Contracts Commons^™

A Footnote For Jack Dawson, James J. White, David A. Peters

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Jack Dawson, known to many at Michigan as Black Jack, taught at the Law School from 1927 to 1958. Much of his work was published in the Michigan Law Review, where he served as a student editor during the 1923-24 academic year. We revisit his work and provide a footnote to his elegant writing on mistake and supervening events. In Part I, we talk a little about Jack the man. In Part II, we recite the nature and significance of his scholarly work. Part III deals briefly with the cases decided in the last twenty years by American courts on …

Law, Economics, And The Skeleton Of Value Fallacy, Kyron Huigens

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Experiments in the last decade or so have demonstrated persistent failures on the part of ordinary individuals rationally to pursue self-interest. The experiments pose serious challenges to economics, rational choice theory, and the law and economics school. Some experiments, for example, suggest an "endowment effect", that contradicts the Coase Theorem; the notion that, in the absence of transaction costs, goods will find their most efficient distribution regardless of their initial assignment. Cass Sunstein has collected a set of essays by economists and legal scholars exploring these challenges, in a volume entitled Behavioral Law and Economics.

Good Faith And The Cooperative Antagonist (Symposium On Revised Article 1 And Proposed Revised Article 2 Of The Uniform Commercial Code), James J. White

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One of Karl Llewellyn's most noted achievements in the Uniform Commercial Code was to impose the duty of good faith on every obligation under the Uniform Commercial Code.1 Some (I am one) have privately thought that imposition of this unmeasurable, undefinable duty was Llewellyn's cruelest trick, but no court, nor any academic writer, has ever been so bold or so gauche as to suggest that good faith should not attend the obligations of parties under the UCC. Notwithstanding this silent indorsement of the duty of good faith, the courts2 and commentators3 have had difficulty in determining what is and what …

Precontractual Reliance, Lucian A. Bebchuk, Omri Ben-Shahar

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During contractual negotiations, parties often make reliance expenditures that would increase the surplus should a contract be made. This paper analyzes decisions to invest in precontractual reliance under alternative legal regimes. Investments in reliance will be socially suboptimal in the absence of any precontractual liability-and will be socially excessive under strict liability for all reliance expenditures. Given the results for these polar cases, we focus on exploring how "intermediate"-liability rules could be best designed to induce efficient reliance decisions. One of our results indicates that the case for liability is shown to be stronger when a party retracts from terms …

The Consequences Of Doj Control Of Litigation On Agencies' Programs, Michael E. Herz, Neal Devins

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No abstract provided.

Autistic Contracts (Symposium), James J. White

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In this paper I address the question whether the law should affirm the offeror's inference and should bind the offeree to the terms proposed by the offeror even in circumstances where the offeree may not intend to accept those terms and where an objective observer might not draw the inference of agreement from the offeree's act. Modem practice and current proposals concerning contract formation in Revised Article 2 and in the Uniform Computer Information Transactions Act (nee Article 2B) press these issues on us more forcefully than old practices and different law did. 1 But contractual autism is not new; …

The Secrecy Interest In Contract Law, Omri Ben-Shahar, Lisa Bernstein

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A long and distinguished line of law-and-economics articles has established that in many circumstances fully compensatory expectation damages are a desirable remedy for breach of contract because they induce both efficient performance and efficient breach. The expectation measure, which seeks to put the breached-against party in the position she would have been in had the contract been performed, has, therefore, rightly been chosen as the dominant contract default rule. It does a far better job of regulating breach-or-perform incentives than its leading competitors-the restitution measure, the reliance measure, and specific performance. This Essay does not directly take issue with the …

Franchisor Liability For The Torts Of Its Franchisees: The Case For Substituting Liability As A Guarantor For The Current Vicarious Liability, John L. Hanks

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The author reviews the justifications for applying the law of vicarious liability in the franchising context and concludes that its application is often inefficient and arbitrary. He argues that the employee-independent contractor dichotomy used by courts to determine franchisor liability is not well-suited to franchising, where the relationship encompasses both concepts. He proposes that vicarious liability not be applied in the franchising context. Instead, the courts by case law or state legislatures by statute should impose a guarantor status on franchisors that would expose them to liability for the torts of the franchisees only if the franchisee was unavailable to …

Despatches From The Front: Recent Skirmishes Along The Frontiers Of Electronic Contracting Law, Jane Kaufman Winn, Michael Rhoades Pullen

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This Article will provide a short overview of the current efforts in the United States and the European Union to reform contract law to accommodate recent innovations in electronic contracting. Whether changes are needed to current contract law doctrines governing contract formation, effectiveness of contract terms, choice of law and forum provisions, special protections for consumers, and signature and writing requirements, revisions in these areas have all proved controversial. Even in those areas where a consensus may be emerging on whether law reform may be appropriate in some form, consensus is often still lacking with regard to the specific legislation …

The Tentative Case Against Flexibility In Commercial Law, Omri Ben-Shahar

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Well-rooted in modern commercial law is the idea that the law and the obligations that it enforces should reflect the empirical reality of the relationship between the contracting parties. The Uniform Commercial Code ("Code") champions this tradition by viewing the performance practices formed among the parties throughout their interaction as a primary source for interpreting and supplementing their explicit contracts. The generous recognition of waiver and modifications, as well as the binding force the Code accords to course of performance, course of dealings, and customary trade usages, effectively permits unwritten commercial practices to vary and to erode explicit contractual provisions.

