1 george mason school of law contracts i illegality: perfectionism f.h. buckley [email protected]
TRANSCRIPT
Next day’s assignment
Vices of Capacity
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Summing Up Lectures I to III:The advantages of contract law
Bargaining in the state of nature offers alternatives to legally enforceable contracts But are they sufficient to exploit
bargaining gains?
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The advantages of Contract Law over State of Nature Binding Strategies
Contract Law frees up assets, as opposed to hostages
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The advantages of Contract Law over State of Nature Binding Strategies
Democratic and open to outsiders, as opposed to union strategies Sir Henry Maine: “The movement of the
progressive societies has hitherto been a movement from Status to Contract.”
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Commerce and the New Man
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“Take the view of the Royal Exchange in London, a place more venerable than many courts of justice. There the Jew, the Mahometan, and the Christiantransact together, and the name of infidel is given to none but bankrupts.”
Voltaire, Letters on the English, Letter VI
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Le doux commerce
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“Commerce cures destructive prejudices;And it is almost a general rule that wherever there are gentle morals (mœures douces) there is commerce; and wherever there is commerce there are gentle morals.”
Montesquieu, The Spirit of the Laws II, book XX, Pléiade 585
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Joseph Schumpeter on the Creative Destruction of Capitalism
Capitalism inevitably and by virtue of the
very logic of its civilization creates,
educates and subsidizes a vested
interest in social unrest.
Capitalism, Socialism and Democracy (1942)
We’ve discussed why promises should be binding
Now: when should they not be binding?
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We’ve discussed why promises should be binding
Now: when should they not be binding? When we choose badly, of course.
But when is that?
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We’ve discussed why promises should be binding
What does it mean to choose badly?Immoral choices
“Perfectionism” and the Enforcement of Morals
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We’ve discussed why promises should be binding
What does it mean to choose badly?Immoral choicesSelf-defeating choices
“I want x but somehow I chose not-x.”
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We’ve discussed why promises should be binding
What does it mean to choose badly?Immoral choicesSelf-defeating choices
Vices of capacity
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We’ve discussed why promises should be binding
What does it mean to choose badly?Immoral choicesSelf-defeating choices
Vices of consent: fraud, duress
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We’ve discussed why promises should be binding
What does it mean to choose badly?Immoral choicesSelf-defeating choicesChoices that harm others
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When Are Promises Not Binding?
1. Immoral Choices and Perfectionism The Enforcement of Morals
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Perfectionism
The subject has immoral preferences which the perfectionist would reform
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Perfectionism is equal-opportunity
Right-wing perfectionism Sexual morality Marriage Drugs Patriotism (e.g. criminalizing flag-
burning)
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Perfectionism is equal-opportunity
Left-wing perfectionism Anti-racism Anti-homophobia Anti-nativism
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Perfectionism
Prior Questions: Should the state seek to correct the
morals of its citizens? Is it able to do so?
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What’s the opposite of Perfectionism?
Anti-perfectionism, or neutralism
Neutralism
Mill’s harm principle: “The only purpose for which power can
rightfully be exercised over any member of a civilized community, against his will, is to prevent harm to others.” Mill, On Liberty (1859)
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Neutralism
Mill’s harm principle: “The only purpose for which power can
rightfully be exercised over any member of a civilized community, against his will, is to prevent harm to others.” Mill, On Liberty (1859)
Self-regarding and other-regarding harms
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Readings
John Stuart Mill, On Liberty, Chapter 1 (Introductory), at www.serendipity.li/jsmill
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John Stuart Mill & Harriet Taylor
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The Film Version
With Hugh Grant as JSM
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The Film Version
And Emma Thompson As Harriet Taylor
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The Film Version“Hi Mom. Hi Dad. I’m home!”
And Jerry Mathers As The Beaver
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Perfectionism in the LawRestatement § 178(1)
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Perfectionism in the LawRestatement § 178(1)
Contracts rendered illegal by statute: Watts v. Malatesta
Contracts illegal at common law: Baby M
Why should gambling be stigmatized?
