For years, commentators have debated how to reform the controversial Rule 10b-5 class action, without pausing to ask whether the game is worth the candle. Is private enforcement of Rule 10b-5 worth preserving, or might we be better off with exclusive public enforcement? This fundamental and neglected question demands attention today more than ever. An academic consensus has now emerged that private enforcement of Rule 10b-5 cannot be defended on compensatory grounds, at least in its most common form (a fraud-on-the-market class action brought against a non-trading issuer). That leaves the oft-cited, but under-theorized, rationale that private enforcement is a necessary supplement to the securities fraud deterrence efforts of the SEC. When this justification is critically examined, however, it proves to be highly debatable. A rich body of law and economics scholarship teaches that bounty hunter enforcement of an overbroad law, like Rule 10b-5, may lead to overdeterrence and stymie governmental efforts to set effective enforcement policy (even assuming away strike suits and the agency costs that attend class action litigation); if private enforcement is nevertheless desirable - a contestable proposition - it is because a world without it might result in even greater deviations from optimal deterrence, due to SEC budgetary constraints, inefficiency and/or capture. By carefully explicating the relative advantages and disadvantages of private Rule 10b-5 enforcement versus exclusive public enforcement, this Article reveals a new and better way to remedy the shortcomings of the Rule 10b-5 class action. It proposes that policymakers adopt an oversight approach to securities litigation reform by, for example, granting the SEC the ability to screen which Rule 10b-5 class actions may be filed, and against whom. By muting the overdeterrence threat of private litigation and placing the SEC back firmly at the helm of Rule 10b-5 enforcement policy, this approach would mitigate the primary disadvantages of private enforcement. Moreover, by preserving a private check on SEC inefficiency and capture and allowing the SEC to continue to supplement its budget with private enforcement resources, it would do so without eliminating the primary advantages of the current system. This approach stands in stark contrast to prior securities litigation reforms, which have responded to the overdeterrence threat posed by Rule 10b-5 class actions by rigidly narrowing the scope of private liability. This Article argues that an oversight approach to securities litigation reform carries distinct advantages over this narrowing approach, and ought to receive serious consideration in the ongoing policy debate.
{"title":"Reforming Securities Litigation Reform: Restructuring the Relationship Between Public and Private Enforcement of Rule 10b-5","authors":"A. Rose","doi":"10.2139/SSRN.1096864","DOIUrl":"https://doi.org/10.2139/SSRN.1096864","url":null,"abstract":"For years, commentators have debated how to reform the controversial Rule 10b-5 class action, without pausing to ask whether the game is worth the candle. Is private enforcement of Rule 10b-5 worth preserving, or might we be better off with exclusive public enforcement? This fundamental and neglected question demands attention today more than ever. An academic consensus has now emerged that private enforcement of Rule 10b-5 cannot be defended on compensatory grounds, at least in its most common form (a fraud-on-the-market class action brought against a non-trading issuer). That leaves the oft-cited, but under-theorized, rationale that private enforcement is a necessary supplement to the securities fraud deterrence efforts of the SEC. When this justification is critically examined, however, it proves to be highly debatable. A rich body of law and economics scholarship teaches that bounty hunter enforcement of an overbroad law, like Rule 10b-5, may lead to overdeterrence and stymie governmental efforts to set effective enforcement policy (even assuming away strike suits and the agency costs that attend class action litigation); if private enforcement is nevertheless desirable - a contestable proposition - it is because a world without it might result in even greater deviations from optimal deterrence, due to SEC budgetary constraints, inefficiency and/or capture. By carefully explicating the relative advantages and disadvantages of private Rule 10b-5 enforcement versus exclusive public enforcement, this Article reveals a new and better way to remedy the shortcomings of the Rule 10b-5 class action. It proposes that policymakers adopt an oversight approach to securities litigation reform by, for example, granting the SEC the ability to screen which Rule 10b-5 class actions may be filed, and against whom. By muting the overdeterrence threat of private litigation and placing the SEC back firmly at the helm of Rule 10b-5 enforcement policy, this approach would mitigate the primary disadvantages of private enforcement. Moreover, by preserving a private check on SEC inefficiency and capture and allowing the SEC to continue to supplement its budget with private enforcement resources, it would do so without eliminating the primary advantages of the current system. This approach stands in stark contrast to prior securities litigation reforms, which have responded to the overdeterrence threat posed by Rule 10b-5 class actions by rigidly narrowing the scope of private liability. This Article argues that an oversight approach to securities litigation reform carries distinct advantages over this narrowing approach, and ought to receive serious consideration in the ongoing policy debate.","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"108 1","pages":""},"PeriodicalIF":2.9,"publicationDate":"2008-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.1096864","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68137975","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this Article, Professor Lee introduces a novel explanation of the Alien Tort Statute (ATS) - a founding-era enactment that has achieved modern prominence as a vehicle for international human rights litigation. He demonstrates how the statute was intended to address violations of something called a "safe conduct" - a sovereign promise of safety to aliens from injury to their persons and property. The safe-conduct theory advances a new modern role for the ATS to redress torts committed by private actors - including aliens - with a U.S. sovereign nexus, and not for international law violations committed by anyone anywhere. In developing this contextual account, Professor Lee resolves uncertainty over the constitutional basis for the ATS and shows how, even with sparse conventional sources, the original meaning of an iconic founding-era statute might be recovered.
