The raison d’etre of independent corporate directors is to constrain the CEO and other top managers. Limitations in the capacity and incentives of such directors, however, mean they are themselves constrained in this job. To date, approaches to this puzzle have taken at face value that the independent board functions as a one-way ratchet empowering shareholders of public companies. Examining the model from a different perspective, however—that of insider-managers, who exercise great influence over directors—reveals a major flaw in the traditional understanding: the independent board works in both directions. It empowers shareholders, and it also empowers managers. A great deal rests on the independent board’s presumed status as a shareholders’ sword rather than a managers’ shield. Consider its interaction with the business judgment rule. By design, the rule insulates workaday decisions such as whether a burger chain should add a breakfast menu. It does not extend beyond that sphere automatically, however; before it can reach the kinds of decisions that require major tradeoffs between the interests of insiders and shareholders—say, the choice of whether to pay a bonus to retain a CEO—the approval of independent directors is required. But if they approve, the rule is triggered and the decision is immunized from shareholder challenge. Reconceptualizing the independent board as a CEO’s shield destabilizes more than just the theoretical and legal vision of the model; it also destabilizes corporate law’s reliance on self-regulation as a substitute for external regulation of the most powerful organizations in the world. To address this in the context of the board, the Article urges that certain sensitive transactions be deemed ineligible for cleansing at the board level and instead be submitted for either shareholder approval or robust judicial review. More broadly, the Article’s analysis suggests that corporate self-regulation may be less efficient than assumed.
{"title":"The Independent Board as Shield","authors":"Gregory H. Shill","doi":"10.2139/ssrn.3454619","DOIUrl":"https://doi.org/10.2139/ssrn.3454619","url":null,"abstract":"The raison d’etre of independent corporate directors is to constrain the CEO and other top managers. Limitations in the capacity and incentives of such directors, however, mean they are themselves constrained in this job. To date, approaches to this puzzle have taken at face value that the independent board functions as a one-way ratchet empowering shareholders of public companies. Examining the model from a different perspective, however—that of insider-managers, who exercise great influence over directors—reveals a major flaw in the traditional understanding: the independent board works in both directions. It empowers shareholders, and it also empowers managers. \u0000 \u0000A great deal rests on the independent board’s presumed status as a shareholders’ sword rather than a managers’ shield. Consider its interaction with the business judgment rule. By design, the rule insulates workaday decisions such as whether a burger chain should add a breakfast menu. It does not extend beyond that sphere automatically, however; before it can reach the kinds of decisions that require major tradeoffs between the interests of insiders and shareholders—say, the choice of whether to pay a bonus to retain a CEO—the approval of independent directors is required. But if they approve, the rule is triggered and the decision is immunized from shareholder challenge. \u0000 \u0000Reconceptualizing the independent board as a CEO’s shield destabilizes more than just the theoretical and legal vision of the model; it also destabilizes corporate law’s reliance on self-regulation as a substitute for external regulation of the most powerful organizations in the world. To address this in the context of the board, the Article urges that certain sensitive transactions be deemed ineligible for cleansing at the board level and instead be submitted for either shareholder approval or robust judicial review. More broadly, the Article’s analysis suggests that corporate self-regulation may be less efficient than assumed.","PeriodicalId":431712,"journal":{"name":"University of Iowa College of Law Legal Studies Research Paper Series","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2019-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132538855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The core insight of this Article is that patent rights are not static and fixed, as they are commonly portrayed, but malleable. Commentators typically treat patent rights as if they are unchanging, frozen forever at the moment the patent issues. But patent law isn’t so limited. Patent rights are surprisingly malleable: The scope and strength of the right can be changed even after the patent is issued through a surprisingly large array of mechanisms, allowing actors operating within the patent system the ability to change the very contours of individual patents. Malleability thus adds an important layer onto previous work recognizing that patent rights are uncertain: It is not merely that patent rights can involve something akin to a roll of the dice or an inability to definitively pin down their scope, but that the outcome of that roll or the contours of the uncertainty can be changed by the actions of the parties involved.This Article develops the concept of malleable rights, a new lens through which to view patents, and distinguishes the idea of malleable rights from that of probabilistic rights. Using this concept, the Article explores the ways in which patent rights are malleable and examines possible theoretical justifications for the malleability of patent rights, concluding that regardless of whether one accepts such justifications, recognizing the malleability of patent rights has profound consequences for discussions about emerging patent monetization strategies, for the patent system as a whole, and perhaps for views about rights over intangibles generally.
