Good faith and fair dealing as an underenforced legal norm

Minnesota Law Review

Volumn 99, Issue 6, 2015, Pages 2051-2110

  MacMahon, Paul ^a  

^a LONDON SCHOOL OF ECONOMICS   (United Kingdom)

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EID: 84941051964     PISSN: 00265535     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (237)

1. RESTATEMENT (SECOND) OF CONTRACTS § 205 (1981).
2. See Steven J. Burton & Eric G. Andersen, The World of a Contract, 75 IOWA L. REV. 861, 869 (1990)
3. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 697 (Tex. 1994);
4. see also Mark Gergen, A Cautionary Tale About Contractual Good Faith in Texas, 72 TEX. L. REV. 1235, 1237 (1994)
5. Robert S. Summers, Good Faith Revisited, 46 SAN DIEGO L. REV. 723, 726 (2009)
6. BLACK'S LAW DICTIONARY 693 (6th ed. 1990).
7. Clayton P. Gillette, Limitations on the Obligation of Good Faith, 1981 DUKE L.J. 619, 619-20 (1981).
8. James J. White, Good Faith and the Cooperative Antagonist, 54 SMU L. REV. 679, 680 (2001).
9. RESTATEMENT (SECOND) OF CONTRACTS § 205 cmt. a (1981).
10. U.C.C. § 1-201(20) (2014)
11. Montanez v. HSBC Mortg. Corp. (USA), 876 F. Supp. 2d 504, 513 (E.D. Pa. 2012)
12. Phila. Plaza-Phase II v. Bank of Am. Nat'l Trust & Sav. Ass'n, No. 3745, 2002 WL 1472337, at 6 (Pa. Ct. C.P. June 21, 2001).
13. See, e.g., Cincinnati SMSA Ltd. P'ship v. Cincinnati Bell Cellular Sys. Co., 708 A.2d 989, 992 (Del. 1998)
14. Edward J. Imwinkelried, The Implied Obligation of Good Faith in Contract Law: Is It Time To Write Its Obituary?, 42 TEX. TECH. L. REV. 1, 10-12, 21 (2009)
15. E.G., Svela v. Union Oil Co. of Cal., 807 F.2d 1494, 1501 (9th Cir. 1987)
16. E.G., Mkt. St. Assocs. V. Frey, 941 F.2d 588, 596 (7th Cir. 1991) (Pos-ner, J.).
17. E.G., Unishippers Global Logistics, LLC v. DHL Express (USA), Inc., 526 F. App'x 899, 910 (10th Cir. 2013)
18. E.G., Am-Pro Protective Agency, Inc. V. United States, 281 F.3d 1234, 1238-39, 1241 (Fed. Cir. 2002) (finding that plaintiffs suing the federal gov-ernment for breach of the implied covenant must provide clear and convincing evidence of bad faith).
19. E.G., Morriss v. Coleman Co., 738 P.2d 841, 851 (Kan. 1987)
20. E.G., Kham & Nate's Shoes No. 2, Inc. V. First Bank of Whiting, 908 F.2d 1351, 1357 (7th Cir. 1990)
21. E.G., Original Great Am. Chocolate Chip Cookie Co. V. River Valley Cookies, Ltd., 970 F.2d 273, 280 (7th Cir. 1992)
22. E.G., Harold Dubroff, The Implied Covenant of Good Faith in Contract Interpretation and Gap-Filling: Reviling a Revered Relic, 80 ST. JOHN'S L. REV. 559, 562 (2006).
23. See, e.g., Emily M.S. Houh, Critical Interventions: Toward an Expan-sive Equality Approach to the Doctrine of Good Faith in Contract Law, 88 CORNELL L. REV. 1025, 1029 (2003)
24. Richard E. Speidel, Article 2 and Relational Sales Contracts, 26 LOY. L.A. L. REV. 789, 797 (1993)
25. For an explicit statement of this generally held assumption, see Greg-ory Klass, Three Pictures of Contract: Duty, Power, and Compound Rule, 83 N.Y.U. L. REV. 1726, 1728, 1780 n.167, 1783 (2008)
26. Meir Dan-Cohen, Decision Rules and Conduct Rules: On Acoustic Sep-aration in Criminal Law, 97 HARV. L. REV. 625, 627 (1984).