{"title":"Safe-Conduct Theory of the Alien Tort Statute, The","authors":"Thomas H. Lee","doi":"10.2139/SSRN.687799","DOIUrl":"https://doi.org/10.2139/SSRN.687799","url":null,"abstract":"In this Article, Professor Lee introduces a novel explanation of the Alien Tort Statute (ATS) - a founding-era enactment that has achieved modern prominence as a vehicle for international human rights litigation. He demonstrates how the statute was intended to address violations of something called a \"safe conduct\" - a sovereign promise of safety to aliens from injury to their persons and property. The safe-conduct theory advances a new modern role for the ATS to redress torts committed by private actors - including aliens - with a U.S. sovereign nexus, and not for international law violations committed by anyone anywhere. In developing this contextual account, Professor Lee resolves uncertainty over the constitutional basis for the ATS and shows how, even with sparse conventional sources, the original meaning of an iconic founding-era statute might be recovered.","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"54 1","pages":"830"},"PeriodicalIF":2.9,"publicationDate":"2007-02-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.687799","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67800724","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Recent scholarship has questioned whether there remains a meaningful distinction between modern textualism and purposivism. Purposivists traditionally argued that because Congress passes statutes to achieve some aim, federal judges should enforce the spirit rather than the letter of the law when the two conflict. Textualists, in contrast, have emphasized that federal judges have a constitutional duty to give effect to the duly enacted text (when clear), and not unenacted evidence of legislative purpose. They have further contended that asking how a reasonable person would understand the text is more objective than searching for a complex, multimember body's purpose.Writing from a textualist perspective, Professor Manning suggests that the conventional grounds for textualism need refinement. Modern textualists acknowledge that statutory language has meaning only in context, and that judges must consider a range of extratextual evidence to ascertain textual meaning. Sophisticated purposivists, moreover, have posited their own "reasonable person" framework to make purposive interpretation more objective. Properly understood, textualism nonetheless remains distinctive because it gives priority to semantic context (evidence about the way a reasonable person uses words) rather than policy context (evidence about the way a reasonable person solves problems). Professor Manning contends that the textualist approach to context is justified because semantic detail alone enables legislators to set meaningful limits on agreed-upon compromises. In contrast, he argues that by authorizing judges to make statutory rules more coherent with their apparent overall purposes, purposivism makes it surpassingly difficult for legislators to define reliable boundary lines for the (often awkward) compromises struck in the legislative process.
{"title":"What Divides Textualists from Purposivists","authors":"J. Manning","doi":"10.2139/SSRN.2849247","DOIUrl":"https://doi.org/10.2139/SSRN.2849247","url":null,"abstract":"Recent scholarship has questioned whether there remains a meaningful distinction between modern textualism and purposivism. Purposivists traditionally argued that because Congress passes statutes to achieve some aim, federal judges should enforce the spirit rather than the letter of the law when the two conflict. Textualists, in contrast, have emphasized that federal judges have a constitutional duty to give effect to the duly enacted text (when clear), and not unenacted evidence of legislative purpose. They have further contended that asking how a reasonable person would understand the text is more objective than searching for a complex, multimember body's purpose.Writing from a textualist perspective, Professor Manning suggests that the conventional grounds for textualism need refinement. Modern textualists acknowledge that statutory language has meaning only in context, and that judges must consider a range of extratextual evidence to ascertain textual meaning. Sophisticated purposivists, moreover, have posited their own \"reasonable person\" framework to make purposive interpretation more objective. Properly understood, textualism nonetheless remains distinctive because it gives priority to semantic context (evidence about the way a reasonable person uses words) rather than policy context (evidence about the way a reasonable person solves problems). Professor Manning contends that the textualist approach to context is justified because semantic detail alone enables legislators to set meaningful limits on agreed-upon compromises. In contrast, he argues that by authorizing judges to make statutory rules more coherent with their apparent overall purposes, purposivism makes it surpassingly difficult for legislators to define reliable boundary