Contracts Commons^™

Downstreaming, Rachel Landy

Faculty Articles

Spotify and its competitors all offer the same product at the same price. Why? Scholars have argued that relationships can be designed in a way that naturally promotes innovation. By “braiding” certain formal contracting practices with informal enforcement norms, parties develop a frame-work that supports trust and positive, long-term collaboration. This Article takes on this consensus and shows that not all braiding is good. Using the multibillion-dollar subscription music streaming business as an illustration, it demonstrates just how industry forces can, and do, overcome braiding’s positive slant. In that industry, the major record labels (Universal, Warner, and Sony) weaponize braiding …

Exit Engineering, Rachel Landy

Faculty Articles

How do business lawyers create value? For nearly forty years, scholars have conceptualized the business lawyer as a “transaction cost engineer” who helps contracting parties efficiently break negotiation stalemates to create more valuable deals. This theory provides meaningful insights about sophisticated corporate law practice, where outside lawyers parachute in to make one-off deals happen. However, it fails to explain the behavior of startup lawyers, who develop long-term relationships with their clients and counsel them on seemingly routine matters, well before a major transaction materializes. These lawyers are not just transaction cost engineers, they are exit engineers. This Article offers a …

Stopping Runs In The Digital Era, Luís C. Calderón Gómez

Faculty Articles

Bank runs, and the financial crises they catalyze and amplify, are incredibly costly-to individuals, families, society, and the economy writ large. Banking regulation has, for the most part, protected us from traditional bank runs for the last ninety years. However, as we saw in the devastating 2008 financial crisis, bank runs can still occur in lightly regulated or opaque segments of the financial sector.

The recent crypto market downturn dramatically forewarned regulators of the potential and significant risks that novel assets could pose to our financial system's stability. In particular, a novel, systemically important asset (stablecoins) revealed its vulnerability to …

Contract Law Should Be Faith Neutral: Reverse Entanglement Would Be Stranglement For Religious Arbitration, Michael J. Broyde, Alexa J. Windsor

Faculty Articles

The first section of this Article will outline the ways in which communities—religious and other groups, including the LGBTQ+ community—have used and continue to use private law to achieve meaningful dispute resolution. By diminishing the role of civil courts to review arbitrations, parties may tailor their resolutions to prioritize community values that may be misaligned with secular society. Outside of historical religious usage, private law offers a field ripe for jurisprudential growth. Through alternative dispute resolution, affinity-based minority groups can pave an avenue towards justice which accurately reflects the unique values of their lived experiences.

The second section will provide …

Total Return Meltdown: The Case For Treating Total Return Swaps As Disguised Secured Transactions, Colin P. Marks

Faculty Articles

Archegos Capital Management, at its height, had $35 billion in assets. But in the spring of 2021, in part through its use of total return swaps, Archegos sparked a $30 billion dollar sell-off that left many of the world's largest banks footing the bill. Mitsubishi UFJ Group estimated a loss of $300 million; UBS, Switzerland's biggest bank, lost $861 million; Morgan Stanley lost $911 million; Japan's Nomura lost $2.85 billion; but the biggest hit came to Credit Suisse Group AG, which lost $5.5 billion. Archegos itself lost $20 billion over two days. The unique characteristics of total return swaps and …

Is Bitcoin Prudent? Is Art Diversified? Offering Alternative Investments To 401(K) Participants, Edward A. Zelinsky

Faculty Articles

Whether 401(k) plans’ investment menus should feature “alternative” investments is a fact-driven inquiry applying ERISA’s fiduciary standards of prudence, loyalty, and diversification. Central to this fact-driven inquiry is whether the alternative investment class in question is broadly accepted by investors in general and by professional defined benefit trustees in particular. A similarly salient concern when making this inquiry is the financial unsophistication of many, perhaps most, 401(k) participants. Accounting for these considerations, this Article concludes that REITs, private equity funds, and hedge funds can, with limits, today be offered as investment choices to 401(k) participants, but that cryptocurrencies (including Bitcoin), …

