Tuesday Top Tips, Week of February 9th
Each week, we bring you new and notable scholarship that has been posted on SSRN. Don’t see your latest here? You can promote it yourself in a guest post!
Carla Reyes, Andrea Tosato, Andrew Hinkes
Abstract
In 2022, an image of a “bored ape” accessible through a non-fungible token (NFT) was stolen from actor Seth Green. The thief then sold the bored ape to a good faith purchaser. Had this been a physical painting, the outcome would have been clear: a thief cannot convey title they do not have, and the purchaser would acquire nothing. Yet the ensuing debate proceeded as though the NFT’s technical features had altered this settled principle, as though blockchain records could bestow property rights on the new purchaser. They cannot. Ownership rights in digital assets stem from law, not from the software systems that create and maintain them.
When Lawrence Lessig famously proclaimed “code is law,” he meant that code functions as behavioral regulation by imposing technical limitations on users, not that it generates enforceable rights. His insight was descriptive: code shapes what people can do within digital environments, just as physical architecture channels movement through physical space. Yet the advent of blockchain networks, cryptocurrencies, and smart contracts has morphed this observation into the flawed conviction that what code makes possible, the law must recognize as legally enforceable.
While legal scholarship has noted this misconception, it has yet to offer a rigorous framework to resolve it. This Article fills this gap by applying H.L.A. Hart’s legal theory to demonstrate that code acquires legal force only to the extent that positive law grants such power. This investiture occurs through two pathways: public empowerment through legislation, and private empowerment through contracts, trusts, and other ordering instruments. Absent such formal investiture, code remains “soft law,” a structural constraint lacking normative force. The relevance of our analysis extends beyond the conceptual malaise affecting the blockchain ecosystem, addressing a foundational conflict poised to reappear with every wave of new technology, from large language models to autonomous robots.
Daniel Schwarcz
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Property insurers have long been heralded as potential leaders in driving adaptation and resilience to the accelerating impacts of climate change. In practice, however, insurers have largely fallen short of these expectations. Premiums frequently fail to reflect even near-term climate risks, discounts for climate-linked property hardening remain limited, and insurers regularly withdraw from the regions most exposed to climate change. Several structural features of contemporary property insurance markets help explain this disappointing track record, including annual policy terms, individualized underwriting, and purchasers’ informational, cognitive, and financial constraints. This Article argues that these structural barriers to insurers promoting climate adaptation and resilience can be mitigated through a largely overlooked legal reform: modernizing state insurance laws that prohibit insurers from providing group insurance coverage to homeowners living within geographically defined communities. Such group property insurance, this Article argues, could enable insurers and communities to better coordinate and finance climate adaptation and resilience strategies, while also producing more accurate and durable pricing signals. Historical experiments with group property insurance and the success of group models in health and life insurance demonstrate both the feasibility and potential benefits of such arrangements. Yet in most states, “fictitious group” laws and restrictive interpretations of state prohibitions against “unfair discrimination” render such group property insurance arrangements legally unworkable. Updating these laws would open the door to much-needed experimentation in homeowners insurance markets, creating the prospect of better aligning these markets with the urgent risks posed by climate change.
Wayne Barnes
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Contract scholars have objected to enforcement of standard form contracts for over a century, arguing that consumer “consent” to unread boilerplate fundamentally lacks legitimacy. The critique centers on “limited awareness”—consumers neither read nor understand the fine print terms to which they ostensibly assent by signing or clicking. This absence of full, knowing consent is seen as incompatible with contract law’s foundational requirements. These critiques have spawned numerous proposals to bifurcate form contracts, enforcing only the known “dickered” terms while invalidating the unread boilerplate, or otherwise requiring explicit consent to specific terms. Yet courts have steadfastly maintained the “duty to read” doctrine, holding consumers bound to all terms upon their external manifestation of assent. This article challenges the scholarly consensus by demonstrating that “limited awareness” is not doctrinally aberrational but rather woven throughout contract law. Multiple established doctrines enforce binding obligations despite incomplete awareness: objective theory requires only external manifestations rather than subjective comprehension; the conscious ignorance exception to mistake binds parties who proceed despite known gaps in knowledge; U.C.C. § 2-207 enforces contracts before parties know which variant terms will govern; incorporation by reference binds parties to unread external documents; unconscionability presumes non-reading as ordinary; and rolling contracts bind consumers to terms not yet disclosed. These doctrinal strands reveal that contract law’s operative concept of assent has never required perfect information or term-by-term awareness. Rather, limited awareness is structurally ordinary—an inevitable accommodation to human cognitive limits and transactional realities. Since enforcing consent despite limited awareness is doctrinally continuous rather than exceptional or alien, the well-meaning legitimacy critique fundamentally mischaracterizes the problem. The real issue is not whether operational consent occurred, but whether specific terms should be enforceable as a policy matter. Continued attacks on baseline consent are unlikely to succeed and would pose a risk of destabilizing commercial relationships if they did. Instead, as I have previously argued, the productive path forward lies in targeted statutory regulation of problematic boilerplate terms—not in attempting to invalidate the well-established enforceability of objective consent to form contracts, even in the face of limited awareness.
Rachel S. Arnow-Richman
Share the <strong>Employment Law Reform from a Contracts Perspective</strong> sectionEmployment Law Reform from a Contracts Perspective
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For most of history, pro-worker legal reform has meant legislative action. By contrast, this Essay, prepared for the 75th Annual NYU Conference on Labor & Employment Law, looks to contract law as the source and site of progressive change.
This may seem odd. Contract has primarily been a tool of management. Terms set by the “parties” to an employment relationship, are likely to be those imposed by the employer. Yet contract law is essential to employment law reform. Protective legislation is incremental and discrete. Beyond its provisions, the employment relationship is defined entirely by private ordering. The day-to-day experience of workers on the job, the assurances they receive, and the expectations they develop all depend on contract law.
Unfortunately, employment contract law has evolved in ways that fail to provide a fair or coherent approach to these rights. Courts historically took the view that employment was a unilateral contract, if it was even a contract at all. But that conception does not fit the dynamic, relational quality of employment where terms and expectations evolve and change over time. The result is a rigid, technical body of law that obscures important policy choices about what should count as a binding employer commitment.
Surprisingly, the solution to this problem lies in contract law itself. Over the last century, mainstream contract law has developed a more flexible approach to contract formation and interpretation that recognizes and supplements indefinite obligations. These moves within general contract law provide the building blocks for a more transparent, coherent, and equitable approach to employment contract rights in at-will relationships.
This Essay reimagines employment contract law from this contemporary perspective. It sketches an alternative approach to employment contract law that maintains many of the core features of employment-at-will, but grants employees an initial period of job-protected employment, requires employers to provide reasonable advance notice of termination, and limits employers’ ability to contract away these duties through boilerplate disclaimers.