Law and Economics Commons^™

Apple Pay, Bitcoin, And Consumers: The Abcs Of Future Public Payments Law, Mark Edwin Burge

Mark Edwin Burge

As technology rolls out ongoing and competing streams of payments innovation, exemplified by Apple Pay (mobile payments) and Bitcoin (cryptocurrency), the law governing these payments appears hopelessly behind the curve. The patchwork of state, federal, and private legal rules seems more worthy of condemnation than emulation. This Article argues, however, that the legal and market developments of the last several decades in payment systems provide compelling evidence of the most realistic and socially beneficial future for payments law. The paradigm of a comprehensive public law regulatory scheme for payment systems, exemplified by Articles 3 and 4 of the Uniform Commercial …

Take This Job And Shove It: The Pragmatic Philosophy Of Johnny Paycheck And A Prayer For Strict Liability In Appalachia, Eugene "Trey" Moore Iii

The Scholar: St. Mary's Law Review on Race and Social Justice

Abstract forthcoming

Towards A Distinctive Trademark Law For The 21st Century, David Vaver

Articles & Book Chapters

Canada's Trade Marks Act, when passed in 1953, was probably the best then around, but 65 years later it is ready to be pensioned off. The Act's deficiencies have become more evident as new markets and interests have gained prominence. A broadly-based Committee to reconsider the reform ofall intellectual property laws, with trademark law as one component, should be struck to produce a user-friendly code fit for 21st century commerce.

Not So Good: The Classification Of “Smart Goods” Under Ucc Article 2, Chadwick L. Williams

Georgia State University Law Review

Refrigerators can now tweet. Today, almost sixty years after the states widely adopted the Uniform Commercial Code (UCC), the line between goods and services is more blurred than ever. When the UCC was drafted, a good was the simple opposite of a service. A good was something “movable” and tangible, and a service was not. Article 2 of the UCC, which governs sales, limits its scope to goods.

However, because Article 2 was drafted long before the proliferation of so-called “smart goods,” courts continuously struggle to determine when a smart good falls within Article 2’s scope. Courts have developed different …

Tax Compliance In A Decentralizing Economy, Manoj Viswanathan

Georgia State University Law Review

Tax compliance in the United States has long relied on information from centralized intermediaries—the financial institutions,employers, and brokers that help ensure income is reported and taxes are paid. Yet while the IRS remains tied to these centralized entities,consumers and businesses are not. New technologies, such as sharing economy platforms (companies such as Airbnb, Uber, and Instacart)and the blockchain (the platform on which various cryptocurrencies are based) are providing new, decentralized options for exchanging goods and services.

Without legislative and agency intervention, these technologies pose a critical threat to the reporting system underlying domestic and international tax compliance. Until now, legal …

How Well Do We Treat Each Other In Contract?, Aditi Bagchi

William & Mary Business Law Review

One of the important contributions of Nathan Oman’s new book is to draw focus onto the quality of the relationships enabled by contract. He claims that contract, by supporting markets, cultivates certain virtues; helps facilitate cooperation among people with diverse commitments; and produces the wealth that may fuel interpersonal and social justice. These claims are all plausible, though subject to individual challenge. However, there is an alternative story to tell about the kinds of relationships that arise from markets--i.e., a story about domination. The experience of domination is driven in part by the necessity, inequality, and competition enjoined by markets, …

Contract Law And The Common Good, Brian H. Bix

William & Mary Business Law Review

In The Dignity of Commerce, Nathan Oman offers a theory of contract law that is largely descriptive, but also strongly normative. His theory presents contract law’s purpose as supporting robust markets. This Article compares and contrasts Oman’s argument about the proper understanding of contract law with one presented over eighty years earlier by Morris Cohen. Oman’s focus is on the connection between Contract Law and markets; Cohen’s connection had been between Contract Law and the public interest. Oman’s work brings back Cohen’s basic insight, and gives it a more concrete form, as a formidable normative theory with detailed prescriptions.

