Post by Samuel Beswick, Frank Knox Memorial Fellow, SJD candidate, Harvard Law School

Let’s put freedom back into “freedom of contract.” That’s the ambition Professors Hanoch Dagan and Michael Heller set out in their forthcoming book, The Choice Theory of Contracts, excerpts of which the authors presented at this week’s HLS Private Law Workshop.

Dagan and Heller contend that contract law’s ultimate value is, and ought to be, enhancing individual autonomy. They say that only a “choice theory” of contracts facilitates such autonomy: only when contract law offers a sufficient array of contract “types” will individuals be free meaningfully to author their own destinies. The explication of this liberal theory entails engaging with, and unseating dogma on, two fundamental questions: what is contract? And what is freedom? Read More…

Posted by: yarbel | 20th Sep, 2016

In Trust We Trust — Yonathan Arbel

Post by Yonathan Arbel

The recent leak of the Panama Papers exposed the public to the magnitude of assets held in offshore accounts. These accounts are often associated with motives such as tax evasion and asset shielding from creditors, although they may be more legitimate motives to locating one’s assets offshore, such as privacy or preference for the rules of a specific legal system.  The estimates of how much is stowed offshore vary significantly, from one to five trillion dollars, an interval so large that it mostly reveals our ignorance. We simply know too little about these accounts, their motives, structures, and value—which, from the viewpoint of those who designed these trusts, is a feature, not a bug.  The most comprehensive work to date on the topic is that of Professors Sitkoff and Schanzenbach, who studied U.S. institutional trustees. However, these trustees are not likely representative of offshore trusts, and so, our understanding of offshore trusts is still foggy.

In a new intriguing paper, forthcoming in the Hastings Law Journal, Adam Hofri-Winogradow is providing us with a glimpse into the clandestine world of onshore and offshore trusts.  Hofri used a combined qualitative methodology of surveying and interviewing providers of trust services. Overall, he surveyed 409 providers of trust services and interviewed 25. Of his many findings, I will highlight just a few.

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Post by Patrick Goold

How important is consent in contract law? Less important than many suppose, says Professor Nathan Oman. At the first HLS Private Law Workshop of the new academic year, Oman presented his current work in progress, Reconsidering Contractual Consent: Why We Shouldn’t Worry Too Much About Boilerplate and Other Puzzles. In this thought-provoking article, Oman argues that robustly voluntary consent to obligations is far less important to the normative defense of contract law than is often assumed.

Oman’s analysis begins with a puzzle. Normative theories of contract tend to suggest that party consent is necessary to justify enforcing contractual obligations. For autonomy theorists, holding parties accountable for commitments to which they have not meaningfully consented interferes with their ability to self-govern. For economists, consent is an important indication that the transaction makes both parties better off. But here’s the paradox: contract law regularly does not require meaningful party consent before enforcing obligations. Many situations exist wherein courts uphold agreements where the parties are almost wholly ignorant of the terms – boilerplate terms providing a familiar example.

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Post by Aditi Bagchi

John Oliver recently purchased and forgave about $15 million in medical debt.  (See https://www.youtube.com/watch?v=hxUAntt1z2c)  His objective was to draw attention to the dubious practices of debt collectors, as well as their “right” to buy information about people who once owed money and to try to collect money from them, even if the debt is no longer legally binding because the statute of limitations has expired.  (What I will refer to as expired debt is also known as “zombie debt.”)  If a debtor makes or promises an additional payment or admits obligation, the statute of limitations may actually be extended and the dead debt may be revived.

There is a fair amount of legislation to protect consumers from debt collectors.  Debt collectors may not discuss debt with debtors’ friends or family and they may not threaten to sue on debt that has expired.  Individuals have the right to demand that debt collectors not call at work or that they cease direct communications with the debtor all together.  A lot of the worst practices by debt collectors are already illegal.

But not all of it.  Why not flat out ban the sale of expired debt?  Why not impose hefty fines on any attempted sale of such debt, including transmission of debtors’ information?  And why not heftier fines on any attempt to collect expired debt?

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Posted by: yarbel | 12th Sep, 2016

Apologies as Tort Reform — Yonathan Arbel

Post by Yonathan Arbel

When we wrong others, there is often an expectation—perhaps a moral duty—that we apologize. By apologizing, the wrongdoer asserts ownership of the wrong and acknowledges the wrongness of the act and the moral standing of the victim. It is also said that apologies can help restore the social order disrupted by the wrong.

In recent decades, many scholars have suggested that there should be a place in the law for apologies. And so the idea of ‘apology laws’ – laws that promote and protect the use of apologies – was born. These laws, now found in 36 states, are meant to encourage wrongdoers to apologize without fear of legal repercussions, and they typically apply in private law settings, such as torts and medical malpractice. A paradigmatic example is a doctor who makes a mistake during surgery but, in the absence of a ‘safe harbor’, would be reluctant to apologize for fear that admitting the mistake would foster litigation and count as an admission of liability.  An apology law that makes apologies inadmissible as evidence of fault at trial, as most do, promises to overcome this barrier.