27. One exception is Shyamkrishna Balganesh, Demystifying the Right To Exclude: Of Property, Inviolability, and Automatic Injunctions, 31 HARV. J.L. & PUB. POL'Y 593, 609-10 (2008)
28. Jane Stapleton, Good Faith in Private Law, 52 CURRENT LEGAL PROBS. 1, 28-30 (1999).
29. Richard H. Fallon, Jr., Judicially Manageable Standards and Consti-tutional Meaning, 119 HARV. L. REV. 1274, 1278-79 (2006).
30. See, e.g., Stephen F. Ross, Legislative Enforcement of Equal Protection, 72 MINN. L. REV. 311, 321-24 (1987).
31. Melvin Aron Eisenberg, The Divergence of Standards of Conduct and Standards of Review in Corporate Law, 62 FORDHAM L. REV. 437, 438 (1993).
32. Julian Velasco, The Role of Aspiration in Corporate Fiduciary Duties, 54 WM. & MARY L. REV. 519, 550-51 (2012).
33. See Lawrence Gene Sager, Fair Measure: The Legal Status of Underenforced Constitutional Norms, 91 HARV. L. REV. 1212, 1213 (1978).
34. see Daniel Markovits, Good Faith As Contract's Core Value, in PHILOSOPHICAL FOUNDATIONS OF CONTRACT LAW 272 (Gregory Klass et al. eds., 2014).
35. For the gap-filling view, see, for example, Koehrer v. Superior Court, 226 Cal. Rptr. 820, 828 (Ct. App. 1986)
36. See, e.g., SIGA Techs., Inc. V. PharmAthene, Inc., 67 A.3d 330, 333-34 (Del. 2013)
37. See Teachers Ins. & Annuity Ass'n v. Tribune Co., 670 F. Supp. 491, 507-08 (S.D.N.Y. 1987) (regarding New York law);
38. see also Alan Schwartz & Robert E. Scott, Precontractual Liability and Preliminary Agreements, 120 HARV. L. REV. 661, 664 n.7 (2007)
39. See, e.g., Hoffman v. Red Owl Stores, 133 N.W.2d 267, 273-75 (Wis. 1965).
40. See, e.g., Robert E. Scott, A Theory of Self-Enforcing Indefinite Agree-ments, 103 COLUM. L. REV. 1641, 1641 (2003)
41. Boone v. Eyre, (1789) 126 Eng. Rep. 148 (K.B.);
42. Carter v. Boehm, (1766) 97 Eng. Rep. 1162 (K.B.) 1164.
43. See E. Allan Farnsworth, Good Faith Performance and Commercial Reasonableness Under the Uniform Commercial Code, 30 U. CHI. L. REV. 666, 668-69 (1963)
44. RESTATEMENT (SECOND) OF CONTRACTS § 205 cmt. b (1981).
45. See McLanahan v. Universal Ins. Co., 26 U.S. (1 Pet.) 170, 185-86 (1828).
46. see Werner F. Ebke & Bettina M. Steinhauer, The Doctrine of Good Faith in German Contract Law, in GOOD FAITH AND FAULT IN CONTRACT LAW 171 (Jack Beatson & Daniel Friedmann eds., 1995);
47. see also JOHN P. DAWSON, THE ORACLES OF THE LAW 461-79 (1968).
48. Brassil v. Maryland Cas. Co., 104 N.E. 622, 624 (N.Y. 1914).
49. See, e.g., World's Exposition Shows, Inc. V. B.P.O. Elks, 186 So. 721, 723 (Ala. 1939);
50. Universal Sales Corp. V. Cal. Press Mfg. Co., 128 P.2d 665, 677 (Cal. 1942);
51. Martindell v. Lake Shore Nat. Bank, 154 N.E.2d 683, 690 (Ill. 1958);
52. Clark v. State St. Trust Co., 169 N.E. 897, 903 (Mass. 1930);
53. Salem King's Prods. Co. V. Ramp, 196 P. 401, 409 (Or. 1921).
54. U.C.C. § 1-304 (2014).
55. See REVIEW OF THE CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) 2002-2003, at 37 (2004);
56. Robert S. Summers, "Good Faith" in General Contract Law and the Sales Provisions of the Uniform Commercial Code, 54 VA. L. REV. 195, 195 n.2 (1968).