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Gambling
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The Hustler
Gambling
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The Hustler
Looks like a church …
Yeah. The Church of the Good Hustle.
Gambling
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De la Tour, The Cheat with the Ace of Diamonds
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Is gambling inconsistent with the norms of capitalism?
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Max Weber, The Protestant Ethic and the Spirit of Capitalism (1905)
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The cultural contradictions of capitalism?
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Daniel Bell, The Cultural Contradictions of Capitalism
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The cultural contradictions of capitalism?
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“Give me your energetic, your exuberant,Your hypomanic risk-takers yearning to breathe free,The restless competitors of your teeming shore.Send these, the novelty-seeking, dopamine-delerious to me.I lift my lamp beside the golden door.“
--Apologies to Emma Lazarus
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Gambling: How might it be stigmatized?
Criminal Law
Advertising and Vice Taxes
Non-enforcement of contracts
Gambling: Criminal Sanction VA § 18.2-325.
1. "Illegal gambling" means the making, placing or receipt, of any bet or wager in this Commonwealth of money or other thing of value, made in exchange for a chance to win a prize, stake or other consideration or thing of value, dependent upon the result of any game, contest or any other event the outcome of which is uncertain or a matter of chance…
NY § 991 in Watts
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Civil Law EffectsEx turpi causa oritur non actio
§ 11-14. Gaming contracts void. Except as otherwise provided in this section, all wagers, conveyances, assurances, and all contracts and securities whereof the whole or any part of the consideration is money or other valuable thing won, laid, or bet, at any game, horse race, sport or pastime, and all contracts to repay any money knowingly lent at the time and place of such game, race, sport or pastime, to any person for the purpose of so gaming, betting, or wagering, or to repay any money so lent to any person who shall, at such time and place, so pay, bet or wager, shall be utterly void.
NY § 992 in Watts
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Virginia: Civil Law EffectsIt’s OK when we do it
§ 11-14. Gaming contracts void. Except as otherwise provided in this section, all wagers, conveyances, assurances, and all contracts and securities whereof the whole or any part of the consideration is money or other valuable thing won, laid, or bet, at any game, horse race, sport or pastime, and all contracts to repay any money knowingly lent at the time and place of such game, race, sport or pastime, to any person for the purpose of so gaming, betting, or wagering, or to repay any money so lent to any person who shall, at such time and place, so pay, bet or wager, shall be utterly void.
Notwithstanding any other provision of law, a contract governing the distribution of state lottery proceeds shall be valid and enforceable as between the parties to the contract.
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Watts
What happened…
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Watts
Π Δ
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Lost and paid $37,500
Lost and paid $37,500 +++
Π sues to recover his losses.
Can Δ offset against this claim his far greater losses to Π?
Watts
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If a contract is illegal, what are the legal consequences?
Watts
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If a contract is illegal, what are the legal consequences? Contract is void as to future performance
Ex turpi causa oritur non actio No recovery for unpaid gambling debts
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Watts
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If a contract is illegal, what are the legal consequences? Contract is void as to future performance
Ex turpi causa oritur non actio
No recovery for moneys paid in past In pari delicto, portior est conditio defendentis
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Watts
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If a contract is illegal, what are the legal consequences? Contract is void as to future performance
Ex turpi causa oritur non actio
No recovery for moneys paid in past In pari delicto, portior est conditio defendentis How is this changed by NY Penal Code § 994?
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Watts
How did the In pari delicto maxim apply here? Crouch on “any person” Crane on the mischief rule.
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Watts
How did the In pari delicto maxim apply here?
Evaluate the incentive effects
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Wait a minute…
Just how do professional gamblers collect their winnings?
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Remember Nick the Chin?
How do professional gamblers collect their winnings?
