ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, March 2, 2012

Live Blogging from the Spring Contracts Conference: Contracts in Action I

Our colleauge here at the blog, Meredith Miller moderated the first of three panels united under the broad rubric of Contracts in Action.

ZalesneProfessor Debra Zalesne began her presentation by noting that "non-traditional families" have become the norm.  Despite that, and despite the advances in recognition of same-sex marriage, family law remains relatively heteronormative and often assumes traditional family structures.  Her presentation focused on cohabitation agreements.  Some courts treat such agreements as commercial contracts, ignoring the relationship between the parties and attendant family law issues. Other courts focus on the non-marital relationship and refuse to enforce the agreement, either because they are contrary to public policy or because they lack consideration.  So cohabitation agreements that refer to the love and companionship at the heart of the relationship is likely to be struck down, while those couched in purely commercial terms (housekeeping, nursing, etc.) are more likely to be enforced.  As a result, the law treats non-married couples differently from married couples, since commercial agreements between married partners would ordinarily be set aside as lacking consideration.

Courts similarly disagree about the status of co-parenting contracts, but most commonly, courts ignore such agreements in favor of the best-interests-of-the-child standard.  Professor Zalesne would like to see courts doing the work and trying to give effect to contractual agreements while also looking out for the best interests of the child.

Zacks-webProfessor Erich Zacks presented a paper on cognitive bases of judges and juries in the context of contract preparatio nand execution.  There is large literature on how cognitive biases affect our contracting behavior, and we know from that literature that an actor (say an advertising executive) aware of our cognitive biases can manipulate us to get us to behave in certain ways, e.g. to purchase products that we would not purchase if we were acting raionally.  But Professor Zacks more or less flips this literature around to see if parties who are themselves engaged in a contracting process can do so with an eye to the cognitive biases of judges and juries in order to improve the likelihood that a court will enforce an agreement in the way they want, in part by getting the judge or jury to feel a certain way about the parties.  

So, for example, let's say that I signed a car rental agreement with unfavorable terms because I had just completed a five-hour flight, had no opportunity to negotiate the terms, and had a long line of people waiting behind me.  What the court sees is that I signed in four different places on a form with bold face terms just above or next to my signature.  The very form of the contract sends signals that situate the contract in a good posture for enforcement, rendering my tale of traveling woe relatively unimportant.

Similarly, recitals are a good locus for framing language that can signal to the court the nature of the agreement and the positions of the parties.  Disclosures can be in plain English so that a judge or a jury looking at the disclosure will think, "Hmmm, I understand this and I would not have agreed to it."  All of this suggests that courts are influenced to find consent when there was no substantive consent in part because contracts are designed to exploit cognitive biases so as to promote their enforcement.  

Aaron Goldstein proposes that courts, when considering a facially unambiguous contract, should permit extrinsic evidence only of public and conventional meaning of terms, like trade usage, but they should exclude extrinsic evidence of the parties' subjective intent, such a course of performance and course of dealing.  Mr. Goldstein points out the dangers of a strict imposition of the plain meaning rule in such contexts because it permits parties with more bargaining power (especially in the context of form contracts) to impose one-sided terms in their favor.  But letting in all sorts of extrinsic evidence also creates dangers given the unreliability of people's membories of the facts and circumstances surrounding the formation of the contract.

Mr. Goldstein advocates a middle path, what he calls the public meaning rule.  When interpreting facially unambiguous contractual provisions, courts should permit the introduction of extrinsic evidence of the public and conventional meaning of the contract terms.  They should not permit introduction of extrinsic evidence that illuminates nothing more than subjective intent.  Such evidence is relevant in the equitable context, where the court is less interested in the meaning of the agreement than in enforcing the parties' agreement in a way that accords with fundamental fairness.  Recognizing that consumers have no opportunity to bargain for terms when they agree to form contracts, Mr. Goldstein acknowledges that his public meaning rule approach would be inappropriate in the context of consumer contracts of adhesion.  There again, courts must be more attuned to the sorts of extrinsic evidence of subject understandings relevant to determining the equity and fairness of such agreements.  


March 2, 2012 in Conferences, Recent Scholarship | Permalink | Comments (2) | TrackBack (0)

Lifetime Achievement Panel: Mel Eisenberg

EisenbergKeith Rowley has put together a panel consisting of Shawn Bayern, Omri Ben-Shahar, and Mark Gergen to honor Melvin Eisenberg, who is the fourth honoree for Lifetime Achievement at the Spring Contracts Conference.

Professor Bayern stressed Professor Eisenberg's fundamental refusal to reduce contracts law to any one unifying principle.  Law must be justified by relevant social propositions: including morality, policy and experiential propositions. Not meaning to criticize theorists who view contracts as promise, or as plan, etc., Professor Beyern regards such views as undoubtedly useful but incomplete when considered from the perspective of Professor Eisenberg's appreciation of contracts as contracts.  In addition, Professor Bayern highlighted Professor Eisenberg's contributions to and critiques of the field of law and economics.  Professor Bayern notes that Professor Eisenberg's work is often not categorized under the rubric as law and economics because although Eisenberg utilizes economic theory, he reaches conclusions that are not usually associated with law and economics.  But Professor Bayern challenges more traditional L&E types to attempt to refute any of Professor Eisenberg's arguments, which he (Professor Bayern) summarized as showing that, while economic models might make sense in the abstract world of rational actors, they do not help us understand the real world of contractual relations.

Omri Ben Shahar again stressed Mel Eisenberg's contributions in the realm of law and economics, recognizing Eisenberg as law and economics pioneer.  Eisenberg's approach to L&E enables economic analysis to improve in resolution.  Because Eisenberg focuses not on generating new theoretical models but on applying them in concrete situations, he can test and refine economic models and help them achieve greater clarity and specificity.   Professor Ben Shahar elaborated on Professor Eisenberg's substantive contributions in refining our understandings of disgorgement, the bargain theory of consideration and procedural unconscionability doctrine.

Mark Gergen celebrated Mel Eisenberg as the best exemplar of his generation of the great pragmatic tradition in contracts scholarship.  Professor Gergen illustrated this by comparing and contrasting Professor Eisenberg's work with that of last year's honoree, Stewart Macauley.  After noting the extent of overlap between the two scholars, Professor Gergen identified the key distinction that Mel Eisenberg more clearly sees the limitations of contracts doctrine.  Contracts may be about relationships, but it cannot repair such relationships when they are broken.  There may be damages, but often the parties just must go their separate ways.  Professor Gergen also contrasted Mel Eisenberg's work with that of another giant of Mel's generation of conracts scholars, Professor Robert Scott, especially in their estimation of the value of litigation and their faith in courts.

Ultimately, all agreed that Mel Eisenberg's scholarship defies easy categorization but is always characterized by lucidity, clarity and persuasiveness.  The pleasure of reading Mel Eisenberg's scholarship is that you always learn by reading him and emerge either persuaded or knowing, because of the clarity of Eisenberg's writing and his transparency in identifying his assumptions, exactly why you disagree.

As expected, Professor Eisenberg was gracious in his remarks, noting that he is currently at work on a book on contracts, and indicating that there is still some "open texture" in his work that he can work on with the help of the comments he received on his work.  


March 2, 2012 in Conferences, Contract Profs, Recent Scholarship | Permalink | Comments (1) | TrackBack (0)

Live from the Springs Contracts Conference I: Don't Mess with Val Ricks

V-ricksWe are under way in San Diego.  Eniola has done an amazing job putting it all together; she has welcomed us, and we are now in the first panel.

I hope to be able to say something more about the excellent papers by Moshe Gelbard and Charles Calleros.  But Val Ricks clearly stole the show with his impassioned defense of the doctrine of consideration.  Learned contracts scholars from around the globe threw him questions, and his answer never changed.

Doctrine of assent?

Covered by the doctrine of consideration.

Affirmative defenses?

Best explained by the doctrine of consideration.

Will Romeny win the nomination?

Only if he properly appreciates the doctrine of consideration!

What is the meaning of life?

Since at least the 16th century, life has been nothing more than an elaboration of the doctrine of consideration.


March 2, 2012 in Conferences, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Greetings from New Zealand!

I am spending a semester in beautiful Wellington, New Zealand where I will be teaching a course in advanced contracts at Victoria University. During my time here, I plan to occasionally post observations about the contracting culture and make sweeping (i.e. lacking in empirical evidence, see earlier post about Zev Eigen's article) generalizations about what that might mean.

One thing that I have noticed is that I haven't had to sign any form contracts since I arrived. I am thinking hard about this, but I honestly can't think of any except maybe at hotels and even then, those forms don't seem to contain the frightening litany of all the things the hotel won't be responsible for that you too often find in US standard forms (you know, "You agree not to indemnify and hold us harmless from any loss of limb, maiming, mayhem, other horrific catastrophic incident arising from your participation in this activity even if it was entirely our fault....") True, I haven't gone bungee jumping or white water rafting (yet), but I did dive into the freezing cold open ocean to swim with dolphins with my two children. (The fun ended when a family of orca appeared). Guess what? The dolphin company didn't ask me to sign a form. Could this have something to do with the fact that New Zealand is a much less litigious country than the U.S.? Is it less litigious because it's smaller, everyone feels like they are "in it together"? Or is it something else? Fewer lawyers? (I don't know if there are fewer lawyers per capita actually but I warned you that my posts would be highly unscientific).

