4,375 research outputs found
Clause Construction: A Glimpse into Judicial and Arbitral Decision-Making
For decades, the U.S. Supreme Court has insisted that forcing a plaintiff to arbitrate—rather than allowing her to litigate—does not affect the outcome of a dispute. Recently, the Court has invoked this “parity assumption” to expand arbitral jurisdiction. Reasoning that it does not matter whether an arbitrator or a judge resolves a particular issue, the Justices have allowed arbitrators to decide important questions about the arbitral proceeding itself.
The parity assumption has proven impossible to test. First, cases that are arbitrated differ from those that end up in the judicial system, complicating efforts to compare outcomes from each sphere. Second, arbitral awards are rarely published and thus remain shrouded in mystery.
However, one important topic defies these limitations. Jurisdictions are divided over whether courts or arbitrators should perform a task known as “clause construction”—determining whether an arbitration clause that does not mention class actions permits such procedures. As a result, both judges and arbitrators have been weighing in on the same question. Moreover, because class members are entitled to notice of rulings that impact their rights, the American Arbitration Association requires arbitral clause-construction awards to be available to the public. For once, then, it is possible to assess how the two kinds of decisionmakers resolve the same issue.
This Article capitalizes on this opportunity by analyzing a dataset of 150 recent judicial and arbitral clause-construction decisions. Its logit regression analysis concludes that arbitrators are nearly 64 times more likely than judges to allow class actions. This Article then uses its findings to propose a solution to the circuit split over clause construction and to inform the broader debate over the boundaries between judicial and arbitral power
Inheritance Forgery
Many venerable norms in inheritance law were designed to prevent forgery. Most prominently, since 1837, the Wills Act has required testators to express their last wishes in a signed and witnessed writing. Likewise, the court-supervised probate process helped ensure that a donative instrument was genuine and that assets passed to their rightful owners. But in the mid-twentieth century, concern about forgery waned. Based in part on the perception that counterfeit estate plans are rare, several states relaxed the Wills Act and authorized new formalities for notarized and even digital wills. In addition, lawmakers encouraged owners to bypass probate altogether by transmitting wealth through devices such as life insurance and transfer-on-death deeds.
This Article offers a fresh look at inheritance-related forgery. Cutting against the conventional wisdom, it discovers that counterfeit donative instruments are a serious problem. Using reported cases, empirical research, grand jury investigations, and media stories, it reveals that courts routinely adjudicate credible claims that wills, deeds, and life insurance beneficiary designations are illegitimate. The Article then argues that the persistence of inheritance-related forgeries casts doubt on the wisdom of some recent innovations, including statutes that permit notarized and electronic wills. The Article also challenges well-established inheritance law norms, including the litigation presumptions in will-forgery contests, the widespread practice of rubber-stamping deeds, and the delegation of responsibility for authenticating a nonprobate transfer to private companies. Finally, the Article outlines reforms to modernize succession while remaining sensitive to the risks of forgery
Flipping the Script: Contra Proferentem and Standard Form Contracts
Virtually all modern contracts are standard forms. Although courts have long interpreted ambiguities in such agreements strictly against the drafter, they have struggled to explain why they do so. Under sustained academic fire, states are beginning to abandon the strict against-the-drafter doctrine. Recent cases have even refused to certify class actions on the grounds that a corporate defendant\u27s nonnegotiated, unilaterally-dictated contract is ambiguous and thus cannot be construed without individualized extrinsic evidence. This Article claims that the rejection of the strict against-the-drafter rule stems from confusion about its normative foundation. Judges and commentators have offered three rationales for the doctrine: that it discourages ambiguity, corrects unfairness, and redistributes wealth. These theories share the goal of improving the quality and legibility of standard-form terms. But even if they succeed, the resulting gains are unclear. Most consumers ignore the fine print, and those who do not are boundedly rational and thus unable to value terms accurately. This Article contends that the doctrine is better understood as encouraging uniformity of meaning in mass-produced contracts. Firms cannot reap the benefits of standardization-institutional in formational, and agency savings-if homogeneous terms lack a single, overarching meaning. At the same time, firms have powerful incentives to use ambiguity strategically and retain confusing terms. The strict against-the-drafter rule counterbalances these enticements. In addition, it prevents the absurd consequences that would result if the meaning of identical terms could fluctuate with the particulars of each transaction
