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Globalization of Freedom of Contract

Martin Shapiro

in On Law, Politics, and Judicialization

The two papers in Ch. 5 examine how lawyers and law professors, operating in private arenas, successfully revived a pre-modern legal system, the Lex Mercatoria – the international body of trade law ... More

The two papers in Ch. 5 examine how lawyers and law professors, operating in private arenas, successfully revived a pre-modern legal system, the Lex Mercatoria – the international body of trade law derived from merchant practice. Shapiro’s paper, which was originally published in The State and Freedom of Contract (ed. Harry Scheiber, Stanford University Press) in 1998) first introduces the Lex Mercatoria (the law of merchants) in relation to freedom of contract and contract law, and then discusses globalizing tendencies in contract law, doctrine, and jurisprudence, before moving on to globalizing tendencies in contract practice, using the legal doctrine of conflict of laws as a baseline for measurement of globalization tendencies. Here, Lex Mercatoria (or general principles of law) often play a substantial part in the resolution of contract disputes, particularly where arbitration is involved. Shapiro goes on to deal with the unification of private law in the United States in the 1920s (the trans-state harmonization of contract law), which he uses as a benchmark to assess the massive post-Second World War movement to a global law of contract. Aspects addressed include the globalization of contracting practice and law, the American-style contract (in relation to franchising law and mineral (non-oil) development contracts), and developments in business organization and law institutions.Less

Choice‐of‐Law Principles

Erin A. O'Hara and Larry E. Ribstein

in The Law Market

This chapter focuses on the legal treatment of choice of law to illustrate one important function of choice-of-law clauses: predictability. Without these clauses, the parties must rely on a morass of ... More

This chapter focuses on the legal treatment of choice of law to illustrate one important function of choice-of-law clauses: predictability. Without these clauses, the parties must rely on a morass of legal rules that give them at best vague ideas about what rules apply to their relationships. This chapter describes the choice-of-law theories that scholars have developed and courts have applied over the last century, with an emphasis on the current choice-of-law rules for contracts. The current system is unsatisfying because it leaves parties with little ability to know at the time of entering into their contract what law will govern their relationships and transactions and facilitates the passage and maintenance of bad laws. Unfortunately, Congress, the state legislatures, and the Supreme Court have consistently failed to help contracting parties escape from the confusing common law choice-of-law rules. The chapter concludes by demonstrating that enforcement of choice-of-law clauses is the best hope for enabling contracting parties to obtain predictability and the best-fitting governing law.Less

Introduction

Michael Lobban

in The Oxford History of the Laws of England: Volume XII: 1820–1914 Private Law

This chapter on contract law in the 19th century begins with a discussion of the age of freedom of contract. It then discusses the impact of legal treatises, the influence of procedure, and the ... More

This chapter on contract law in the 19th century begins with a discussion of the age of freedom of contract. It then discusses the impact of legal treatises, the influence of procedure, and the social and economic context of contracting.Less

Contract Law

EYAL ZAMIR and BARAK MEDINA

in Law, Economics, and Morality

This chapter discusses contract law. Ordinarily, market transactions do not involve infringements of deontological constraints. For this reason (and since they usually involve money or easily ... More

This chapter discusses contract law. Ordinarily, market transactions do not involve infringements of deontological constraints. For this reason (and since they usually involve money or easily monetized goods), standard cost-benefit analysis is particularly apt for analyzing contract law. Nevertheless, it is argued that certain deontological constraints apply to contracting behavior and that combining deontological constraints with economic analysis of contract law, may be fruitful. The chapter briefly surveys the deontological constraints pertinent to contract law and critically examines the standard economic response to them. It then demonstrates how deontological constraints may be integrated with economic analysis of the contracting stage, focusing on the doctrines of mistake and misrepresentation. Last, it highlights the differences between economic and deontological analyses of contract performance and breach, and discusses the difficulties facing integration of deontological constraints with the economic analysis of contract remedies, given the current state of the pertinent theories.Less

Contractual Terms and their Performance

Michael Lobban

in The Oxford History of the Laws of England: Volume XII: 1820–1914 Private Law

This chapter shows that despite the pervasive language of freedom of contract in mid-19th-century England, consumers had little bargaining power over the terms of the contracts they entered into for ... More

This chapter shows that despite the pervasive language of freedom of contract in mid-19th-century England, consumers had little bargaining power over the terms of the contracts they entered into for goods or services. While there were some moves towards developing consumer protection, the common law developed its rules on the implied obligations of sellers and suppliers, largely in commercial contexts. The relative weakness of consumers is reflected in the fact that they were more likely to find themselves faced with claims that they were prevented by express terms in a standard form contract from recovering for contractual misperformance by a powerful adversary.Less

