Contracts Commons^™

The Three And A Half Minute Transaction: Boilerplate And The Limits Of Contract Design, Mitu Gulati, Robert E. Scott

Faculty Scholarship

Last fall we gave a faculty workshop at the Hofstra University School of Law on an early version of our book manuscript, The Three and a Half Minute Transaction. The resulting debate was lively and the discussion ranged over a wide variety of topics. The end result, much to our delight, was that the editors of the Hofstra Law Review suggested a symposium where they would invite a group of eminent scholars and practitioners to react to the manuscript. The hope was that those reactions would generate a further debate akin to the one we had at the workshop. …

After Frustration: Three Cheers For Chandler V. Webster, Victor P. Goldberg

Faculty Scholarship

Performance of a contract can be excused by a number of circumstances, notably impossibility, impracticability, and frustration. When performance is excused there remains the question of how to treat any payments or expenditures that were made prior to the occurrence of the contract-frustrating event. In Chandler v. Webster, the English courts decided over a century ago that the parties should be left where they were at the time of the frustrating event. Forty years later that holding was overturned so that now recovery might be had both for restitution of payments made prior to the event and for expenditures …

Contract, Uncertainty, And Innovation, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott

Faculty Scholarship

Contract today increasingly links entrepreneurial innovations to the efforts and finance necessary to transform ideas into value. In this chapter, we describe the match between a form of contract that “braids”1 formal and informal contractual elements in novel ways and the process by which innovation is pursued.

Freedom Of Contract Vs. Free Alienability: An Old Struggle Emerges In A New Context, Neil B. Cohen, William Henning

Faculty Scholarship

No abstract provided.

Construction Defects: Are They “Occurrences”?, Chris French

Faculty Scholarship

An issue in the area of insurance law that has been litigated frequently in recent years is whether construction defects are “occurrences” under Commercial General Liability (“CGL”) insurance policies. The courts have been divided in deciding the issue and in their approaches to analyzing the issue. This article addresses how the issue should be analyzed and concludes that construction defects are “occurrences”. The relevant rules of insurance policy interpretation dictate that construction defects are “occurrences”. Policy language should be interpreted in such a way as to fulfill the reasonable expectations of the policyholder when the policy is construed as a …

Rethinking The Laws Of Good Faith Purchase, Alan Schwartz, Robert E. Scott

Faculty Scholarship

This Essay is a comparative economic analysis of the disparate doctrines governing the good faith purchase of stolen or misappropriated goods. We argue that prior treatments have misconceived the problem. An owner will take optimal precautions to prevent theft if she is faced with the loss of her goods; and a purchaser will make an optimal investigation into his seller's title if faced with the loss of the goods. An owner and a buyer cannot both be faced with the full loss, however. This presents a problem of "double moral hazard" and it cannot be solved in a first-best efficient …

Contracts Meet Henry Ford, Barak D. Richman

Faculty Scholarship

Legal scholars and legal educators view contracts as a welfare-maximizing (or optimal risk-allocating) device for two or more parties. Because we cling to this principal-driven paradigm, we think of lawyers only as the proverbial “transaction cost engineers,” the loyal agents of parties to a transaction. And whenever we observe contracts that appear to be suboptimal, we blame agency costs. We instead should apply the literature on organizational economics to understand the production of contracts by the modern law firm. This literature better illustrates how law firms organize, why they produce the products they do, and why those products sometimes exhibit …

The “Non-Cumulation Clause”: An “Other Insurance” Clause By Another Name, Chris French

Faculty Scholarship

How long-tail liability claims such as asbestos bodily injury claims and environmental property damage claims are allocated among multiple triggered policy years can result in the shifting of tens or hundreds of millions of dollars from one party to another. In recent years, insurers have argued that clauses commonly titled, “Prior Insurance and Non-Cumulation of Liability” (referred to herein as “Non-Cumulation Clauses”), which are found in commercial liability policies, should be applied to reduce or eliminate their coverage responsibilities for long-tail liability claims by shifting their coverage responsibilities to insurers that issued policies in earlier policy years. The insurers’ argument …

Website Design As Contract, Woodrow Hartzog

Faculty Scholarship

Few website users actually read or rely upon terms of use or privacy policies. Yet users regularly take advantage of and rely upon website design features like privacy settings. To reconcile the disparity between boilerplate legalese and website design, this article develops a theory of website design as contract. The ability to choose privacy settings, un-tag photos, and delete information is part of the negotiation between websites and users regarding their privacy. Yet courts invariably recognize only the boilerplate terms when analyzing online agreements. In this article, I propose that if significant website features are incorporated into the terms of …

