ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Saturday, December 13, 2008

Contracts Panel at AALS Annual Meeting

Please plan to attend the Contracts Section's program and business meeting at the AALS Annual Meeting in sunny San Diego. The topic for this year's panel is "Immutable Rules and Contract Law."

Chosen from among those who the planning committee invited to submit a proposal and those who submitted a proposal in response to a general call for papers I posted to this web site and sent to the AALS Contracts listserv in September, this year's presenters are Kenneth Ayotte (Northwestern), Robert P. Bartlett, III (Georgia), and Tom Joo (UC-Davis), who will be speaking about the following topics:

Ayotte

Kenneth Ayotte & Patrick Bolton (Columbia-Business), "Optimal Property Rights in Financial Contracting"

In this paper we propose a theory of optimal property rights in a financial contracting setting.  Following recent contributions in the property law literature, we emphasize the distinction between contractual rights, that are only enforceable against the parties themselves, and property rights, that are also enforceable against third parties outside the contract. Our analysis starts with the following question: which contractual agreements should the law allow parties to enforce as property rights? Our proposed answer to this question is shaped by the overall objective of minimizing due diligence (reading) costs and investment distortions that follow from the inability of third-party lenders to costlessly observe pre-existing rights in a borrower’s property. Borrowers cannot reduce these costs without the law’s help, due to an inability to commit to protecting third-parties from redistribution. We find that the law should take a more restrictive approach to enforcing rights against third-parties when these rights are i) more costly for third-parties to discover, ii) more likely to redistribute value from third-parties, and iii) less likely to increase efficiency. We find that these qualitative principles are often reflected in observed legal rules, including the enforceability of negative covenants; fraudulent conveyance; corporate veil-piercing; and limits on assignability. In this paper we propose a theory of optimal property rights in a financial contracting setting.

Bartlett_4

Robert P. Bartlett, III & Victoria Plaut (Georgia-Psychology), "Blind Consent? A Social Psychological Investigation of Non-Readership of Click-Through Agreements"

Across two studies we aimed to measure empirically the extent of non-readership of clickthrough agreements (CTAs), identify the dominant social representations that exist about CTAs, and experimentally manipulate these representations in order to decrease automatic non-reading behavior. In our initial questionnaire study (Study 1), as predicted, the vast majority of participants reported not reading CTAs and the most prevalent social representations of CTAs contributing to non-readership included: they are too long and time-consuming, they are all the same, they give one no choice but to agree, they are not important, the companies are reputable, and they are irrelevant. Manipulating these representations on a simulated music web site (Study 2) revealed an increase in readership. The greatest effect on comprehension of CTA terms and rates of rejection came from manipulating the length representation. These results demonstrate support for the influence of social representations on CTA readership, provide evidence against the common "limited cognition" perspective on non-readership, and suggest that presenting CTAs in a shorter, more readable format can increase CTA readership and comprehension as well as shopping of CTA terms.

Joo_3 Tom Joo, "The Immutable Role of the Court in Contract Law"

It is routinely stated that the defining aspect of contract law is that parties control their obligations.  But in fact the most fundamental, and immutable, rule of contract law points in the opposite direction: every "contractual" arrangement of the parties is potentially subject to broad judicial review.  The law empowers courts to supply critical aspects of incomplete contracts.  This power is commonly described as the passive facilitation of the parties' intent.  But "contract law" includes the potential that a court, in some extreme cases, will abrogate party intent by rewriting or refusing to enforce agreements to which parties did agree. Moreover, even run-of-the-mill "contract law" cases often turn on questions as to which which the contracting parties' intent cannot be discerned. In such cases, the fundamental "objective theory" of contract holds that subjective agreement of the parties is not necessary, as long as a court believes parties' actions should be "objectively" interpreted to manifest consent.

Analyzing the legitimacy of this broad court power lies in recognizing the implicit policy judgments courts apply. This is made difficult by the fact that these judgments tend to be cloaked in rhetoric that invokes notions of consent.  For example, the "objective theory" consistently uses the term "consent" even while conceding that subjective agreement is unnecessary.  Recognizing courts' implicit policy judgments then demands an explanation of whether courts are qualified to make them.  Conservative market economics offers a theoretical explanation for the importance of the parties in contract -- their purportedly unique ability to value entitlements and trade them in utility-enhancing ways.  A realistic modern theory of contract must recognize that parties do not control contracts and thus requires a theoretical explanation for judicial role.