57. See James Whitman, Commercial Law and the American Volk: A Note on Llewellyn's German Sources for the Uniform Commercial Code, 97 YALE L.J. 156, 157-58, 162-63, 166-67 (1987)
58. See David G. Epstein et al., Fifty: Shades of Grey - Uncertainty About Extrinsic Evidence and Parol Evidence After All The-se UCC Years, 45 ARIZ. ST. L. J. 925, 937-39 (2013).
59. U.C.C. § 1-201(18) (May 1949 Draft).
60. Walter D. Malcolm et al., Report of Committee on the Proposed Com-mercial Code, 6 BUS. LAW. 119, 127 (1951)
61. U.C.C. § 1-201(19) (1962).
62. 1 STATE OF N.Y., REPORT OF THE LAW REVISION COMMISSION FOR 1955, STUDY OF THE UNIFORM COMMERCIAL CODE 310-15 (1955).
63. Guam, Puerto Rico, and the Virgin Islands have also adopted the U.C.C. See, e.g., Uniform Commercial Code (UCC), DUKE LAW, https://law .duke.edu/lib/researchguides/ucc/ (last visited Apr. 21, 2015).
64. Louisiana has not adopted Article 2 of the U.C.C., though it has adopted Article 1 and several other Articles. Uniform Commercial Code Locator, LEGAL INFO. INST., https:// www.law.cornell.edu/uniform/ucc (last visited Apr. 21, 2015).
65. See J.L. AUSTIN, SENSE AND SENSIBILIA 70-71 (1962);
66. see also Roland Hall, Excluders, 20 ANALYSIS 1 (1959) (discussing excluders);
67. cf. Dennis M. Patterson, Wittgenstein and the Code: A Theory of Good Faith Performance and Enforcement Under Article Nine, 137 U. PA. L. REV. 335, 348-49 (1988)
68. See Robert S. Summers, The General Duty of Good Faith and Fair Dealing - Its Recognition and Conceptualization, 67 CORNELL L. REV. 810, 810 (1982)
69. RESTATEMENT (SECOND) OF CONTRACTS § 205 (1981).
70. See, e.g., 15 U.S.C. § 1222 (2012)
71. See U.C.C. § 2A-103(4) (2014).
72. U.C.C. § 1-201(20) (2014).
73. See 6 CORBIN ON CONTRACTS § 26.8 n.6 (2014)
74. see Robert E. Scott, The Promise and Peril of Relational Contract Theory, in REVISITING THE CONTRACTS SCHOLARSHIP OF STEWART MACAULAY 105 (Jean Braucher et al. eds., 2013).
75. E.G., Best v. U.S. Nat'l Bank of Or., 739 P.2d 554, 557 (Or. 1987).
76. E.G., Carma Developers (Cal.), Inc. V. Marathon Dev. Cal., Inc., 826 P.2d 710, 728 (Cal. 1992).
77. E.G., Beidel v. Sideline Software, Inc., 811 N.W.2d 856, 864 (Wis. 2013);
78. In re Estate of Chayka, 176 N.W.2d 561, 564 n.7 (Wis. 1970).
79. E.G., Beraha v. Baxter Health Care Corp., 956 F.2d 1436, 1444 (7th Cir. 1992) (reasonable expectations);
80. Carma Developers, 826 P.2d at 728
81. See Joseph Singer, The Rule of Reason in Property Law, 46 U.C. DAVIS L. REV. 1369, 1380-81 (2013).
82. Duncan Kennedy, Form and Substance in Private Law Adjudication, 89 HARV. L. REV. 1685, 1721 (1976)
83. ROBERTO MANGABEIRA UNGER, LAW IN MODERN SOCIETY 210 (1976).
84. see also Melvin A. Eisenberg, The Duty To Rescue in Contract Law, 71 FORDHAM L. REV. 647, 666-70 (2002)
85. Douglas K. Newell, Will Kindness Kill Contract?, 24 HOFSTRA L. REV. 455, 471 (1995).
86. Steven J. Burton, Good Faith in Articles 1 and 2 of the U.C.C.: The Practice View, 35 WM. & MARY L. REV. 1533, 1554 (1994).
