Fundamentals of Contract Law (Photocopy Edition)

Author: (USA) Krauswell / (USA) Schwartz
Publisher:
Publish Date: 2005-03-01
Features: Most of the papers in this book employ economic methods for theoretical analysis, while some use ethical theories to explain viewpoints. The emphasis on these selections reflects a certain preference (which we feel justified in). We focus on these two analytical methods because we aim to achieve three goals with this book: First, we hope to clearly articulate our stance on the values of contract law through this collection of papers. In selecting the articles, we deliberately excluded those that specifically explain the current state of case law. However, this selection criterion also overlooks other important analytical methods that traditionally do not engage directly with normative legal theory. For example, historical analysis is rarely addressed in this book (Clair Dalton’s article is an exception). In fact, only economists and philosophers (or legal practitioners deeply influenced by these principles) have clearly demonstrated their stance on legal values. Second, we hope this book can help explain the motivations behind parties entering into contracts. Recently, economists have developed extensive theories to explain contractual behavior. Many of these theories are built on mathematical tools and rigorous econometric methods. However, we have excluded such articles as well. Nevertheless, the influence of technical economics on legal research is profound, so this collection includes some articles that touch on this field. Third, we hope this collection can address specific contract law issues covered in the first-year law school curriculum. We aspire for the series of papers in this book to accompany students throughout an entire semester or even academic year of studying contract law, rather than being classified as mere "theoretical overviews" at the beginning or end of the course. Therefore, the book rarely includes articles that discuss the entire contract law system, with most being thematic discussions, such as the limitation on compensation for indirect damages in Hadley v. Baxendale or the scope of liability in contract negotiation in Hoffman v. Redlich. In fact, we adopt a practical principle: understanding normative theory is achieved through examining how specific issues are resolved, rather than relying solely on abstract analysis of the theory. Of course, this criterion excludes articles that explain the overall theory of contract law without addressing specific issues. The organization of this collection reflects our goal of aligning with a first-year contract law course. The core of the collection consists of Chapters 2–5, structured according to Lon Fuller’s "reversed" or remedial approach. Thus, Chapter 2 explains legal remedies for breach of contract, assuming the contract is validly formed but one party fails to perform. Chapter 3, "Defining the Scope of Performance Obligations," still assumes a validly formed contract and discusses what obligations the contract imposes. This chapter explores topics such as implied excuses (impossibility, frustration of purpose, mistake) and implied warranties, as well as recent theories on long-term "relationship" contracts. Finally, Chapters 4 and 5 address the issue of contract formation. Chapter 4 discusses consideration and traditional offer-and-acceptance problems, while Chapter 5 covers topics such as unconscionability and other defenses in contract formation. Clearly, this classification is somewhat arbitrary. For example, the discussion of rescission and restitution (pp. 115–126) actually concerns whether one party has "substantially performed" the contract, which would more appropriately belong in Chapter 3, "Defining the Scope of Performance Obligations," rather than Chapter 2, "Remedies for Breach." The discussion of "non-disclosure" (pp. 160–174) in Chapter 3, combined with "unilateral or mutual mistake," would arguably be better placed in Chapter 5, "Defenses in Contract Formation." These examples merely illustrate that the law is an intricate web. From a practical standpoint, we have strived to make each section of the book "self-contained" (though references are cross-referenced between chapters), allowing for flexible reading order. This "self-contained" or "modular" principle is also reflected in Chapter. The articles in this chapter have potential connections to every part of the contract law curriculum, addressing three issues: the enforcement of promises, the selection of breach of contract rules, and the distributive effects of contract law. These topics are closely related to both contract formation and breach of contract remedies, making them suitable for study at any stage of the contract law course. Placing these topics at the beginning of the collection does not necessarily mean the course must start with them (we never teach in this order). The arrangement of the book’s sections is designed to accommodate the diverse needs of different teaching methodologies in contract law. If these topics were interspersed within discussions of specific legal principles, the flexibility of our organization would be compromised. This collection was originally intended for use in first-year contract law courses in U.S. law schools but is also aimed at a broader audience. The papers in this collection provide a comprehensive reflection of the theories on contractual behavior developed by legal scholars, economists, and philosophers with a normative mindset over the past 15 years. Contract theory has flourished during this period. Therefore, this book can be used in pre-law academic seminars (as we have already tried), as well as in undergraduate or graduate courses on law and economics or contract theory. The publication of this collection was made possible by the assistance of many people. We are particularly grateful to the editor of this series, Roberta Romano. Ian Ayres, David Carroll, Jason Johnston, and David Schlossman provided useful suggestions for the book’s development. Stacy Cole, Hanoch Dagan, and Terence Garland assisted with our research. Excerpts from articles are marked with ellipses, but omitted footnotes and subheadings are not marked. Richard Krauswell Alan Schwartz Los Angeles New Haven December 1993