The Stored Communications Act and Digital Assets
This Article explores the impact of federal law on a state fiduciary\u27s management of digital assets. It focuses on the lessons from the Stored Communications Act ( SCA\u27), initially enacted in 1986 as one part of the Electronic Communications Privacy Act. Although Congress designed the SCA to respond to concerns that Internet privacy posed new dilemmas with respect to application of the Fourth Amendment\u27s privacy protections, the drafters did not explicitly consider how the SCA might affect property management and distribution. The resulting uncertainty affects anyone with an email account. While existing trusts and estates laws could legitimately be interpreted to encompass the new technologies, and while the laws applicable to these new technologies could be interpreted to account for wealth transfer, we are currently in a transition period. To fulfill their obligations, however, fiduciaries need certainty and uniformity. The article suggests reform to existing state and federal laws to ensure that nonprobate-focused federal laws ultimately effectuate the decedent\u27s intent. The lessons learned from examining the intersection of federal law focused on digital assets and of state fiduciary law extend more broadly to show the unintended consequences of other nonprobate-focused federal laws
Tomorrow\u27s Inheritance: The Frontiers of Estate Planning Formalism
The rules that govern the creation of an estate plan are in flux. Courts once demanded strict adherence to the Wills Act. Yet, this legacy of hyper-vigilance is waning, as the Uniform Probate Code, the Restatement (Third) of Property, and ten states have adopted the harmless error rule. Meanwhile, trusts, which need not comply with the Wills Act, have eclipsed wills as the dominant method of posthumous wealth transmission. This Article explores three budding topics that threaten to further complicate this area. First, there are anecdotal accounts of decedents trying to make electronic wills. In both strict compliance and harmless error jurisdictions, e-wills raise thorny issues about the meaning of “signed” and “writing” in the Wills Act, and when, if ever, courts should be able to overlook violations of the statute. Second, despite the received wisdom that trusts are less formal than wills, a rising number of settlors are failing to observe the arcane principles that govern the transfer of property into a trust. Third, most state legislatures have adopted or are currently considering statutes that give fiduciaries access to the contents of a decedent’s email, text messaging, and social media accounts. But the precise steps necessary to convey these cutting-edge forms of property after death is unclear. This Article tries to help courts and policymakers regulate these matters by offering a fresh perspective on the purpose of mechanical, bright-line principles in the realm of estate planning. As conventionally framed, this debate revolves around what the Article calls the “intent paradigm”: the idea that execution doctrines should be gauged primarily by whether they facilitate or frustrate the wishes of individual decedents. Conversely, this Article explores a different virtue of formalism: its ability to prevent decedents from imposing spillover costs. This Article demonstrates how some unyielding principles limit the burden on courts, survivors, trustees, the trustee’s creditors, purchasers of trust property, and other third parties. It then explains how recognizing this anti-externality function can pay dividends in wills law, trust law, and emerging niches such as the inheritability of digital assets
Unconscionability in the Law of Trusts
