coercion contracts – prof. merges march 8, 2011. where are we? 1.¢ 2.formation –...
TRANSCRIPT
Coercion
Contracts – Prof. Merges
March 8, 2011
Where are we?
1. ¢
2. Formation – Offer/acceptance
3. “Policing” (Defenses; invalidation) Capacity Equity, Duress Fraud Unconscionability
4. Remedies
Alaska PackersAss’n v. Domenico
Alaska PackersAss’n v. Domenico
• Facts
• Procedural History
Alaska Packers
• What is admiralty?
– What is a libelant?
Consideration issue
• What was the consideration for the K signed by the individual seamen?
Alaska Packers
Sailors
The modification
Alaska Packers
Sailors
K1: SF Contract
Work hard, do what the boss says
$50 plus piece rate
Alaska Packers
Sailors
K2: Alaska Contract
Work hard, do what the boss says
$100 plus piece rate
Alaska Packers
Sailors
K2: Alaska Contract
Work hard, do what the boss says
$100 plus piece rate
Is there anything new or extra coming from the sailors?
What were the circumstances of the renegotiation?
• Where did it take place?
• What were the bargaining positions of the parties?
Quick review: Transaction Cost Economics
Oliver Williamson, Markets and Hierarchies (1975); The Economic Institutions of Capitalism (1985)
Oliver Williamson, UC Berkeley
“Asset Specificity”
• When “sunk cost” investments lock one party into a contract, make it difficult to recoup investment if the other party does not perform
Paul Jaskow: “Markets for Power”
“Objective” price escalation clauses; long-term contracts
“Take or pay” clauses
“Take or pay” clauses
A Property Rights Example
Private parcels
Could the sailors ever win?
• Mid. P. 328
• See 2000 Utah L Rev 185 “A Fish Story”
Schwartzreich, p. 332
• Novation: rescission and then re-contracting
• Disfavored: see why?
§ 89. Modification Of Executory Contract
A promise modifying a duty under a contract not fully performed on either side is binding
(a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or
(b) to the extent provided by statute; or
(c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.
Watson and Son v. Carrig
Watson and Son v. Carrig
• Facts
• Procedural History
Was the hardrock foreseeable?
• Stretching rescission
• For good or ill?