Wednesday, August 23, 2006
Pretty much everyone agrees that one of the least successful bits of UCC Article 2 -- not that there's not a lot of spirited competition -- is section 2-209, which deals with modifications and waivers. At one swoop it removes the consideration requirement for modifications, but then quickly backtracks by adding some writing requirements, which it then suggests don't really need to be followed, and then adds that the gratuitous modification can be retracted unless retraction would be unjust. Follow?
In a new paper, How to Create a Commercial Calamity, forthcoming in the Ohio State Law Journal, Robert A. Hillman (Cornell) uses 2-209 as a springboard to take a critical look at what happens when reform-minded lawmakers don't really understand either what they're trying to do or what the consequences of their actions will be. Here's the abstract:
There are many ways to define a legal calamity. For example, a grossly unfair or inefficient law constitutes a legal calamity. A law that produces serious and deleterious unintended effects, such as effects opposite from those intended, is another kind of legal calamity. A law that is so imprecise and confusing that judges do not know how to apply it and lawyers do not know how to advise their clients is still another example of a legal calamity, which I focus on in this paper. Because this paper is a contribution to a symposium on commercial legal calamities, my example is Uniform Commercial Code (UCC) section 2-209, dealing with contract modification and waiver. But my goal is not to explain why 2-209 is a calamity of the third kind - everybody already knows that it is. I use the section to illustrate the kind of strategy of lawmaking that cannot fail to create a calamity of obfuscation. Section 2-209 illustrates what happens when lawmakers who boldly seek to reform the law cannot bring themselves to carry out their plan or never fully understand the ramifications of what they are doing. Instead, they waiver. The result is chaos - a commercial calamity.