My argument also suggests that the discourse about mandatory and default rules in contract may incorrectly framed.  It assumes there are two kinds of rules: those that the parties can agree to change, and those that they may not.  Starting from the normative assumption that parties should presumably be able to change rules, and the descriptive assumption that they can change most rules, it asks for descriptive and normative explanations of exceptions.  But as a descriptive matter, true "default rules" may not exist in contract law.  That is, because courts always have the power to review any agreement, even an agreement to opt out of court review, there is no way for parties to make a self-enforcing commitment to opt out.

The program begins Friday, January 9, 2009, at 8:30 am in Marina Salon G, South Tower/Level 3, San Diego Marriott Hotel & Marina, and will be followed by a brief business meeting.  We hope to see you there.

[Keith A. Rowley]

December 13, 2008 in Meetings, Recent Scholarship | Permalink | TrackBack (0)

AALS Workshop on Transactional Law

Aalslogo_4

Longbeach

You may want to mark your calendars for next June's AALS Workshop on Transactional Law, June 10-12, in scenic Long Beach, California.  If you go, keep your eyes open for flying buses and '67 Shelby GTs.  (Both scenes are set in or entering Long Beach; and yes, the dialogue in the second one is in Español.)  The workshop is part of the AALS Mid-Year Meeting.  Program details are not yet available on the AALS web site.  However, the November AALS News provides the following description, as well as a list of topic and speakers and registration information that you can access by clicking this link.

“Transactional law” refers to the various substantive legal rules that influence or constrain planning, negotiating, and document drafting in connection with business transactions, as well as the “law of the deal” (i.e., the negotiated contracts) produced by the parties to those transactions. Traditionally, the law school curriculum has emphasized litigation over transactional law. However, many modern lawyers serve corporate clients, and a significant percentage of lawyers engage in some form of transactional practice. Hence, law schools must place greater emphasis on training law students to be transactional lawyers, and should support law faculty engaged in scholarship focused on transactional law. To this end, in 1994, the AALS held a workshop on the transactional approach to law, which sparked experimentation and innovation in teaching and scholarship related to transactional law. Since that time, there have been significant developments in transactional law. This Workshop not only will take stock of those developments, but also will enable participants to gain some in-depth perspective regarding the relative benefits and drawbacks of those developments.

Law schools have attempted to respond to the demand for increased transactional training in a variety of ways, from integrating transactional law into traditional law school courses to developing stand alone “Deals” or “Business Planning” courses. A number of law schools have developed innovative programs in transactional law.  This Workshop will enable participants to discuss specific methods of teaching transactional skills with an eye towards ferreting out best practices. Should professors interested in teaching transactional law focus on substantive law, “transactional skills,” (i.e., planning, negotiating, and drafting), economic or other theories of business transactions, or all of the above? Should transactional skills be taught in separate courses or integrated into substantive courses?  If taught in separate courses, should such courses be part of the first-year curriculum, integrated throughout the three years, or focused on the upper-level curriculum?  How do you modify or supplement the traditional case method to teach students useful transactional skills?  The Workshop also will explore the challenges and benefits that arise for those who write or would like to write transactional scholarship.  And as initial matter, the Workshop will address how best to define “transactional scholarship” in a way that accurately captures the potential breadth and depth of transactional law, and how transactional scholarship differs from traditional legal scholarship.

The Workshop also will explore best practices for writing scholarship in this area, including methodologies for researching the legal, financial and practical effects of various corporate transactions. The Workshop will feature concurrent works-in-progress sessions, enabling participants to exchange ideas and insights regarding new scholarship related to transactional law.