{"title":"The Malleability of Patent Rights","authors":"Jason A. Rantanen","doi":"10.2139/ssrn.2540356","DOIUrl":"https://doi.org/10.2139/ssrn.2540356","url":null,"abstract":"The core insight of this Article is that patent rights are not static and fixed, as they are commonly portrayed, but malleable. Commentators typically treat patent rights as if they are unchanging, frozen forever at the moment the patent issues. But patent law isn’t so limited. Patent rights are surprisingly malleable: The scope and strength of the right can be changed even after the patent is issued through a surprisingly large array of mechanisms, allowing actors operating within the patent system the ability to change the very contours of individual patents. Malleability thus adds an important layer onto previous work recognizing that patent rights are uncertain: It is not merely that patent rights can involve something akin to a roll of the dice or an inability to definitively pin down their scope, but that the outcome of that roll or the contours of the uncertainty can be changed by the actions of the parties involved.This Article develops the concept of malleable rights, a new lens through which to view patents, and distinguishes the idea of malleable rights from that of probabilistic rights. Using this concept, the Article explores the ways in which patent rights are malleable and examines possible theoretical justifications for the malleability of patent rights, concluding that regardless of whether one accepts such justifications, recognizing the malleability of patent rights has profound consequences for discussions about emerging patent monetization strategies, for the patent system as a whole, and perhaps for views about rights over intangibles generally.","PeriodicalId":431712,"journal":{"name":"University of Iowa College of Law Legal Studies Research Paper Series","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2015-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124661313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Federal Circuit is a response to a failure in judicial administration that produced a fractured, unworkable patent law; one that Congress concluded ill-served entrepreneurship and innovation. The purpose of the response – vesting exclusive jurisdiction for patent appeals in the Federal Circuit – was to permit that court to develop patent law in the direction of greater clarity and uniformity. Both at the time of the Federal Circuit’s creation and more recently, scholars, judges, and practitioners have waged great debates over whether patent law uniformity furthers the ultimate goals of entrepreneurship and innovation. These debates have rested on a largely untested empirical proposition: that the Federal Circuit’s patent law jurisprudence embodies a move towards doctrinal uniformity. This paper reports an empirical study that examines patent law uniformity through the measure of open decisional disagreement between Federal Circuit judges. Its central empirical observation is a remarkable increase in decisional disagreement – indicative of a decline in doctrinal uniformity – among Federal Circuit judges over the past several years. The paper raises and discusses several possible explanations for its surprising observations, including, inter alia, the Supreme Court and personnel changes at the Federal Circuit. It also considers what the observations and explanations might contribute to a current debate over the merits of Congress’s decision to unify patent jurisdiction in the Federal Circuit.
{"title":"Disuniformity","authors":"Jason A. Rantanen, Lee Petherbridge","doi":"10.2139/ssrn.2351993","DOIUrl":"https://doi.org/10.2139/ssrn.2351993","url":null,"abstract":"The Federal Circuit is a response to a failure in judicial administration that produced a fractured, unworkable patent law; one that Congress concluded ill-served entrepreneurship and innovation. The purpose of the response – vesting exclusive jurisdiction for patent appeals in the Federal Circuit – was to permit that court to develop patent law in the direction of greater clarity and uniformity. Both at the time of the Federal Circuit’s creation and more recently, scholars, judges, and practitioners have waged great debates over whether patent law uniformity furthers the ultimate goals of entrepreneurship and innovation. These debates have rested on a largely untested empirical proposition: that the Federal Circuit’s patent law jurisprudence embodies a move towards doctrinal uniformity. This paper reports an empirical study that examines patent law uniformity through the measure of open decisional disagreement between Federal Circuit judges. Its central empirical observation is a remarkable increase in decisional disagreement – indicative of a decline in doctrinal uniformity – among Federal Circuit judges over the past several years. The paper raises and discusses several possible explanations for its surprising observations, including, inter alia, the Supreme Court and personnel changes at the Federal Circuit. It also considers what the observations and explanations might contribute to a current debate over the merits of Congress’s decision to unify patent jurisdiction in the Federal Circuit.","PeriodicalId":431712,"journal":{"name":"University of Iowa College of Law Legal Studies Research Paper Series","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2014-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127572446","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the United States responsibility for innovation policy and competition policy are assigned to different agencies with different authority. The principal institutional enforcers of patent policy are the United States Patent and Trademark Office (USPTO), the International Trade Commission (ITC), and the federal district courts as overseen by the United States Court of Appeals for the Federal Circuit, and ultimately the Supreme Court. While competition policy is not an explicit part of patent policy, competition issues arise frequently, even when they are not seen as such. Since early in the twentieth century antitrust courts have had to confront practices that implicate patent law. Over the next century patent/antitrust policy veered between extremes, from periods characterized by heavy deference to patent practices, even where they seemed obviously anticompetitive, to periods in which the courts viewed patents as little more than a nuisance and used every opportunity to apply the antitrust laws against them. This brief essay addresses the question of relative institutional advantage in cases where both competitive harm and harm to innovation are relevant but patent and antitrust approaches differ widely and are likely to reach different conclusions.