In Contracts We Trust (And No One Can Change Their Mind)! There Should Be No Special Treatment For Religious Arbitration, Michael J. Broyde, Alexa J. Windsor

Faculty Articles

The recent article In God We Trust (Unless We Change Our Mind): How State of Mind Relates to Religious Arbitration ("In God We Trust") proposes that those who sign arbitration agreements that consent to a religious legal system as the basis of the rules of arbitration be allowed to back out of such agreements based on their constitutional right to free exercise. This article is a response and is divided into two sections. In the first section, we show that such an exemption would violate the Federal Arbitration Act's (FAA) basic rules preventing the states from heightened regulation of arbitration …

Unwaivable: Public Enforcement Claims And Mandatory Arbitration, Myriam E. Gilles, Gary Friedman

Faculty Articles

This essay, written for a conference on the “pathways and hurdles” that lie ahead in consumer litigation, is the first to examine the implications of California’s recent jurisprudence holding public enforcement claims unwaivable in standard-form contracts of adhesion, and the inevitable clash with the U.S. Supreme Court’s decisional law interpreting the Federal Arbitration Act. With its rich history of rebuffing efforts to deprive citizens of public rights through private contract, California provides an ideal laboratory for exploring this escalating conflict.

Contract Lore As Heuristic Starting Points, Colin P. Marks

Faculty Articles

What Professor Hillman labels as lore are better thought of as a series of heuristic starting points. I do not label them heuristics in and of themselves as they do not represent shortcuts to the ultimate answer. But, as I explain, all of the areas that Professor Hillman identifies as lore are actually quite nuanced, sometimes filled with exceptions; other times, they simply represent the first step in a long inquiry. Heuristics as a teaching device has been recognized in law and other disciplines as an effective tool in not only conveying information, but also prodding the student to conduct …

There Oughta Be A Law: What Corporate Social Responsibility Can Trach Us About Consumer Contract Formation, Colin P. Marks

Faculty Articles

The Restatement of Consumer Contracts has been a controversial project since its inception. Some have argued that the project is unnecessary as there is no separate law of consumer contracts. Others have argued that the project is more appropriate for a Principles of Law project than for a Restatement. Substantively, the project has also drawn criticism from both consumer and business advocates. Consumer advocates have argued that some of the sections, in particular section 2 which addresses standard terms, favor businesses and subject consumers to terms and conditions that they never truly assented to.9 Business advocates have argued, among other …

Tuition As A Fraudulent Transfer, David G. Carlson

Faculty Articles

Bankruptcy trustees are suing universities because the insolvent parent of an adult student has written a tuition check while insolvent. The theory is that the university is the initial transferee of a fraudulent transfer that has provided benefit to the student but not to the parent debtor. This article claims that the university is never the initial transferee of tuition dollars. Rather, the student is. Where the university has no knowledge of parent insolvency, the university can count educating the student as a good faith transfer for value, thus immunizing the university from liability. The unpleasant side effect is that …

Mere Conduit, David G. Carlson

Faculty Articles

"Mere conduit" is a legal fiction in fraudulent transfer and other avoidance cases. This article argues that the legal fiction is misleading, unnecessary and rendered obsolete by the Supreme Court's recent opinion in Merit Management Group v. FTI Consulting, Inc. (2018). The article further contends that a huge majority of leading cases confound fraudulent transfer law with the law of corporate theft. This error leads to depriving financial intermediaries of their opportunity to avoid liability on the ground of being bona fide transferees for value. Finally, courts often mistake banks as initial transferees of fraudulent transfers (absolutely liable in spite …