One important goal of the Workshop is to bring together faculty from different doctrinal areas of law, including faculty who teach in the clinical setting.  Transactional law touches many substantive areas of law, and it is closely identified with bankruptcy, business associations, contracts, commercial law, intellectual property, labor and employment law, securities regulation, and taxation.  The Workshop will provide a unique opportunity for faculty members to make connections between their primary fields and transactional law, and thus should appeal to a broad spectrum of scholars and teachers.

[Keith A. Rowley]

December 13, 2008 in Conferences | Permalink | TrackBack (0)

Friday, December 12, 2008

Now in Print

Pileofbooks

Shmuel I. Becher, Assymetric Information in Consumer Contracts: The Challenge That Is Yet To Be Met, 45 Am. Bus. L.J. 723 (2008).

Aaron-Andrew P. Bruhl, The Unconscionability Game: Strategic Judging and the Evolution of Federal Arbitration Law, 83 N.Y.U. L. Rev. 1420 (2008).

Martin F. Koehler & Guo Yujun, The Acceptance of the Unified Sales Law (CISG) in Different Legal Systems: An International Comparison of Three Surveys on the Exclusion of the CISG's Application Conducted in the United States, Germany, and China, 20 Pace Int'l L. Rev. 45 (2008).

Anna L. Linne, Burden of Proof Under Article 35 CISG, 20 Pace Int'l L. Rev. 31 (2008).

Trevor Perea, Comment, Treibacher Industrie, A.G. v. Allegheny Technologies, inc: A Perspective on the lackluster Implementation of the CISG by American Courts, 20 Pace Int'l L. Rev. 191 (2008).

Lachmi Singh & Benjamin Leisinger, A Law for International Sales of Goods: A Reply to Michael Bridge, 20 Pace Int'l L. Rev. 161 (2008).

Hiroo Sono, Japan's Accession to the CISG: The Asia Factor, 20 Pace Int'l L. Rev. 105 (2008).

[Keith A. Rowley]

December 12, 2008 in Recent Scholarship | Permalink | TrackBack (0)

Thursday, December 11, 2008

Alex Kuczynski Is Not the Poster-Mom for Surrogacy

Pregnancy_comparisonMy heart sank when I saw Alex Kuczynski's article, Her Body, My Baby, in the New York Times Magazine on her experience as the beneficiary of the services of a surrogate mother. I have a child because of the wonders of advanced reproductive technologies. Fortunately, my wife and I did not have to go the surrogacy route, and I doubt that we would have. Still, I fear that people reading articles like Kuczynski's will think (justifiably based on her article) that surrogacy is now the new option for rich people who want biological children without all the inconvenience of pregnancy.

This fear was concretized through this Thomas Frank opinion piece in yesterday's Wall Street Journal. Mr. Frank seems to think that Ms. Kuczynski, a fashion writer, evangelist for cosmetic surgery and wife of a hedge-fund billionaire, is too thick to realize that "reproduction for hire" is the product of her "billionaire-centric world."

Goodness! Thomas Frank is making me defend Alex Kuczynski!! What Frank misses is that Ms. Kuczynski went through "11 failed I.V.F. cycles and four failed pregnancies, stretched out over five years." I don't think anybody who has not experienced the rollercoaster ride that is assisted reproduction can appreciate the heartache encompassed within that sentence. Even someone as privileged as Kuczynski opted for surrogacy only after trying to avoid it through five years of what must have been devastating emotional turmoil. Contrary to Mr. Frank's assertion, it is not "the market" but absolute desperation that drives people into surrogacy contracts. I can see why that is lost on Mr. Frank, but that has more to do with Alex Kuczynski than it does with surrogacy.

Mr. Frank is right, however, that surrogacy has "been the subject of much philosophical and political dispute," and his article begins to set out the parameters of that dispute. Unfortunately, he forecloses serious consideration of the issues with rhetoric about women "putting their biological functions up for sale like so many Jimmy Choos."

Please. I recognize that a surrogacy contract, like any contract is designed to be a mutually beneficial transaction, and that it is different from other mutually beneficial transactions in that it does indeed involve the use of one woman's body for the benefit of another couple. That does indeed raise significant issues, but they are not issues that will be resolved through sloganeering or by treating all people who resort to surrogacy like the moral equivalents of Alex Kuczynski. The alternative to paying women to be surrogate mothers is not paying women to be surrogate mothers or not permitting infertile couples to have their own biological children. Rather than simply bashing people who enter into surrogacy contracts, let's talk about the implications of the options.