87. Cincinnati SMSA Ltd. P'ship v. Cincinatti Bell Cellular Sys. Co., 708 A.2d 989, 992 (Del. 1998).
88. Seidenberg v. Summit Bank, 791 A.2d 1068, 1079 (N.J. Super. Ct. App. Div. 2002).
89. See, e.g., Wilson v. Amerada Hess Corp., 773 A.2d 1121, 1132 (N.J. 2001).
90. See Aronson v. Lewis, 473 A.2d 805, 811-12 (Del. 1984).
91. Vlahos v. Int'l Baking Co., No. A102335, 2005 WL 1632089, at 8 (Cal. Ct. App. July 12, 2005).
92. See Gillian K. Hadfield, Problematic Relations: Franchising and the Law of Incomplete Contracts, 42 STAN. L. REV. 927, 984-85 (1990)
93. Jeffrey C. Selman, Applying the Business Judgment Rule to the Franchise Relationship, 19 FRANCHISE L.J. 111 (2000)
94. E.G., Carma Developers (Cal.), Inc. V. Marathon Dev. Cal., Inc., 826 P.2d 710, 727 (Cal. 1992)
95. see also, e.g., Paccar Inc. V. Elliot Wilson Capitol Trucks LLC, 905 F. Supp. 2d 675, 685 (D. Md. 2012).
96. 773 A.2d 1121 (N.J. 2001).
97. 941 F.2d 588 (7th Cir. 1991);
98. see also Richard A. Posner, Let Us Never Blame a Contract Breaker, 107 MICH. L. REV. 1349, 1357, 1359-60 (2009).
99. Mkt. St. Assocs. Ltd. P'ship v. Frey, 817 F. Supp. 784, 788 (E.D. Wis. 1993)
100. Todd D. Rakoff, Good Faith in Contract Performance: Market Street Associates v. Frey, 120 HARV. L. REV. 1187 (2007).
101. E.G., Original Great Am. Chocolate Chip Cookie Co. V. River Valley Cookies, Ltd., 970 F.2d 273, 280 (7th Cir. 1992)
102. See, e.g., Centex Corp. V. United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005).
103. See Bryan O. Ramos, Never Say Die: The Continued Existence of the Government Officials' Good Faith Presumption in Federal Contracting Law and the Well-Nigh Irrefragable Proof Standard After Tecom, 63 A.F. L. REV. 163 (2009).
104. Info. Tech. & Applications Corp. V. United States, 316 F.3d 1312, 1323 n.2 (Fed. Cir. 2003).
105. Am-Pro Protective Agency, Inc. V. United States, 281 F.3d 1234, 1239-40 (Fed. Cir. 2002).
106. See Stuart B. Nibley & Jade Totman, Let the Government Contract: The Sovereign Has the Right, and Good Reason, To Shed Its Sovereignty When It Contracts, 42 PUB. CONT. L.J. 1 (2012).
107. Tecom, Inc. V. United States, 66 Fed. Cl. 736, 769 (2005).
108. See Road & Highway Builders, LLC v. United States, 702 F.3d 1365, 1369 (Fed. Cir. 2012) (rejecting argument that presumption of good faith should be limited to fraud or quasi-criminal wrongdoing);
109. Precision Pine & Timber, Inc. V. United States, 596 F.3d 817, 829-30 (Fed. Cir. 2010);
110. D'Andrea Bros. LLC v. United States, 96 Fed. Cl. 205, 222 (2010).
111. N. Star Alaska Hous. Corp. V. United States, 76 Fed. Cl. 158 (2007).
112. E.G., Hoffman La-Roche v. Campbell, 512 So. 2d 725, 738 (Ala. 1987);
113. K Mart Corp. V. Ponsock, 732 P.2d 1364, 1370 (Nev. 1987);
114. Hall v. Farmers Ins. Exch. 713 P.2d 1027, 1030 (Okla. 1985);
115. Mitford v. de Lasala, 666 P.2d 1000, 1006-07 (Alaska 1983);
116. Cleary v. Am. Airlines, 111 Cal. App. 3d 443, 445 (Ct. App. 1980);
117. Fortune v. Nat'l Cash Register Co., 364 N.E.2d 1251, 1256 (Mass. 1977);
118. Monge v. Beebe Rubber Co., 316 A.2d 549, 551 (N.H. 1974).
119. See James J. Brudney, Reluctance and Remorse: The Covenant of Good Faith and Fair Dealing in American Employment Law, 32 COMP. LAB. L. & POL'Y J. 773, 773-74 (2011).
