Tuesday Tips: New Scholarship from SSRN, Week of April 20th
Roy Shapira & Shay Lavie
Abstract
Legal scholarship typically conceptualizes enforcement as operating directly on wrongdoers: either by enjoining them ex ante or by imposing monetary sanctions on them ex post. Yet across a wide range of legal fields, courts and lawmakers have long employed a different and largely untheorized instrument. Instead of sanctioning the wrongdoer directly, these doctrines deter misconduct by conferring a legal advantage on the wrongdoer’s rival: a business competitor, a litigation counterparty, or another strategically positioned actor. For example, when a patent holder forces customers to sign aggressive licensing agreements, courts may allow the patent holder’s competitors to freely infringe the patent. And in family law, when one parent alienates a child from the other, courts often respond not by fining the alienator parent but by granting the alienated parent additional visitation rights.
This Article is the first to systematically analyze this institutional design, which we term “rivalrous remedies.” In the process, the Article makes three contributions. Conceptually, it identifies the conditions under which regulating behavior indirectly—by empowering rivals—can outperform classic remedies. Rivalrous remedies can leverage the superior information and incentives of rivals. At the same time, these remedies operate effectively only in certain market structures and pose risks of overuse and spillover harms to third parties.
Descriptively, the Article demonstrates the prevalence of rivalrous remedies by analyzing nine doctrines across diverse legal fields: from false advertising to defamation law to civil procedure. While each doctrine has been criticized by scholars in their respective fields, viewing them through a common lens reveals a shared institutional logic: they emerged to address chronic underenforcement problems. In particular, these doctrines respond to underenforcement by shifting who enforces (not necessarily the direct victim) and/or how enforcement occurs (through largely self-executed mechanisms requiring minimal judicial involvement).
Normatively, the Article offers guidance for courts interpreting existing rivalrous remedies, identifying when they should be expanded, constrained, or combined with traditional remedies. It also proposes the adoption of a new rivalrous remedy in trade secret law to address enforcement failures surrounding consumers’ “right to repair.”
Tal Kastner & Ethan J. Leib
Recitals and Contract Interpretation [Tal presented this at KCON XVIII!]
Abstract
Despite longstanding interest in the interplay between text and context in contract interpretation among courts and commentators, recitals—the “whereas” clauses or prefatory provisions at the start of a contract, which operate at the edge of the document’s “four corners”—have yet to be given much scholarly attention, let alone theorized. This paper interrogates the rationale for and challenges the traditional rule that contract recitals lack interpretive weight unless ambiguity exists in the “operative” contract provisions. Drawing on caselaw, contract theory, and relevant developments in statutory interpretation, it argues that courts should reverse the default rule that marginalizes recitals and presumptively dismisses them as “non-operative.” Instead, courts should consider the entire document—including preambles and recitals—as part of the interpretive baseline from the outset without looking for ambiguity in operative provisions first. This proposed shift, rooted in canons that direct courts to consider the contract as a whole, suits both formalist and contextualist jurisdictions. Ultimately, this paper offers a framework for understanding recitals as meaningful textual cues that illuminate contractual purpose, promote interpretive coherence, and enhance party autonomy. By harmonizing recitals’ status in contracts with the more coherent interpretive treatment of enacted preambles and purposes in statutes, courts can best achieve the dominant goal of contract doctrine: effectuating the intention of the parties as manifested in their agreements.
Enrico Baffi & Francesco Parisi
Abstract
Standard economic reasoning suggests that expanding an individual’s choice set cannot reduce welfare because additional options may always be ignored. This intuition underlies the traditional economic justification for freedom of contract. This paper shows that the monotonic relationship between choice and welfare may break down in bargaining environments characterized by asymmetric bilateral monopoly and unequal costs of disagreement. In such settings, some contractual options do not improve the weaker party’s outside alternative but instead expand the set of concessions that the stronger party can credibly demand during negotiation. The paper introduces a distinction between beneficial options, which strengthen a party’s disagreement position, and leverage options, which enlarge the bargaining space without improving the weaker party’s exit opportunities. When leverage options become legally available, the bargaining equilibrium may shift in favor of the stronger party, even if the options themselves are never exercised. The analysis suggests that certain legal limits on contractual autonomy-such as doctrines of public policy, duress, abuse of dependence, and unconscionability-can be understood as institutional commitment devices that remove leverage options from the bargaining space. Rather than imposing paternalistic limits on voluntary exchange, these rules can be understood as providing bargaining safeguards in relationships marked by asymmetric bargaining power. A comparative analysis of legal systems, together with a range of illustrative case studies spanning family, employment, and commercial relationships, shows how legal institutions frequently operate in this manner. The paper thus offers a unified explanation for a wide range of limits on contractual freedom and identifies conditions under which restricting contractual options may improve the welfare of vulnerable parties.