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Reconciling The Old Theory And The New Evidence: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Jacob I. Corré Jan 2000

Reconciling The Old Theory And The New Evidence: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Jacob I. Corré

Michigan Law Review

Ronald Mann's thorough research and rigorous analysis provide compelling evidence that the commercial letter of credit does not further the fundamental purpose traditionally associated with it. Equally persuasive are his hypotheses about the functions that letters of credit actually serve in the real world. The objective statistics are startling. An overwhelming majority of letter of credit seller-beneficiaries make at least initial presentations to issuing or correspondent banks that by the express terms of the letter of credit do not entitle the seller to payment. Without a waiver from its customer, the issuing bank is legally entitled to, and surely will …

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Empirical Insight And Some Thoughts On Future(S) Investigation: Comments On Mark West's 'Private Ordering At The World's First Futures Exchange', A.W. Brian Simpson Jan 2000

Empirical Insight And Some Thoughts On Future(S) Investigation: Comments On Mark West's 'Private Ordering At The World's First Futures Exchange', A.W. Brian Simpson

Michigan Law Review

Some considerable number of years ago, when I was in Chicago, I had a plan to undertake a general study of the origins of futures markets. They fascinated me for a variety of reasons, one being their bizarre nature: traders meeting together, usually in some form of ring, in order to sell, on a huge scale, quantities of commodities which they neither possess, nor intend to possess, to other traders, who have not the least wish to receive such commodities, and nowhere to put them if they did. At first sight it appears a weird perversion of the institution of …

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Exploring The Battle Of The Forms In Action, Daniel Keating Jan 2000

Exploring The Battle Of The Forms In Action, Daniel Keating

Michigan Law Review

Like many commercial law professors, I have long been fascinated with the workings of the Uniform Commercial Code's section 2-207, the "battle of the forms" provision. There are two features of that section, one internal and one external, that make it such an intriguing statute to ponder. The internal source of fascination with section 2-207 is that it provides a classic model for teaching students about the intricacies of statutory construction. There is probably no other provision within U.C.C. Article 2 that provides more confusion to law students and more challenge to the instructor than does section 2-207. There is …

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The Limits Of Behavioral Decision Theory In Legal Analysis: The Case Of Liquidated Damages, Robert A. Hillman Jan 2000

The Limits Of Behavioral Decision Theory In Legal Analysis: The Case Of Liquidated Damages, Robert A. Hillman

Cornell Law Faculty Publications

Discontent with the apparent tunnel vision of economic analysis of law's rational choice theory, legal scholars recently have turned with enthusiasm to "behavioral decision theory" (BDT) to enrich their understanding of how people make decisions and of the law's effect on human behavior. This article, for the first time, evaluates BDT's potential contribution to legal analysis by focusing on a single, important legal paradox: Despite contract law's freedom of contract paradigm, courts actively and enthusiastically police agreed damages provisions. Although the article finds an important place in legal analysis for this new discipline, the article raises and discusses several obstacles …

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Economic Reasoning And The Framing Of Contract Law: Sale Of An Asset Of Uncertain Value, Victor P. Goldberg Jan 2000

Economic Reasoning And The Framing Of Contract Law: Sale Of An Asset Of Uncertain Value, Victor P. Goldberg

Faculty Scholarship

By analyzing two American contract law decisions, the paper illustrates the usefulness of economic analysis in framing the inquiry. The cases have a common feature, unrecognized by the courts: they both deal with the production and transfer of information regarding the sale of an asset of uncertain value. One involves the combination of an option and a lockup to encourage the buyer to produce information. The other involves contingent compensation to convey the seller's assurance of the quality of the assets. Once this is recognized, the outcomes are straightforward.

