Fault at the contract-tort interface

Michigan Law Review

Volumn 107, Issue 8, 2009, Pages 1533-1550

  Kreitner, Roy ^a  

^a TEL AVIV UNIVERSITY   (Israel)

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EID: 66749158463     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (123)

1. For some of those notable exceptions, see GOOD FAITH AND FAULT IN CONTRACT LAW (Jack Beatson & Daniel Friedmann, eds., 1995);
2. George M. Cohen, The Fault Lines in Contract Damages, 80 VA. L. REV. 1225 (1994) [hereinafter Cohen, Fault Lines];
3. George M. Cohen, The Negligence-Opportunism Tradeoff in Contract Law, 20 HOFSTRA L. REV. 941 (1992) [hereinafter Cohen, Negligence-Opportunism];
4. and Ariel Porat, The Contributory Negligence Defence and the Ability to Rely on the Contract, 111 LAW Q. REV. 228 (1995). Of course, the articles published in this Symposium may change all that.
5. James Ban- Ames, Law and Morals, 22 HARV. L. REV. 97, 99 (1908).
6. For a representative sampling of some of the early haggling, see OLIVER WENDELL HOLMES, JR., THE COMMON LAW (Mark DeWolfe Howe ed., Harvard Univ. Press 1963) (1881);
7. Nathan Isaacs, Fault and Liability, 31 HARV. L. REV. 954 (1918);
8. Jeremiah Smith, Tort and Absolute Liability - Suggested Changes in Classification (pts. 1-3), 30 HARV. L. REV. 241, 319, 409 (1917);
9. Ezra Ripley Thayer, Liability without Fault, 29 HARV. L. REV. 801 (1916);
10. and John H. Wigmore, Responsibility for Tortious Acts: Its History (pts. 1-3), 7 HARV. L. REV. 315, 383, 441 (1894).
11. For modern articulations with greater historical complexity, see MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1780-1860, at 85-99 (1977);
12. DUNCAN KENNEDY, THE RISE AND FALL OF CLASSICAL LEGAL THOUGHT 228-34 (BeardBooks 2006) (1975);
13. JOHN FABIAN WITT, THE ACCIDENTAL REPUBLIC: CRIPPLED WORKINGMEN, DESTITUTE WIDOWS, AND THE REMAKING OF AMERICAN LAW 43-54 (2004);
14. and Gary T. Schwartz, The Character of Early American Tort Law, 36 UCLA L. REV. 641 (1989).
15. Richard A. Epstein, A Theory of Strict Liability, 2 J. LEGAL STUD. 151, 152 (1973).
16. See KENNEDY, supra note 3, at 232-34;
17. WITT, supra note 3, at 47-51.
18. See generally WILLIAM M. WIECEK, THE LOST WORLD OF CLASSICAL LEGAL THOUGHT: LAW AND IDEOLOGY IN AMERICA, 1886-1937 (1998).
19. See WITT, supra note 3, at 51-52, 67-70.
20. E. ALLAN FARNSWORTH, CONTRACTS 617 (3d ed. 1999);
21. see also RESTATEMENT (SECOND) OF CONTRACTS, ch. 11, introductory note, 309 (1981).
22. For the most direct challenge, see Cohen, Fault Lines, supra note 1.
23. For one of many accounts, see WIECEK, supra note 5, at 102.
24. For a detailed statement of the relational idea in the common law as opposed to the idea of will in Roman law, see Roscoe Pound, The End of Law as Developed in Juristic Thought (pt. 2), 30 HARV. L. REV. 201, 211-217 (1917).
25. This point is intuitive regarding a category like bailment, in which various standards of duty aligned with the different types of bailment, and where slight, ordinary, or gross negligence could trigger liability, or their absence shield from. it. But the same idea is actually applicable to a host of other contractual relations that made up the early nineteenth-century scheme of contract law.
