Anthony J. Duggan

Consumer Credit Redux

Consumer credit law was a hot topic for legal scholars during the 1970s and 1980s, but its attraction waned in the next two decades, no doubt due in part to the dampening effect of the law and economics movement on government intervention and its advocacy. However, the last five years have seen a resurgence of scholarly interest in consumer credit law. This is partly because recent market developments have given academics a range of interesting new issues to address and partly because the new generation of legal scholars is economically literate and has been able to draw successfully on developments in law and economics, behavioural economics, and other new theoretical perspectives to enrich the debate over the case for regulation. This essay surveys the recent literature on three topics - sub-prime lending, credit cards, and payday loans - with particular reference to the challenges developments in these areas pose for truth-in-lending laws and policies that, at least until very recently, had remained largely unchanged since the heyday of consumer credit law reform.

Contracts, Fiduciaries and the Primacy of the Deal

This paper is a defence of the contractarian theory of fiduciary obligations, with reference to Canadian and other Commonwealth case law and literature. The paper focuses on two cases in particular, 3464920 Canada Inc. v. Strother (2007) 281 DLR (4th) 640, where the Supreme Court of Canada divided on the relationship between contract and fiduciary law and Australian Securities and Investment Commission v. Citigroup Global Markets Australia Pty Ltd (No. 4) (2007) 160 FCR 35, where the Federal Court of Australia upheld a provision by which the parties contracted out of a fiduciary relationship.

Constructive Trusts from a Law and Economics Perspective

The constructive trust is a court order declaring that the defendant holds a disputed asset on trust for the plaintiff. The aim of this paper is to develop a theory of the constructive trust based on economic considerations. It is commonly said that the constructive trust serves two functions: (1) a deterrence function (the prevention of unconscionable conduct); and (2) a restitutionary function (the reversal of unjust enrichment). This taxonomy overlooks the constructive trusts perfectionary function, namely the enforcement of express and implied bargains. Some constructive trusts serve an explicitly perfectionary function: the constructive trust to perfect an agreement to transfer is a case in point. Other constructive trusts appear to serve a deterrence or restitutionary function. However, on closer examination these constructive trusts turn out to be perfectionary as well. The paper discusses five leading Australian, Canadian and English cases, concluding that in each case the primary objective in granting or withholding the remedy is to reproduce the outcome the parties are likely to have agreed on up front if bargaining between them had been costless. Express or implicit cost benefit analysis is an indisensable part of the decision-making process.

Saying Nothing With Words

Good legislation depends on clearly articulated policy objectives. This paper argues that a significant threat to effective consumer protection is posed by fuzzy thinking at the policy-making stage. Three major Australian law reform initiatives are examined: the Contracts Review Act 1980 (New South Wales); new uniform truth in lending laws; and product liability legislation. In each case, effective policy choices were left unresolved, either because the choice was politically too difficult or simply because of a failure by the policy makers to perceive that there was a choice needing to be made. In each case, the problem has been disguised by resort to drafting at a high level of abstraction, and this serves to make rhetorical claims in support of the legislation seem plausible. The truth, however, is that legislation drafted this way is bound to be indeterminate and it is left to the courts to invent policy as part of the interpretation process. This is not a legitimate judicial function.