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I’m tinkin’ youse should pay what youse owe
Watts
Is every contract made in breach of statute void for illegality?
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Watts
Is every contract made in breach of statute void for illegality? The state requires restaurants to be
licensed and makes it illegal to carry on business if unlicensed. A restaurant obtains a license but forgets to pay the fee to renew the license one year.
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Watts
Is every contract made in breach of statute void for illegality? Cf. Restatement § 181(a)(b)
What is a regulatory purpose?
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Watts
Is every contract made in breach of statute void for illegality? Cf. Restatement § 181(a)(b)
What is a regulatory purpose? Illustration 1.
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Watts
A customer at a yoga studio runs up a tab of $1,000. The studio is not licensed.
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Watts
Is every contract made in breach of statute void for illegality? Cf. Restatement § 181(a)(b)
What is a regulatory purpose? What does “public policy” mean here?
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Watts
Is every contract made in breach of statute void for illegality? Cf. Restatement § 181(a)(b)
What is a regulatory purpose? What does “public policy” mean here?
Cf. Restatement § 178 and § 181 illustration 3
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Restraint of Trade
When is a contract in restraint of trade? Restatement §§ 186-88
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Restraint of Trade
When is a contract in restraint of trade? See § 186, illustrations 1 & 2
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Restraint of Trade
When is a contract in restraint of trade?
Why do cartel arrangements tend to break down?
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Severability
A sells his grocery store to B. Once clause in the contract prohibits A from carrying on a similar business anywhere in the world for the rest of his life. Is the sale enforceable? Restatement §
188 Is it severable? Restatement § 184.
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Restraint of Trade
Ancillary Non-competes CB, the 60% owner of Sehler Corp., sells
his stock interest in Acme to Beyer Inc., and in exchange for a cash payment to himself executes a personal non-compete, worldwide for the rest of his life.
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Restraint of Trade
Ancillary Non-competes CB, the 60% owner of Sehler Corp., sells his
stock interest in Acme to Beyer Inc., and in exchange for a cash payment to himself executes a personal non-compete, worldwide for the rest of his life. Restatement § 188(2)(a) Is there a problem under § 188(1)?
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Restraint of Trade
Non-ancillary non-competes A pays B $50,000 not to open up a
competing store in A’s town.
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Restraint of Trade
Non-ancillary non-competes A pays B $50,000 not to open up a
competing store in A’s town. Restatement §§ 187, 186(1)
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Commission of a Wrong
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Commission of a Wrong
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Restatement § 192 ff.
Baby M
How do you see Mary Beth Whitehead?
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Mary Beth Whitehead
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Baby MMary Beth Whitehead
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Baby MThe Sterns
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Baby M: Who gets the child?Who’s got the better c.v.?
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Who is more likely to:subscribe to The New Republic? attend an Arthur Miller play?read a Jonathan Franzen novel?
Baby M
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Why did the Whiteheads enter into the contract?
Baby M
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Why did the Sterns not have their own children?
So what did the court hold?
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So what did the court hold?
Contrary to statute
Contrary to public policy
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Baby M: Who gets the child?
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Baby M: Who gets the child?Who’s got the better c.v.?
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Who is more likely to:subscribe to The New Republic? attend an Arthur Miller play?read a Jonathan Franzen novel?
Baby M
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What was it about the name “Melissa”?
Baby M
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Was it relevant that “most of his family had been destroyed in the Holocaust.”
Baby M
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Did Whitehead’s extreme attachment to her daughter render her an unfit mother?
Surrogacy Contracts
Should they be enforced?
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Surrogacy Contracts
Should they be enforced? Note that the industry has expanded,
AFTER Baby M. Are there ground rules you’d adopt to
make it more palatable?
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Surrogacy Contracts
Should they be enforced? Note that the industry has expanded,
AFTER Baby M. Are there ground rules you’d adopt to
make it more palatable? Why not just enforce them, if the yuppies
win anyway?
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