And Eu, Jane K. Winn, Brian H. Bix

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The focus of this Article is the interrelated set of issues that have arisen, on one hand, from Internet transactions regarding the downloading of free or purchased software, as well as other Internet sales, and on the other hand, the distinctive transactional problems that modern business practices have created under the rubric of "shrink-wrap" or "terms in the box"—a late presentation of terms associated with the sale of computers or the licensing of software (with the terms included in the packaging, rather than presented to the user ahead of time)—but not necessarily confined to those transactions.

Such transactions raise novel …

The Impact Of Eu Unfair Contract Terms Law On U.S. Business-To-Consumer Internet Merchants, Jane K. Winn, Mark Webber

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This article focuses on the application of European Union unfair contract terms law to retail Internet transactions that U.S. businesses might engage in with European consumers. It compares attitudes toward consumer protection regulation in the U.S. and the EU to provide some context within which the specific provisions of unfair contract terms law can be understood.

While many lawyers and legal academics in the U.S. who study the development of online markets are aware of the profound differences in U.S. and EU information privacy laws, the magnitude of the divergence in consumer electronic contracting law is not as widely recognized. …

Contracting Spyware By Contract, Jane K. Winn

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The question of what constitutes "spyware" is controversial because many programs that are adware in the eyes of their distributors may be perceived as spyware in the eyes of the end user. Many of these programs are loaded on the computers of end users after the end user has agreed to the terms of a license presented in a click-through interface.

This paper analyzes whether it might be possible to reduce the volume of unwanted software loaded on end users' computers by applying contract law doctrine more strictly. Unwanted programs are often bundled with programs that the end user wants, …

Getting Serious About User-Friendly Mass Market Licensing For Software, Robert W. Gomulkiewicz

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Software publishers use standard form end user licenses (“EULAs”) in mass market transactions on a regular basis. Most software users find EULAs perplexing and generally ignore them. Scholars, however, have focused on them intently. In the past twenty years over a hundred scholarly articles have been written on the subject. Most of these articles criticize EULAs and argue that courts should not enforce them. In their critique of EULAs, some scholars examine the adequacy of the offer, acceptance, and consideration. Others discuss EULAs as part of the troublesome issue of standard form contracting, and whether standard forms, on balance, harm …

Contracting Under Amended 2-207 (Freedom From Contract Symposium), James J. White

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Amended Section 2-207 of the Uniform Commercial Code1 (the Code) states new contract rules. I call these "contract rules" to avoid the labels of contract formation and contract interpretation. These new rules cure many of the problems presented by current Section 2-2072 and remind courts that the purpose of Section 2-207 is to interpret a contract that has been made, not to see if a contract exists. One is tempted to label current Section 2-207 as a contract formation provision-and to some extent that would be right-but most of this Section's work has been in contract interpretation, not in contract …

Threatening An Irrational Breach Of Contract, Oren Bar-Gill, Omri Ben-Shahar

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When circumstances surrounding the contract change, a party might consider breach a more attractive option than performance. Threatening breach, this party may induce the other party to modify the original agreement. The contract law doctrine of modification determines whether and when these modifications are enforceable. To promote social welfare as well as the interests of the threatened party, the law should enforce modifications if and only if the modification demand is backed by a credible threat to breach. This paper argues that credibility is not a function of pecuniary interests alone. A decision to breach can be motivated also by …

The Law Of Duress And The Economics Of Credible Threats, Oren Bar-Gill, Omri Ben-Shahar

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This paper argues that enforcement of an agreement, reached under a threat to refrain from dealing, should be conditioned solely on the threat's credibility. When a credible threat exists, enforcement promotes social welfare and the threatened party's interests. If agreements backed by credible threats were not enforceable, the threatening party would not extort them and would instead refrain from deaing-to the threatened party's detriment. The doctrine of duress, which invalidates such agreements, hurts the coerced party. By denying enforcement when a credible threat exists, the duress doctrine precludes the threatened party from making the commitment necessary to reach agreement. Paradoxically, …