[Jeremy Telman]

December 11, 2008 in In the News, True Contracts | Permalink | Comments (1) | TrackBack (0)

Wednesday, December 10, 2008

Bratz v. Barbie: The Sequel

We reported earlier that Mattel won the first round of its legal battle with Bratz doll-maker MGA. Last week, Bloomberg news reported that Barbie was not satisfied to get the Bratz dolls in a headlock. She went for the kill. Now MGA is banned from marketing or distributing the Bratz dolls. MGA has stated that the ban on Bratz would be lethal for the company. Fortunately for MGA, the ban will not go into effect until after a February 11th hearing on the parties' post-trial motions. Moreover, a few of the Bratz dolls will be exempted from the ban. My seven-year-old daughter is relieved. What would the holidays be without Bratz? Actually, my daughter got her first Bratz doll when my sister, unaware that the Bratz have long been banned in our house, bought "Yasmin" for my daughter, because Yasmin is my sister's daughter's name and she thought it was cool that my daughter should have a doll named for her cousin.

"What's a Bratz doll?" my brother-in-law asked.
"They're like Barbies," my sister answered, "but they dress like prostitutes."

Yeah, thanks a lot. Fortunately, as the conversation took place in Hebrew, my daughter is blissfully unaware of the semiotics of Bratz.

Meanwhile, both companies are hurting, according to Bloomberg. Sales are down for both the Barbie and the Bratz lines, and Mattel has incurred legal fees relating to the MGA litigation of nearly $30 million. Mattel has announced that it will need to reduce its workforce by about 1,000.

It is much harder than one would expect to find a PG-rated YouTube clip about the conflict between Barbie and the Bratz. Come on, guys! The potential for humor is almost unlimited, and it need not be crass. Anyway, here's the best I could come up with:

[Jeremy Telman]

December 10, 2008 in In the News | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 9, 2008

4 Sale: 1 Br Condo nr 7 trn w EIC, River Vues & 5-yr $$$back guarantee

07deal1500Does the real estate bust have you beat?  Want to buy a new condo, but don't want to worry about waiting for the next boom before you can sell without a loss?  Well, Rockrose Development Corporation has a brand new condo in Long Island City just for you.  The New York Times reports that the developer "has come up with a pitch to ease the fears of jittery buyers: a five-year money-back guarantee."  The Times reports:

At the View at EastCoast, in Long Island City, just across the East River from Manhattan, Rockrose is offering — at least to the next batch of buyers who step up to sign contracts — a promise to buy back apartments in five years at 110 percent of the sales price.

“I believe in the product, I believe in the marketplace, I believe that value will increase and I am willing to put my money where my opinions are,” said Kevin P. Singleton, a senior vice president at Rockrose.

The View at EastCoast, an 18-story glass condominium tower at 4630 Center Boulevard, is the third of seven Rockrose apartment towers planned along the river in what used to be a 22-acre industrial area of Long Island City near the well-known Pepsi-Cola sign facing Manhattan.

The first two towers were rentals, and after apartments at the View went on the market last summer, 18 out of 184 went into contract. But then in the faltering economy sales stalled, despite the Manhattan skyline views, the 30,000-square-foot terrace and pool, the high ceilings, the white oak floors, and the quick commute on the No. 7 line.

Now, with the building just about finished, an amendment approved by the state attorney general last month offers a five-year “buyback guarantee” to buyers who sign contracts before the sponsors declare the condominium plan effective (after at least 15 percent of apartments go into contract to residential buyers).

Under the guarantee, on the fifth anniversary of the closing, buyers will have 90 days to return their apartments to Rockrose for 110 percent of the purchase price. However, the buyers will have to pay all closing costs, including transfer taxes and the sponsor’s legal fees.

The amendment also introduces other concessions to buyers, including a mortgage contingency clause, and the possibility of five years of sponsor financing for purchase. In addition, buyers who sign up before the plan becomes effective are entitled to a free parking space for the next five years in a lot built by Rockrose just across the street.