Enforcing Family Promises: Reliance, Reciprocity, And Relational Contract, Melanie B. Leslie

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Courts are willing, in commercial contexts, to enforce promises even without consideration when enforcement supports a norm of reciprocity-a norm which recognizes that promises are seldom totally gratuitous, but are often made in furtherance of reciprocal, long-term, trust-based relationships. In this article, Professor Leslie argues that relational contract principles are firmly embedded in wills law. Courts enforce the reciprocity norm in the family context just as they do in commercial contexts; this enforcement is seen, however, not in breach of promise suits, which occur rarely between family members, but rather in will contests. Despite the prevalent ideology of wills law, …

How To Do Things With Hegel, David G. Carlson

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The article argues that contract is not merely a tool for pre-existing personalities but is instead constitutive of personality itself. It challenges the conventional view that personality exists prior to law, instead positing that contract is necessary for the emergence and recognition of personality. The author contends that contract is foundational to legal and personal identity, as it establishes mutual recognition and rights between individuals.

Metropolitanism, Progressivism, And Race, Edward A. Zelinsky

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Professor Zelinsky examines three books on local government. Two of these, Cities Without Suburbs, by David Rusk, and Citistates, by Neal Peirce, call for metropolitanizing the governance of urban areas. Our Town, by David L. Kirp, John P. Dwyer, and Larry A. Rosenthal, explores the Mt. Laurel litigation and its aftermath and suggests that the land use authority of local governments be diminished through court-ordered zoning for low-income housing.

Professor Zelinsky is skeptical of these well-intentioned proposals. The metropolitan governments advocated by Rusk and Peirce would be less responsive than the smaller localities they would replace and less likely to …

Separation Of Powers And The Separate Treatment Of Contract Claims Against The Federal Government For Specific Performance, Richard Henry Seamon

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No abstract provided.

The License Is The Product: Comments On The Promise Of Article 2b For Software And Information Licensing, Robert W. Gomulkiewicz

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Article 2B promises to draw together contract principles for software and information licensing that, at present, are spread among various bodies of law.

This Article argues that Article 2B must affirm industry standard licensing practices in order to prove beneficial. For example, Article 2B's affirmation of industry standard mass market licensing is important for both publishers and end users. Article 2B must also provide the flexibility to accommodate new distribution and licensing models that will arise as electronic commerce matures. Any other approach would fundamentally disrupt the software and information industries.

Moreover, this Article urges the drafters of Article 2B …

Freeing The Tortious Soul Of Express Warranty Law, James J. White

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I suspect that most American lawyers and law students regard express warranty as neither more nor less than a term in a contract, a term that is subject to conventional contract rules on formation, interpretation, and remedy. Assume, for example, that a buyer sends a purchase order to a seller and the purchase order specifies the delivery of 300 tons of "prime Thomas cold rolled steel." The acknowledgment also describes the goods to be sold as "prime Thomas cold rolled steel." Every American lawyer would agree that there is a contract to deliver such steel and furthermore would conclude that …

The New York Court Of Appeals: 150 Years Of Leading Decisions, Stewart E. Sterk

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During its first 150 years, the New York Court of Appeals has had more impact on more areas of law than any other court in the United States. Other state courts-the California Supreme Court in the Traynor era, the New Jersey Supreme Court under Chief Justice Weintraub, to take two obvious examples-have had enormous impact, but no other state court has generated leading case after leading case in every decade for 150 years. Federal courts, including the United States Supreme Court, have had an enormous impact on American law, but that impact has been concentrated in public law; no federal …

Form Contracts Under Revised Article 2 (Symposium: Consumer Protection And The Uniform Commercial Code), James J. White

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The current draft of section 2-206 in Revised Article 2 of the Uniform Commercial Code ("UCC") entitled "Consumer Contract: Standard Form"1 presents a unique and threatening challenge to the drafters of consumer form contracts. In earlier drafts, one part of the section applied to both to commercial contracts and consumer contracts. It required that "one manifest assent" to any form contract, commercial or consumer, in order for it to be binding.2 Bowing to commercial opposition in the most recent version, the drafters have omitted all reference to commercial contracts. As the section stands, it applies only to consumer contracts.

Globalisation Of Contract Law: Rules For Commercial Contracts In The 21st Century, Whitmore Gray

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This is a paper given at the Asia-Pacific Lawyers Association meeting held in Bangkok in November 1995. The author describes the principles of international commercial contracts published in 1994 by the International Institute for the Unification of Private Law. Professor Gray sees a new era of harmonisation of contract law. An appendix gives an abstract of a contract law decision given by an Austrian Court in 1994.

