Roy Kreitner

Frameworks of Cooperation: Competing, Conflicting, and Joined Interests in Contract and Its Surroundings

Private law and regulation are constantly involved in the evaluation of conflicts of interest, judging some of them salutary, with others requiring adjustment. Focusing on the question of conflicts of interest allows us to clarify our vision of when such adjustment is appropriate and, more specifically, when the law should supply an infrastructure for cooperative behavior. Thus, the prism of conflicts of interest provides a lens through which to view basic legal problems that turn on whether individual actors will be deemed responsible to some joint interest or whether they will be at liberty to pursue their individual interests despite the adverse effects of such activity on others. This article proposes a conflicts of interest perspective for examining contract law and its immediate surroundings. It suggests a map of conflicts of interest along three axes: the remedial axis; the axis of positive duties to avoid conflicts; and the axis of the transition from independence to loyalty. Applying the map to contract doctrine, the article examines a number of contract doctrines including: remedies for breach of contract; modification; conditions; good faith in performance; and formation. The article goes on to apply the map of conflicts to two complex fact situations: corporate acquisitions and corporate bankruptcies. The analysis underscores the fact that conflicts of interest rules do not simply protect existing interests, but also contribute to the very constitution of those interests. Recognizing the constitutive role of legal rules raises questions about our ability to determine interests ex ante and thus calls for a more nuanced approach to gauging the incentive effects of a legal regime.

The Jurisprudence of Global Money

The decades before and after the turn of the twentieth century, like those surrounding the turn of the twenty-first, are often understood as periods of globalization. The two periods share key features that characterize the global as a motif, including high mobility of goods, services, people, ideas and, perhaps most centrally, capital. An important distinguishing feature between the periods is the monetary regime: the gold standard for the turn of the twentieth century; managed flexibility (ranging from currency pegs to floating exchange rates) for the turn of the twenty-first. This paper examines the legal infrastructure of these two monetary regimes in order to illuminate two distinct yet related issues. The first is the connection between the form of rulemaking (e.g., legislation versus technocratic regulation) and the means of isolating monetary policy decisions from political influence. The second is the role of the monetary regime in mediating value. Both the gold standard and the managed flexibility regime aim to shield money from partisan intervention, but they do so in different ways; attention to the legal framework sheds light on how these differing regimes pursue the goal of insulating money from politics.

Fault at the Contract-Tort Interface

The formative period in the history of contract and tort (in the second half of the nineteenth century) may be characterized by the cleavage of contract and tort around the concept of fault: tort modernized by moving from strict liability to a regime of “no liability without fault,” while contract moved toward strict liability. The opposing attitudes toward fault are puzzling at first glance. Nineteenth-century scholars of private law offered explanations for the opposition, reasoning that alternative ideas about fault account for the different character of state involvement in enforcing private law rights: tort law governs liabilities imposed by law on nonconsenting members of society (and thus, it should limit itself to fault-based conduct), while contract law governs bargained-for duties and liabilities of parties who exercise freedom of contract (and thus, liability voluntarily undertaken need not consider fault). These theories are problematic, especially because they cannot offer a complete account of contract or tort. Tort retains too much strict liability to be thought of as a regime of no liability without fault, and contract has too many fault-based rules to be conceived of through strict liability. While these justifications for the distinction between contract and tort were questioned in ensuing generations, they still structure much of the debate over the current boundary between contract and tort.

Justification Between Positivism and Decision

Thus ends the first stanza of Milton’s epic, Paradise Lost. In the aftermath of revolutionary struggle, after the beheading of a monarch, the restoration of the monarchy and his own incarceration, and finally, his blindness, Milton sets out to justify the ways of God to men. Here, on the brink of modernity, Milton will attempt to achieve an improbable task: to justify that which is beyond justification. Indeed, to justify, precisely where the call to justification may itself be blasphemous: for were it possible to justify the ways of God, at least in terms understandable to humankind, there would be no need of faith. Luther put the point starkly: