Opportunism and Trust in the Negotiation of Commercial Contracts: Toward a New Cause of Action

In a complex economy, many business transactions take place sequentially-one party performs in part or in full before the other side executes its side of the bargain. Sequencing has many advantages, but it creates an unfortunate incentive. Having received its benefit from the bargain, the party who is to perform last may be tempted to renege on its obligations. Law and economics scholars often describe the conduct of a reneging party in these situations as opportunistic. The reneging party, perceiving an opportunity to increase its gain, yields to temptation and refuses to perform. The law of contract helps to diminish the danger of opportunism by providing assurance to those performing first that their contracting partners can be held accountable if they renege. Accountability reduces the risk of entering business transactions and facilitates an atmosphere of confidence conducive to exchange. Recently, scholars have explored the dangers of opportunism even after a contract is formed. If performance under the contract requires one side to invest in assets specially tailored to the transaction, the other side may be tempted to exploit this postcontractual situation by renegotiating the original terms to capture more of the bargaining surplus.\u27 The same postcontractual opportunistic incentives exist when one side becomes dependent on unique skills or knowledge acquired by the other side after performance has begun. This scholarly interest in postcontractual opportunism has not extended to the precontractual stage of business dealings. Law and economics scholars have assumed that parties in the precontractual stage are not likely to invest heavily in contract-specific assets and that the costs of finding suitable substitutes for performance are relatively low. More traditional doctrinal scholars likewise have failed to explore the concept of opportunism in their analyses of precontractual legal regulation. Both groups\u27 approaches reflect traditional doctrinal distinctions, which sharply differentiate between precontractual and postcontractual dealings. This Article challenges the assumptions of law and economics scholars regarding precontractual opportunism and seeks to fill a significant gap in the doctrinal analysis of commercial negotiation. First, the Article argues that the dangers of opportunism arise in the precontractual stages of business relations more frequently than law and economics literature has recognized. Opportunism often is more subtle in initial negotiations than in long-term contracts, and precontractual losses usually are more modest than those in the postcontractual cases. Nevertheless, a case survey reveals recurring fact patterns that point strongly toward the presence of opportunism in the initial negotiation of agreements. Second, as a normative matter, the Article posits that legal doctrines regulating the precontractual stage can be made more precise and effective by directly introducing the concept of opportunism into the law. Third, the Article argues that regulation of precontractual opportunism is appropriate because opportunistic behavior during bargaining undermines one of the fundamental psychological conditions for the successful coordination of complex commercial transactions--interpersonal trust. Social psychologists, sociologists, economists, philosophers, and legal scholars all have recognized that trust is central to the efficient coordination of human goals. Once trust is established, commercial parties are better able to take risks that are necessary to coordinate transactions. Without trust, parties must resort to costly mechanisms such as simultaneous exchanges, precontractual contracts, or deposits to reduce suspicion of one another\u27s motives to manageable levels. If these mechanisms are unavailable, parties may forego transactions altogether. Until now, scholarship regarding the relationship between law and trust has been lacking. Legal economists have discounted trust in their analyses of legal regulation. At the opposite extreme, more traditional scholars have treated trust as a self-evident necessity of commercial dealings without examining the social psychological mechanisms for creating and maintaining trust. This Article addresses the shortcomings of both law and economics theorists and traditional scholars. It does so by exploring theoretical and empirical research on trust from the fields of sociology and social psychology and linking that research to the judicialy imposed legal penalties for precontractual opportunism. Part II of this Article first discusses and defines commercial opportunism. Part II then describes the landscape of complex commercial negotiations. By exploring the wide variety of doctrines that courts have manipulated to compensate victims of precontractual opportunistic conduct, this section demonstrates that transaction-specific investments are common in complex negotiations. Part III explores why precontractual opportunism is socially and economically undesirable. Part III examines sociological and social psychological literature on the dynamics of interpersonal trust and asserts that precontractual transaction-specific investments are part of a vital trust-building process that undergirds many commercial relationships. Part IV looks at the role of law in supporting the construction of trusting commercial relationships. After analyzing nonlegal methods of deterring opportunistic conduct and reviewing the costs of legal intervention, Part IV concludes that legal rules proscribing opportunism in negotiation are justified as a means to reinforce and support the process of building trust. Part IV then extends this analysis by suggesting a new cause of action to improve deterrence of precontractual opportunistic conduct. Part V concludes with a summary and a suggestion for further research