{"title":"Institutional Advantage in Competition and Innovation Policy","authors":"Herbert Hovenkamp","doi":"10.2139/SSRN.2307141","DOIUrl":"https://doi.org/10.2139/SSRN.2307141","url":null,"abstract":"In the United States responsibility for innovation policy and competition policy are assigned to different agencies with different authority. The principal institutional enforcers of patent policy are the United States Patent and Trademark Office (USPTO), the International Trade Commission (ITC), and the federal district courts as overseen by the United States Court of Appeals for the Federal Circuit, and ultimately the Supreme Court. While competition policy is not an explicit part of patent policy, competition issues arise frequently, even when they are not seen as such. Since early in the twentieth century antitrust courts have had to confront practices that implicate patent law. Over the next century patent/antitrust policy veered between extremes, from periods characterized by heavy deference to patent practices, even where they seemed obviously anticompetitive, to periods in which the courts viewed patents as little more than a nuisance and used every opportunity to apply the antitrust laws against them. This brief essay addresses the question of relative institutional advantage in cases where both competitive harm and harm to innovation are relevant but patent and antitrust approaches differ widely and are likely to reach different conclusions.","PeriodicalId":431712,"journal":{"name":"University of Iowa College of Law Legal Studies Research Paper Series","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2013-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128409621","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters will be updated frequently. The author uses this casebook for a three-unit class in Innovation and Competition Policy taught at the University of Iowa College of Law and available to first year law students as an elective. This Chapter, in a revised and expanded second edition, deals with issues of IP pooling and cross licensing, blanket and package licensing, joint development ventures, standard setting, the FRAND licensing process for standards essential patents, FRAND licensing obligations, the Jan. 2013 FTC/Google settlement, and related issues relating to collaborative innovation.
{"title":"Innovation and Competition Policy, Ch. 9 (2d ed): The Innovation Commons","authors":"Herbert Hovenkamp","doi":"10.2139/SSRN.1952091","DOIUrl":"https://doi.org/10.2139/SSRN.1952091","url":null,"abstract":"This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters will be updated frequently. The author uses this casebook for a three-unit class in Innovation and Competition Policy taught at the University of Iowa College of Law and available to first year law students as an elective. This Chapter, in a revised and expanded second edition, deals with issues of IP pooling and cross licensing, blanket and package licensing, joint development ventures, standard setting, the FRAND licensing process for standards essential patents, FRAND licensing obligations, the Jan. 2013 FTC/Google settlement, and related issues relating to collaborative innovation.","PeriodicalId":431712,"journal":{"name":"University of Iowa College of Law Legal Studies Research Paper Series","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2013-01-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122928201","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This brief essay reviews Firat Cengiz’s book “Federalism in the EU and the US” (2012), which compares the role of federalism in the competition law of the European Union and the United States. Both of these systems are “federal,” of course, because both have individual nation-states (Europe) or states (US) with their own individual competition provisions, but also an overarching competition law that applies to the entire group. This requires a certain amount of cooperation with respect to both territorial reach and substantive coverage. Cengiz distinguishes among “markets,” “hierarchies,” and “networks” as forms of federalism. Markets are the least centralized and have more episodic, or ad hoc, control. As a result they are more prone to policy “races” among sovereigns in the system. Cengiz concludes that the EU and US systems are similar in that both begin with a set of system-wide policies that are broad and strong, with internal unification as a primary objective. Where they tend to differ is in areas governing conflicts between the laws at the different levels. Here, the US system is more structured and hierarchical, while the EU system tends to rely more on cooperation.