Islands of Transnational Governance

Alec Stone Sweet

in On Law, Politics, and Judicialization

The two papers in Ch. 5 examine how lawyers and law professors, operating in private arenas, successfully revived a pre-modern legal system, the Lex Mercatoria – the international body of trade law ... More

The two papers in Ch. 5 examine how lawyers and law professors, operating in private arenas, successfully revived a pre-modern legal system, the Lex Mercatoria – the international body of trade law derived from merchant practice. Stone Sweet’s paper traces the development of a transnational legal system, comprised of a national contract law and a network of arbitration houses that compete to supply third-party dispute resolution to the international commercial world. The paper is divided into two parts. The first discusses, in a theoretical manner, obstacles to the emergence of a stable network of traders engaged in relatively long-range, impersonal exchange, focusing on three generic problems of human community: cooperation and commitment, transaction costs, and institutional choice and governance. The second part examines three quite different regimes that have governed transnational commercial activity: from the mediaeval law merchant, to the Westphalian state system and its institutional failings (including discussion of conflict of laws practices), and – the principal focus of the chapter – the new Lex Mercatoria and its institutionalization.Less

Mistake

Michael Lobban

in The Oxford History of the Laws of England: Volume XII: 1820–1914 Private Law

This chapter discusses notions of mistake in contract formation. Topics covered include mistake in equity, mistake at common law, and mistake of identity.

Restitutionary Remedies

Michael Lobban

in The Oxford History of the Laws of England: Volume XII: 1820–1914 Private Law

This chapter on restitutionary remedies in the 19th century covers waiver of tort, mistaken payments, failure of consideration, money paid, equity, common law, and the redefinition of ... More

This chapter on restitutionary remedies in the 19th century covers waiver of tort, mistaken payments, failure of consideration, money paid, equity, common law, and the redefinition of ‘quasi-contract’.Less

“Public” and Hybrid Regulatory Solutions

Margaret Jane Radin

in Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law

This chapter considers “public” and hybrid regulatory solutions for boilerplate. It first examines the U.S. preference for private, market solutions, with particular emphasis on its tendency to ... More

This chapter considers “public” and hybrid regulatory solutions for boilerplate. It first examines the U.S. preference for private, market solutions, with particular emphasis on its tendency to provide for disclosure rather than substantive regulation of boilerplate, along with state legislation and judge-made law that goes beyond disclosure to create substantive regulations of contract law in particular areas. It then discusses issues associated with industry-specific regulation; piecemeal “fixes” to current law that may be enacted through legislation, imposed by agency rulemaking, or developed by judge-made law; and hybrid regimes in which private initiatives would be supported or protected by legislation or judge-made law. It also explores regulation in form of black lists, white lists, or grey lists and the problem of piecemeal adjudication. Finally, it looks at comprehensive regulation by drawing on the case of the European Union.Less

Consideration

Michael Lobban

in The Oxford History of the Laws of England: Volume XII: 1820–1914 Private Law

This chapter discusses the requirement for consideration in English contract law in the 19th century. The fact that the courts did not enforce gratuitous promises, or ‘bare pacts’ unless made by ... More

This chapter discusses the requirement for consideration in English contract law in the 19th century. The fact that the courts did not enforce gratuitous promises, or ‘bare pacts’ unless made by deed, was a cornerstone of English contract law. In order to be binding as a contract, any ‘informal’ promise, made without a deed, had to be given for some ‘consideration’. In theory, consideration was ‘the material cause of every contract or agreement, or that thing in expectation of which each party is induced to give his consent to what is stipulated reciprocally between both parties’. In practice, it was something ‘for the Benefit of the Defendant, or to the Trouble or Prejudice of the Plaintiff’. Any benefit had to move from the plaintiff or promisee, for a stranger to the consideration could not sue on it.Less

Contracts

Kent Greenawalt

in Legal Interpretation: Perspectives from Other Disciplines and Private Texts

The law of contracts is a major part of modern private law, and the law's treatment of contracts is the subject of extensive scholarly attention in the United States. This chapter explores questions ... More

The law of contracts is a major part of modern private law, and the law's treatment of contracts is the subject of extensive scholarly attention in the United States. This chapter explores questions about contract interpretation similar to those concerning wills. These include: How far should courts be guided by objective meaning, how far by the subjective intent of the parties? How general or contextual should objective meaning be taken to be? When should courts “write in” terms that parties have failed to supply—a power that is quite limited for wills—and how should they go about that task? If various contractual provisions point in different directions, should a court give each its apparent meaning, even at the cost of an unwieldy totality, or bend the language of some terms to make the whole contract work well? What evidences of meaning should courts allow?Less

