A Consent Theory of Contract

We look to legal theory to tell us when the use of legal force against an individual is morally justified. We look to contract theory, in particular, to tell us which interpersonal commitments the law ought to enforce. Contract theory at present, however, does not provide a satisfactory answer to this question. The five best known theories or principles of contractual obligation-the will theory, the reliance theory, the fairness theory, the efficiency theory and the bargain theory each have very basic shortcomings. A consent theory of contract avoids these difficulties while explaining coherent obligation in a plausible and coherent manner

Credit Where It’s Due: The Law and Norms of Attribution

The reputation we develop by receiving credit for the work we do proves to the world the nature of our human capital. If professional reputation were property, it would be the most valuable property that most people own because much human capital is difficult to measure. Although attribution is ubiquitous and important, it is largely unregulated by law. In the absence of law, economic sectors that value attribution have devised non-property regimes founded on social norms to acknowledge and reward employee effort and to attribute responsibility for the success or failure of products and projects. Extant contract-based and norms-based attribution regimes fail optimally to protect attribution interests. This article proposes a new approach to employment contracts designed to shore up the desirable characteristics of existing norms-based attribution systems while allowing legal intervention in cases of market failure. The right to public attribution would be waivable upon proof of a procedurally fair negotiation. The right to attribution necessary to build human capital, however, would be inalienable. Unlike an intellectual property right, attribution rights would not be enforced by restricting access to the misattributed work itself; the only remedy would be for the lost value of human capital. The variation in attribution norms that currently exists in different workplace cultures can and should be preserved through the proposed contract approach. The proposal strikes an appropriate balance between expansive and narrow legal protections for workplace knowledge and, in that respect, addresses one of the most vexing current debates at the intersection of intellectual property and employment law

Contracts Ex Machina

Smart contracts are self-executing digital transactions using decentralized cryptographic mechanisms for enforcement. They were theorized more than twenty years ago, but the recent development of Bitcoin and blockchain technologies has rekindled excitement about their potential among technologists and industry. Startup companies and major enterprises alike are now developing smart contract solutions for an array of markets, purporting to offer a digital bypass around traditional contract law. For legal scholars, smart contracts pose a significant question: Do smart contracts offer a superior solution to the problems that contract law addresses? In this article, we aim to understand both the potential and the limitations of smart contracts. We conclude that smart contracts offer novel possibilities, may significantly alter the commercial world, and will demand new legal responses. But smart contracts will not displace contract law. Understanding why not brings into focus the essential role of contract law as a remedial institution. In this way, smart contracts actually illuminate the role of contract law more than they obviate it

A new version of the reliance theory

In contract law, a crude distinction can be drawn between the classical theory and the reliance theory. The main features of the classical theory seem to be freedom of contract, the bargain theory of consideration, and the expectation measure of damages, and those of the reliance theory limited freedom of contract, an expansion of contract to include cases of detrimental reliance not arising out of an agreement or bargain, and the reliance measure of damages. On one view, the reliance theory is tantamount to the reduction of contract into tort and restitution and the rejection of a distinct law of contract. However it has never been made clear exactly how to characterise the classical theory and the reliance theory

Drafting Chapter 2 of the ALI\u27s Employment Law Restatement in the Shadow of Contract Law: An Assessment of the Challenges and Results

The American Law Institute (ALI) has just completed the Restatement of the Law Third, Employment Law. Chapter 2 is entitled Employment Contracts: Termination. As the name suggests, the Chapter focuses on the law\u27s difficult challenge of applying contract law to distinguish lawful terminations of employees from wrongful ones. The question is especially problematic because, on the one hand, employment law\u27s long-existing default rule allows employers to terminate employees at will and without cause. Advocates of the at-will doctrine present several policies to support it, including freedom of contract and efficiency. On the other hand, employers seek to attract talented employees and, once employed, establish an orderly, cooperative and loyal work force. Toward that end, numerous judicial decisions and scholarly research reveal unsurprisingly that employers design their communications to attract employees and create loyal workers. It is no wonder, then, that contract law\u27s approach to indefinite-duration employment issues includes decisions policing employer overreaching and thereby creating rules that limit employment at will. Given this clash of policies, the primary challenge for the reporters of the new employment restatement in Chapter 2 was to search the cases and identify the circumstances in which terminated employees should be entitled to legal protection, no easy task given the multitudinous and amorphous case law on employment discharge, the dynamic labor market atmosphere and, perhaps most important, contract law\u27s lack of a unifying theory of its own. Related to this challenge, the ALI\u27s conception of a restatement seemingly allows reporters to venture beyond describing the law (but cautiously). The reporters therefore had to decide what constitutes the appropriate mix of description and prescription in their efforts to assess the contradiction in employment policies. This essay focuses on Chapter 2\u27s treatment of employment at will, on the one hand, and promissory estoppel and good faith, on the other, as examples of how Chapter 2 meets these challenges. The essay concludes that Chapter 2 establishes a useful framework and helpfully identifies the issues for the courts. Because promissory estoppel and good faith (and other contract doctrines) are themselves indistinct, however, Chapter 2 often cannot resolve the principle and counter-principle dilemma in particular cases and therefore cannot fully satisfy ALI\u27s goal of clarifying and modernizing the law through restatements. For the same reason, I doubt that a project in the form of a restatement will be particularly helpful in enhancing employee protection if the playing field is uneven

Braiding: the Interaction of Formal and Informal Contracting in Theory, Practice, and Doctrine

This Article studies the relationship between formal and informal con tract enforcement The theoretical literature treats the two strategies as separate phenomena. By contrast, a rich experimental literature considers whether the introduction of formal contracting and state enforcement "crowds out" the operation of informal contracting. Both literatures focus too narrowly on how formal contracts create incentives for parties to perform substantive actions, while assuming that informal enforcement depends on preexisting levels of trust. As a result, current scholarship misses the relationship between formal and informal contract mechanisms that characterizes contemporary contracting in practice. Parties respond to ?sing uncertainty by writing contracts that intertwine formal and informal mechanisms?what we call "braiding"?in a way that allows each to assess the disposition and capacity of the other to respond cooperatively and effectively to unforeseen circumstances. These parties agree on formal contracts for exchanging information about the progress and prospects of their joint activities, and it is this information sharing regime that "braids" the formal and informal elements of the contract and endogenizes trust. We argue that the low-powered enforcement associated with the formal governance structure in these braided contracts complements rather than crowds out the informal mechanisms that rely on increasing levels of trust. We examine the braiding phenomenon in a variety of contexts characterized by increasing uncertainty. In each instance, courts appear to have harnessed the braiding phenomenon by using low-powered sanctions to protect formal contractual "preliminaries." This technique allows potential collaborators to explore and develop their relations, but it does not impose mutually enforceable obligations to pursue a particular project. Despite the wisdom of temperate enforcement of braided contracts, however, courts that emphasize the contemporary duty to negotiate in good faith are often tempted to expand the legal sanction. We conclude by explaining how courts can best support the braiding strategies that are critical to the success of an integrated regime of formal and informal contracting