{"title":"Comparative Antitrust Federalism: Review of Cengiz, Antitrust Federalism in the EU and the US","authors":"Herbert Hovenkamp","doi":"10.2139/SSRN.2070079","DOIUrl":"https://doi.org/10.2139/SSRN.2070079","url":null,"abstract":"This brief essay reviews Firat Cengiz’s book “Federalism in the EU and the US” (2012), which compares the role of federalism in the competition law of the European Union and the United States. Both of these systems are “federal,” of course, because both have individual nation-states (Europe) or states (US) with their own individual competition provisions, but also an overarching competition law that applies to the entire group. This requires a certain amount of cooperation with respect to both territorial reach and substantive coverage. Cengiz distinguishes among “markets,” “hierarchies,” and “networks” as forms of federalism. Markets are the least centralized and have more episodic, or ad hoc, control. As a result they are more prone to policy “races” among sovereigns in the system. Cengiz concludes that the EU and US systems are similar in that both begin with a set of system-wide policies that are broad and strong, with internal unification as a primary objective. Where they tend to differ is in areas governing conflicts between the laws at the different levels. Here, the US system is more structured and hierarchical, while the EU system tends to rely more on cooperation.","PeriodicalId":431712,"journal":{"name":"University of Iowa College of Law Legal Studies Research Paper Series","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2012-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129079052","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this contribution to a symposium sponsored by the Kansas Law Review, I examine the path from the Iowa Supreme Court’s 2009 ruling in Varnum v. Brien (in which the court struck down the state’s ban on same-sex marriage) to the ouster of three of the court’s seven justices in Iowa’s 2010 judicial retention election. I describe the campaign efforts of the justices’ detractors and supporters. I then suggest a number of lessons that academics, activists, and judges nationwide can learn from the Iowa experience.
在这篇由《堪萨斯法律评论》主办的研讨会上，我考察了爱荷华州最高法院2009年对瓦纳姆诉布莱恩案(Varnum v. Brien)的裁决(该法院推翻了该州对同性婚姻的禁令)，以及2010年爱荷华州司法保留选举中法院七名法官中三名被罢免的历程。我描述了大法官的批评者和支持者的竞选活动。然后，我提出了一些全国范围内的学者、活动家和法官可以从爱荷华州的经验中学到的教训。
{"title":"Letter from Iowa: Same-Sex Marriage and the Ouster of Three Justices","authors":"T. E. Pettys","doi":"10.17161/1808.20157","DOIUrl":"https://doi.org/10.17161/1808.20157","url":null,"abstract":"In this contribution to a symposium sponsored by the Kansas Law Review, I examine the path from the Iowa Supreme Court’s 2009 ruling in Varnum v. Brien (in which the court struck down the state’s ban on same-sex marriage) to the ouster of three of the court’s seven justices in Iowa’s 2010 judicial retention election. I describe the campaign efforts of the justices’ detractors and supporters. I then suggest a number of lessons that academics, activists, and judges nationwide can learn from the Iowa experience.","PeriodicalId":431712,"journal":{"name":"University of Iowa College of Law Legal Studies Research Paper Series","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2010-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123567486","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Fundamentalist Church of Jesus Christ of Latter Day Saints is best known for its open practice of polygamy, long abandoned by the church from which it broke away generations ago. Less notorious is its communitarian economic program involving the centralized ownership and management of the real estate assets of the church and its members. Their houses, farms, and businesses, located in a remote community straddling the Utah-Arizona border, are owned by the United Effort Plan Trust, a public charitable trust. The terms of the trust have obligated the trustees to administer its assets in accordance with religious principles. The Trustees have historically been leaders of the church. In 2005 the Utah Attorney General alleged that the trustees were committing serious breaches of their fiduciary duty, putting its assets at risk. In response to the Attorney General's petition, a state trial court placed control of the trust in the hands of a "special fiduciary." The court then reformed the trust extensively, converting it into an essentially secular instrument. For example, trustees selected and controlled by the church president are to be replaced with a board approved by the court. They are to accept only non-binding advice from ecclesiastical leaders. The "needs and just wants" of beneficiaries are no longer to be gauged by religious purpose and the mandates of scripture, but by the new trustees' assessment of their need for adequate housing and education. The changes wrought by the court impose deeply upon the religious character of the trust. The reformation of the trust raises challenging issues under the religion clauses of the First Amendment. The reformation may pass muster under the Free Exercise Clause, but the court did trespass the bounds of the Establishment Clause, which constrains the state from intruding into the functioning of a religious community.
