Welcome back from Spring Break! For our next class, we’re going to go back in time, back to the summer of ’04. That’s when Mark Zuckerberg relocated his new company to Northern California and brought along Facebook’s first two interns, Stephen Dawson-Haggerty and Erik Schultink, for the ride. Legally speaking, what do James Bond, Rich Paul, and Facebook’s interns have in common? In a word, they’re all “agents,” i.e. persons who are authorized to work on behalf of another, the principal. (FYI: Rich Paul works for LeBron James as his sports agent, while the fictional James Bond works for MI6, the British Secret Intelligence Service.) Principal-agent relationships are very common in the business world, so we will spend an entire lecture on the law of agency in our next class. Why? Because whenever a principal-agent relationship exists, the following fundamental legal question often arises: When is the principal legally liable for the acts committed by its agents? Under the doctrine of respondeat superior, the answer to this question depends in large part on whether the agents are employees or independent contractors (see chart below). Accordingly, although we have been focusing mostly on the founding of Facebook this semester, we will take a time out from the movie The Social Network and focus on the fictional world of secret agent #007 James Bond instead. In particular, we will debate whether Mr Bond is an employee or an independent contractor.
Note: This is the third of a series of blog posts in which we review Nate Oman’s new book The Dignity of Commerce: Markets and the Moral Foundation of Contract Law.
As we mentioned in a previous post, Part I of Nate Oman’s book on “The Dignity of Commerce” considers the close relationship between markets and morality, while Part II surveys such specific areas of contract law as the doctrine of consideration, remedies for breach, and contracts of adhesion (i.e. boilerplate contracts). Here, we review Oman’s chapter on the doctrine of consideration, which we consider (pun intended) to be one of the best chapters in the book. Continue reading
We’re soooo late to the La La Land party, but my dear wife and I finally saw this whimsical musical and we absolutely loved it.
Note: This is the second of several blog posts in which we review The Dignity of Commerce: Markets and the Moral Foundation of Contract Law, by Nathan B. Oman.
In our previous post, we introduced Nate Oman’s book on “The Dignity of Commerce.” Professor Oman’s beautiful book is divided into two parts. Part I explores the relationship between markets and morality. Part II then delves into specific areas of contract law, such as the doctrine of consideration, remedies for breach, and boilerplate contracts. We shall review each chapter in Part II in future posts, so here we shall focus on the main idea in Part I: the moral nature of markets. Continue reading
Note: This is the first of six blog posts in which we review Nathan B. Oman’s book The Dignity of Commerce: Markets and the Moral Foundation of Contract Law, University of Chicago Press (2016).
Nate Oman begins his beautiful book on contract law with The Merchant of Venice. At the center of Shakespeare’s classic morality play is a quasi-Faustian pact. A lifeless law professor might describe the voluntary bargain in The Merchant of Venice in dry, analytical terms as follows: S agrees to loan a large sum of money (3000 ducats) to B on the condition that A agree to guarantee repayment the loan. But what makes the simple loan agreement in The Merchant of Venice so memorable is its penalty clause: if the loan is not repaid in full by a certain date, S may elect to obtain a pound of A’s flesh! A Socratic law professor might then pose the following question: why shouldn’t the law enforce this contract? After all, the parties voluntarily and knowingly consented to these terms, however monstrous. (Or, to paraphrase Prince Hamlet: to enforce or not to enforce, that is the question …)
For his part, Oman argues that the formal legal decision whether to enforce the odious agreement between Antonio and Shylock in The Merchant of Venice does not depend on any deep deontological theory regarding moral autonomy or the moral duties of the contracting parties. (Indeed, deep down, we don’t really want the Venetian courts to enforce this wicked promise.) Nor does it matter whether the parties gave meaningful or voluntary consent. (After all, the consensual nature of Shylock’s immortal contract does not detract from its depravity.) More surprisingly, Oman even rejects economic theories such as efficiency or welfare (the holy grail of economic analysis of law) as the legal reason for enforcing voluntary agreements. The legal decision in Shakespeare’s morality tale is not about maximizing the sum total of economic welfare of the Venetian city-state because either wealth is not a value (Ronald Dworkin) or it is but one important value among many others (the rest of us).
There is thus a dramatic tension between our moral intuitions and the mercantile logic of the Rialto in Shakespeare’s play. As Oman observes: on the one hand, the pound-of-flesh contract should not be enforced in the interest of individual justice, but at the same time, the greater good–the integrity of Venetian trade in the future–demands that all commercial bargains be enforced. Oman thus makes an important and insightful observation about the immortal contract in The Merchant of Venice: “In the play, the law enforces contracts in order to make commerce on the Rialto possible” (p. 7). In a word, contract law is about markets, not morality. Why markets and not morality? Oman’s book explores this question in greater detail, and we shall review the rest of his book in future blog posts.