The Concept of National Law and the Rule of Recognition

It is a commonly held position that a rule cannot be a legal rule unless it is binding; or to put it differently, that one element that distinguishes legal rules from other kinds of rules is that legal rules are regarded as binding by duly constituted officials - typically, courts - who are called upon to apply them. Similarly, it is an often-held position that the law consists of the rules of a jurisdiction that are duly enacted or adopted by officials who have the power to make rules that are binding in the jurisdiction. The thesis of this article is that both positions are incorrect.I begin by developing a concept that I call national law. The concept of national law is that there is a body of law in the United States that is made by officials across jurisdictions, legal scholars, and scholarly institutions, which constitutes law despite the fact that it is not binding in, and is not necessarily made by, officials of a deciding jurisdiction. Examples of national law are the rules that a donative promise is enforceable if relied upon, that an acceptance is effective on dispatch, and that the remedy for breach of a bargain contract is expectation damages. National law is law because, as I show, under the practice of the legal profession, particularly the courts, the rules of national law (and not simply the reasons for those rules) are invoked as legal rules of decision.Next, I take the concept of a rule of recognition as a postulate, and develop the following four principles concerning the meaning, application, and scope of that concept, which are independent of, but exemplified by, the concept of national law: (1) The social group that must accept a secondary rule for the rule to constitute a rule of recognition is the legal profession, rather than simply judges and other officials. (2) Whether the legal profession accepts a secondary rule as a rule of recognition can be determined by examining the kinds of primary rules that are invoked by the profession as legal rules in resolving legal issues in general, and deciding cases in particular. (3) A rule can be a legal rule even though it is not binding. (4) In the United States, law is made not only by judges and other officials of the deciding jurisdiction, but also by the national judiciary, legal scholars, and professional institutions (in particular, the American Law Institute)

The Modernization of Corporate Law: An Essay for Bill Cary

The business reality to which corporate law relates is constantly evolving. The author argues that in many critical areas, corporate statutory law has failed to evolve alongside that business reality, with the result that much of the statutory law is obsolescent and in need of modernization. After discussing some of the institutional reasons for this statutory obsolescence, he illustrates the problem by discussing the areas of corporate combinations, shareholders\u27 informational rights, corporate distributions, and corporate structure, and describes how a few statutes have managed to deal with the underlying issues in these areas in a realistic manner. He concludes by discussing the prospects for modernizing corporate statutory la

The Disgorgement Interest in Contract Law

Restatement Second of Contracts provided that contract law serves to protect one or more of three interests: the expectation interest, the reliance interest, and the restitution interest. There is, however a fourth interest that contract law should and does protect: the disgorgement interest, which is the promisee\u27s interest in requiring the promisor to disgorge a gain that was made possible by the promisor\u27s breach, but did not consist of a benefit conferred on the promisor by the promisee. It is not clear why Restatement Second excluded the disgorgement interest. Perhaps the drafters believed that this position was compelled by positive law. That proposition, however, would have been doubtful even when Restatement Second was published, and it is clearly wrong today: some appellate cases, and a handful of trial court cases, have denied protection to the disgorgement interest, but a dozen or so American appellate cases, as well as cases decided by the highest courts of several other common law jurisdictions, have afforded such protection. Alternatively, the drafters of Restatement Second may have believed that the disgorgement interest should not be protected as a normative matter That proposition also cannot be supported. On the contrary, there are strong efficiency reasons, as well as moral reasons, for protecting the disgorgement interest, because in certain categories of cases, protection of that interest in contract law is necessary to provide efficient incentives to the promisor, to effectuate contracts, or to prevent unjust enrichment. Of course, the disgorgement interest should not be protected in all cases in which a promise is legally enforceable, any more than the reliance interest, the restitution interest, or for that matter the expectation interest are protected in all cases. Rather, as in the case of those interests, the disgorgement interest should be protected when appropriate, and in certain categories of cases protection of the disgorgement interest is always appropriate

The Modernization of Corporate Law: An Essay for Bill Cary

The business reality to which corporate law relates is constantly evolving. The author argues that in many critical areas, corporate statutory law has failed to evolve alongside that business reality, with the result that much of the statutory law is obsolescent and in need of modernization. After discussing some of the institutional reasons for this statutory obsolescence, he illustrates the problem by discussing the areas of corporate combinations, shareholders\u27 informational rights, corporate distributions, and corporate structure, and describes how a few statutes have managed to deal with the underlying issues in these areas in a realistic manner. He concludes by discussing the prospects for modernizing corporate statutory la

The Role of Fault in Contract Law: Unconscionability, Unexpected Circumstances, Interpretation, Mistake, and Nonperformance

It is often asserted that contract law is based on strict liability, not fault. This assertion is incorrect. Fault is a basic building block of contract law, and pervades the field. Some areas of contract law, such as unconscionability, are largely fault based. Other areas, such as interpretation, include sectors that are fault based in significant part. Still other areas, such as liability for nonperformance, superficially appear to rest on strict liability, but actually rest in significant part on the fault of breaking a promise without sufficient excuse. Contract law discriminates between two types of fault: the violation of strong moral norms, such as the prohibition of deception, and the violation of somewhat weaker moral norms, such as the requirement of due care. In some areas of contract law, one type of fault dominates. Where both types of fault are relevant, one party\u27s violation of a strong moral norm will normally override the other party\u27s violation of a weaker moral norm. Fault is pervasive in contract law because it should be. One part of the human condition is that we hold both policy and moral values; law cannot escape this condition. Moreover, if moral obligation and fault were removed from contract law, the contracting system would be much less efficient. The efficiency of the contracting system rests on a tripod whose legs are legal remedies, reputational effects, and the internalization of social norms-in particular, the moral norm of promise keeping. All three legs are necessary to ensure the reliability, and therefore the efficiency, of the contracting system