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Trade Secrets And Mutual Investments, Gillian L. Lester, Eric L. Talley Jan 2000

Trade Secrets And Mutual Investments, Gillian L. Lester, Eric L. Talley

Faculty Scholarship

This paper employs an optimal contracting framework to study the question of how courts should adjudicate disputes over valuable trade secrets (such as customer lists). We focus principally on contexts where trade secrets are formed endogenously, through specific, non-contractible investments that could potentially come from either employers or employees (or both). Within such contexts, we argue, an "optimal" trade secret law diverges in many important respects from existing doctrine. In particular, an optimal doctrine would (1) expressly consider the parties' relative skills at making value enhancing investments rather than the mere existence of a valuable informational asset; (2) tend to …

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Enforcing Contracts In Dysfunctional Legal Systems: The Close Relationship Between Public And Private Orders: A Repy To Mcmillan And Woodruff, Ariel Porat Jan 2000

Enforcing Contracts In Dysfunctional Legal Systems: The Close Relationship Between Public And Private Orders: A Repy To Mcmillan And Woodruff, Ariel Porat

Michigan Law Review

When the public order is dysfunctional, a private order for enforcing contracts will develop. In the absence of courts, transactors will seek ways to secure performance without recourse to legal sanctions. Social and economic sanctions imposed on the party in breach, whether by the aggrieved party or by the economic and social community in which both parties operate, replace legal sanctions. These sanctions sometimes arise within a private order functioning spontaneously, as when ongoing contractual relationships prevail between the parties, or when a close-knit economic or social community exists in which information concerning breaches of contract flows freely. In other …

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The Role Of Letters Of Credit In Payment Transactions, Ronald J. Mann Jan 2000

The Role Of Letters Of Credit In Payment Transactions, Ronald J. Mann

Michigan Law Review

Common justifications for the use of the letter of credit fail to explain its widespread use. The classic explanation claims that the letter of credit provides an effective assurance of payment from a financially responsible third party. In that story, the seller - a Taiwanese clothing manufacturer, for example - fears that the overseas buyer - Wal-Mart - will refuse to pay once the goods have been shipped. Cross-border transactions magnify the concern, because the difficulties of litigating in a distant forum will hinder the manufacturer's efforts to force the distant buyer to pay. The manufacturer-seller solves that problem by …

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Letters Of Credit As Signals: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Clayton P. Gillette Jan 2000

Letters Of Credit As Signals: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Clayton P. Gillette

Michigan Law Review

Why would buyers and sellers transact with each other through a third party that charges a significant fee for its services and that typically is authorized to make payment notwithstanding noncompliance with the very prerequisites that it has been engaged to monitor? This is the puzzle that Ronald Mann's provocative and nuanced article purports to explain. Under the traditional story about the esoteric world of letters of credit, these transactions allow distant buyers and sellers to circumvent obstacles that would otherwise frustrate long-distance transactions. The traditional story explains that these credits induce buyers to approve payment prior to receiving conforming …

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Informality As A Bilateral Assurance Mechanism: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Avery Wiener Katz Jan 2000

Informality As A Bilateral Assurance Mechanism: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Avery Wiener Katz

Michigan Law Review

Ronald Mann's study of documentary defects in the presentation of commercial letters of credit is a valuable contribution to the commercial law literature in at least three respects. First, it offers a detailed and thorough empirical survey of an important though specialized aspect of commercial practice. Mann collected and coded a data sample of 500 randomly selected letter-of-credit transactions, personally evaluating each transaction to determine whether the documentary presentation by the beneficiary of the letter of credit (i.e., the seller) complied with the letter's formal terms. Then, for each case in which he found one or more documentary defects, Mann …

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A Public Choice Approach To Private Ordering: Rent-Seeking At The World's First Futures Exchange: Comments On Mark West's 'Private Ordering At The World's First Futures Exchange', Omri Yadlin Jan 2000

A Public Choice Approach To Private Ordering: Rent-Seeking At The World's First Futures Exchange: Comments On Mark West's 'Private Ordering At The World's First Futures Exchange', Omri Yadlin