Mitigating Risk, Eradicating Slavery, Ramona Lampley

Faculty Articles

For U.S. companies with forced labor or child labor in the supply chain, litigation is on the rise. This Article surveys the current litigation landscape involving forced labor in the supply chain. It ultimately concludes that domestic corporations that source from international suppliers should adopt the Model Contract Clauses drafted by the ABA Business Law Section Working Group to Draft Human Rights Protections in International Supply Contracts ("Working Group"). This Article traces the origins of cases involving supply chain forced labor, beginning with the early employee negligence cases that form the backdrop of existing case law and the cornerstone of …

Online Terms As In Terrorem Devices, Colin P. Marks

Faculty Articles

Online shopping has quickly replaced the brick-and-mortar experience for a large portion of the consuming public. The online transaction itself is rote: browse items, add them to your cart, and check out. Somewhere along the way, the consumer is likely made aware of (or at least exposed to) the merchant's terms and conditions, via either a link or a pop-up box. Such terms and conditions have become so ubiquitous that most consumers would be hardpressed to find a merchant that doesn't try to impose them somewhere on their website.

Though such terms and conditions are pervasive, most consumers do not …

Milking The Estate, David R. Hague

Faculty Articles

Recent Chapter 7 bankruptcy cases are exposing a widespread problem. Chapter 7 trustees are retaining their own law firms to represent them and then in clear breach of their fiduciary duties to creditors-requesting illegitimate legal fees to be paid by the estate. This practice is immoral and particularly harmful to creditors. Indeed, every dollar paid to the trustee and his firm is a dollar that will not be distributed to creditors. The Bankruptcy Code, remarkably, allows a trustee to retain his own law firm to represent him in his capacity as a trustee. But this inherently conflicted arrangement is not …

The Politics Of Access: Examining Concerted State/Private Enforcement Solutions To Class Action Bans, Myriam E. Gilles

Faculty Articles

Procedural and substantive constraints on the ability of ordinary people to access the civil justice system have become all too commonplace. The “justice gap” owes much to cuts in funding for legal aid and court administration, heightened pleading standards, ever-rising costs of discovery, increasingly restrictive views on standing to sue, and the co-opting of small claims court by businesses seeking to collect debts, among other obstacles in the path to the courthouse. But the most consequential impediment, surely, is the enforcement of mandatory arbitration clauses with class action bans, which bar consumers and employees from bringing or being represented in …

Data Collection And The Regulatory State, Hillary Green, James Cooper, Ahmed Ghappour, Felix Wu

Faculty Articles

The following remarks were given on January 27, 2017 during the Connecticut Law Review's symposium, "Privacy, Security & Power: The State of Digital Surveillance."

Bitcoin And The Uniform Commercial Code, Jeanne L. Schroeder

Faculty Articles

Much of the discussion of bitcoin in the popular press has concentrated on its status as a currency. Putting aside a vocal minority of radical libertarians and anarchists, however, many bitcoin enthusiasts are concentrating on how its underlying technology – the blockchain – can be put to use for wide variety of uses. For example, economists at the Fed and other central banks have suggested that they should encourage the evolution of bitcoin’s blockchain protocol which might allow financial transactions to clear much efficiently than under our current systems. As such, it also holds out the possibility of becoming that …

The Continuing Battle Over Economically Targeted Investments: An Analysis Of The Department Of Labor's Interpretative Bulletin 2015-01, Edward A. Zelinsky

Faculty Articles

In Interpretive Bulletin 2015-01 (IB 2015-01), the U.S. Department of Labor (DOL) renewed the now two-decades old battle over “economically targeted investments” (ETIs). As a matter of statutory interpretation, IB 2015-01, like its predecessors, is unpersuasive. The Employee Retirement Income Security Act of 1974 (ERISA) requires plan trustees to invest “solely” to provide participants’ retirement benefits. A trustee who invests in ETIs violates this statutory obligation by pursuing collateral economic benefits for persons other than plan participants. As a matter of policy, the social investing which ETIs exemplify is unsound. At best, such social investing in practice merely shuffles investment …