Tax Transitions, Opportunistic Retroactivity, And The Benefits Of Government Precommitment, Kyle D. Logue

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What if the current federal income tax laws were repealed and replaced with a simple flat tax? What if the entire Internal Revenue Code (with its graduated rates and countless deductions, exclusions, and credits) were scuttled in favor of a broad-based consumption tax? Only a few years ago, such proposals would have seemed radical and extremely unlikely to be adopted. But times are changing. Calls for a drastic overhaul of the Internal Revenue Code have become commonplace, even at the highest levels in the tax-policy community. In addition, proposals that would replace the income tax with a flat-rate broad-based consumption …

How To Negotiate A Sales Contract, James J. White

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A. Introduction 1. In my experience, lawyers begin negotiating only after the business people have decided upon the description and quality of the product, the time of delivery, and the mode and amount of payment. The lawyers are left with the pathological problems - who gets what in case of trouble. 2. Most of those pathological problems relate to the seller's responsibility if the product does not conform to the contract or otherwise fails to please the buyer. These failures can cause economic loss to the buyer, economic loss to a remote purchaser, or personal injury or property damage to …

The Influence Of International Practice On The Revision Of Article 5 Of The Ucc, James J. White

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The topic of this symposium is the influence that international law has had on domestic law of the United States. I believe that the story of the revision of Article 5 of the Uniform Commercial Code fits here, but some might dispute that. Although it is certainly fair to say that international practice-in a sense international law-was a powerful influence on the revision of Article 5 of the Uniform Commercial Code, that practice, and the way in which that influence was exerted were almost entirely sui generis to the letter of credit law, practice and history.

Grant Gilmore, Holmes, And The Anxiety Of Influence, Charles M. Yablon

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The article explores Grant Gilmore's ambivalent relationship with Oliver Wendell Holmes, particularly in The Death of Contract. Gilmore both praises Holmes's intellectual brilliance and critiques his formalistic approach to contract law. Drawing on Harold Bloom's The Anxiety of Influence, the analysis suggests that Gilmore engages in a struggle with Holmes's legacy, reflecting a mix of admiration and opposition, akin to how strong poets handle influential predecessors.

Restraints On Alienation Of Human Capital, Stewart E. Sterk

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No abstract provided.

Setting The Fee When The Client Discharges A Contingent Fee Attorney, Lester Brickman

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The bold and precedent-setting case of Martin v. Camp endowed the attorney-client relationship with the legacy of the "client discharge rule"; it provides that a client can discharge his attorney at any time without cause and without penalty. The predicate of the rule is that trust and confidence are essential features of the attorney-client relationship. If that trust and confidence dissipate, the client should not be forced to continue to confide in and rely upon that attorney. Accordingly, the client should not be penalized financially if he elects to change attorneys. The discharged attorney, precluded from realizing the contingent percentage …

Coordinating Sanctions For Corporate Misconduct: Civil Or Criminal Punishment, David Yellen, Carl J. Mayer

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No abstract provided.

Contingent Fees Without Contingencies: Hamlet Without The Prince Of Demark?, Lester Brickman

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According to conventional wisdom virtually all contingent fee percentages exceeding fifty percent are illegal and excessive, but most lower percentages are valid. This Article challenges the conventional wisdom, an amalgam of the unassailability of the standard one-third rate, notions of fairness versus price gouging, lawyer effort versus lawyer' reward, and the right of a lawyer to contract freely for a fee. It advances instead two propositions for determining the legitimacy of contingent fees. The first is that for a contingent fee to be valid, there must be an actual contingency, which means a realistic risk of nonrecovery. Though this proposition …

Hiring Ruled Contractual, Bill Gore, Douglas A. Kahn, Stan Shields

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On December 29, 1988, the California Supreme Court decided Foley vs. Interactive Data Corp., perhaps the most eagerly awaited state supreme court decision in years. The Foley ruling, which immediately was hailed as a tremendous victory for California employers, eliminated punitive damage awards for many wrongfully terminated employees. That was good news for the employers. The decision, however, also provided employers with sobering news. Most significantly, the court ruled that employment relationships essentially are contracts, with terms created by the reasonable expectation of the parties. Thus, the majority of California employees now have a right to sue for breach …

The Continuity Of Legislatures: Of Contracts And The Contracts Clause, Stewart E. Sterk

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Legislatures change constantly. Each election brings new legislators and removes old ones. Those who remain are nevertheless affected by the changes in composition, and by other changes wrought by the passage of time. These changes in composition and changes in external stimuli inevitably produce pressure for changes in policy. And in a democratic system, legislatures are generally free to reverse or modify the policies of their predecessors.

The Decline Of The Contract Market Damage Model, James J. White

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In law school every American lawyer learns that the conventional measure of damages for breach of a sales contract is the difference between the contract price and the market price. Even before these rules were embodied in the Uniform Sales Act and the Uniform Commercial Code (UCC), they were a staple of Anglo-American common law. They remain the rules with which a court would determine damage liability not only for the sale of goods, but also for the sale of real estate and securities.