Contract, Promise, And The Right Of Redress, Andrew S. Gold

William & Mary Business Law Review

This Essay reviews Nathan Oman’s recent book, The Dignity of Commerce. The book is compelling, and it makes an important and original contribution to contract theory—a contribution that insightfully shows how markets matter. Yet, in the course of developing a market-centered justification for contract law, The Dignity of Commerce also downplays the significance of consent and promissory morality. In both cases, the book’s argument is problematic, but this Essay will address questions of promissory morality. Oman contends that promise-based accounts struggle with contract law’s bilateralism and with its private standing doctrine. Yet, promissory morality is a very good fit …

A Pragmatist’S View Of Promissory Law With A Focus On Consent And Reliance, Robert A. Hillman

William & Mary Business Law Review

This Article discusses Professor Nate Oman’s excellent new book, The Dignity of Commerce, which makes an impressive case for how markets can produce “desirable” outcomes for society. In addition to a comprehensive account of what he calls “virtues” of markets, such as their tendency to produce cooperation, trust, and wealth, the book is full of useful and persuasive supporting information and discussions.

Oman is not only a fan of markets, but he asserts that markets are the “center” of contract theory, and provide its normative foundation. Elaborating, Oman concludes that “contract law exists primarily to support markets” and that …

Does Contract Law Need Morality?, Kimberly D. Krawiec, Wenhao Liu

William & Mary Business Law Review

In The Dignity of Commerce, Nathan Oman sets out an ambitious market theory of contract, which he argues is a superior normative foundation for contract law than either the moralist or economic justifications that currently dominate contract theory. In doing so, he sets out a robust defense of commerce and the marketplace as contributing to human flourishing that is a refreshing and welcome contribution in an era of market alarmism. But the market theory ultimately falls short as either a normative or prescriptive theory of contract. The extent to which law, public policy, and theory should account for values …

Markets And Morals: The Limits Of Doux Commerce, Mark L. Movsesian

William & Mary Business Law Review

In this Essay on Professor Oman’s beautifully written and meticulously researched book, The Dignity of Commerce, I do three things. First, I describe what I take to be the central message of the book, namely, that markets promote liberal values of tolerance, pluralism, and cooperation among rival, even hostile groups. Second, I show how Oman’s argument draws from a line of political and economic thought that dates to the Enlightenment, the so-called doux commerce thesis of thinkers like Montesquieu and Adam Smith. Finally, I discuss what I consider the most penetrating criticism of that thesis, Edmund Burke’s critique from …

Smart Contracts And The Cost Of Inflexibility, Jeremy M. Sklaroff

Prize Winning Papers

No abstract provided.

The Evolution Of Entrepreneurial Finance: A New Typology, J. Brad Bernthal

Publications

There has been an explosion in new types of startup finance instruments. Whereas twenty years ago preferred stock dominated the field, startup companies and investors now use at least eight different instruments—six of which have only become widely used in the last decade. Legal scholars have yet to reflect upon the proliferation of instrument types in the aggregate. Notably missing is a way to organize instruments into a common framework that highlights their similarities and differences.

This Article makes four contributions. First, it catalogues the variety of startup investment forms. I describe novel instruments, such as revenue-based financing, which remain …

The Lost Volume Seller In English Law, Victor P. Goldberg

Faculty Scholarship

If a buyer breaches a contract but the market price has remained unchanged, English courts and the treatises have treated the seller as a “lost volume seller.” The seller, it is argued, could have had two sales, not one, so it lost the profit on the second sale. This paper recognizes that the buyer has an option to terminate and that the contract prices that option. The implicit option price of the lost volume remedy results in an absurd contract, setting the option price high when it should be low and vice versa. The default rule ought to be the …

Remedies In The Ucc: Some Critical Thoughts, Victor P. Goldberg

Faculty Scholarship

I thank the conference organizers and the law review for giving me the opportunity to vent some of my frustrations with the Uniform Commercial Code (UCC). I have expressed my concerns with the Code’s overreliance on “custom and usage” elsewhere, and will not pursue that further here. Nor will I bemoan the Code’s invocation of good faith to undo the parties’ balancing of flexibility and reliance. I will confine my discussion to contract remedies. But I have to begin by noting one section I simply do not understand. Why on earth would the Code drafters in § 2–718(2)(b) have required …

Relational Contracts Of Adhesion, David A. Hoffman

All Faculty Scholarship

Not all digital fine print exculpates liability: some exhorts users to perform before the consumer relationship has soured. We promise to choose strong passwords (and hold them private); to behave civilly on social networks; to refrain from streaming shows and sports; and to avoid reverse-engineering code (or, worse, deploying deadly bots). In short: consumers are apparently regulated by digital fine print, though it’s universally assumed we don’t read it, and even if we did, we’ll never be sued for failing to perform.

