Contract parties are free to structure their relations as they see fit, but within limits set by statute or by the courts. That raises the question, does it make sense to state in a contract that you’re complying with a given legal requirement?

… To explore this, I considered the phrase as liquidated damages and not as a penalty, which obviously enough occurs in provisions in which the parties, instead of having actual damages determined in the event of a dispute, specify what damages a party is to pay on breach of a given obligation. … I recommend that you do more than just trot out as liquidated damages and not as a penalty. It’s sufficiently rote and terse as to constitute jargon. Because drafters and their clients don’t give it much thought, courts would be entitled not to pay much attention to it either.

Here’s a more meaningful way of saying the same thing:

Acme acknowledges that the actual damages likely to result from breach of this section X are difficult to estimate on the date of this agreement and would be difficult for Widgetco to prove. The parties intend that Acme’s payment of the Liquidated Damages Amount would serve to compensate Widgetco for any breach by Acme of its obligations under this section X, and they do not intend for it to serve as punishment for any such breach by Acme.

7
02
2011

Gary Flood

On 24 January 2011, the Supreme Court gave permission to appeal in the case of Flood v Times Newspapers. Lords Hope, Brown and Mance originally proposed to grant permission on the condition that the “Times” agreed to pay Mr Flood’s costs in any event but the Court has now granted permission unconditionally.  We commented on the Court of Appeal decision at the time and other discussions of it can be found in the “Table of Recent Cases” above. There is a report on the initial permission decision in the Press Gazette.

Today brings word of an interesting new article by Peter W. Martin of Cornell Law School, “Abandoning Law Reports for Official Digital Case Law.”  The article, which you can download without charge from SSRN, discusses Arkansas’s cessation of publishing its state courts’ opinions in the Arkansas Reporter, which had been the official record of those decisions, in favor of posting them on the Internet, where the state’s Reporter of Decisions maintains them as official records, and “explore[s] the distinctive alignment of factors that both led and enabled the Arkansas judiciary to take a step that courts in other jurisdictions, state and federal, have so far resisted.”  Thanks to Prof. Martin for making this article freely available, and a Hat Tip to Paul Lomio of Stanford Law School and Legal Research Plus for posting and tweeting about it.

So, here are the demographics of who is using Twitter, Facebook and LinkedIn?

Remedies On and Off Contract

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Written by Richard R.W. Brooks & Alexander Stremitzer, [View as PDF]

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120 Yale L.J. 690 (2011).  Liberal allowance of rescission followed by restitution has, for centuries, unsettled legal authorities who fear it as a threat to commercial order or other normative values. Responding to these fears, authorities have limited the ease with which rescission may be elected. Their responses, however, are often excessive and based on misunderstandings of the remedy’s effects. Rescission, followed by restitution, may in fact promote contracting by allowing parties to create efficient incentives. Concern about the stability of contracting is not entirely unfounded, but the problem is not primarily due to the ease of rescission following breach; rather, the problem concerns the remedy that follows rescission. This Article presents an argument for liberal rescission followed by limited ensuing remedies. Modern reforms and proposals seem to embrace the opposite route, restricting access to rescission while, at times, allowing for generous ensuing remedies. These reforms and proposals, we show, are the real threat to contractual stability.