原教旨主义的耶稣基督后期圣徒教会以其公开实行一夫多妻制而闻名，这一做法早在几代人之前就被教会抛弃了。不那么臭名昭著的是它的社区经济计划，包括教会及其成员的房地产资产的集中所有权和管理。他们的房屋、农场和企业位于横跨犹他州和亚利桑那州边境的一个偏远社区，由公共慈善信托机构联合努力计划信托基金(United Effort Plan Trust)所有。信托条款规定受托人有义务按照宗教原则管理其资产。受托人历来都是教会的领袖。2005年，犹他州总检察长声称受托人严重违反了他们的受托责任，使其资产处于危险之中。作为对司法部长请愿书的回应，一个州初审法院将信托的控制权交给了一位“特殊受托人”。法院随后对信托进行了广泛改革，将其转变为本质上的世俗工具。例如，由教会主席选择和控制的受托人将由法院批准的董事会取代。他们只能接受来自教会领袖的不具约束力的建议。受益人的“需要和仅仅需要”不再由宗教目的和圣经的命令来衡量，而是由新的受托人对他们对适当住房和教育需求的评估来衡量。法院造成的变化深深影响了信托的宗教性质。信托的改革在宪法第一修正案的宗教条款下提出了具有挑战性的问题。这项改革可能会通过《宗教自由条款》的审查，但法院确实侵犯了《政教分离条款》的界限，这一条款限制了国家干涉宗教团体的运作。
{"title":"Protecting Religious Liberty Through the Establishment Clause: The Case of the United Effort Plan Trust Litigation","authors":"Eric G. Andersen","doi":"10.5072/ULR.V2008I3.821","DOIUrl":"https://doi.org/10.5072/ULR.V2008I3.821","url":null,"abstract":"The Fundamentalist Church of Jesus Christ of Latter Day Saints is best known for its open practice of polygamy, long abandoned by the church from which it broke away generations ago. Less notorious is its communitarian economic program involving the centralized ownership and management of the real estate assets of the church and its members. Their houses, farms, and businesses, located in a remote community straddling the Utah-Arizona border, are owned by the United Effort Plan Trust, a public charitable trust. The terms of the trust have obligated the trustees to administer its assets in accordance with religious principles. The Trustees have historically been leaders of the church. In 2005 the Utah Attorney General alleged that the trustees were committing serious breaches of their fiduciary duty, putting its assets at risk. In response to the Attorney General's petition, a state trial court placed control of the trust in the hands of a \"special fiduciary.\" The court then reformed the trust extensively, converting it into an essentially secular instrument. For example, trustees selected and controlled by the church president are to be replaced with a board approved by the court. They are to accept only non-binding advice from ecclesiastical leaders. The \"needs and just wants\" of beneficiaries are no longer to be gauged by religious purpose and the mandates of scripture, but by the new trustees' assessment of their need for adequate housing and education. The changes wrought by the court impose deeply upon the religious character of the trust. The reformation of the trust raises challenging issues under the religion clauses of the First Amendment. The reformation may pass muster under the Free Exercise Clause, but the court did trespass the bounds of the Establishment Clause, which constrains the state from intruding into the functioning of a religious community.","PeriodicalId":431712,"journal":{"name":"University of Iowa College of Law Legal Studies Research Paper Series","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2008-05-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117120575","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.1093/acprof:oso/9780198728733.003.0023
S. Burton
This book Chapter is about breach of contract based on the obligation to perform in good faith, which is implied in virtually every contract in the United States. The Restatement (Second) of Contracts provides: Every contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement. Similarly, the Uniform Commercial Code provides: Every contract or duty within [the Uniform Commercial Code] imposes an obligation of good faith in its performance and enforcement. These vague formulations, however, beg the practical question: What distinguishes good faith from bad faith performance?The good faith performance doctrine is a relative newcomer to American law. It has burgeoned in importance in recent decades; it now seems that hardly a complaint is filed stating a claim in contract without including an allegation of bad faith. By far, most of these claims are rejected by the courts, most often for good reasons. Enough of them succeed to make it crucial to grasp the shape of current judicial practice. In this Chapter, I will give a brief history of the good faith performance doctrine and present the main current theories of its proper use. We now can see that some lines of development that seemed important only a few years ago are dead ends. In particular, case law treating the good faith obligation as a basis for claims of tortious breach of contract, allowing damages for emotional distress and even punitive recoveries, has vanished except in the insurance context. Similarly, early scholarly commentary treating good faith performance as a post-formation counterpart to the unconscionability doctrine, allowing courts to impose obligations of “contractual morality” or "altruism" on the parties, has not gained general favor with the courts. The now-considerable case law has taken on a distinctly free market orientation, regularly construing good faith to protect and serve the parties' justified expectations arising from their promises. I will conclude with some remarks on comparative aspects of good faith.
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