THE NATIONAL AND REGIONAL IMPORTANCE OF WHOLESALE PRODUCE MARKETS

The results of a three-year study to establish baseline estimates of the importance of wholesale produce markets (WPM) are reported. It is estimated that a third of all produce marketed in the United States and Canada goes through WPM. These facilities tend to be most important in larger urban areas. Gate and unloading fees commonly charged at WPM may place them at a competitive disadvantage relative to off-market sites.Agribusiness,

John Wesley and A.B. Simpson on sanctification

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A Comparative Study of Students’ Motivation for Learning English As A Foreign Language and Their Preferences for Instructional Strategies in Grades 9-12 At Pan-Asia International School, Bangkok, Thailand

This study focused on Grades 9-12 at Pan-Asia International School in the academic year 2016. The main purposes of this study were: 1) to determine the level of students’ motivation for learning English as a foreign language (EFL); 2) to determine the students’ preferences among five instructional strategies for teaching EFL; 3) to compare the students’ motivation for learning social studies according to their preferences for instructional strategies. The study was designed as a quantitative and comparative study using two questionnaires: a motivation questionnaire and an instructional strategies preferences questionnaire. The respondents were 123 EFL students during the academic year 2015-2016 in PAIS. The data collected by the 2 questionnaires was analyzed first by descriptive statistics, frequency & percentage, mean, standard deviation and then by inferential statistics, i.e., a One-way Analysis of Variance (ANOVA). The results of this study indicated that student motivation for learning EFL in Grades 9-12 was high. Among the five motivation subscales, task value, control of learning beliefs, extrinsic goal orientation, self-efficacy for learning & performance were all high, but intrinsic goal orientation was moderate. For the five instructional strategies preferences, 26.8% of the students preferred experiential learning, 20.3% preferred indirect instruction, 18.7% preferred interactive instruction, 17.9% preferred independent study and 16.3% preferred direct instruction. The research indicated that there was no significant difference between the students’ motivation for learning EFL according to their preferences for instructional strategies in Grades 9-12 at PAIS

A Method of Altering Coronal Plane Prosthetic Foot Stiffness for Studying its Effect on Amputee Gait

In an effort to understand the effects of prosthetic foot stiffness on amputee gait and mobility, it is useful to produce prototype prosthetic feet that differ in stiffness. While many commercial prosthetic feet are made out of carbon fiber, the manufacturing process is ill-suited to design experimentation as it is expensive, time consuming and requires tooling modifications to produce design changes. In order to facilitate a study of the effects of coronal plane prosthetic foot stiffness on amputee maneuvering gait, we are manufacturing custom prosthetic feet using a form of additive manufacturing, selective laser sintering (SLS), that was developed at the University of Texas at Austin. We have previously used SLS technology to create functional transtibial prosthetic sockets, ankle-foot orthoses, and prosthetic foot prototypes. To manufacture prosthetic feet with different stiffnesses, we first measured the stiffness profile of a commercially available carbon fiber prosthetic foot on an Instron 3345 (Norwood, MA) in two configurations where the foot was loaded to 114 kg in foot flat at 0° eversion and toe-only at 5° eversion positions. A computer aided design model of an SLS prosthetic foot was developed and adjusted to match the stiffness profile of the carbon fiber foot. Finite element analysis (SolidWorks Corp.; Waltham, MA) was then used to verify that the desired stiffness level was achieved. This process was repeated to create three prosthetic feet with altered coronal plane stiffness profiles (25% greater, 50% greater, and 25% less) while sagittal stiffness was held constant. The prototype feet were fabricated using selective laser sintering in a Vanguard HiQ/HS SLS Machine (3D Systems Corp.; Rock Hill, SC). Finally, the feet were mechanically tested in the same configurations as the carbon fiber foot to confirm that they had the desired stiffness profiles. Prototype feet closely matched the sagittal stiffness of the chosen prosthetic foot while coronal plane stiffnesses were approximately the same, 30% greater and 30% less than the carbon fiber foot. Future work will be to use these feet to observe the influence of coronal plane stiffness on amputee gait