120. See Brockmeyer v. Dun & Bradstreet, 335 N.W.2d 834, 838 (Wis. 1983)
121. See Sabetay v. Sterling Drug, Inc. 506 N.E.2d 919, 922 (N.Y. 1987)
122. Guz v. Bechtel Nat'l, Inc., 8 P.3d 1089, 1110 (Cal. 2000).
123. For overviews of contract law neoformalism, see David Charny, The New Formalism in Contract, 66 U. CHI. L. REV. 842 (1999);
124. William J. Wood-ward, Jr., Neoformalism in a Real World of Forms, 2001 WIS. L. REV. 971 (2001).
125. See Robert E. Scott, A Theory of Self-Enforcing Indefinite Agreements, 103 COLUM. L. REV. 1641, 1688 (2003)
126. See Lisa Bernstein, Merchant Law in a Merchant Court: Rethinking the Code's Search for Immanent Business Norms, 144 U. PA. L. REV. 1765, 1775-76 (1996)
127. Lisa Bernstein, Private Commercial Law in the Cotton In-dustry: Creating Cooperation Through Rules, Norms, and Institutions, 99 MICH. L. REV. 1724, 1734 (2001)
128. Victor Goldberg, Discretion in Long-Term Open Quantity Contracts: Reining in Good Faith, 35 U.C. DAVIS L. REV. 319 (2002)
129. Mark Snyderman, Comment, What's So Good About Good Faith? The Good Faith Performance Obligation in Commercial Lending, 55 U. CHI. L. REV. 1335, 1338 (1988)
130. See Dennis M. Patterson, A Fable from the Seventh Circuit: Frank Easterbrook on Good Faith, 76 IOWA L. REV. 503, 523 (1991)
131. Kham & Nate's Shoes No. 2, Inc. V. First Bank of Whiting, 908 F.2d 1351, 1357 (7th Cir. 1990).
132. Tymshare, Inc. V. Covell, 727 F.2d 1145, 1153-54 (D.C. Cir. 1984).
133. For example, in July 2013, the Supreme Court of Wisconsin decided Beidel v. Sideline Software, Inc., 842 N.W.2d 240 (Wis. 2013).
134. See In re Facebook PPC Adver. Litig., 709 F. Supp. 2d 762, 770 (N.D. Cal. 2010)
135. Michael P. Van Alstine, Of Textualism, Party Autonomy, and Good Faith, 40 WM. & MARY L. REV. 1223, 1223-24 (1999).
136. See, e.g., Super Valu Stores, Inc. V. D-Mart Food Stores, Inc., 431 N.W.2d 721, 726 (Wis. Ct. App. 1988)
137. See, e.g., Pasadena Live, LLC v. City of Pasadena, 8 Cal. Rptr. 3d 233, 237 (2004).
138. Sheinman Provisions, Inc. V. Nat'l Deli, LLC, No. 08-cv-453, 2008 WL 2758029, at 3 (E.D. Pa. July 15, 2008);
139. see also Benchmark Group, Inc. V. Penn Tank Lines, Inc., 612 F. Supp. 2d 562, 584 (E.D. Pa. 2009)
140. See, e.g., Kamco Indus. Sales, Inc. V. Lovejoy, Inc., 779 F. Supp. 2d 416, 426 n.8 (E.D. Pa. 2011).
141. See, e.g., CapitalSource Fin. LLC v. Pittsfield Weaving Co., 571 F. Supp. 2d 668, 673 (D. Md. 2006);
142. Bay Fireworks, Inc. V. Frenkel & Co., 359 F. Supp. 2d 257, 266 (E.D.N.Y. 2005).
143. PERMANENT EDITORIAL BD. FOR THE UNIFORM COMMERCIAL CODE, PEB COMMENTARY ON THE UNIFORM COMMERCIAL CODE: COMMENTARY NO. 10 (SECTION 1-203) FINAL DRAFT 4 (1994).
144. See, e.g., Bellemare v. Wachovia Mortg. Corp., 894 A.2d 335, 345-46 (Conn. App. Ct. 2006)
145. Littlejohn v. Parrish, 839 N.E.2d 49, 54 (Ohio Ct. App. 2005)
146. See, e.g., ICD Holdings S.A. V. Frankel, 976 F. Supp 234, 243-44 (S.D.N.Y. 1997)
147. Chunlin Leonhard, Subprime Mortgages and the Case for Broadening the Duty of Good Faith, 45 U.S.F. L. REV. 621, 622 (2011).
