Учебный год 22-23 / Binding Promises - The Late 20th-Century Reformation of Contract Law
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BINDING PROMISES
T H E L AT E 2 0 T H-C E N T U R Y R E F O R M AT I O N
O F C O N T R AC T L AW
W. David Slawson
P R I N C E T O N U N I V E R S I T Y P R E S S P R I N C E T O N, N E W J E R S E Y
Copyright 1996 by Princeton University Press
Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540
In the United Kingdom: Princeton University Press, Chichester, West Sussex All Rights Reserved
Library of Congress Cataloging-in-Publication Data
Slawson, W. David 1931-
Binding promises : the late 20th-century reformation of contract law / W. David Slawson.
p. cm.
Includes bibliographical references and index. ISBN 0-691-04415-5 (alk. paper)
1. Contracts—United States. I. Title. KF801.S525 1996
346.73'02—dc20 [347.3062] 95-25448 CIP
This book has been composed in Times Roman
Princeton University Press books are printed on acid-free paper and meet the guidelines
for permanence and durability of the Committee on Production Guidelines for Book Longevity of the Council on Library Resources
Printed in the United States of America by Princeton Academic Press
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I dedicate this book to the
American common law judge.
Contents
Acknowledgments |
xi |
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Introduction |
3 |
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1. |
Classical Contract |
9 |
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Freedom of Contract and the Common Callings |
9 |
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Freedom of Contract at Its Zenith |
12 |
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The American Rule |
16 |
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Troubles with the Will Theory |
17 |
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The Objective Theory and the Failure to Require |
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Evidence of Real Consent |
20 |
2. |
Product Dependence and Unequal Bargaining Power |
22 |
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Product Dependence |
22 |
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Unequal Bargaining Power |
23 |
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The Effects of Classical Contract on the Law’s Ability |
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to Serve Public Purposes or to Prevent Abuses of |
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Bargaining Power |
35 |
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Different Conceptions of Bargaining Power |
37 |
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Arguments in Opposition to the Reforms |
39 |
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Conclusion |
43 |
3. |
Reasonable Expectations |
44 |
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Origins in Insurance |
44 |
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Justifications in Insurance |
45 |
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Acceptance in Insurance |
46 |
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Estoppel in Insurance |
47 |
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Employment Contracts |
48 |
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Origins and Justifications in General Contract Law |
49 |
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The Restatement (Second) of Contracts |
54 |
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Contracts of Adhesion |
56 |
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Unconscionability |
57 |
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Article 2 of the Uniform Commercial Code |
58 |
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The Covenant of Good Faith and Fair Dealing |
59 |
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Unknowing Uses |
60 |
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Acceptance |
62 |
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Public Lawmaking and Contracting Power |
65 |
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Concerns |
68 |
viii |
C O N T E N T S |
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Division of Labor between Jury and Judge |
70 |
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The Effect of Special Knowledge |
71 |
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The Role of Reasonable Expectations in the Reform |
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of Contract Law |
72 |
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The Future of Reasonable Expectations |
73 |
4. |
Relational Torts |
74 |
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Limitations of Freedom of Contract in Classical |
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Contract Law |
74 |
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Products Liability |
76 |
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The Birth of Relational Torts in California |
77 |
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Insurance |
80 |
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Wrongful Discharge from Employment |
80 |
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Sales of New Dwellings and Construction Services |
82 |
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Landlord and Tenant |
83 |
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Services Generally |
83 |
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Warranty Disclaimers under the Code |
85 |
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Brokers’ Commissions |
86 |
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Fiduciary Relationships |
87 |
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Discretionary Powers |
88 |
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The Covenant of Good Faith and Fair Dealing Not |
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Sounding in Tort |
89 |
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Consumer Protection Legislation |
90 |
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Analysis |
90 |
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Confusion with Contract |
94 |