26. Of course, fault in the late nineteenth century under a regime of no liability without fault is also objective fault, and not a simple version of moral blameworthiness. For the early articulation, see HOLMES, supra note 3, at 161-163
27. See GRANT GILMORE, THE DEATH OF CONTRACT 46-48 (1974).
28. More specifically, the idea of absolute liability coming of age is intertwined with the dominance of the will theory of contract. See James Gordley, Contract, Property, and the Will - The Civil Law and Common Law Tradition, in THE STATE AND FREEDOM OF CONTRACT 66, 79 (Harry N. Scheiber, ed., 1998) ("In the common law world, a genuinely dogmatic will theory did not appear, perhaps, until Langdell, and the best worked out version was developed by Pollock under German influence in the 1880s.").
29. See JAMES GORDLEY, THE PHILOSOPHICAL ORIGINS OF MODERN CONTRACT DOCTRINE 158-60, 201-13 (1991);
30. John V. Orth, Contract and the Common Law, in THE STATE AND FREEDOM OF CONTRACT, supra note 13, at 44, 45-49.
31. For the rise of mutual promises (or executory contracts) as the paradigm of modern contract thought, see P.S. ATIYAH, ESSAYS ON CONTRACT 10-31 (1986)
32. and P.S. ATIYAH, THE RISE AND FALL OF FREEDOM OF CONTRACT 420-440 (1979).
33. Of course, this is a counterfactual assumption if the transaction is conducted on an organized commodity exchange, rather than between actual farmers or merchants whose specific trade is in this type of commodity.
34. See LARRY A. DIMATTEO, CONTRACT THEORY: THE EVOLUTION OF CONTRACTUAL INTENT (1998);
35. GORDLEY, supra note 14, at 201-13;
36. KEVIN M. TEEVEN, A HISTORY OF THE ANGLO-AMERICAN COMMON LAW OF CONTRACT 223-240 (1990) .
37. Losee v. Buchanan, 51 N.Y. 476, 483-84 (1873). For additional examples, see WITT, supra note 3, at 48.
38. See WITT, supra note 3, at 45-49;
39. Roscoe Pound, The Role of the Will in Law, 68 HARV. L. REV. 1, 7, 17 (1954).
40. See MORTON J. HORWITZ, THE TRANSFORMATION OF AMERICAN LAW, 1870-1960: THE CRISIS OF LEGAL ORTHODOXY 54-60, 123-26 (1992);
41. KENNEDY, supra note 3, at 230-34;
42. WIECEK, supra note 5, at 184-85;
43. WITT, supra note 3, at 46-51, 65-70.
44. For opposing evaluations of late nineteenth-century contract theory, which, however, share the view that those theorists were self-conscious about their modification of contract, compare GILMORE, supra note 13
45. , with Jody S. Kraus, Essay, From Langdell to Law and Economics: Two Conceptions of Stare Decisis in Contract Law and Theory, 94 VA. L. REV. 157 (2008).
46. See Orth, supra note 14, at 51-53.
47. James Ban- Ames, Undisclosed Principal-His Rights and Liabilities, 18 YALE L.J. 443 (1909).
48. Joseph H. Beale, Jr., Gratuitous Undertakings, 5 HARV. L. REV. 222 (1891).
49. WILLIAM A. KEENER, A TREATISE ON THE LAW OF QUASI-CONTRACTS (1893).
50. See GORDLEY, supra note 14, at 208-213
51. For a wide ranging account, see HORWITZ, supra note 20, at 33-63.
52. See K.N. Llewellyn, Forward, On the Complexity of Consideration, 41 COLUM. L. REV. 777 (1941);
53. Ian R. Macneil, The Many Futures of Contracts, 47 S. CAL. L. REV. 691, 696 (1974).
54. See, e.g., Leavitt v. Dover, 32 A. 156 (N.H. 1892).
55. W. DAVID SLAWSON, BINDING PROMISES 3 (1996);
56. WIECEK, supra note 5, at 103.
57. See generally Pound, supra note 19 (discussing the difference between tort and contract as liability stemming from, aggression and agreement, respectively).
