Contracts Commons^™

Legal Ethics For The Millennials Avoiding The Compromise Of Integrity, Helia Garrido Hull

Faculty Scholarship

No abstract provided.

Chain-Link Confidentiality, Woodrow Hartzog

Faculty Scholarship

Disclosing personal information online often feels like losing control over one’s data forever; but this loss is not inevitable. This essay proposes a “chain-link confidentiality” approach to protecting online privacy. One of the most difficult challenges to guarding privacy in the digital age is the protection of information once it is exposed to other people. A chain-link confidentiality regime would contractually link the disclosure of personal information to obligations to protect that information as the information moves downstream. The system would focus on the relationships not only between the discloser of information and the initial recipient, but also between the …

The Dynamics Of Contract Evolution, Mitu Gulati, Stephen J. Choi, Eric A. Posner

Faculty Scholarship

Contract scholarship has given little attention to the production process for contracts. The usual assumption is that the parties will construct the contract ex nihilo, choosing all the terms so that they will maximize the surplus from the contract. In fact, parties draft most contracts by slightly modifying the terms of contracts that they have used in the past, or that other parties have used in related transactions. A small literature on boilerplate recognizes this phenomenon, but little empirical work examines the process. This Article provides an empirical analysis by drawing on a data set of sovereign bonds. The authors …

Law By Non Sequitur: Norcon V. Niagara Mohawk, Victor P. Goldberg

Faculty Scholarship

Under the common law, a contracting party could only demand assurance of performance if the other party was insolvent. If a party had reasonable grounds for insecurity, the UCC §2-609 allowed it demand adequate assurance even if the counterparty were solvent. The Restatement (Second) adopted the same rule for non-goods. In NorCon v. Niagara Mohawk the New York court extended the adequate assurance doctrine for some non-goods contracts. Although the decision seems to imply that there is some relation between the NorCon facts and its conclusion as to the law, there is none. Relying primarily on material available to the …

Legal Regulation Of Twenty-First-Century Families, Marsha Garrison, Elizabeth S. Scott

Faculty Scholarship

This post includes the table of contents, introduction and our comment as the editors of an interdisciplinary volume that explores the implications for law and policy of changes in marriage and family over the past half century. The volume includes chapters by leading social science researchers and family law scholars whose work focuses on these matters. The book captures the complexity of debates about the regulation of marriage and families and the best policy paths forward, through contributions by authors with widely varying perspectives. But it also aims to inform these debates by situating them in a framework grounded in …

Corporate Control And Credible Commitment, Ronald J. Gilson, Alan Schwartz

Faculty Scholarship

The separation of control and ownership – the ability of a small group effectively to control a company though holding a minority of its cash flow rights – is common throughout the world, but also is commonly decried. The control group, it is thought, will use its position to consume excessive amounts of project returns, and this injures minority shareholders in two ways: there is less money and the controllers are not maximizing firm value. To the contrary, we argue here that there is an optimal share of the firm that compensates the control group for monitoring managers and otherwise …

The Interstate Commerce Act, Administered Contracts, And The Illusion Of Comprehensive Regulation, Thomas W. Merrill

Faculty Scholarship

The 125th anniversary of the Interstate Commerce Act invites reflection on what it has contributed to our understanding of public regulation. Perhaps the most important and enduring idea associated with the Act is what we may call the administered contract. At common law, transportation services, like other goods and services, were governed by ordinary contracts between customer and carrier. Building on innovations in English and state railroad legislation, the Interstate Commerce Act developed a different form of contracting. Contracts for transportation services became public acts, understood to have the openness, generality, and binding force of public law. This concept of …

The Measure Of A Mac: A Quasi-Experimental Protocol For Tokenizing Force Majeure Clauses In M&A; Agreements, Eric L. Talley, Drew O'Kane

Faculty Scholarship

This paper develops a protocol for using a familiar data set on force majeure provisions in corporate acquisitions agreements to tokenize and calibrate a machine-learning algorithm of textual analysis. Our protocol, built on regular expression (RE) and latent semantic analysis (LSA) approaches, serves to replicate, correct, and extend the hand-coded data. Our preliminary results indicate that both approaches perform well, though a hybridized approach improves predictive power further. Monte Carlo simulations suggest that our results are generally robust to out-of-sample predictions. We conclude that similar approaches could be used more broadly in empirical legal scholarship, especially including in business law.