Traynor (Drennan) Versus Hand (Baird): Much Ado About (Almost) Nothing, Victor P. Goldberg

Faculty Scholarship

Most Contracts casebooks feature either Baird v. Gimbel or Drennan v. Star Paving to illustrate the limits on revocability of an offer. In this article an analysis of the case law yields three major conclusions. First, as is generally known, in the contractor-subcontractor cases Drennan has prevailed. However, both it and its spawn, Restatement 2d E 87(2), have had almost no impact outside that narrow area. Moreover, almost all the cases involve public construction projects – private projects account for only about ten percent of the cases. This suggests that private parties have managed to resolve the problem contractually. Public …

Drafting A Model Collective Action Clause For Eurozone Sovereign Bonds, Mitu Gulati, Lee C. Buchheit

Faculty Scholarship

In the wake of the Eurozone sovereign debt crisis, the European financial authorities announced last November that all Eurozone sovereign bonds issued after mid-2013 must contain an identical collective action clause (CAC) in order, if necessary, to facilitate a restructuring of those
instruments.

CACs in sovereign bonds have been the subject of considerable attention over the last ten years. They were introduced into sovereign bonds governed by U.S. law only in early 2003. Yet a surprising number of versions of the clause can be found in modern sovereign bonds.

The history of the research and development of this contractual provision …

Introductory Note To The International Centre For Settlement Of Investment Disputes: Aes Summit Generation Ltd. V. Republic Of Hungary, Charles O. Verrill Jr.

Faculty Scholarship

No abstract provided.

The Unenforceable Corrupt Contract: Corruption And Nineteenth Century Contract Law, Zephyr Teachout

Faculty Scholarship

This paper explores the 19th century practice of courts refusing to enforce "corrupt" contracts as against public policy.

Towards A Convention For The International Sale Of Real Property: Challenges, Commonalities, And Possibilities, Christopher K. Odinet

Faculty Scholarship

In a world that is increasingly global in scope, society has come to view the ever-growing body of international commercial laws as being exceptionally important. This is evidenced through the adoption of several high profile pieces of legislation over the past several decades: International Interest in Mobile Equipment - Study LXXI, the EU’s Draft Common Frame of Reference, the EU Directives on Consumer Protection, and, most noteworthy of all, the Convention for the International Sale of Goods (CISG).

As raised by Professors Sprankling, Coletta, and Mirow, what has been conspicuously absent from this growing body of laws is an international …

The Windfall Myth, A. Christine Hurt

Faculty Scholarship

No abstract provided.

Regulating Compensation, A. Christine Hurt

Faculty Scholarship

No abstract provided.

Resolving The Dilemma Of Nonjusticiable Causation In Failure-To-Warn Litigation, Neil B. Cohen, Aaron Twerski

Faculty Scholarship

No abstract provided.

The Statute Of Frauds And Oral Promises Of Job Security The Tenuous Distinction Between Performance And Excusable Nonperformance, Daniel P. O'Gorman

Faculty Scholarship

No abstract provided.

Consumer Assent To Standard Form Contracts And The Voting Analogy, Wayne Barnes

Faculty Scholarship

Standard form contract are ubiquitous, whether signed in the real world or clicked in the online world. Consumers are constantly entering into standard form contracts with the merchants they transact with in order to buy goods or services. Consumers, however, are usually aware of only the basic terms in the form like price, subject matter, and quantity. Consumers otherwise rarely read the form contracts that they sign. However, traditional contract law and the duty to read provide that the consumer is bound to all the terms contained in the form contract, both the known terms and the unread and unknown …

The Productive Tension Between Official And Unofficial Stories Of Fault In Contract Law, Martha M. Ertman

Faculty Scholarship

Officially Contract law ignores fault. However, an unofficial story complements the official one, and explains why fault occasionally slips into contract law through doctrines such as willful breach. This chapter of FAULT IN AMERICAN CONTRACT LAW (Omri Ben-Shahar & Ariel Porot, eds, Cambridge U. Press, forthcoming 2010) argues that the official and unofficial stories operate in productive tension to both facilitate ex ante planning and, when necessary, look backward at reasons for breach to reach a just result. The occasional presence of fault in contract law, in this view, represents merely one more instance of the common doctrinal pattern of …

Solomon And Strikes: Labor Activity, The Contract Doctrine Of Impossibility Or Impracticability Of Performance, And Federal Labor Policy, Daniel P. O'Gorman

Faculty Scholarship

No abstract provided.