Once the plan is effective, and buyers begin to move in, the sponsor could continue to offer the buyback guarantee, or rent some units and gradually sell them off as the market improves.

There is a catch: "Buyers are warned under the amendment that 'no bond or other security' has been furnished to make sure the developers honor the pledge." 

Seems like Rockrose is betting pretty confidently that, 5 years out, the NYC real estate market will show at least a 10% gain on current prices.  This seems likely based on the history of real estate prices in Manhattan in particular, and could be a good strategy to counteract the collective anxiety that is now permeating all markets.  At the same time, and this is possibly informed only by the current collective anxiety, I am wondering whether this real estate bust seems different than others - given that its precursor was a housing bubble hoisted by real estate loans themselves.  Given Rockrose's experience in real estate development, the vote of confidence does counteract some of the anxiety. But the promise also seems like a 110% guarantee of a lawsuit in 5 years.

[Meredith R. Miller]

December 9, 2008 in In the News | Permalink | TrackBack (0)

Now in Print

Pileofbooks

Oren Bar-Gill & Elizabeth Warren, Making Credit Safer, 157 U. Pa. L. Rev. 1 (2008).

Nancy S. Kim, The Software Licensing Dilemma, 2008 BYU L. Rev. 1103.

Timothy J. Maun, Comment, iHack, Therefore iBrick: Cellular Contract Law, the Apple iPhone, and Apple's Extraordinary Remedy for Breach, 2008 Wis. L. Rev. 747.

Guanghua Yu & Hao Zhang, Adaptive Efficiency and Financial Development in China: The Role of Contracts and Contractual Enforcement, 11 J. Int'l Econ. L. 459 (2008).

[Keith A. Rowley]

December 9, 2008 in Recent Scholarship | Permalink | TrackBack (0)

Business Associations Limerick of the Week: Escott v. BarChris

BowlerbowlingOrdinarily, I would not include a case like Escott v. BarChris in my Business Associations course. First off, it's long. Second, there's not much law in it, or at least not much law for which I like to hold my Business Associations students responsible. If I were teaching Securities Law, that would be another matter. On the other hand, it is a case about bowling alleys and, as I mentioned before here, it is thus indispensable to the course's bowling theme. It also contributes to the course's great sports cases, memorialized here, here and here.

The case involves the question of who can be liable for material misstatements in a registration statement. The short answer is, everybody who signed it, even if they did not read what they signed. A good lesson for students to learn before they attend their first board meeting.

Escott v. BarChris Construction

BarChris failed to disclose
The extent of its financial woes.
Read what you sign
Or the court will incline
To deliver you unto your foes.

[Jeremy Telman]

December 9, 2008 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

Monday, December 8, 2008

Ebenezer Scrooge on Contract Formation

Achristmascarol I consulted several print and on-line versions of Dickens's A Christmas Carol and did not find the following dialogue, nor does it appear in all of the film versions of the tale.  So, I'll attribute it to the Roger O. Hirson's screenplay for the 1984 Hallmark Hall of Fame version of A Christmas Carol, starring the late, great George C. Scott.

Ebenezer Scrooge, delayed on his way to the mercantile exchange by his nephew, Fred Holywell's, unwelcome visit to Scrooge & Marley, arrives shortly before the exchange is to close, whereupon he encounters Messrs. Tipton, Pemberton, and Forbush (none of whom appear in Dickens's text), with whom Scrooge has been negotiating the sale of a quantity of corn.  What follows illustrates the then-prevailing common law rule that an offer made in a face-to-face conversation expires at the end of the conversation unless the offeror indicates otherwise.

Tipton: Ah, Ebenezer. We were afraid you wouldn't come.

Pemberton: It's almost closing, sir.

Scrooge: Well, I'm here, aren't I?

Forbush: I said you'd be here.  [To Tipton and Pemberton] Didn't I say Ebenezer Scrooge would be here?  [To Scrooge] I knew you'd change your mind.

Scrooge: You're right, I have changed my mind.

Tipton: Oh, good.  Then you'll take our bid?

Scrooge: The price has gone up.