148. Emily L. Sherwin, Law and Equity in Contract Enforcement, 50 MD. L. REV. 253, 300-14 (1991)
149. Jeremy Bentham, An Introduction to the Principles of Morals and Leg-islation, in A FRAGMENT ON GOVERNMENT AND AN INTRODUCTION TO THE PRINCIPLES OF MORALS AND LEGISLATION 113, 430 (Wilfrid Harrison ed., 1948) (emphasis omitted).
150. See Paul H. Robinson, Rules of Conduct and Principles of Adjudica-tion, 57 U. CHI. L. REV. 729, 730 (1990)
151. see Mitchell N. Berman, Constitutional Deci-sion Rules, 90 VA. L. REV. 1 (2004).
152. Henry P. Monaghan, Foreword: Constitutional Common Law, 89 HARV. L. REV. 1, 2-3 (1975);
153. see also Richard H. Fallon, Jr., Foreword: Imple-menting the Constitution, 111 HARV. L. REV. 56, 57 (1997). 184.
154. See, e.g., Nixon v. United States, 506 U.S. 224, 238 (1993).
155. See generally 541 U.S. 267 (2004) (Scalia, J., plurality opinion).
156. Baker v. Carr, 369 U.S. 186, 217 (1962).
157. See Frederick Schauer, Official Obedience and the Politics of Defining "Law" (Univ. of Va. Sch. of Law Pub. Law & Legal Theory Paper Series, Re-search Paper No. 2013-11, 2013), available at http://papers.ssrn.com/sol3/ papers.cfm?abstract-id=2220923.
158. See Gerald L. Neuman, The Constitutional Requirement of "Some Evi-dence", 25 SAN DIEGO L. REV. 631, 633 (1988) (internal quotation marks omit-ted).
159. See Rostker v. Goldberg, 453 U.S. 57, 64-65 (1981).
160. See generally, e.g., Vieth v. Jubelirer, 541 U.S. 267 (2004).
161. see also Stephen F. Ross, Legislative Enforcement of Equal Protection, 72 MINN. L. REV. 311, 315-26 (1987).
162. U.S. CONST. amend. XIV.
163. City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 439 (1985).
164. See Kermit Roosevelt III, Aspiration and Underenforcement, 119 HARV. L. REV. 193, 196 (2006).
165. See, e.g., Parents Involved in Cmty. Sch. V. Seattle Sch. Dist. No. 1
166. 551 U.S. 701, 720 (2007).
167. See United States v. Virginia, 518 U.S. 515, 533 (1996) (the justifica-tion for a gender-based classification must be "exceedingly persuasive");
168. See, e.g., Armour v. City of Indianapolis, 132 S. Ct. 2073, 2079-80 (2012).
169. Grutter v. Bollinger, 539 U.S. 306, 326 (2003).
170. Oregon v. Mitchell, 400 U.S. 112, 247 (1970)
171. See Plyler v. Doe, 457 U.S. 202, 216 (1982);
172. cf. JOHN HART ELY, DEMOCRACY AND DISTRUST: A THEORY OF JUDICIAL REVIEW 105 (1980)
173. See generally City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432 (1985).
174. See generally Romer v. Evans, 517 U.S. 620 (1996).
175. See Washington v. Davis, 426 U.S. 229, 239 (1976).
176. See Richard H. Fallon, Jr., Jurisdiction-Stripping Reconsidered, 96 VA. L. REV. 1043, 1081 (2010)
177. See, e.g., Shelby Cty. V. Holder, 133 S. Ct. 2612, 2629-31 (2013)
178. Bd. of Trs. of Univ. of Ala. V. Garrett, 531 U.S. 356, 365 (2001);
179. City of Boerne v. Flores, 521 U.S. 507, 536 (1997).
180. See MODEL BUS. CORP. ACT §§ 8.30-.31 (2011).
181. See 1 PRINCIPLES OF CORPORATE GOVERNANCE: ANALYSIS AND RECOMMENDATIONS § 4.01(a) cmt. to § 4.01(a), para. 1 (1994).
182. see Robert J. Rhee, The Tort Foundation of Duty of Care and Business Judgment, 88 NOTRE DAME L. REV. 1139, 1152 (2013).
183. The terminology of "exit" and "voice" derives from ALBERT O. HIRSCHMAN, EXIT, VOICE, AND LOYALTY: RESPONSES TO DECLINE IN FIRMS, ORGANIZATIONS, AND STATES (1970).
184. John C. Coates IV & Bradley C. Faris, Second-Generation Shareholder Bylaws: Post-Quickturn Alternatives, 56 BUS. LAW. 1323, 1323-28 (2001).
