Monday, March 12, 2012

From the Bin: Arthur Leff Explains Contract Law

Every first-year law student learns that "“A contract is a promise the law will enforce.”  But then you have to beat it out of them; to persuade them that contract enforcement has little to do with the law and almost everything to do with whether the parties want the deal to work.

How to make the point?  You could watch reruns of "The Supranos."  Or you could return to the work of the late, great Arthur Allen Leff who died in 1981 at the absurdly young age of 46:

But considerably more important for avoiding the coercive collection game is the availability of a strikingly effective alternative procedure, one while not abjuring threat and coercion, avoids the costs and dangers of the official varieties. It depends not on force, but on the exchange of information. The “solution” to many of the divers disputes between businessmen takes the form of some variation on one of the following scenarios.
[I quote only the third:]
Seller: So Kevin? Morris. Where’s the money?
Buyer: Soon.
Seller: It’s been soon for a long time. Now it’s now.
Buyer: Look Morris, I could have gotten the stuff from Acme or Nadir cheaper. I gave you the trade.
Seller: Now you’re giving me the business. Now! Or there’ll be trouble.
Buyer: Tell you what I’ll do. I’ll pay you today, right now, what I could’ve got the merchandise for from Acme.
Seller: Tell you what I’ll do. I’ll break your head is what I’ll do. We got a goddam contract Kevin, and you pay the goddam contract price.
Buyer: Morris, you don’t like my deal, sue me with your contract.
Seller: I may and I may not. But one thing I know I’ll do; anyone asks me if you pay your bills the answer is no [The last clause is delivered in a high-pitched shriek of absolute certainty.]
Buyer: Morris? Half today, the rest the end of the month?
Seller: OK.
Buyer: My best to Ethel.
Seller: You too. Remember me at home.
[Back in Professor mode, Leff draws the moral:]
It would be folly to characterize these solutions as ‘coercive’ or ‘cooperative;” they are deals and like all deals partake of both elements. But one thing is perfectly clear: this form of solution depends upon the generation, transmission and communication of information and threats of information. And another thing is clear: until one begins to understand this method of collection, one understands nothing.

--Arthur Allen Leff, Ignorance, Injury and Spite: 
The Dynamics of Coercive Collection, 80 Yale LJ 1, 25-6 (1970)


Ebenezer Scrooge said...

You illustrated a certain similarity between physics and law faculties. For sound pedagogical reasons, both faculties must inculcate a pack of lies into their respective student bodies before they get to the truth. (For physics, the lies are Newtonian force mechanics; the truth is classical and quantum energy mechanics.)

The difference between law and physics is that the physics faculty knows the truth and wants to get there as soon as possible. Much of the law faculty can't tell the difference, especially the lawn economics brigade.

Buce said...

A student with a strong engineering background explained to me how they teach the second law of thermodynamics:

In undergrad you write it down and spit it out on the test.

When you begin grad school you say
"this can't possibly work."

By the end of grad school you say "okay, it just might work."