Show Me The Money The Applicability Of Contract Laws Ratification And Tenderback Doctrines To Title Vii Releases, Daniel P. O'Gorman

Faculty Scholarship

No abstract provided.

Expanding The Scope Of The Principles Of The Law Of Software Contracts To Include Digital Content, Nancy Kim

Faculty Scholarship

The Principles of the Law of Software Contracts, or the "Principles," seek to "unify and clarify" the law of software transactions. The drafters, however, excluded "digital content" from the scope of their project. This Essay explains why the scope of the Principles should encompass digital content. The exclusion of digital content creates two different but related problems. The first problem is that it creates what I refer to as "classification confusion." Given the complexity and speed of technological innovation, the task of distinguishing digital content from software may be difficult for courts. The second problem is that it fails to …

Arbitration's Summer Soldiers Marching Into Fall: Another Look At Eisenberg, Miller, And Sherwin's Empirical Study Of Arbitration Clauses In Consumer And Nonconsumer Contracts, Nancy Kim

Faculty Scholarship

Our empirical study examines the role and importance of arbitration clauses in standard form contracts, primarily with other businesses. While much has been written about the impact of mandatory arbitration clauses in consumer contracts, relatively little has been written on mandatory arbitration clauses in customer agreements where the customer was a business and not an individual consumer. In this Article, we specifically address the findings presented in Theodore Eisenberg, Geoffrey Miller, and Emily Sherwin’s study, Arbitration’s Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts.1 Our study finds that many businesses employ mandatory arbitration clauses in …

Reasonable Expectations In Socio-Cultural Context, Nancy Kim

Faculty Scholarship

Under the objective theory of contract, courts interpret the intent of the parties in adopting a particular contractual term according to the reasonable meaning of that term, or the meaning that a reasonable person would assign to that term. Courts adopt the objective theory to determine all aspects of the understanding between the parties-from the determination of contract formation, to an evaluation of the meaning of written or spoken terms, to an assessment of contract performance. In a series of articles, Professor Melvin Eisenberg explained how modern contract law evolved from the will theory to the classical model, and from …

Expectation Damages The Objective Theory Of Contracts And The Hairy Hand Case A Proposed Modification To The Effect Of Two Classical Contract Law Axioms In Cases Involving Contractual, Daniel P. O'Gorman

Faculty Scholarship

No abstract provided.

Residual-Risk Model For Classifying Business Arrangements, Bradley T. Borden

Faculty Scholarship

No abstract provided.

"The Sole Right ... Shall Return To The Authors": Anglo-American Authors' Reversion Rights From The Statute Of Anne To Contemporary U.S. Copyright, Lionel Bently, Jane C. Ginsburg

Faculty Scholarship

The rise in the seventeenth and eighteenth centuries of a professional class of writers stimulated authors' demands for better remuneration from their writings. The increase in authors who sought to live from their work, rather than from patronage or personal fortune, likely provided at least one impulse for the author-protective provisions of the 1710 Statute of Anne. Under the regime of printing privileges that preceded the Statute of Anne, authors generally received from publisher-booksellers a one-time payment, made when the authors surrendered their manuscripts for publication. Authors whose works enjoyed particularly high demand might negotiate additional payments for new editions …

Contract Interpretation Redux, Alan Schwartz, Robert E. Scott

Faculty Scholarship

Contract interpretation remains the largest single source of contract litigation between business firms. In part this is because contract interpretation issues are difficult, but it also reflects a deep divide between textualist and contextualist theories of interpretation. While a strong majority of U.S. courts continue to follow the traditional, "formalist" approach to contract interpretation, some courts and most commentators prefer the "contextualist" interpretive principles that are reflected in the Uniform Commercial Code and the Second Restatement. In 2003, we published an article that set out a formalist theory of contract interpretation to govern agreements between business firms. We argued that, …

Origin Myths, Contracts, And The Hunt For Pari Passu, Mark C. Weidemaier, Robert E. Scott, G. Mitu Gulati

Faculty Scholarship

Sovereign loans involve complex but largely standardized contracts, and these include some terms that no one understands. Lawyers often account for the existence of these terms through origin myths. Focusing on one contract term, the pari passu clause, this article explores two puzzling aspects of these myths. First, it demonstrates that the myths are inaccurate as to both the clause’s origin and the role of lawyers in contract drafting. Second, the myths often are unflattering, inaccurately portraying lawyers as engaged in little more than rote copying. The article probes this disjunction between the myths and lawyers’ actual practices and explores …