185. RESTATEMENT (SECOND) OF CONTRACTS § 205 cmt. a (1981).
186. See Thomas A. Diamond & Howard Foss, Proposed Standards for Evaluating When the Covenant of Good Faith and Fair Dealing Has Been Violated: A Framework for Resolving the Mystery, 47 HASTINGS L.J. 585, 600-01 (1996).
187. Stewart Macaulay, Non-Contractual Relations in Business: A Prelimi-nary Study, 28 AM. SOC. REV. 55, 61 (1963)
188. See Robert A. Hillman, Court Adjustment of Long-Term Contracts: An Analysis Under Modern Contract Law, 1987 DUKE L.J. 1, 6-7 (1987).
189. See IAN R. MACNEIL, THE NEW SOCIAL CONTRACT: AN INQUIRY INTO MODERN CONTRACTUAL RELATIONS 1-35 (1980);
190. Ian R. Macneil, Values in Contract: Internal and External, 78 NW. U. L. REV. 341, 346-66 (1983).
191. Robert E. Scott, A Relational Theory of Default Rules for Commercial Contracts, 19 J. LEGAL STUD. 597, 604 (1990).
192. Alan D. Miller & Ronen Perry, Good Faith Performance, 98 IOWA L. REV. 689 (2013).
193. See Alan Schwartz, Karl Llewellyn and the Origins of Contract Theory, in THE JURISPRUDENTIAL FOUNDATIONS OF CORPORATE AND COMMERCIAL LAW 12, 16-17, 20-22 (Jody S. Kraus & Steven D. Walt eds., 2000)
194. Zick v. Verson Allsteel Press Co., 623 F. Supp. 927, 929 (N.D. Ill. 1985)
195. DAN B. DOBBS ET AL., THE LAW OF TORTS §§ 127, 218 (2d ed. 2011).
196. See David Charny, Nonlegal Sanctions in Commercial Relationships, 104 HARV. L. REV. 373, 392-93 (1990).
197. ERIC A. POSNER, LAW AND SOCIAL NORMS 63 (2000).
198. Best v. U.S. Nat'l Bank of Oregon, 739 P.2d 554, 558 (Or. 1987).
199. See Henry E. Smith, The Equitable Dimension of Contract, 45 SUFFOLK U. L. REV. 897, 907 (2012)
200. See, e.g., Gregory Scott Crespi, Standards of Conduct and Standards of Review in Corporate Law: The Need for Closer Alignment, 82 NEB. L. REV. 671, 673 (2004)
201. Richard Singer, On Classism and Dissonance in the Criminal Law: A Reply to Professor Meir Dan-Cohen, 77 J. CRIM. L. & CRIMINOLOGY 69, 84-100 (1986).
202. But see Melanie B. Leslie, Enforcing Family Promises: Reliance, Reci-procity, and Relational Contract, 77 N.C. L. REV. 551, 634-35 nn.339-42 (1999)
203. Cf. Marc Galanter, Why the "Haves" Come Out Ahead: Speculation on the Limits of Legal Change, 9 LAW & SOC'Y REV. 95, 98-100 (1974)
204. See John C.P. Goldberg, Introduction: Pragmatism and Private Law, 125 HARV. L. REV. 1640, 1656 (2012)
205. For an illuminating discussion of the law's guidance function, with a private law focus, see generally Dale A. Nance, Guidance Rules and Enforce-ment Rules: A Better View of the Cathedral, 83 VA. L. REV. 837 (1997).
206. See Jack M. Beermann & Joseph William Singer, Baseline Questions in Legal Reasoning: The Example of Property in Jobs, 23 GA. L. REV. 911, 942-45 (1989).
207. See Henry E. Smith, An Economic Analysis of Law Versus Equity 15-30 (Mar. 10, 2010) (unpublished manuscript) (on file with Harvard Universi-ty), available at http://isites.harvard.edu/fs/docs/icb.topic619738.files/Paper- 08-03-22-Smith.pdf.
208. Seana Valentine Shiffrin, Inducing Moral Deliberation: On the Occasional Virtues of Fog, 123 HARV. L. REV. 1214, 1219-29 (2010).
209. See generally Seana Valentine Shiffrin, The Divergence of Contract and Promise, 120 HARV. L. REV. 708 (2007)
210. Ste-ven W. Feldman, Autonomy and Accountability in the Law of Contracts: A Re-sponse to Professor Shiffrin, 58 DRAKE L. REV. 177, 194-96 (2009).