Pemberton: Gone up? But that's not possible!

Scrooge: If you want my corn, gentlemen, you must meet my quote ... plus five percent for the delay.

Forbush: That's outrageous, Scrooge. You'll be left with a warehouse stuffed with corn!

Scrooge: Well, that's my affair, isn't it?

Tipton: But if we pay your price, our bread will be dearer. The poor will suffer.

Scrooge: Buy the corn someplace else. Good day, sir.

Pemberton: Scrooge, a moment. We'll take your corn ... at the price you quoted yesterday.

Scrooge: Too late. If you wait until tomorrow, it'll cost you another five percent.

Forbush: Damn it, Scrooge, it's not fair!

Scrooge: No, but it's business. I'll give you a moment to make up your minds.

[The three bidders confer.]

Tipton: All right, Scrooge, done and done!

Scrooge: Very good, gentlemen. Now, make sure that the draft for the entire amount of this transaction is deposited with my clerk. I don't ship until I have the cash in hand.

[Keith A. Rowley]

December 8, 2008 in Film Clips | Permalink | TrackBack (0)

Arianna Huffington + Jon Stewart = Eggplant Parmesan

HuffingtonArianna Huffington (pictured) was on The Daily Show last week promoting her new how-to book on how to be a successful blogger. The key, Huffington says, is to write about your passion, which in her case is cheese.  An incredulous Stewart responds that his passion is eggplant.  He obviously has a hard time imagining that the HuffPo would be the leading political blog that it is if its focus where on cheese.  More generally, Stewart seems to have a rather low opinion of blogs, at least as the blogging process is described by Huffington.  Why, Stewart asks, would people want to read all the dreck that didn't make it onto my show?  You can watch the full exchange here.

As a committed blogger, I have to add, LONG LIVE DRECK!!!

[Jeremy Telman]

December 8, 2008 in About this Blog | Permalink | Comments (1) | TrackBack (0)

Contracts Limerick of the Week: Nanakuli Paving v. Shell Oil

Honolulu I've taught this case for years, and I've always considered it Limerickworthy, but only recently did the proper rhyme scheme occur to me. Giving credit where credit is due, I must acknowledge that my wife, the celebrated poet Catherine Tufariello, suggested the first rhyme word, but only because she never takes my poems seriously. Well, I showed her! The last rhyme word is all mine, and it may be a bit obscure to some, so I have added a link to clarify matters.

Nanakuli Paving and Rock Co. and Shell Oil had developed a symbiotic relationship in which Shell provided asphalt for Nanakuli's paving business, thus giving Shell a partner in Hawaii so that it could compete in the paving business there with its rival, Chevron, which supplied asphalt to Honolulu's leading paving company, H.B. Although the contract between Nanakuli and Shell provided that the price for asphalt would be Shell's posted price at the time of delivery, Nanakuli relied on trade usage evidence to argue that Shell had always granted Nanakuli price protection when rapid changes in petroleum prices would otherwise make Nanakuli's government contracts unprofitable. In fact, there was plenty of evidence that the paving business as it operated in Hawaii would have been commercially impossible without price protection.

Still, the issue was how to reconcile trade usage with a clear price term, as required under the UCC. The Ninth Circuit got creative (in my view) and distinguished permissible "cutting down" of an express term from "negating" it. A negation of the express price term, "Shell's Posted Price at the time of delivery," would have been to permit Nanakuli to set the price. Instead, the court simply "qualified" the express term with an implied term permitting price protection. That is obviously the right result based on commercial reasonableness, but it requires considerable suspension of disbelief.

Nanakuli Paving v. Shell Oil

Was the Ninth Circuit snorting patchouli
Letting parol in to help Nanakuli?
Shell Oil was brought low
As if by a blow
From the bat of a trade-use Gillooly.

[Jeremy Telman]

December 8, 2008 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

Sunday, December 7, 2008

Wilkinson-Ryan on the Behavioral Economics of Efficient Breach and Liquidated Damages

Tesswilkinsonryan_2Tess Wilkinson-Ryan, Sharswood Fellow in Law and Psychology at the University of Pennsylvania School of Law, recently posted Do Liquidated Damages Clauses Encourage Efficient Breach?, in which she (1) reports the methodology and results of a series of experiments designed to elicit participants' hypothetical likelihood to breach an existing contract either because what they thought was a winning contract now looks to be a losing one or because a more lucrative, but mutually exclusive, opportunity has come along, (2) introduces a liquidated damages provision to the hypothetical contract and reports how its presence or absence appeared to affect participants' responses, and then (3) attempts to draw from her experimental results broad conclusions about the cognitive processes of her sample groups and the implications her results have for efficient breach theory.  Here's an excerpt from the abstract:

Economic theorists predict that parties will breach a contract when it is possible to pay expectation damages to the promisee and still make a net profit.  The moral obligations entailed by a promise, however, implicate unusually robust moral intuitions which in turn may deter parties from breaching even when there is an economic incentive to do so.  In this paper I use experimental methods to investigate the role of moral norms in parties' propensity to capitalize on efficient breach opportunities....  In the last experiment, subjects were asked to think about the effect of a liquidated damages clause on their intuitions. The most important result from this study is that subjects required less money to breach contracts with liquidated damages than otherwise identical contracts.

I have some concerns, which I am happy to discuss with the author, about her methodology (or at least her methodological explanation), the way she characterizes efficient breach theory, and the robustness of a couple of her conclusions.  Those concerns aside, this is an interesting working paper that is, at the very least, a substantial first step toward an interesting article.

[Keith A. Rowley]

December 7, 2008 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Australia: A Movie About Contract Law

A few days ago, in a fit of holiday and pre-exam frivolity, I went to see Australia, the latest Baz Luhrmann – Nicole Kidman collaboration.  It’s quite different from Moulin Rouge (no singing to speak of), yet it’s still a similar kind of oddball high-kinetic vision, and a lot of fun.  The one flaw of the movie (okay, other than the fact that it lacks Ewan McGregor) is that it tries to weave too many strands together – a sense of the beauty of the outback, cattle ranching, business competition, racism, aboriginal rights, WWII, mysticism, a love story.  Too much for one movie.

Aside from all these themes, I perceived that Baz Luhrmann wanted to make a movie about contract law.  When Lady Sarah (Kidman) arrives in Australia, the dominating cattle baron, King Carney, offers her a lowball price for her cattle ranch.  If she can succeed in driving her cattle to the Port of Darwin, she will win the contract for supply of the army, thereby undercutting Carney’s monopoly.  The climax of the first part of the movie (the first movie?) involves whether the army officer will sign Carney’s proffered contract before Lady Sarah rides into town with the cattle. 

Unfortunately, the army officer does sign the contract before Lady Sarah arrives.  But then the officer tells Lady Sarah that the contract is only binding upon delivery of the cattle to the ship.  A race then ensues to load the cattle first.  Who knew that the UCC could be so much fun?

So, there you have it.  The epic of Australia is really a movie about contract law.

[Miriam Cherry / Cross Posted at Concurring Opinions]

December 7, 2008 in Film Clips | Permalink | TrackBack (0)

Now in Print: Dispatches from Abroad

Pileofbooks

As our world shrinks and becomes increasingly interconnected, U.S. scholars visit or take posts abroad and foreign scholars reciprocate, and private law systems tend to converge, it seems odd that U.S. contracts scholarship is not chock full of citations to articles and essays appearing in foreign law journals and that, likewise, the work of predominantly non-U.S. scholars appearing in foreign law journals -- particularly from countries that share a common legal ancestry -- is not chock full of citations to articles and essays appearing in U.S. law journals. It's as if we still lived in an age where most legal scholars relied on postal delivery of law journals, there was no Internet providing a worldwide web of opportunities for collaboration and cross-pollination, and the only English-language journal devoted to contracts scholarship  -- the Journal of Contract Law -- wasn't based in Australia.

In an effort to help raise awareness among this blog's readers, most of whom are (as am I and my fellow bloggers) based in the U.S., this is the first of an irregular series of posts designed to call attention to recent English-language contracts scholarship appearing in journals that SmartCILP generally does not index and to which Westlaw or LexisNexis may not provide full-text on-line access. (Hein Online makes many of these periodicals available -- but typically not the most recent issues.)