In a new paper, Tort Reform Through the Backdoor: A Critique of Law & Apologies, (Forthcoming S. Cal. L. Rev., 2017), Yotam Kaplan and I are challenging the predominant scholarly disposition favoring laws that create safe harbors for apologies. We argue that in commercial settings—involving insurance companies, large firms, hospitals, etc.—using the law to encourage apologies may undermine tort liability and undercut deterrence. This effect is not necessarily negative—many people believe that the tort system is out of control—but it does mean apology laws are de-facto tort reform. That many states that normally oppose tort reform adopted apology laws was the result of clever marketing and concentrated lobbying efforts by tort reformers who co-opted the legal discourse on apologies to their own ends. Perhaps most notably, Barack Obama and Hillary Clinton—neither of whom is a card-carrying tort reformer—advocated actively for apology laws in an article in The New England Journal of Medicine.

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Posted by: yarbel | 25th Aug, 2016

Private Law and Asset Shielding — Yonathan Arbel

Post by Yonathan Arbel,  postdoctoral fellow in private law, Harvard Law School (job market candidate)

One of the central questions in the New Private Law is how ‘down-to-earth’ should legal analysis be? Regardless of one’s substantive view on this debate, there is one area in which we have been insufficiently realistic: private law enforcement. There is a real gap in our understanding of how legal norms are executed by sheriffs, bailiffs, and private ordering. Understanding the limits of doctrine and law could be informative for both economic and justice-based views of the law, as well as to views that look at the law from the internal point of view.

My scholarship focuses on questions concerning the enforcement of private legal norms. In Shielding of Assets and Lending Contracts (Forthcoming, Int’l Rev. L. Econ.) I consider the problem of asset shielding. Most judgments, if not voluntarily implemented, depend on enforcement through the seizure of the judgment-debtor’s assets. The problem is that ownership is too malleable and enforcement is too constrained, so there are many ways in which people can hide, shield, or protect their assets (transfer of money to an exotic offshore trust, bankruptcy planning, sham transfer to one’s relatives, hiding money under the mattress, etc.). Some of these techniques are more complicated than others, and some people will have moral reservations about deploying certain kinds of shielding techniques, or self-interested concerns about the effects of shielding on their credit scores, but overall, there is a real temptation here – especially since criminal enforcement against those who shield is quite rare. Given this temptation, it is puzzling why people do not shield assets more often. More generally, because avoiding judgments through asset shielding undermines many private legal obligations, it is important to have an account of when people would choose to meet their obligations and, if they decide to shield, the magnitude of assets that would be shielded.

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Posted by: pgoold | 12th Aug, 2016

Why Private Law? — Patrick Goold

Post by Patrick Goold

I have a question for the readers of this blog: Why make a distinction between public law and private law? Note, my question is not what is the distinction, but why is it a useful and helpful division to make? Of course, both questions are important and interrelated, but for now, I would like to focus on the latter.

This may be the central question in the New Private Law. Prior private law scholarship has typically fallen into two broad schools. On one hand, there are the Private Law Skeptics, who argue that all law has “public” ends, and ergo all law is public. On the other hand, we find Private Law Disciples, who point to the millennia-old private-public law distinction and assume it will simply continue. New Private Lawyers are different from both traditional camps. We do not take for granted the private-public distinction. Rather, as inclusive pragmatists, we demand to know whether this is a distinction worth retaining. What good does it do us? But, contrary to Private Law Skeptics, most of us, at least intuitively, believe that something is or can be accomplished by retaining the distinction. So the question is: what is that?

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Post by Samuel Beswick, Frank Knox Memorial Fellow, SJD candidate, Harvard Law School

* At the outset I should disclose that I had a hand in drafting the plaintiffs’ claim as a solicitor at Meredith Connell, New Zealand, in 2012/13.

Although the paradigm case of a tort suit against a product manufacturer involves a claim of personal injury caused by the manufacturer’s allegedly defective product, there is a wealth of litigation concerning products whose defects do not pose a risk of personal injury. For example, currently progressing through the District Court of Minnesota is a class-action product liability lawsuit, which consolidates claims arising in eight states against James Hardie Building Products Inc. in respect of its allegedly defective Hardiplank cladding product. The plaintiffs contend that Hardiplank fails prematurely by allowing moisture ingress, which causes damage to underlying building structures and adjoining property. Their claims sound in negligence, breach of express and implied warranties, and breach of consumer protection legislation. The plaintiffs might find some reassurance in last Friday’s decision of the Supreme Court of New Zealand: Carter Holt Harvey Limited v. Minister of Education [2016] NZSC 95. 

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Post by John Golden

From June 29 to July 1, the University of Amsterdam hosted a “summer school” on “Contract Law in a Liberal Society.”  The gathering featured extended presentations by Aditi Bagchi of the Fordham University School of Law, Hanoch Dagan of Tel Aviv University’s Buchmann Faculty of Law, and Martijn Hesselink of the University of Amsterdam, as well as additional short presentations of completed works or works in progress by more junior scholars.  This post describes aspects of the presentations by Bagchi, Dagan, and Hesselink as I perceived them.

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Post by Sadie Blanchard, Research Fellow Yale Law School

At the last session of this spring’s Seminar in Private Law, we considered dispute resolution in universities. The speakers were Jonathan Holloway, Dean of Yale College and Professor of African American Studies, History, and American Studies, and Mary Rowe, who teaches at MIT’s Sloan School of Management and was MIT’s Ombuds for over 40 years. In view of the tumult on campuses over the past year, it seemed apt to consider universities as part of our survey of dispute resolution beyond the state. What is distinctive about conflicts in this setting? What processes are best suited to resolve or manage them? Are protests evidence of a failure of dispute resolution, or are they a desirable or inevitable form of complaint?

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