This Article claims that trust law should recognize the unconscionability defense. It begins by noting the symmetry between trust and contract defenses and the growing consensus among courts and scholars that trusts are contracts. It sketches the leading rationales for why courts enforce promises between private actors: the theories that free exchange allows parties to maximize welfare and exercise free will. It then argues that neither concept justifies upholding a contractual term if informational defects prevent one party from observing that it sharply deviates from her ex ante desires. It asserts that the unconscionability doctrine strikes down contractual terms that suffer from precisely that defect. The Article then explains how the unconscionability doctrine could serve the same purpose in trust law. It discusses why the policies underlying freedom of testation depart from those behind freedom of contract and provide less support for a laissez faire regime. It then challenges the unarticulated but intuitive notion that controls in the trust-creation process are sufficient to align an instrument\u27s text with a settlor\u27s intent. It reveals that corporate fiduciaries, trust mills, and a revitalized do-it-yourself movement have spawned “procedurally suspect” trusts: those created without attorney involvement and laden with complex terms. It then examines three common but controversial “substantively suspect” terms — exculpatory, no contest, and arbitration clauses — and shows how a trust-specific unconscionability doctrine would improve outcomes in cases. Reprinted by permission of the publisher
Extreme Sports and Assumption of Risk: A Blueprint
A GROWING NUMBER of personal injury litigants stand outside the contours of tort law. Plaintiffs who are hurt while engaging in high risk recreational activities do not fit within a doctrine that uses reasonableness as its central criterion. Reasonableness hinges on whether the cost of an untaken precaution outweighs that of a particular harm. In many risky sports, the only way to avoid getting hurt is to forego the activity altogether. For most people, this is not a burden. Even if it is, the lost opportunity value is dwarfed by the omnipresent specter of grave injury. For example, consider the sport of motocross, which involves racing and performing stunts on off-road motorcycles. Motocross is so dangerous that midway through the professional circuit\u27s most recent season, half of its contestants had suffered broken bones or concussions. Thus, the reasonably prudent person would probably never try the sport
Borrowing in the Shadow of Death: Another Look at Probate Lending
“Fringe” lending has long been controversial. Three decades ago, demand for subprime credit soared, and businesses started to offer high-interest rate cash advances, such as tax refund anticipation loans, payday loans, and pension loans. These products have sparked intense debate and are subject to a maze of rules.
However, in Probate Lending, published in the Yale Law Journal, a coauthor and I examined a form of fringe lending that has gone largely unnoticed: firms that pay lump sums in return for an heir or beneficiary’s interest in a pending decedent’s estate. Capitalizing on a California law that requires companies to file these contracts in probate court, we analyzed seventy-seven loans that stemmed from deaths in 2007.
In this companion Article, I report the results of a study of two additional twenty-two months of probate records. My research provides hard evidence about the multimillion dollar inheritance-buying industry, including the prevalence of loans, characteristics of borrowers, how often lenders are repaid, and annual interest rates. I then use this data to compare probate lending to other species of fringe lending and to outline how courts and lawmakers should regulate the practice
Mass Arbitration and Democratic Legitimacy
This Article reviews Margaret Jane Radin\u27s dazzling new book, Boilerplate. Radin makes two central claims about the widespread use of adhesion contracts. First, she argues that the heavy saturation of fine print causes normative degradation, the erosion of contract law\u27s bedrock requirement of consent. Second, and more provocatively, she contends that the lockstep use of standard forms permits private actors to override the public laws and thus causes democratic degradation. This Article uses developments in consumer and employment arbitration as a proving ground for Radin\u27s democratic degradation thesis. Spurred on by the United States Supreme Court\u27s interpretation of the Federal Arbitration Act (FAA), companies use their dominion over adhesive provisions to alter procedural rules on a massive scale. The issue of whether these terms are consensual is hotly contested. Yet no matter one\u27s view of fine print generally, the Court\u27s separability doctrine-a legal fiction that allows arbitrators to decide the very question of whether an arbitration clause is valid-drives a wedge between arbitration and contractual consent. Finally, after years of denying that arbitration affects substantive rights, in cases such as AT&T Mobility LLC v. Concepcion and American Express Co. v. Italian Colors Restaurant, the Court is shunting plaintiffs to an extrajudicial forum even when there is no dispute that doing so will deprive them of any remedy. Thus, through the expedient of printed or electronic words, corporations do precisely what Radin says: they delete rights that are granted through democratic processes. (p. 16)
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