Examples of Holmesian Contracts?

225px-Oliver_Wendell_Holmes_Jr_circa_1930.jpgAs a part of an experimental project, I’m trying to find examples of contracts which, when breached, have a similar psychological profile to a speeding ticket. That is, are there categories of deals where people generally see breach in the way that Justice Holmes purportedly) did: “the duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it – and nothing else.”

Most people don’t think of contracts in this way. But perhaps there are certain contexts where they do. The reason I think a speeding ticket is a nice analogy is that most people don’t think of speeding as an ordinary crime, though it is punished by the state. There is generally no moral component to being caught (reckless, high-speed, chases are perhaps a bit of a counter-example).

I’ve come up with a very narrow list so far: (1) breaching certain obligations limiting your use of software downloaded online; (2) late returns to video stores (which might not even be a breach); and (3) a contractor’s duty to finish a job on time. All of these share the characteristic of being commonly breached contracts where I don’t think we would anticipate that the breachee has a reasonable likelihood of feeling morally harmed. I’d appreciate any other ideas you might have.

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7 Responses

  1. Archit Shah says:

    cell phone contracts

  2. Dave says:

    Hmmm…contracts to give AIG executives bonuses, perhaps?


  3. Lawrence Cunningham says:

    An easy specific one that follows from your examples: rental car agreements requiring drivers to obey all driving regulations, including speed limits.

    An exception to one of yours: a contractor’s duty to finish a job on time, unless the contract contains a clause making time of the essence.

    Some more general categories that go well beyond your examples follow. I may be emphasizing law too much, so please forgive me if they’re not what you are looking for, but I think the law reflects some moral sensibility in the background:

    1. Contracts containing enforceable liquidated damages clauses.

    2. Consruction contracts that contractors “substantially perform,” with deviation from strict performance compensated for in money damages.

    3. Goods contracts in active functioning markets where an aggrieved party easily can cover and obtain the contract-cover differential as damages.

    4. Contracts where the aggrieved party is otherwise obliged to mitigate damages so that they are not recoverable for breach.

    5. Purported contracts that are unsupported by consideration, such as promises to make gifts that do not induce forseeable reliance.

    6. In the 18th and 19th centuries, perhaps, sobriety clauses? (E.g., Clark v. West?)

  4. A.W. says:

    Btw, Holmes’ formulation has always been incomplete. You have 3 options under a contract:

    1) perform

    2) breach and pay, orrrrr

    3) breach and try to weasel out of it in court.

    So really to make it sound like it is a binary, “either or” proposition is frankly simplistic. His comment about a “duty to keep a contract” presumes an obviousness of the duty that very often doesn’t exist. The real analysis in deciding to committ an efficient breach is a weighing of the cost/benefit of performance v. the likelihood of successful suit if you breach, plus any X factors present. in some cases it is so clear that it is a pure “cost of performance v. cost of breach” analysis, but i would say at least 33% of the time in my experience, there are good reasons to doubt the enforceability of contracts. and i live in VA where the obligation of contracts is alive and well.

  5. If you haven’t yet, you might look at empirical work by Tess Wilkinson-Ryan (Penn JD/PhD or almost), who has looked specifically at people’s perceptions of the morality of contract breach. I’m pretty sure she has a few papers on SSRN.

  6. Jeff Lipshaw says:

    I’d add two more alternatives to A.W.’s list:

    4. Refuse to perform on the grounds that the other party breached.

    5. Interpret the words of the agreement not to be inconsistent with your present conduct. This is slightly different than A.W.’s “3” because while you concede it’s possible that the other party will call what you are doing a breach, you’re not “breaching and weaseling.” You are simply weaseling. But weaseling is what everybody does.

    As to my “5,” I completely concur with A.W.’s observation that law professors (and I think here Holmes was speaking ex podium) grossly oversimplify contract breach, but worse, assume a determinacy to language that wholly puts aside issues of interpretation. A.W.’s practical observation is what I (as a long-time practitioner) tried to reconcile with the theory and doctrine in The Bewitchment of Intelligence, Language and Ex Post Illusions of Intention, 78 Temp. L. Rev. 99 (2005).

  7. Bruce Boyden says:

    I think Dave’s (1) can probably be expanded to all consumer form agreements. I don’t think the drafters are all that insulted when they’re breached, even if they argue strenuously that the contract should be enforced. Indeed, the fine print that accompanies such agreements indicates the level of concern that the drafter has that the terms are actually followed (as opposed to enforced).