The American common law of contracts appears to direct courts to decide contract disputes by considering two opposing points of view: the ex ante perspective of the parties’ intent at the time of formation, and the ex post perspective of justice and fairness to the parties at the time of adjudication. Despite the black letter authority for both perspectives, the ex post perspective cannot withstand scrutiny. Contract doctrines taking the ex post perspective—such as the penalty, just compensation, and forfeiture doctrines—were created by equity in the early common law to police against abuses of the then prevalent penal bond. However, when the industrial revolution pushed courts to accommodate fully executory agreements, and parties abandoned the use of penal bonds, the exclusively ex ante focus of the new contract law that emerged rendered the ex post doctrines obsolete. While initially intended to do justice between the parties, if used today these doctrines perversely and unjustly deny parties contractual rights that were bargained for in a free and fair agreement. Yet judges continue to recognize the ex post doctrines, even as they struggle to reconcile them with respect for the parties’ intent. Although infrequently applied, the ex post doctrines are far from dead letter. The penumbra of uncertainty they cast over contract adjudication continues to undermine contracting parties’ personal sovereignty. The only case for continuing to recognize these equitable interventions, therefore, must turn on whether they serve a new valid purpose. We consider and reject the possible purposes of paternalism and anti-opportunism suggested by contemporary pluralist scholars. In our view, the criteria governing theories of legal interpretation support the interpretation of contract law as exclusively serving personal sovereignty rather than any pluralist interpretation. Under its best interpretation, contract law has no place for the ex post perspective.
From Volume 92, Number 4 (May 2019) Bluffing in business-to-business contract negotiations The relationship between moral […]
From Volume 92, Number 4 (May 2019) The Long Convergence: “Smart Contracts” and the “Customization” of Commercial […]
In this Article, we study rules that solve the conflict between the original owner and an innocent buyer of a stolen or embezzled good. These rules balance the protection of the original owner’s property and the buyer’s reliance on contractual exchange, thereby addressing a fundamental legal and economic trade-off. Our analysis is based on a unique, hand-collected dataset on the rules in force in 126 countries. Using this data, we document and explain two conflicting trends. There is a large amount of first-order divergence: both rules that apply to stolen goods and those that apply to embezzled goods vary widely across countries. Yet, there is also remarkable second-order convergence: virtually all legal systems protect the innocent buyer more strongly if the good was embezzled (rather than stolen) and if she purchased it in an open market, at an auction, or from a professional seller (as opposed to a private sale). We show that, while divergence is attributable to varying cultural values, convergence can be rationalized using a classic functional approach: these rules harmonize the owner’s incentives to protect property and the buyer’s incentives to inquire about title.
This Article seeks to clarify the relationship between contract law and promises of privacy and information security. It challenges three commonly held misconceptions in privacy literature regarding the relationship between contract and data protection—the propertization fatalism, the economic value fatalism, and the displacement fatalism—and argues in favor of embracing contract law as a way to enhance consumer privacy. Using analysis from Sorrell v. IMS Health Inc., marketing theory, and the work of Pierre Bourdieu, it argues that the value in information contracts is inherently relational: consumers provide “things of value”—rights of access to valuable informational constructs of identity and context—in exchange for access to certain services provided by the data aggregator. This Article presents a contract-based consumer protection approach to privacy and information security. Modeled on trade secret law and landlord-tenant law, it advocates for courts and legislatures to adopt a “reasonable data stewardship” approach that relies on a set of implied promises—nonwaivable contract warranties and remedies—to maintain contextual integrity of information and improve consumer privacy.
Consumer contracts are pervasive. Yet, the promises that make up these contracts are becoming increasingly empty, as sellers reserve the power to modify their contracts unilaterally. While some modifications benefit both sellers and consumers, others increase seller profits at the consumer’s expense. The law’s goal should be to facilitate good modifications, while preventing bad ones. Currently this goal is not met. The problem is twofold. First, consumers fail to appreciate the risk of unilateral modification and thus fail to demand a commitment by sellers to avoid inefficient modifications. Second, and more important, even if consumers demand a commitment to make only mutually beneficial modifications, existing commitment mechanisms—consumer assent to modifications, judicial review of modifications, and seller reputation—are inadequate. We propose a novel commitment mechanism: adding Change Approval Boards (“CABs”) as parties to consumer contracts. These CABs would selectively assent to, or withhold assent from, contractual changes that sellers wish to make, according to each CAB’s modification policy. We envision a market for CABs—multiple CABs, each striking a different balance between flexibility and security, offering a range of modification policies from which consumers can choose. The market-based CAB system promises to deter abusive term changes while retaining the flexibility to change consumer contracts when change is justified.
In January 2003, the Slammer worm hit the Internet. Five of the Internet’s thirteen root-name servers shut down. Three hundred thousand cable modems in Portugal went offline, all of South Korea’s cell phone and Internet services went down, and Continental Airlines cancelled flights from its Newark hub due to its inability to process tickets. It took only six months after the disclosure of a security flaw for a virus writer to write the 376 byte virus. When it unleashed, it took ten minutes to infect ninety percent of vulnerable systems.
The flaw was a buffer overflow in the Microsoft SQL Server 2000 software. Because the code is embedded in other Microsoft products, not all users were even aware that their systems were running a version of SQL Server. Unfortunately, this was a well-known, preventable security flaw. Moreover, Microsoft had released a patch for the flaw exploited by Slammer six months before the attack. Despite the widespread effects, no flood of lawsuits ensued.
In 2005, cross-border investment exceeded $1.3 trillion globally. Yet the international law governing the protection of foreign-owned property remains unsettled even in U.S. courts. Not only do American courts often refuse to reach the merits of expropriation claims, but they also frequently ignore relevant authority and rely upon the outdated and muddled Restatement (Third) for guidance. This article, which focuses on breach and forced renegotiation of contract claims, is the first of five planned articles that examine different theories of expropriation under international law. Together, these five articles try to construct a new and comprehensive analytical framework for adjudicating expropriation claims.