Just Contracts and Catholic Social Teaching: A Perspective from Anglo-American Law

Vincent D. Rougeau

in The True Wealth of Nations: Catholic Social Thought and Economic Life

This chapter presents a brief legal history of contract law in the United States and identifies multiple ways in which it includes a bias toward market decisions and often excludes fundamental ... More

This chapter presents a brief legal history of contract law in the United States and identifies multiple ways in which it includes a bias toward market decisions and often excludes fundamental concerns of justice. The chapter is organized as follows. Section 1 describes the three major understandings of justice in the Catholic intellectual tradition. Section 2 relates those areas to a particular aspect of Anglo-American contract law and policy. Section 3 evaluates how the law addresses justice concerns and assesses its strengths and limitations in light of Catholic conceptions of justice. Finally, Section 4 offers some suggestions about the future direction of contract law and its potential for being a force for economic justice in society.Less

An Overview of Worlds A and B

Margaret Jane Radin

in Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law

This book examines standardized form contracts, also known as boilerplate. In the past, “contract” was interpreted as a bargained-for exchange transaction between two parties who each consent to the ... More

This book examines standardized form contracts, also known as boilerplate. In the past, “contract” was interpreted as a bargained-for exchange transaction between two parties who each consent to the exchange. Bargained-for exchange represents contract in a world of voluntary agreement—World A (for Agreement). Standardized form contracts, on the other hand, belong to World B (for Boilerplate). World B doesn't fit the theory, the rationale, of contract law. This book explores judicial oversight of boilerplate through the legal doctrines of unconscionability and voidness as against public policy, among others. It also considers the problem of boilerplate rights deletion schemes as well as attempts to bring such schemes under the aegis of traditional contract theories. This chapter provides an overview of worlds A and B as well as varieties of World B contracts, boilerplate as a method of contract formation, and two problems arising from boilerplate: normative degradation and democratic degradation.Less

Concurrent Liability

Gerhard Dannemann

in The German Law of Unjustified Enrichment and Restitution: A Comparative Introduction

This chapter presents an overview of issues of concurrent liability. Topics covered include concurrent liability within unjustified enrichment, unjustified enrichment and contract law, unjustified ... More

This chapter presents an overview of issues of concurrent liability. Topics covered include concurrent liability within unjustified enrichment, unjustified enrichment and contract law, unjustified enrichment and negotiorum gestioun, justified enrichment and tort law, and unjustified enrichment and property law.Less

Contractual Remedies

Michael Lobban

in The Oxford History of the Laws of England: Volume XII: 1820–1914 Private Law

This chapter discusses contractual remedies in the 19th century. Topics covered include penalties and liquidated damages, quantum meruit and expectation damages, remoteness of damage, and specific ... More

This chapter discusses contractual remedies in the 19th century. Topics covered include penalties and liquidated damages, quantum meruit and expectation damages, remoteness of damage, and specific performance.Less

Introduction

Robert D. Cooter and Ariel Porat

in Getting Incentives Right: Improving Torts, Contracts, and Restitution

This book examines how the law of torts, contracts, and restitution can be improved by showing how private law reduces the cost of accidents, lubricates bargains, and encourages unrequested benefits. ... More

This book examines how the law of torts, contracts, and restitution can be improved by showing how private law reduces the cost of accidents, lubricates bargains, and encourages unrequested benefits. It considers the two pervasive rules of tort law that provide incentives for actors to reduce accident costs: strict liability and negligence. It also explains how contract law achieves effiency through the remedy of damages and how restitution law allows benefactors to recover gains that their beneficiaries wrongfully obtained from them. The book makes three central claims: misalignments in tort law should be removed; in contract law, promisee's incentives should be improved; and the law should recognize some right of compensation for those who produce unrequested benefits. Each claim is based on the desire to reform private law and to make it more effective in promoting social welfare.Less

Evaluating Current Judicial Oversight

Margaret Jane Radin

in Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law

This chapter examines current judicial oversight of contract law, and more specifically the extent to which boilerplate is regulated as contract. It first considers the three categories of the ... More

This chapter examines current judicial oversight of contract law, and more specifically the extent to which boilerplate is regulated as contract. It first considers the three categories of the normal, traditional oversight doctrines for contracts: coercion or duress; fraud, deception, or misrepresentation; and invalid contract formation. It then explores the doctrine of unconscionability and a related wild-card doctrine that makes it possible for courts to declare a contract void because it undermines public policy. It also discusses the jurisprudential problem with “wild-card” doctrines before concluding with an analysis of how traditional oversight doctrines are faring with regard to boilerplate rights deletion schemes, with particular emphasis on arbitration clauses, choice of forum clauses, exculpatory clauses, and limitation of remedy.Less