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

Faculty Articles

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 …

Postdefault Interest Rates In Bankruptcy, David G. Carlson

Faculty Articles

This Article shows that as Bankruptcy Code section 506(b) is currently written, postdefault interest rates are prohibited when the default is an “ipso facto event” — a filing for bankruptcy or insolvency as the event of a default. Yet some courts have insisted on postdefault interest in situations reinstating a loan agreement and have been ignoring restrictions on pendency interest to permit oversecured creditors from obtaining penalty rates of interest. This Article argues that those holdings violate section 506(b) and Supreme Court precedent. It begins with an analysis of ipso facto defaults, showing that the Bankruptcy Code prohibits ipso facto …

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

Faculty Articles

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 …

Many-To-Many Contracts, Heidi S. Bond

Faculty Articles

In classical contract law the concept of one-to-one negotiations is familiar: contracts where one party negotiates with the other and, eventually, terms are offered and then accepted. More modern times have made us comfortable with the notion of one-to-many contracts: contracts typically drafted by large corporations and then distributed on a take-it-or-leave-it basis to the masses. This Article discusses a third kind of contract: a many-to-many contract which may look like the standard one-to-many contract in that it is composed of nonnegotiable language. But when the arrangements between the parties are further considered we will see that the point of …

Powerful Buyers And Merger Enforcement, John B. Kirkwood

Faculty Articles

Although large buyers like Walmart and Tyson Foods occupy important positions in the American economy, antitrust law remains focused on the conduct of sellers. Moreover, when mergers of buyers have been challenged, the cases have been based on a single theory – that the merger would create a dominant buyer (or group of buyers) that would exploit small, powerless suppliers. Most powerful buyers, however, face suppliers with power of their own, and in such cases, the buyers exert “countervailing power,” which can also be anticompetitive. Yet buyer mergers that reduce competition through the exercise of countervailing power are not addressed …

Comparative Study Of The Formation Of Electronic Contracts In American Law With References To International Law, Roberto Rosas

Faculty Articles

An understanding of the basic principles that regulate contract formation is of great importance when deciphering the most appropriate ways of fom1ing a new contract or when assessing the legality of an already existing contract. While the basic rules of contract formation are generally applicable to all types of contracts regardless of the method utilized in their creation, there are some juridical rules that apply specifically to electronically created contracts.

Comparative Study Of The Formation Of Electronic Contracts In American Law With References To International Law, Roberto Rosas

Faculty Articles

No abstract provided.

Rendered Impracticable: Behavioral Economics And The Impracticability Doctrine, Aaron J. Wright

Faculty Articles

No abstract provided.

Estudio Comparativo De La Formacion De Contratos Electronicos En El Derecho Estadounidense Con Referencia Al Derecho International Y Al Derecho Mexicano, Roberto Rosas

Faculty Articles

The author presents the underlying fundamental contractual principles in American law, and in this respect, tire Uniform Commercial Code, with particular emphasis in how electronic transactions are regulating, and therefore in the Uniform Computer Information Transaction Act, the Uniform Electronic Transactions Act, and the Electronic Signatures in Global and National Commerce Act. Concerning international law, the United Nations Convention on Contracts for the International Sale of Goods and concerning Mexican law, with reference to the Commerce Code and the Federal Civil Code.

Un Enfoque Comparativo Sobre La Formacion De Los Contratos Electronicos, Roberto Rosas

Faculty Articles

Understanding the basic principles governing the formation of contracts is of paramount importance when it comes to figuring out the most appropriate to enter into a new contract or to assess the legality of a contract existing ones. While the basic rules for the forming of general contracts are applicable to most type of contracts, regardless of how they are done, there are some legal rules that apply specify to contracts concluded electronically.

Comparative Study Of The Formation Of Electronic Contracts In American Law With References To International And Mexican Law, Roberto Rosas

Faculty Articles

No abstract provided.