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Criticisms |
98 |
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Acceptance |
103 |
5. |
Bad Faith Breach and Remedies Reform |
104 |
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The Birth of Bad Faith Breach in California |
104 |
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Bad Faith Breach Nationally |
112 |
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Justifications |
114 |
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Bad Faith beyond Contract |
116 |
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Recovery of Litigation Costs: The American Rule |
117 |
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Damages for Emotional Distress |
121 |
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Punitive Damages |
122 |
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The Roles of Bad Faith Breach and Remedies Reform |
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in the Reform of Contract Law |
131 |
6. |
Article 2 of the Uniform Commercial Code |
133 |
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The Reasons for Creating Article 2 |
133 |
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The Efforts to Make Amending Article 2 Unnecessary |
135 |
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The Process for Drafting and Enacting the Code |
139 |
C O N T E N T S |
ix |
Unconscionability |
140 |
Contract Formation in a “Battle of the Forms” |
145 |
Warranties and Remedies |
147 |
7. Choices and Prohibitions |
151 |
The Choice between Reasonable Expectations and |
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Relational Torts |
151 |
Reasonable Expectations under the Uniform Commercial |
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Code |
154 |
Relational Torts under the Uniform Commercial Code |
155 |
Bad Faith Breach under the Uniform Commercial Code |
158 |
The Choice between Legislation and Judicial Lawmaking |
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for Article 2 |
158 |
Constitutional Considerations |
167 |
Preventing Abuses |
170 |
Making Promises Binding Again |
173 |
Notes |
175 |
Index |
201 |
Acknowledgments
THE University of Southern California Law Center provides its faculty with a magnificent atmosphere for scholarship and helpful financial support, from which I have benefited immeasurably. I would especially like to thank Dean Scott H. Bice, whose interest in scholarship and whose labors on behalf of the Law Center have been instrumental in creating and maintaining this atmosphere and support.
I would like to thank the library staff of the Law Center for the excellent and goodhearted service it invariably provides. I would like to thank in particular the director, Albert O. Brecht, reference librarian Brian Raphael, and a former reference librarian here, now director of the Law Library at Vanderbilt University, Pauline M. Aranas. I would also like to thank my secretary, Madeline Paige, for her very competent work, her loyalty, and her enthusiasm.
I thank my former colleague at the Law Center, Robert M. Thompson, for the many interesting and helpful discussions we had on the subjects of remedies and bad faith breach. Bob taught remedies, I taught contracts, and we shared interests in litigation and insurance law. Bob also gave me many valuable insights from his years of experience as a litigator and trial and appellate court judge. I also wish to thank my former colleague and fellow contracts teacher, Richard Craswell, with whom I had many helpful discussions and who read and commented on early drafts of some chapters. Dick was especially helpful with economic theory and the Uniform Commercial Code. I presented early versions of parts of this book as papers at our faculty workshops. I would like to thank all my colleagues who attended for their trenchant, lively, and helpful comments. As is usual, however, I have to exonerate all of the above-mentioned people from blame for any mistakes I may have made. Of course, the responsibility for accuracy is entirely mine.
I have always found the critical analyses of my student assistants to be very helpful, as well as their research. I would like to thank the following for their long labors and insights: Daniel H. Baren, Richard Slane Davis, Thomas Ian Dupuis, Mark Andrew Finkelstein, Edward Alexander Hoffman, Timothy S. Lykowski, Patrick Casey McGannon, Elizabeth Marie Otter, and Daniel Scott Schecter. Ed Hoffman, Casey McGannon, and Dan Schecter also contributed through their work in a seminar on new developments in contract law that I taught, as did the fourth member of that seminar, who was not one of my student assistants, Patricia Byars Cisneros.
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A C K N O W L E D G M E N T S |
I will not try to name here the scholars and judges from whose published works I have benefited; I have named those from whose works I especially benefited in the text. I will make one exception, however, because textual references alone cannot explain my indebtedness. James J. White’s and Robert S. Summers’ treatise on the Uniform Commercial Code was an especially valuable resource because of the manner in which it treats legal issues. It presents all the reasonable arguments others have made before presenting the authors’, and if the authors disagree with each other, it explains their disagreements. The result is to provide the reader with a succinct, comprehensive, and fairly balanced view of every significant current issue on the subject of the treatise.
It has been a pleasure working with Princeton University Press. I am very grateful for the confidence, the help, and the patience it has shown me. I would especially like to thank its former editor, Malcolm DeBevoise, his assistant, Heidi Sheehan, and the promotions editor, Harriet Hitch.
Finally, I want to thank my wife, Kaaren Tofft Slawson, for her many comments, suggestions, and criticisms and for her love and emotional support through the years of our marriage and especially during the several years of illness that came between my beginning and completing this book. Kaaren reads widely and eclectically. She is not a lawyer. Both facts increased the value of her help.