211. See James B. Thayer, The Origin and Scope of the American Doctrine of Constitutional Law, 7 HARV. L. REV. 129, 155-56 (1893).
212. On juridification generally, see Gunther Teubner, Juridification: Con-cepts, Aspects, Limits, Solutions, in JURIDIFICATION OF SOCIAL SPHERES: A COMPARATIVE ANALYSIS IN THE AREAS OF LABOR, CORPORATE, ANTITRUST AND SOCIAL WELFARE LAW 3 (Gunther Teubner ed., 1987).
213. For intricate discussion of some analogous issues in contract law, see DORI KIMEL, FROM PROMISE TO CONTRACT: TOWARDS A LIBERAL THEORY OF CONTRACT 7-87 (2003);
214. Aditi Bagchi, Separating Contract and Promise, 38 FLA. ST. U. L. REV. 709, 715-32, 739-45 (2011).
215. Bert I. Huang, Shallow Signals, 126 HARV. L. REV. 2227, 2229 (2013)
216. See Empire Gas Corp. V. Am. Bakeries Co., 840 F.2d 1333, 1340 (7th Cir. 1988).
217. See D. Gordon Smith, Independent Legal Significance, Good Faith, and the Interpretation of Venture Capital Contracts, 40 WILLAMETTE L. REV. 825, 851-52 (2004)
218. See Am. Mart Corp. V. Joseph E. Seagram & Sons, 824 F.2d 733, 734 (9th Cir. 1987).
219. see also Joseph William Singer, Subprime: Why a Free and Democratic Society Needs Law, 47 HARV. C.R.-C.L. L. REV. 141, 167 (2012)
220. See, e.g., Tarrant Reg'l Water Dist. V. Herrmann, 133 S. Ct. 2120, 2130 (2013)
221. Alabama v. North Carolina, 560 U.S. 330, 351-52 (2010).
222. citing Omnibus Low-Level Radio-active Waste Interstate Compact Consent Act, Pub. L. No. 99-240, §§ 222, 224, 225, 99 Stat. 1859, 1865, 1886, 1897 (1986)
223. Stewart Macaulay makes a similar point when responding to Bern-stein's work. Stewart Macaulay, Relational Contracts Floating on a Sea of Custom? Thoughts About the Ideas of Ian Macneil and Lisa Bernstein, 94 NW. U. L. REV. 775, 787-88 (2000).
224. See Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 YALE L.J. 87, 87 (1989)
225. STEVEN J. BURTON & ERIC G. ANDERSEN, CONTRACTUAL GOOD FAITH: FORMATION, PERFORMANCE, BREACH, ENFORCEMENT 72-74 (1995).
226. Indus. & Gen. Trust v. Tod, 73 N.E. 7, 9 (1905).
227. See Steven Shavell, Alternative Dispute Resolution: An Economic Analysis, 24 J. LEGAL STUD. 1, 5-6 (1995)
228. See In re Libbey Glass, Inc., 116 Lab. Arb. Rep. (BNA) 182, 186-87 (2000)
229. Sierra Chem. Co., 121 Lab. Arb. Rep. (BNA) 1593, 1595-96 (2005)
230. See Libbey Glass, 116 Lab. Arb. Rep. (BNA) at 186-87.
231. But see In re United Technologies Auto., 108 Lab. Arb. Rep. (BNA) 769, 772-73 (1997)
232. O. W. Holmes, The Path of the Law, 10 HARV. L. REV. 457, 462 (1897).
233. See, e.g., Daryl J. Levinson, Rights Essentialism and Reme-dial Equilibration, 99 COLUM. L. REV. 857, 859-60, 931 (1999)
234. David E. Pozen, Self-Help and the Separation of Powers, 124 YALE L.J. 2, 11-12, 49 (2014)
235. Todd Rakoff, Washington v. Davis and the Objective Theory of Contracts, 29 HARV. C.R.-C.L. L. REV. 63, 63 (1994) (drawing on the law of contracts to illu-minate constitutional law);
236. D. Theodore Rave, Politicians As Fiduciaries, 126 HARV. L. REV. 671, 677 (2013)
237. See Neil Komesar, The Logic of the Law and the Essence of Economics: Reflections on Forty Years in the Wilderness, 2013 WIS. L. REV. 265, 323 (2013);