On reflection, this ordinary phenomenon is perplexing. Why would firms persist in deploying uncommunicative behavioral spurs? The conventional …

The Price Of Law: The Case Of The Eurozone's Collective Action Clauses, Elena Carletti, Paolo Colla, Mitu Gulati, Steven Ongena

Faculty Scholarship

Do markets value contract protections? And does the quality of a legal system affect such valuations? To answer these questions we exploit a unique experiment whereby, after January 1, 2013, newly issued sovereign bonds of Eurozone countries under domestic law had to include Collective Action Clauses (CACs) specifying the minimum vote needed to modify payment terms. We find that CAC bonds trade at lower yields than otherwise similar no-CAC bonds; and that the quality of the legal system matters for this differential. Hence, markets appear to see CACs as providing protection against the legal risk embedded in domestic-law sovereign bonds.

Does Contract Law Need Morality?, Kimberly D. Krawiec, Wenhao Liu

Faculty Scholarship

In The Dignity of Commerce, Nathan Oman sets out an ambitious market theory of contract, which he argues is a superior normative foundation for contract law than either the moralist or economic justifications that currently dominate contract theory. In doing so, he sets out a robust defense of commerce and the market-place as contributing to human flourishing that is a refreshing and welcome contribution in an era of market alarmism. But the mar-ket theory ultimately falls short as either a normative or prescriptive theory of contract. The extent to which law, public policy, and the-ory should account for values …

Governance By Contract: The Implications For Corporate Bylaws, Jill E. Fisch

All Faculty Scholarship

Boards and shareholders are increasing using charter and bylaw provisions to customize their corporate governance. Recent examples include forum selection bylaws, majority voting bylaws and advance notice bylaws. Relying on the contractual conception of the corporation, Delaware courts have accorded substantial deference to board-adopted bylaw provisions, even those that limit shareholder rights.

This Article challenges the rationale for deference under the contractual approach. With respect to corporate bylaws, the Article demonstrates that shareholder power to adopt and amend the bylaws is, under Delaware law, more limited than the board’s power to do so. As a result, shareholders cannot effectively constrain …

Why Autonomy Must Be Contract's Ultimate Value, Hanoch Dagan, Michael A. Heller

Faculty Scholarship

In “The Choice Theory of Contracts”, we develop a liberal theory of contract law. One core task of the book was to persuade advocates of economic analysis that they must situate their enterprise within our liberal framework. Autonomy, rightly understood, is the telos of contract.

Oren Bar-Gill pushes back strongly in “Choice Theory and the Economic Analysis of Contracts”. He offers a penetrating – perhaps devastating – critique of our approach. Bar-Gill notes the substantial convergence between choice theory and a welfarist view. If he is right, then what does choice theory add?

Our task in Part I of this …

Consequential Damages And Exclusion Clauses, Victor P. Goldberg

Faculty Scholarship

Contracts often include language excluding compensation for consequential damages. However, the boundary between consequential and direct damages is a blurry one. Courts have used concepts like foreseeability, natural result of the breach, and collateral business in their attempts to define the boundary. Those categories, I argue, are not particularly helpful. I consider three classes of cases: wrongful termination, delay, and breach of warranty. This paper argues that lost profits, when referring to the change in value of the contract after a wrongful termination would be direct damages; the hard case involves terminated dealers who had been paid indirectly for retailing …

The Macpherson-Henningsen Puzzle, Victor P. Goldberg

Faculty Scholarship

In the landmark case of MacPherson v. Buick, an automobile company was held liable for negligence notwithstanding a lack of privity with the injured driver. Four decades later, in Henningsen v. Bloomfield Motors, the court held unconscionable the standard automobile company warranty which limited its responsibility to repair and replacement, even in a case involving physical injury. This suggests a puzzle: if it were so easy for firms to contract out of liability, did MacPherson accomplish anything?

The Middleman’S Damages Revisited, Victor P. Goldberg

Faculty Scholarship

If A promises to sell to B who, in turn, promises to sell to C and either A or C breaches should B receive the gain it expected had both transactions occurred (lost profits) or the larger market/contract differential? Recent case law and commentary argues for the lost profit remedy. The argument is that there is a conflict between awarding market damages and making the nonbreacher whole. This paper argues that there is no conflict. If B were a broker, and C breached, then A would have an action against C for market damages. If B were party to the …