Michigan Law Review

The literature on private ordering systems has expanded exponentially over the last decade. Yet, very few scholars have actually attempted to define the term "private ordering" - a failure that sometimes leads to confusion. Some scholars identify private ordering with non-state ordering. According to this view, the private legal systems Robert Ellickson, Lisa Bernstein, McMillan & Woodruff, Mark West, and others have investigated are "private" simply because their norms are not manufactured or enforced by the state. The alternative view emphasizes the decentralized feature of private ordering systems. Robert Ellickson, for example, studied "how people manage to interact to mutual …

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Commercial Norms And The Fine Art Of The Small Con: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Douglas G. Baird Jan 2000

Commercial Norms And The Fine Art Of The Small Con: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Douglas G. Baird

Michigan Law Review

The standard battle-of-the-forms story, often rehearsed in the classroom, is one in which merchants try to take advantage of their contracting opposites. A seller wants to escape the obligations that come with implied terms and seeks to disclaim them in its acknowledgment form. Its buyers do not realize they have been had until after the goods fail. Only then do they read the seller's form and discover that they are without remedy. Conspicuously absent in Dan Keating's fine article, however, is any evidence that supports this story. Some of his merchants talk about putting favorable terms in their forms, but …

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The Sound Of One Form Battling: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Richard Craswell Jan 2000

The Sound Of One Form Battling: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Richard Craswell

Michigan Law Review

Daniel Keating has provided a thoughtful and useful study of the way that businesses form contracts. In particular, he has given us a good deal of data concerning the problem known as the "battle of the forms." Commercial lawyers have, of course, been wrangling over this problem for decades, so it is no small accomplishment to be able to offer a useful contribution. In Part I below, I describe more precisely just what Keating's data does and does not illuminate. Parts II and III then focus on a particular contracting practice that Keating has identified: the practice of getting both …

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The Limits Of Empiricism: What Facts Tell Us: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Dennis Patterson Jan 2000

The Limits Of Empiricism: What Facts Tell Us: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Dennis Patterson

Michigan Law Review

The conventional legal academic wisdom about empiricism is that empirical information is by-and-large a good thing, that we need more of it, and that empirical analysis is preferable to many scholarly alternatives now on offer in the law review literature. I do not dispute the proposition that, all things considered, empirical information is a good thing. What I question is the notion that empirical information necessarily leads to knowledge. Put differently, it is one thing to marshal the facts, and another to know what to make of the facts. I shall raise these points both in a general way and …

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On The Use Of Practitioner Surveys In Commercial Law Research: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Avery Wiener Katz Jan 2000

On The Use Of Practitioner Surveys In Commercial Law Research: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Avery Wiener Katz

Michigan Law Review

As Daniel Keating's principal article attests, the literature on U.C.C. section 2-207 and the "battle of the forms" is both vast and intricate. 1 That fact, together with the distinguished array of commentators assembled here, makes it unlikely that I will be able to say anything substantially original on that subject. Accordingly, in the spirit of this overall symposium, I will focus the bulk of my remarks not on the substantive issues raised by Keating's article, but on his methodology. In particular, I will suggest that Keating's empirical method - the free-form, oral interview conducted personally by the principal researcher …

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Private Order Under Dysfunctional Public Order, John Mcmillan, Christopher Woodruff Jan 2000

Private Order Under Dysfunctional Public Order, John Mcmillan, Christopher Woodruff

Michigan Law Review

Businesspeople need contractual assurance. Most transactions are less straightforward than a cash sale of an easily identifiable item. Buyers need assurance of the quality of what they are purchasing, and sellers need assurance that bills will be paid. The legal system may not always be available to provide contractual assurance - and when the law is dysfunctional, private order might arise in its place. Many developing and transition economies have dysfunctional legal systems, either because the laws do not exist or because the machinery for enforcing them is inadequate. In such countries, bilateral relationships, communal norms, trade associations, or market …

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In Search Of Best Efforts: Reinterpreting Bloor V. Falstaff, Victor P. Goldberg Jan 2000