58. The most prominent of the classical thinkers advancing this claim were Thomas Cooley and Christopher Tiedeman, in treatises on torts, constitutional law, and constitutional limitations. See WITT, supra note 3, at 46, 49-50, 134-136
59. See KENNEDY, supra note 3, at 240-241 (describing the image of contract as the core of private law).
60. See HORWITZ, supra note 3, at 85-94.
61. See WITT, supra note 3, at 47-50.
62. For a leading view of contract as public law, see Morris R. Cohen, The Basis of Contract, 46 HARV. L. REV. 553 (1933).
63. For analyses, see HORWITZ, supra note 20, at 35-63,
64. and WITT, supra note 3, at 51-70.
65. For a sample of some of the more self-conscious examples of this assault, see JOHN R. COMMONS, LEGAL FOUNDATIONS OF CAPITALISM (1924);
66. RICHARD T. ELY, PROPERTY AND CONTRACT IN THEIR RELATIONS TO THE DISTRIBUTION OF WEALTH (1914);
67. Robert L. Hale, Coercion and Distribution in a Supposedly Non-Coercive State, 38 POL. Sci. Q. 470 (1923);
68. K.N. Llewellyn, The Effect of Legal Institutions Upon Economics, 15 AM. ECON. REV. 665 (1925);
69. and Roscoe Pound, Liberty of Contract, 18 YALE L.J. 454 (1909).
70. See ROBERTO MANGABEIRA UNOER, WHAT SHOULD LEGAL ANALYSIS BECOME? 41-52 (1996).
71. Id. at 41.
72. Id. at 47.
73. In contract (via a doctrine like culpa in contrahendo) or in tort (through negligent misrepresentation)? Friedrich Kessler & Edith Fine, Culpa in Contrahendo, Bargaining in Good Faith, and Freedom of Contract: A Comparative Study, 11 HARV. L. REV. 401 (1964).
74. Or perhaps using something (somewhat) different, in the shape of promissory fraud? IAN AYRES & GREGORY KLASS, INSINCERE PROMISES 59-82 (2005).
75. Clarke B. Whittier, The Restatement of Contracts and Mutual Assent, 17 CAL. L. REV. 441 (1929).
76. Gregory Klass, Contracting for Cooperation in Recovery, 117 YALE L.J. 2 (2007).
77. The literature on reliance damages is voluminous; for my purposes here it is sufficient to note that some commentators are adamant that the reliance interest is simply not contractual and that reliance damages, when awarded, are therefore best understood through tort. Peter Benson, The Unity of Contract Law, in THE THEORY OF CONTRACT LAW 118, 174-77 (Peter Benson ed., 2001);
78. Daniel Friedmann, The Performance Interest in Contract Damages, 111 LAW Q. REV. 628, 632 (1995).
79. For a clear expression of this recurring idea in realist work on contract, see George K. Gardner, An Inquiry Into the Principles of the Law of Contracts, 46 HARV. L. REV. 1 (1932).
80. See RESTATEMENT (SECOND) OF TORTS § 402A cmt. b (1965).
81. George L. Priest, The Invention of Enterprise Liability: A Critical History of the Intellectual Foundations of Modem Tort Law, 14 J. LEGAL STUD. 461, 505-11 (1985).
82. For earlier explanations of the development, see Friedrich Kessler, Products Liability, 76 YALE L.J. 887 (1967);
83. William L. Prosser, The Assault upon the Citadel (Strict Liability to the Consumer), 69 YALE L.J. 1099 (1960).
84. Greenman v. Yuba Power Prods., Inc., 377 P.2d 897 (Cal. 1963);
85. Escola v. Coca Cola Bottling Co., 150 P.2d 436, 440-44 (Cal. 1944);
86. Henningsen v. Bloomfield Motors, Inc., 161 A.2d 69, 77-78, 80-84 (N.J. 1960).
87. U.C.C. § 2-318 (2005).
88. RESTATEMENT (SECOND) OF TORTS § 402A.
89. 662 N.E.2d 730 (N. Y. 1995).