Mutual Assent Versus Gradual Ascent: The Debate Over The Right To Retract, Omri Ben-Shahar

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I ended Contracts Without Consent: Exploring a New Basis for Contract Liability with a reminder that the analysis was "lacking in rigor and in nuance" and that "[i]t remains for future work to explore the extent to which the approach developed. . . has the horsepower to resolve pragmatically the problems that have proven difficult for current doctrine and to examine whether these solutions advance the various social objectives associated with contract formation." Such "future work" arrived sooner than I expected. I have now had the privilege to read the three commentaries that the University of Pennsylvania Law Review solicited, …

'Agreeing To Disagree': Filling Gaps In Deliberately Incomplete Contracts, Omri Ben-Shahar

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Incomplete contracts have always been viewed as raising the following challenge for contract law: does the incompleteness-or, "indefiniteness," as it is usually called-rise to such a level that renders the agreement legally unenforceable? When the indefiniteness concerns important terms, it is presumed that the parties have not reached an agreement to which they intend to be bound. This "fundamental policy" is the upshot of the view that "contracts should be made by the parties, not by the courts."' When, in contrast, the indefiniteness concerns less important terms, courts supplement the agreement with gap fillers and enforce the supplemented contract.

Forward [To Freedom From Contract Symposium], Omri Ben-Shahar

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This Symposium explores freedom from contract. When I was preparing to travel from my home in Ann Arbor to the University of Wisconsin where this Symposium was to be held, my 9-year-old son asked where I was headed. I explained that a bunch of people and I were going to meet and talk about freedom from contract, but the boy seemed unsure what this exchange was going to be about. I tried to translate: "It is about making promises that you don't really have to keep." This sounded surprising to him. He raised an inquisitive brow, and I knew he …

Contracts Without Consent: Exploring A New Basis For Contractual Liability, Omri Ben-Shahar

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This Essay explores an alternative to one of the pillars of contract law, that obligations arise only when there is "mutual assent "--when the parties reach consensus over the terms of the transaction. It explores a principle of "no-retraction," under which each party is obligated to terms it manifested and can retract only with some liability. In contrast to the all-or-nothing nature of the mutual assent regime, where preliminary forms of consent are either full-blown contracts or create no obligation, under the no-retraction regime, obligations emerge gradually, as the positions of the negotiating parties draw closer. Further, the no-retraction liability …

Whose Deal Is It? Teaching About Structural Inequality By Teaching Contracts Transactionally, Kellye Y. Testy

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Although Scott Burnham and others have urged the use of more contracts to teach Contracts for some time,'9 it is safe to say that the majority of Contracts courses in the United States do not put actual contracts front and center. While particular phrases or provisions surely are referenced in the steady diet of appellate decisions that comprise the first-year course, those decisions very rarely include the actual contract at issue for study. Moreover, in the increased compression of the first year course," few professors believe they can justify the time for transactional exercises or simulations in the rush to …

"Show Me The Money": In Lucrative Sports Contracts, An Adr Clause Makes All The Difference, Peter A. Carfagna

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No abstract provided.

Legal Protection For Software: Still A Work In Progress, Robert W. Gomulkiewicz

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Software began as geekware-something written by programmers for programmers. Now, software is a business and consumer staple. Cryptic character-based user interfaces have given way to friendly graphical ones; multi-media is everywhere; people own multiple computers of varying sizes; computers are connected to one another across the globe; email and instant electronic messages have replaced letters and telephone calls for many people.

The issue of whether the law should protect software seems quaint to us now. Over the past twenty-five years, legislatures and courts have concluded that copyright, patent, trade secret, trademark, and contract law all can be used to protect …

Default Rules In Sales And The Myth Of Contracting Out, James J. White

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In this article, I trace the dispute in the courts and before the ALI and NCCUSL over the proper contract formation and interpretation default rules. In Part II, I consider the Gateway litigation. In Part III, I deal with UCITA and the revision to Article 2. In Part IV, I consider the merits of the competing default rules.