ContractsProf Blog

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

Tuesday, February 28, 2012

Best Contracts Scholarship of 2011: Honorable Mentions, Part IV

Two weeks ago we announced the top vote getters in our search for the best contracts scholarship of 2011.  We, the editors of the blog then voted for our favorites among those five, which are:

Omri Ben-Shahar, Fixing Unfair Contracts, 63 Stan. L. Rev. 869 (2011)

Robert A. Caplen, Turning Esch to Dust? The State of Supplementation of the Administrative Record in Bid Protests before the Court of Federal Claims, 12 Whittier L. Rev. 197 (2011)

Victor Goldberg, Traynor (Drennan) Versus Hand (Baird):Much Ado About (Almost) Nothing, J. Legal Analysis Advance Access (Oct. 7, 2011)

Juliet P.Kostritsky, Interpretive Risk and Contract Interpretation: A Suggested Approach for Maximizing Value2 Elon L. Rev. 109 (2011)

Kemit A. Mawakana, In the Wake of Coast Federal: The Plain Meaning Rule and the Anglo-American Rhetorical Ethic, 11 U. Md. L.J. Race, Religion, Gender & Class 39 (2011)

The voting confirmed the quality of the competition, as each of the finalists had its supporters, with three different articles receiving at least one vote for #1 among the five of us who voted.

In order to draw out the suspense as long as possible, we will count down to #1 Casey Kasem style, except that our honorable mentions are in no particular order. 

Kostritsky_julietHonorable mention #4 goes to Juliet Kostritsky, Everett D. & Eugenia S. McCurdy Professor of Contract Law at the Case Western Reserve University School of Law.

Jody S. Kraus and Robert E. Scott, in Contract Design and the Structure of Contractual Intent (84 N.Y.U. L. Rev. 1023  (2009)), have urged courts to enforce the contractual terms that the parites have chosen, unless they have given the court an invitation to exercise equitable powers through the use of terms such as "best efforts."  According to Professor Kostritsky, the result is that Kraus and Scott divide the world of contracts in to those capable of strict enforcement and those with open terms.  Professor Kostritsky takes issue with this view and urges courts to use a variety of tools of interpretation, whether or not the contractual terms are specific, including: "ordinary meaning, trade usage, the entire contract, the purpose of the contract, the surrounding circumstances, and reasonableness."  Courts should aim to "maximize gains from trade and minimize deadweight losses and transaction costs."

Professor Kostritsky's articles reviews numerous situations in which courts have made interpretive interventions despite the lack of open-ended terms in the contracts or delegations of interpretive authority to the courts.  Professor Kostritsky favors such interventions whenever the court determines that the costs of intervention are less than the net benefits and efficiency gains that will result from intervention.  In determining whether or not to intervene, courts should consider the following factors: (1) whether the intervention is likely to curb opportunistic behavior; (2) the ease and cost of the court’s intervening; (3) whether the court can intervene by constructing a liability rule or deciding a legal question based on considerations of projected effects on parties’ behavior given average assumptions about human behavior; (4) whether there are impediments to express contracting; (5) whether informal sanctioning mechanisms exist; and (6) the effect of intervention on the prospect of uncontrolled discretion in a performance obligation.


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