The “Ensuing Loss” Clause In Insurance Policies: The Forgotten And Misunderstood Antidote To Anti-Concurrent Causation Exclusions, Chris French

Faculty Scholarship

As a result of the 1906 earthquake and fire in San Francisco which destroyed the city, a clause known as the “ensuing loss” clause was created to address concurrent causation situations in which a loss follows both a covered peril and an excluded peril. Ensuing loss clauses appear in the exclusions section of such policies and in essence they provide that coverage for a loss caused by an excluded peril is nonetheless covered if the loss “ensues” from a covered peril. Today, ensuing loss clauses are found in “all risk” property and homeowners policies, which cover all losses except for …

Debunking The Myth That Insurance Coverage Is Not Available Or Allowed For Intentional Torts Or Damages, Christopher French

Faculty Scholarship

Over the years, a myth has developed that insurance coverage is not available or allowed for intentional injuries or damage. This myth has two primary bases: one, the “fortuity” doctrine, which provides that insurance should only cover losses that happen by chance; and two, public policy, which allegedly disfavors allowing insurance for intentional injuries or damage. This article dispels that myth. Many types of liability insurance policies expressly cover intentional torts including trademark infringement, copyright infringement, invasion of privacy, defamation, disparagement, and improper employment practices such as discrimination. In addition, punitive damages, which typically are awarded for intentional misconduct, are …

Virtue Ethics And Efficient Breach, Avery W. Katz

Faculty Scholarship

The concept of "efficient breach" – the idea that a contracting party should be encouraged to breach a contract and pay damages if doing so would be more efficient than performance – is probably the most influential concept in the economic analysis of contract law. It is certainly the most controversial. Efficient breach theory has been criticized from both within and without the economic approach, but its most prominent criticism is that it violates deontological ethics – that the beneficiary of a promise has a right to performance, so that breaching the promise wrongs the promisee.

This essay argues that …

Contracts, Victor P. Goldberg

Faculty Scholarship

This article focuses on the general problems confronting parties designing a contractual relationship. Contracts concern the future, which is both uncertain and influenced by the behavior of the parties. This presents the parties with a number of problems, the solutions for which are imperfect. Contract doctrine can facilitate their efforts, but it can also be an impediment. Contract design and contract law are discussed.

Reforming Derivative Taxation, Alex Raskolnikov

Faculty Scholarship

This brief essay outlines three benchmarks for evaluating alternative ways of taxing capital income, summarizes anticipatory, retroactive, and accrual-based proposals for reforming the taxation of derivatives, and offers guidelines for evaluating more limited reforms. It is intended as an introduction to key concepts, tensions, and ideas for reforming the taxation of financial instruments.

Measuring, Monitoring, Reporting, And Verifying (Mmrv): Negotiating Trust In Transnational Contracts For Redd,, David Takacs

Faculty Scholarship

No abstract provided.

Private Regulation Of Consumer Arbitration, Christopher R. Drahozal, Samantha Zyontz

Faculty Scholarship

Arbitration providers, such as the American Arbitration Association ("AAA') and JAMS, have promulgated due process protocols to regulate the fairness of consumer and employment arbitration agreements. A common criticism of these due process protocols, however, has been that they lack an enforcement mechanism. While arbitration providers state that they enforce the protocols by refusing to administer cases in which the arbitration agreement materially fails to comply with the relevant protocol, the private nature of arbitral dispute resolution makes it difficult to verify whether providers in fact refuse to administer such cases.

This Article reports the results of the first empirical …

Bargaining For Motherhood: Postadoption Visitation Agreements, Carol Sanger

Faculty Scholarship

This Article is about the use of contract in family formation. More specifically, I want to look at how contract is now used by parents in the process of acquiring children and, as we shall see, also as a means of retaining interests in those same children under the developing regime of open adoption.

The Evolution Of Contractual Terms In Sovereign Bonds, Stephen J. Choi, Mitu Gulati, Eric A. Posner

Faculty Scholarship

In reaction to defaults on sovereign debt contracts, issuers and creditors have strengthened the terms in sovereign debt contracts that enable creditors to enforce their debts judicially and that enable sovereigns to restructure their debts. These apparently contradictory approaches reflect attempts to solve an incomplete contracting problem in which debtors need to be forced to repay debts in good states of the world; debtors need to be granted partial relief from debt payments in bad states; debtors may attempt to exploit divisions among creditors in order to opportunistically reduce their debt burden; debtors may engage in excessively risky activities using …

In-House Counsel’S Role In The Structuring Of Mortgage-Backed Securities, Steven L. Schwarcz, Shaun Barnes, Kathleen G. Cully

Faculty Scholarship

The authors introduce the financial crisis and the role played by mortgage-backed securities. Then describe the controversy at issue: whether, in order to own and enforce the mortgage loans backing those securities, a special-purpose vehicle “purchasing” mortgage loans must take physical delivery of the notes and security instruments in the precise manner specified by the sale agreement. Focusing on this controversy, the authors analyze (i) the extent, if any, that the controversy has merit; (ii) whether in-house counsel should have anticipated the controversy; and (iii) what, if anything, in-house counsel could have done to avert or, after it arose, to …