Richard Austen-Baker, Consumer-Supplier Relations, Regulation and Essential Contract Theory, 24 J. Contract L. 60 (2008).

Lord Bingham of Cornhill, A New Thing Under the Sun? The Interpretation of Contract and the ICS Decision, 12 Edinburgh L. Rev. 374 (2008).

David Capper, The Extinctive Effect of Promissory Estoppel, 37 Common L. World Rev. 105 (2008).

David Capper, A "Golden Victory" for Freedom of Contract, 24 J. Contract L. 176 (2008).

J.W. Carter, Partial Termination of Contracts, 24 J. Contract L. 1 (2008).

J.W. Carter & Elisabeth Peden, Damages Following Termination for Repudiation: Taking Account of Later Events, 24 J. Contract L. 145 (2008).

David Collins, Compulsory Arbitration Agreements in Domestic and International Consumer Contracts, 19 King's L.J. 335 (2008).

Wayne Courtney, Termination of Contract by a Party in Breach, 3 J. Bus. L. 226 (2008).

Wayne Courtney, Construction of Contractual Indemnities -- Out with the Old, in with the New?, 24 J. Contract L. 182 (2008).

Ross Grantham & Charles Rickett, A Normative Account of Defences to Restitutionary Liability, 67 Cambridge L.J. 92 (2008).

Birke Häcker, Mistakes in the Execution of Documents: Recent Cases on Rectification and Related Doctrines, 19 King's L.J. 293 (2008).

Parker Hood, "A Stitch in Time"? Repairs and Rejection in Sale of Goods, 12 Edinburgh L. Rev. 316 (2008).

Simon Lean-Massey, Employment Agreements: Special Contracts Deserving of Special Treatment?, 14 Canterbury L. Rev. 101 (2008).

Sarah Leslie, Much Ado About Nothing: Steele v Serepisos and a Notice Requirement for Contingent Conditions, 39 Victoria U. Wellington L. Rev. 319 (2008).

David McLauchlan, The "Drastic" Remedy of Rectification for Unilateral Mistake, 124 L.Q. Rev. 608 (2008).

Jennifer M. Nadler, What Right Does Unjust Enrichment Law Protect?, 28 Oxford J. Legal Studies 245 (2008).

Sara Partington & Kirk Page, Best Endeavours?  What's Reasonable and What's Best?, 158 New L.J. 1407 (2008).

Luke Pearce, Foakes v. Beer and Promissory Estoppel: A Step Too Far, 19 King's L.J. 630 (2008).

David Pearce & Roger Halson, Damages for Breach of Contract: Compensation, Restitution and Vindication, 28 Oxford J. Legal Stud. 73 (2008).

Nick Sage, Should Contract Law Demand Equality in Exchange? Reflections on Substance, Procedure and a Modus Vivendi, 24 J. Cont. L. 28 (2008).

Chaim Saiman, Restitution in America: Why the US Refuses to Join the Global Restitution Party, 28 Oxford J. Legal Stud. 99 (2008).

James Simon, European Contract Law: Odysseus the Hero or Muffin the Mule?, 2 L. & Fin. Mkts. Rev. 498 (2008).

Richard Sutton, Interest on Money Claims: The Restitutionary Award, 23 N.Z. U. L. Rev. 34 (2008).

Greg Tolhurst, The Nature of an Assignee’s Right to Damages for Breaches of Contract That Occur Prior to Assignment, 24 J. Cont. L. 77 (2008).

Alexander Trukhtanov, Foakes v Beer: Reform of Common Law at the Expense of Equity, 124 L.Q. Rev. 364 (2008).

John Zerilli, Accident in the Equitable Jurisdiction, 24 J. Contract L. 112 (2008).

Qi Zhou, An Economic Perspective on the Doctrine of Unilateral Mistake in English Contract Law: A Remedy-Based Approach, 59 N. Irl. L.Q. 327 (2008).

[Keith A. Rowley]

December 7, 2008 in Recent Scholarship | Permalink | TrackBack (0)