Reviewing Larry DiMatteo, Principles of Contract Law and Theory, Part V

This is the fifth post in my series on Larry Di Matteo‘s Principles of Contract Law and Theory (Principles).  The aim is to call some attention to this book while using it to stimulate my thinking as I once again consider how to teach contracts law to first-year students.  Principles is a scholarly textbook addressing advanced topics at a very high level of sophistication.

A note of explanation is in order. When I started this project, I was reviewing two books side by side. As I got further along, I decided that I could not recommend the other book to readers and thus there was no point in continuing with the review. I had numerous points of disagreement with the views of the authors of the other book, both as to substantive matters and as to the organization of the material. This did not seem like the appropriate space to air those differences. 

Chapter five of Principles covers the substantive elements of contracts, and of the chapters discussed thus far, it reads the most like a traditional hornbook. The chapter concentrates much of contracts doctrine into a clear, straightforward, forty-page presentation, covering formation, capacity, illegality and public policy, conditions, and performance and breach. Principles treats capacity as an element of contract formation. It also considers legality an element. (90-91) I think most first year courses and casebooks treat incapacity and illegality as affirmative defenses to contract formation. Seeing them presented as elements of formation is jarring for me, but that is precisely why reading new takes on doctrine is rewarding.

I was disappointed that Principles’ discussion of agreement (94-96) omits any discussion of electronic contracting or contracts of adhesion. The book does not delve into these topics in any depth, and this would have been the place to do so.  Most contracts are entered into through form contracting or electronic contracting, and establishing knowing assent to terms poses an important challenge to their enforceability. Many of the cases reviewed on this Blog feature courts’ careful consideration of whether consumers, small businesses, or employees were on inquiry notice of material terms. Professor DiMatteo could have discussed similar issues in his section on silence as assent. (109-10) Principles accurately states the general rule that silence is not assent, and it discusses some exceptions. But we all silently assent to new terms when we are parties to contracts of adhesion that permit the vendor to amend its terms with notice.

As he does frequently throughout the book Professor DiMatteo provides us with an enlightening comparative perspective, contrasting the common law’s objective approach to formation with civil law’s subjective approach and the CISG’s hybrid approach. (96-98) I suspect that a common-law court, attempting to parse the CISG’s careful modulation between objective and subjective modalities would satisfy itself that an objective approach settled the matter appropriately.

Professor DiMatteo subtitles his section on contract formation (99-111) “Rules, Rules, Rules.” True to his word, he dutifully lays them out, cheek by jowl, with sub-categories and a chart to help us sort them out and keep track. He illustrates the rules with quotations from treatises and brief discussions of cases, mostly  from the UK and mostly either old or very, very old. There is nothing wrong with this, as it illustrates the stability of common-law rules of offer and acceptance. My students object when I give them old cases (which includes for them cases from the 20th century), but my students, for the most part, are not Professor DiMatteo’s target audience.

There follows a brief discussion of substantive components of consideration (111-15), which serves as a supplement to discussion of the formal aspects of the topic in other chapters. Professor DiMatteo discusses Lampleigh v. Braithwaite, a case from 1615 involving allegations of past consideration. Party A promised to pay Party B after the latter procured a pardon for Party A. There had been no discussion of payment prior to the pardon. The court found consideration based on reasonable expectations of payment at the time the services were tendered. (112) That seems a stretch to me, absent some discussion of the amount to be paid. I wonder if today the case would not be decided under the doctrine of moral consideration/promissory restitution.

The next section of the chapter discusses incapacity, including infancy, mental incapacity and intoxication. (115-19) Principles notes that concepts of capacity have evolved: Married women lacked capacity under the doctrine of coverture. (115-16) Although capacity is treated here as a requirement of contract formation, people lacking capacity can form contracts. However, those contracts are voidable at the election of the person lacking capacity. (116)

The last section on contract formation covered in the chapter is illegality and public policy (120-26). Illegality is fairly straightforward, but there is an interesting, brief section on inadequate licensing as a form of illegality. (120-21). I wonder about recovery in restitution in such cases. Professor DiMatteo elegantly sub-divides his discussion of public policy into four common contractual clauses to which courts give close scrutiny: covenants not-to-compete (121-22), exculpatory clauses (122-23), penalties (123-25), and commercial lease assignments. (125-26) I think this well captures most of the cases in this area. I would propose only one addition: sovereign immunity and the state secrets privilege, but I have written in the area, and perhaps that warps my judgment of the importance of these topics.

Professor DiMatteo rounds out the chapter with a brief discussion of conditions (126-27) and an introduction to the topic of performance and breach. (127-33) The discussion of the latter covers trivial versus material breach (127-28) and the evolution of the substantial performance doctrine as an evolution from the old common-law expectation of strict performance. (128-31) Finally, there is a very short discussion of the right to cure, which does not reference the UCC’s rules on the subject matter (131-32) and a discussion of anticipatory repudiation and adequate assurances, relying on UK cases.(132-33)

On the whole, Professor DiMatteo provides an extremely concentrated summary of the rules of contract formation and an introduction to problems of performance and breach. There are times when one would like more detail and more examples drawn from U.S. case law, but given the book’s ambitions and considerations of space, the chapter provides an admirably succinct yet comprehensive overview.

The first post in this series can be found here
Part II is here.
Part III is here.
Part IV is here.