90. The court found that a plaintiff relying on the warranty of merchantability could succeed in a design defect claim by showing that the design did not meet consumer expectations, while a tort plaintiff would have to show that the design did not meet a riskutility test. Id. at 737-39.
91. In this case, the Ford Bronco at issue could pass the risk-utility test when all its possible uses (on road and off road) were taken into account, but might fail the consumer expectation test, because consumers would be expecting on-road safety (i.e., a car that would not roll over during on-road driving). Id. at 738-39.
92. See generally Jay M. Feinman, Implied Warranty, Products Liability, and the Boundary Between Contract and Tort, 75 WASH. U. L.Q. 469 (1997) (discussing the differences between implied warranty and products liability standards).
93. Denny, 662 N.E.2d at 738.
94. See, e.g., Linda J. Rusch, Products Liability Trapped by History: Our Choice of Rules Rules Our Choices, 76 TEMP. L. REV. 739 (2003).
95. See, e.g., East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870-871 (1986).
96. Id. at 869-874
97. N.Y. Cent. R.R. Co. v. Lockwood, 84 U.S. (17 Wall.) 357 (1873);
98. WITT, supra note 3, at 51;
99. Charles W. McCurdy, The "Liberty of Contract" Regime in American Law, in THE STATE AND FREEDOM OF CONTRACT, supra note 13, at 161.
100. Some of the leading pieces of scholarship included Richard A. Epstein, Products Liability as an Insurance Market, 14 J. LEGAL STUD. 645 (1985);
101. Richard A. Epstein, The Unintended Revolution in Product Liability Law, 10 CARDOZO L. REV. 2193 (1989);
102. George L. Priest, The Current Insurance Crisis and Modern Tort Law, 96 YALE L.J. 1521 (1987);
103. Priest, supra note 47;
104. Alan Schwartz, Proposals for Products Liability Reform: A Theoretical Synthesis, 97 YALE L.J. 353 (1988).
105. RICHARD A. EPSTEIN, SIMPLE RULES FOR A COMPLEX WORLD 213 (1995);
106. see also Mark Geistfeld, The Political Economy of Neocontractual Proposals for Products Liability Reform, 72 TEX. L. REV. 803, 803 (1994);
107. Schwartz, supra note 57, at 413.
108. See generally PETER W. HUBER, LIABILITY: THE LEGAL REVOLUTION AND ITS CONSEQUENCES (1988) (arguing for replacement of most tort liability with contractual principles);
109. Geistfeld, supra note 58, at 803-804
110. See, e.g., EPSTEIN, supra note 58, at 214-15;
111. Priest, supra note 47, at 507-08;
112. Schwartz, supra note 57, at 413.
113. For such an evaluation, see Steven. P. Croley & Jon D. Hanson, Rescuing the Revolution: The Revived Case for Enterprise Liability, 91 MICH. L. REV. 683 (1993).
114. Geistfeld, supra note 58, at 811-812
115. See id. at 809-14;
116. Schwartz, supra note 57, at 362-368
117. See Schwartz, supra note 57, at 408-411
118. The parties will be able to bargain to a second-best solution, some compromise that takes into account the desire for more safety than the insurance component warrants, but there is no happy coincidence aligning their bargaining interests with a socially ideal level of investment in safety.
119. See Schwartz, supra note 57, at 410.
120. For an analogous argument in the context of medical malpractice, see Jennifer Arlen, Contracting over Malpractice Liability, (Law & Economics Research Paper Series, Working Paper No. 08-12, 2008), available at http://ssrn.com/abstract=1105368.
121. See Anthony T. Kronman, Mistake, Disclosure, Information, and the Law of Contracts, 1 J. LEGAL STUD. 1, 22-27 (1978).
122. Leon Green, Tort Law Public Law in Disguise (pts. 1 & 2), 38 TEX. L. REV. 1, 257 (1959-1960). For the contract version of the claim,
123. see Cohen, supra note 36.