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EXCUSE DOCTRINE: THE EISENBERG UNCERTAINTY PRINCIPLE

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Oliver Wendell Holmes observed that “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. . . . If you commit a contract, you are liable to pay a compensatory sum unless the promised event comes to pass” (1897, 462). That aphorism has to be qualifi ed by recognizing that in the face of changed circumstances, the performance might be modifi ed or excused and that parties often do include such qualifi cations in their agreements. Contract law adds some default rules to these qualifi cations for impossibility, impracticability, and frustration. Eisenberg presumes that parties would not be very good at designing responses to changed conditions and proposes a beefedup excuse doctrine. He proffers two tests and associated remedies. His fi rst test—the shared-assumption test—is based on the notion that some events are so unlikely that no one would actually have thought of them. When such an event comes to pass, the promisor should be excused. Case law often invokes the unforeseeability of such events, but a quick review of the core cases—the coronation cases and Taylor v. Caldwell —suggests that parties are better at this than Eisenberg gives them credit. His emphasis on the remoteness of the event is not, unfortunately, out of line with the Restatement 2d. The boldness of Eisenberg’s argument illuminates the more subtle fl aws of the Restatement, which uses softer, vaguer language.
His bigger errors concern his bounded-risk test. He asserts that large changes in costs are typically associated with large changes in fi nal market demand, and this dubious proposition drives his analysis (even as he abandons it for his application to actual cases). If the magnitude of a cost (or price) change is large enough, he argues, the courts should insert a ceiling that would provide some protection for the seller. His analysis has some serious logical errors, as noted previously. But the biggest problem is that it identifi es the wrong set of instances in which parties would be most likely to excuse, ex ante, for an unanticipated change in costs.

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Informasi Detail

Judul Seri

Journal of Legal Analysis

No. Panggil

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Penerbit

Oxford : Oxford University Press on behalf of The John M. Olin Center for Law., 2010

Deskripsi Fisik

Spring 2010: Volume 2, Number 1 ~ Journal of Legal Analysis

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

HUKUM

Info Detail Spesifik

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Pernyataan Tanggungjawab

agus

Versi lain/terkait

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