In Search Of Best Efforts: Reinterpreting Bloor V. Falstaff, Victor P. Goldberg

Faculty Scholarship

When contracting parties cannot quite define their obligations, they often resort to placeholder language, like "best efforts." They (and their counsel) likely have little idea of what they might mean, but, so long as they avoid litigation, it will not matter much. But "best efforts" clauses are on occasion litigated, and courts must read content into them. In Bloor v. Falstaff, a casebook favorite, the court held that Falstaff s lackluster promotional efforts for Ballantine beer violated its best efforts covenant. So far as I can tell, no commentators have questioned this outcome. Indeed, some commentators have found Falstaff …

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Second Generation Of Law And Economics Of Conflict Of Laws: Baxter's Comparative Impairment And Beyond, Erin O'Hara O'Connor, William H. Allen May 1999

Second Generation Of Law And Economics Of Conflict Of Laws: Baxter's Comparative Impairment And Beyond, Erin O'Hara O'Connor, William H. Allen

Scholarly Publications

In his 1963 article in the Stanford Law Review, “Choice of Law and the Federal System,” Professor William F. Baxter criticized the choice-of-law approach of the First Restatement of the Conflict of Laws. According to the Restatement, courts should apply the law of the state where the last act or event deemed necessary to create a cause of action occurred. In contrast, Baxter advocated a comparative-impairment approach, whereby judges were obligated to apply the law of the state whose public policy would suffer the greatest impairment if its law was not applied. The authors contend that although Baxter’s approach caries …

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The Employment Contract, Ian Ayres, Stewart J. Schwab Apr 1999

The Employment Contract, Ian Ayres, Stewart J. Schwab

Cornell Law Faculty Publications

This article consists of Professors Ian Ayres and Stewart Schwab 's presentation given at the Economic Analysis of State Employment Law Issues Symposium. Following the presentation, audience members and the presenters participated in a discussion concerning employment contracts. The Journal staff and Professors Ayres and Schwab compiled and edited some of these questions and responses.

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Microfinance And The Mechanics Of Solidarity Lending: Improving Access To Credit Throught Innovations In Contract Structure, Jameel Jaffer Jan 1999

Microfinance And The Mechanics Of Solidarity Lending: Improving Access To Credit Throught Innovations In Contract Structure, Jameel Jaffer

Florida State University Journal of Transnational Law & Policy

No abstract provided.

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Lawyers, Law, And Contract Formation: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Robert K. Rasumssen Jan 1999

Lawyers, Law, And Contract Formation: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Robert K. Rasumssen

Michigan Law Review

Attempting to infuse the austerity of theory with a dose of reality, an intrepid group of legal scholars has left the security of the office and ventured into the work-a-day world of commercial practices. The information that they have gathered and are sharing with the rest of us is furthering our understanding of the interaction between commercial law and commercial practice. Embedded in much of the research they have generated is the not-so-flattering conclusion that law professors suffer from a self-serving bias. Those of us in the academy engage in the assumption, often unstated or even unacknowledged, that the law …

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The Tentative Case Against Flexibility In Commercial Law, Omri Ben-Shahar Jan 1999

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

Articles

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.

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An Economic Analysis Of The Guaranty Contract, Avery W. Katz Jan 1999

An Economic Analysis Of The Guaranty Contract, Avery W. Katz

Faculty Scholarship

Guaranty arrangements, in which one person stands as surety for a second person's obligation to a third, are ubiquitous in commercial transactions and in commercial law. In recent years, however, scholarly attention to the topic has been scant; and no one has systematically analyzed this body of law and practice from an economic policy perspective. Accordingly, this Article attempts to outline the basic economic logic underlying the guaranty relationship, and applies the results to a variety of specific issues in government policy and private planning. It poses and answers three main questions: First, why would a creditor prefer to make …

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Private Ordering At The World's First Futures Exchange, Mark D. West Jan 1999

Private Ordering At The World's First Futures Exchange, Mark D. West

Michigan Law Review

Modern derivative securities - financial instruments whose value is linked to or "derived" from some other asset - are often sophisticated, complex, and subject to a variety of rules and regulations. The same is true of the derivative instruments traded at the world's first organized futures exchange, the Dojima Rice Exchange in Osaka, Japan, where trade flourished for nearly 300 years, from the late seventeenth century until shortly before World War II. This Article analyzes Dojima's organization, efficiency, and amalgam of legal and extralegal rules. In doing so, it contributes to a growing body of literature on commercial self-regulation while …

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Bloomer Girl Revisited Or How To Frame An Unmade Picture, Victor P. Goldberg Jan 1998

Bloomer Girl Revisited Or How To Frame An Unmade Picture, Victor P. Goldberg

Faculty Scholarship

Nearly all contracts casebooks feature the saga of Shirley MacLaine's suit against Twentieth Century Fox arising from the cancellation of the proposed film Bloomer Girl. None really get the story right. To be fair, none try. The case is a vehicle for exploring the obligation of the victim of the breach of an employment contract to take alternative employment. If MacLaine refused an offer of alternative employment that was not "different and inferior," her failure to mitigate would mean that the earnings she would have received would be offset against the damages; so, asked the court, was the alternative …

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Standard Form Contracts, Avery W. Katz Jan 1997

Standard Form Contracts, Avery W. Katz

Faculty Scholarship

Among legal commentators, standard form contracts have long been received with distrust, and the rules governing their interpretation have engendered considerable controversy. While economic analysis has little to say regarding the libertarian objection to standard form contracts or their relationship to personal autonomy, it can help evaluate their effects on efficiency and the distribution of the gains from trade. From such a perspective, standard forms should be analyzed like any other productive input, comparable to design, marketing, and technical support. Whether their use raises any special regulatory or policy concerns, therefore, depends on their implications for the standard litany of …

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Contract Formation And Interpretation, Avery W. Katz Jan 1997

Contract Formation And Interpretation, Avery W. Katz

Faculty Scholarship

Much research in law and economics, following Coase's insight that the effects of a legal rule depend on the ability of those whom it governs to bargain around it, has undertaken to explain how substantive entitlements such as property rights influence the bargaining process. Perhaps more important than any substantive rights or duties in this regard, however, is the extensive body of contract doctrine that governs the procedural mechanics of exchange. The formal rules of contract formation, by attaching consequences to the various acts and omissions that bargainers can choose from in a negotiation, affect the parties' incentives to make …

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Unilateral Competitive Effects Theories In Merger Analysis, Jonathan Baker Jan 1997

Unilateral Competitive Effects Theories In Merger Analysis, Jonathan Baker

Scholarly Articles in Law Reviews & Journals

No abstract provided.

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International Jurisdiction In Products Liability Cases (Analysis Of Asahi And Post-Asahi Cases), Tsutomu Kuribayashi Jan 1997

International Jurisdiction In Products Liability Cases (Analysis Of Asahi And Post-Asahi Cases), Tsutomu Kuribayashi

LLM Theses and Essays

With the increase of foreign trade, there has also been an increase in the number of foreign manufacturers and distributors involved in product liability litigation in the United States. In many cases, the products from these foreign manufacturers and distributors reach the forum states through the stream of commerce, and are distributed to the customers by regional distributors, wholesalers, and retailers. Therefore, in many product liability cases where defective products from these foreign manufacturers and distributors cause injuries to people in the United States, those foreign companies do not have a direct relationship with the forum states. In these cases, …

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Antitrust Balancing In A (Near) Coasean World: The Case Of Franchise Tying Contracts, Alan J. Meese Oct 1996

Antitrust Balancing In A (Near) Coasean World: The Case Of Franchise Tying Contracts, Alan J. Meese

Michigan Law Review

Antitrust law has largely succumbed to the hegemony of balancing. Courts applying the rule of reason are told to balance a restraint's procompetitive effects against its anticompetitive impact. Mergers once deemed anticompetitive solely because they facilitated the exercise of market power are now evaluated by weighing the anticompetitive effects of such increased power against any efficiencies created by the transaction. Finally, some activities once deemed per se illegal are now subject to a balancing approach, either by explicit application of the rule of reason, or by recognition of certain affirmative defenses to otherwise per se violations. Unlike many other balancing …

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