Friday, March 27, 2009
Deborah Post (Touro) and I were guests on a Legal Talk Network segment discussing (what else?) the AIG bonuses. For those who can't get enough of hearing law professors talk to each other, you can access the podcast here.
One of the most interesting moments came, I thought, with Deborah's suggestion that the current meltdown is something far bigger in scope and effect than previous recessions, and that it has (I'm trying to say it as clearly as she did) essentially changed the lives of all of us in ways that were entirely unexpected a year or two ago. She suggests that not even AIG insiders, who were ostensibly thinking about future risks, could have really understood the calamity that was about to come about, and thus the doctrine of changed circumstances might justify a court in modifying the contracts
Her point was broader than simply AIG, though; she argued that nearly everyone in America has been touched by this unexpected event. If that's so, and if this is potentially a valid theory, it might apply to a lot more situations than the employment contracts of bailed-out financial institutions, potentially affecting all kinds of contracts where the meltdown has caused the economics of deals to change. It's an ineresting idea.