While there seem to be fewer form contracts thrust in people's faces, there are a great many more notices. I rather like these notices as they are eye-catching, amusing and sometimes mysterious. I particularly like the road signs that don't pussy foot around: "TEXT AND DRIVE, SOMEONE DIES," "SLOW DOWN, STAY IN MANTROL". Notices, of course, are not contracts but they can serve some of the same functions. I've blogged about this in the past, and will blog more about this in the future as it is something I have been working on for a while. For now, I'll leave you with this image.

Wellington NZ (640x480) (640x480)

[Nancy Kim]

March 2, 2012 in Travel | Permalink | Comments (0) | TrackBack (0)

Thursday, March 1, 2012

But where's the consideration, Chris?

I'm apparently a bit behind in my celebrity contracts gossip otherwise I would blogged about this earlier - apparently Chris Brown (yes, he of the restraining order fame) attended Rihanna's 24th birthday party. But before he stepped foot inside the party house (aka the Hearst Mansion), he tried to make the guests who were already inside sign a confidentiality agreement, presumably to keep mum about his attendance. Not everyone signed, and Brown's rep claims that only workers and those who snapped a picture of Brown were asked to sign the NDA. The burning question for contracts profs everywhere is, Where's the consideration? Presumably the guests, the workers and the picture-snappers were already at the party and had already snapped his picture. Presumably none of them knew that he would appear and probably couldn't care less that he was there - it wasn't like they were trying to induce him to attend the party and it's not like their invitation was conditional upon their signing the agreement. As for the picture snappers - hey, he never gave them permission and unless there's a privacy claim (which I doubt), what's to stop them? I doubt this type of agreement would be enforceable. Who says consideration is a non-issue in contract law?

But there's an even bigger, more burning question that contracts profs want to know WHY THE HELL WAS CHRIS BROWN AT RIHANNA'S PARTY IN THE FIRST PLACE GIVEN THEIR HISTORY OF VIOLENT ABUSE??!!

[Nancy Kim]

March 1, 2012 in Celebrity Contracts, Commentary | Permalink | Comments (1) | TrackBack (0)

Tuesday, February 28, 2012

Weekly Top Tens from the Social Science Research Network

Stephen_Colbert_at_RallyStephen Colbert (pictured) often makes a big deal about the "Colbert Bump" that candidates get from appearing on his show, but that's nothing compared to the Berggren Bump that contracts profs get when ContractsProf Blog Intern 2.0 Justin Berggren posts about their work.  Take as a case in point Zev Eigen, whose work Empirical Studies of Contract was enjoying the respectful obscurity that all too often greets works of serious scholarship.   But now that Justin has given his endorsement of Professor Eigen's project, he's sprung to the top of the Law & Society: Contracts Top Ten!

Folks on the Contracts & Commercial Law Top Ten, you'd better watch out if you are north of #5.  And the rest of you, perhaps it's time you had your people contact Justin's people.  But don't come on too strong.  Start by taking him to lunch.

SSRNRECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal

December 30, 2011 to February 28, 2012

Rank Downloads Paper Title
1 422 The Scope and Implications of Stern v. Marshall, 131 S. Ct. (2011)
Michael St. Patrick Baxter, Elizabeth Gibson, Randal C. Picker, R. Patrick Vance,
Covington & Burling LLP, University of North Carolina (UNC) at Chapel Hill - School of Law, University of Chicago - Law School, Jones Walker - New Orleans Office
2 359 Choice of Law in the American Courts in 2011: Twenty-Fifth Annual Survey
Symeon C. Symeonides,
Willamette University - College of Law
3 160 Bankruptcy, Backwards: The Problem of Quasi-Sovereign Debt
Anna Gelpern,
American University Washington College of Law
4 134 The Proposal for a Regulation on a Common European Sales Law: Shortcomings of the Most Recent Textual Layer of European Contract Law
Horst Eidenmueller, Nils Jansen, Eva-Maria Kieninger, Gerhard Wagner, Reinhard Zimmermann,
University of Munich, University of Muenster, University of Wuerzburg, University of Bonn, Max Planck Institute for Comparative and International Private Law,
5 133 Empirical Studies of Contract
Zev J. Eigen,
Northwestern University School of Law
6 111 Contract Theory: Is There a Path Through the Theoretical Jungle?
Martin Hogg,
University of Edinburgh - School of Law
7 104 Boomer-Ang Eldercare: Deductible Claim?
Wendy C. Gerzog,
University of Baltimore - School of Law,
Date posted to database: February 6, 2012
Last Revised: February 6, 2012
8 96 Judging Lite: How Arbitrators Use and Create Precedent
Mark C. Weidemaier,
University of North Carolina (UNC) at Chapel Hill - School of Law,
9 87 The WTO’s Revised Government Procurement Agreement - An Important Milestone Toward Greater Market Access and Transparency in Global Public Procurement Markets
Robert D. Anderson, Steven L. Schooner, Collin D. Swan,
World Trade Organization, George Washington University - Law School, George Washington University - Law School
10 78 A Radical View of Legal Pluralism
Jan M. Smits,
Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI),

RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)

December 30, 2011 to February 28, 2012

Rank Downloads Paper Title
1 132 Empirical Studies of Contract
Zev J. Eigen,
Northwestern University School of Law
2 111 Contract Theory: Is There a Path Through the Theoretical Jungle?
Martin Hogg,
University of Edinburgh - School of Law
3 96 Judging Lite: How Arbitrators Use and Create Precedent
Mark C. Weidemaier,
University of North Carolina (UNC) at Chapel Hill - School of Law
4 77 Aggregation and Law
Ariel Porat, Eric A. Posner,
Tel Aviv University, University of Chicago - Law School,
Date posted to database: December 20, 2011
Last Revised: February 23, 2012
5 65 A Dual Approach to Contract Remedies
Michael D. Knobler,
Yale University - Law School,
Date posted to database: December 9, 2011
Last Revised: February 10, 2012
6 60 Beyond Ex Post Expediency - An Ex Ante View of Rescission and Restitution
Richard R. W. Brooks, Alexander Stremitzer,
Yale University - Law School, UCLA School of Law
7 54 Contract Law's Inefficiency
David M. Driesen,
Syracuse University - College of Law
8 53 Private Law and Moral Practices Part 1: Contract
Prince Saprai, George Letsas,
University College London - Faculty of Laws , University College London - Faculty of Laws
9 50 Non-State Law in the (Proposed) Hague Principles on Choice of Law in International Contracts
Genevieve Saumier, Lauro Gama,
McGill University - Faculty of Law, PUC-Rio
10 48 Contracts Meet Henry Ford
Barak D. Richman,
Duke University - School of Law


February 28, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Monday, February 27, 2012

Recent Scholarship: Zev Eigen on Empirical Studies of Contract

In Empirical Studies of Contract,  Zev Eigen, examines scholarly works published in the last seven years from the fields of, among others, law, management, sociology, psychology, and law and economics to report the trend of empirical analysis of the relationship of contracting party behavior to contract terms.  Eigen aims to determine whether scholars are asking the right questions and whether their methods are producing reliable empirical data. 

EigenProfessor Eigen briefly reviews the history and evolution of contracts doctrine and the trend noted as early as 1963 (by Stewart Macaulay) of a growing “discord between how contract is experience and how the law assumes contract is experienced.”  He next presents the methods used to classify the papers reviewed.  Professor Eigen classified 113 empirical papers according to the eight questions they sought to answer.  These eight questions are then sorted in relation to two propositional poles: 1) Contracts are a product of how drafters and signers interpret the law; and 2) Contracts are a product of factors exogenous to the law. 

The paper’s findings include the following: 1) researchers are increasingly persuaded that actors do not behave rationally or in ways that optimize efficiency; 2) moral constraints are important in understanding how individuals interpret contractual obligations; and 3) there has been a notable rise in scholarly exploration of form contracting.

Professor Eigen recommends that scholars improve the substance and methods of collecting empirical data.  He notes in the scholarship a disproportionate focus on certain questions and corresponding neglect of others.  He makes a number of suggestions for empirical projects that scholars might undertake.  As to method, Professor advocates more qualitative analysis as well as the observation that forty percent of the papers evaluated used experimental methodologies, a relatively high percentage. 

Based on his review of recent empirical works on contracts, Professor Eigen concludes that they review “the fungibility of contract law in . . . post-Durkheimian and post-Weberian contemporary life, wherein the role of law is reduced, and perhaps more importantly, compartmentalized.”  In our world, contract law parallels or shadows “extra-legal sources of power, authority, status and norms of exchange” rather than moderating and mediating social and economic exchange on its own.

[JT and Justin Berggren]

February 27, 2012 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

The Spring Contracts Conference Is Only Days Away!!

We will be honoring Professor Melvin Eisenberg for a lifetime of important contributions to contracts scholarship.  We will also be honoring our selection for the best contracts article to appear in 2011 (keep an eye on this blog for an announcement of the winner later this week).  

San Diego
For those seeking more information on the conference, at which CLE credits are available, here is the main page.

And for those already stocking up on suntan lotion for the trip to San Diego, here is the conference program.

We at the blog are proud to note one of our own contributors, Eniola Akindemowo, is the conference organizer.  Thanks and congratulations to Eniola for pulling this conference together!


February 27, 2012 in Conferences | Permalink | Comments (0) | TrackBack (0)