Overbilling And Informed Financial Consent — A Contractual Solution, Barak D. Richman, Mark A. Hall, Kevin A. Schulman

Faculty Scholarship

U.S. hospitals and physicians regularly charge uninsured patients and patients receiving care outside their health-plan networks far more what most health insurers pay and far more than their actual costs. Such practices have triggered over 100 lawsuits and prompted calls for pricing transparency in Congress and price regulation in several states. This Perspective argues that the theory of implied contracts, a foundation in most first-year courses in contract law, offers a useful legal and ethical mechanism for handling these troubling problems in health care billing.

Cds Zombies, Anna Gelpern, Mitu Gulati

Faculty Scholarship

This paper examines the contract interpretation strategies adopted by the International Swaps and Derivatives Association (ISDA) for its credit derivatives contracts in the Greek sovereign debt crisis. The authors argue that the economic function of sovereign credit default swaps (CDS) after Greece is limited and uncertain, partly thanks to ISDA’s insistence on textualist interpretation. Contract theory explanations for textualist preferences emphasise either transactional efficiency or relational factors, which do not fit ISDA or the derivatives market. The authors pose an alternative explanation: the embrace of textualism in this case may be a means for ISDA to reconcile the competing political …

Must Licenses Be Contracts? Consent And Notice In Intellectual Property, Mark R. Patterson

Faculty Scholarship

Intellectual property owners often seek to provide access to their patented or copyrighted works while at the same time imposing restrictions on that access. One example of this approach is “field-of-use” licensing in patent law, which permits licensees to use the patented invention but only in certain ways. Another is open-source licensing in copyright law, where copyright owners typically require licensees that incorporate open-source software in other products to license those other products on an open-source basis as well. Surprisingly, though, the legal requirements for granting restricted access are unclear. The source of the lack of clarity is the ill-defined …

The Statutory Ucc: Interpretative License And Duty Under Article 2, Nicholas J. Johnson

Faculty Scholarship

No abstract provided.

Contract Law Walks The Plank: Carnival Cruise Lines V. Shute, Charles L. Knapp

Faculty Scholarship

No abstract provided.

Contracts As Organizations, D. Gordon Smith, Brayden G. King

Faculty Scholarship

Empirical studies of contracts have become more common over the past decade, but the range of questions addressed by these studies is narrow, inspired primarily by economic theories that focus on the role of contracts in mitigating ex post opportunism. We contend that these economic theories do not adequately explain many commonly observed features of contracts, and we offer four organizational theories to supplement-and in some instances, perhaps, challenge-the dominant economic accounts. The purpose of this Article is threefold: first, to describe how theoretical perspectives on contracting have motivated empirical work on contracts; second, to highlight the dominant role of …

Reforming Regulation In The Markets For Home Loans, Edward J. Janger, Susan Block-Lieb

Faculty Scholarship

No abstract provided.

Known And Unknown, Property And Contract: Comments On Hoofnagle And Moringiello, James Grimmelmann

Faculty Scholarship

No abstract provided.

Fingerprints Of Equitable Estoppel And Promissory Estoppel On The Statute Of Frauds In Contact Law, Stephen J. Leacock

Faculty Scholarship

No abstract provided.

Contract's Adaptation And The Online Bargain, Nancy Kim

Faculty Scholarship

The model of traditional contracts is that of two individuals negotiating terms that are to each party's advantage. This model persists even though it no longer reflects the reality of consumer contracts. This Article traces the evolution of modern day consumer contracts and explains how courts have accommodated business needs by distorting contract law. This Article argues that the doctrine of consideration should be reconceptualized in light of new technologies and changes in doctrinal application. It concludes that in order to restore contract law's legitimacy, courts must allocate the burdens of technological and doctrinal changes in a more evenhanded manner. …

Political Risk And Sovereign Debt Contracts, Mitu Gulati, Stephen J. Choi, Eric A. Posner

Faculty Scholarship

Default on sovereign debt is a form of political risk. Issuers and creditors have responded to this risk both by strengthening the terms in sovereign debt contracts that enable creditors to enforce their debts judicially and by creating terms that enable sovereigns to restructure their debts. These apparently contradictory approaches reflect attempts to solve an incomplete contracting problem in which debtors need to be forced to repay debts in good states of the world; debtors need to be granted partial relief from debt payments in bad states; debtors may attempt to exploit divisions among creditors in order to opportunistically reduce …

Justifying Board Diversity, Lawrence M. Solan, James A. Fanto, John M. Darley

Faculty Scholarship

No abstract provided.