lines for the (often awkward) compromises struck in the legislative process.","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"1 1","pages":""},"PeriodicalIF":2.9,"publicationDate":"2006-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.2849247","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68386954","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Over the past decade, the Chinese media have emerged as among the most influential actors in the Chinese legal system. As media commercialization and increased editorial discretion have combined with growing attention to social and legal problems, the media have gained incentives to expand their traditional mouthpiece roles in new directions. As a result, the media have emerged as one of the most effective and important avenues of citizen redress. Their role in the legal system, however, has also brought them increasingly into conflict with China’s courts. This Article examines the implications of the media’s roles in the Chinese legal system for China’s legal development. It shows how media commercialization has resulted in incentives for the media to expand the scope of
{"title":"Watchdog or Demagogue? The Media in the Chinese Legal System","authors":"B. Liebman","doi":"10.7916/D8J67GK4","DOIUrl":"https://doi.org/10.7916/D8J67GK4","url":null,"abstract":"Over the past decade, the Chinese media have emerged as among the most influential actors in the Chinese legal system. As media commercialization and increased editorial discretion have combined with growing attention to social and legal problems, the media have gained incentives to expand their traditional mouthpiece roles in new directions. As a result, the media have emerged as one of the most effective and important avenues of citizen redress. Their role in the legal system, however, has also brought them increasingly into conflict with China’s courts. This Article examines the implications of the media’s roles in the Chinese legal system for China’s legal development. It shows how media commercialization has resulted in incentives for the media to expand the scope of","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"92 1","pages":"1-157"},"PeriodicalIF":2.9,"publicationDate":"2005-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"71366649","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Rethinking Article I, Section 1: From Nondelegation to Exclusive Delegation","authors":"T. Merrill","doi":"10.2307/4099357","DOIUrl":"https://doi.org/10.2307/4099357","url":null,"abstract":"","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"104 1","pages":"2097-2181"},"PeriodicalIF":2.9,"publicationDate":"2004-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2307/4099357","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68755657","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this Article, Professor Lee argues that the Constitution vests in the Supreme Court original and exclusive jurisdiction over suits brought by foreign states against States alleging violations of treaties of the United States. The basis for nonimmunity is a peacekeeping theory of ratification consent: Just as, by ratifying the Constitution, the States agreed to suits by other States and the national sovereign to ensure domestic peace, they agreed to suits by foreign states in the supreme national tribunal for the sake of international peace. The Founders of the new Republic viewed state breach of the 1783 Treaty of Peace as the leading potential cause for a shooting or trade war. The Article’s thesis is supported by the text of Article III as amended by the Eleventh Amendment and by evidence of original intent, including the inaugural implementation of the Original Jurisdiction Clause by the Judiciary Act of 1789. Nor is it inconsistent with the principle of sovereign dignity for the semisovereign States to be sued by fully sovereign foreign states in the Supreme Court. Justices of the Court throughout the nineteenth and the first quarter of the twentieth centuries acknowledged this aspect of the Court’s original jurisdiction, but awareness was lost by the time of the 1934 decision in Principality of Monaco v. Mississippi when the Republic had become a world power. Reclaiming the Court’s lost jurisdiction today requires a narrowing of that decision, but makes sense given the resurgence of American federalism and the pace of globalization.
在这一条款中，李教授主张，宪法赋予最高法院对外国指控违反美国条约的国家提起的诉讼的原始和专属管辖权。不豁免的基础是批准同意的维持和平理论:正如各国通过批准《宪法》同意其他国家和国家主权为确保国内和平而提起诉讼一样，它们也同意外国为了国际和平向国家最高法庭提起诉讼。新共和国的创始人认为国家违反1783年的和平条约是引发枪击或贸易战的主要潜在原因。本条款的论点得到经第十一修正案修正的第三条文本和原意证据的支持，包括1789年《司法法案》对“原始管辖权条款”的首次实施。由完全主权的外国在最高法院起诉半主权国家也不违反主权尊严原则。在整个19世纪和20世纪前25年，最高法院的大法官们都承认法院最初管辖权的这一方面，但在1934年摩纳哥公国诉密西西比州案(Principality of Monaco v. Mississippi)的判决中，当共和国已经成为世界强国时，人们对这方面的认识就消失了。今天，要收回最高法院失去的管辖权，需要缩小这一决定的范围，但考虑到美国联邦制的复苏和全球化的步伐，这是有道理的。
{"title":"THE SUPREME COURT OF THE UNITED STATES AS QUASI-INTERNATIONAL TRIBUNAL: RECLAIMING THE COURT'S ORIGINAL AND EXCLUSIVE JURISDICTION OVER TREATY-BASED SUITS BY FOREIGN STATES AGAINST STATES","authors":"Thomas H. Lee","doi":"10.2307/4099335","DOIUrl":"https://doi.org/10.2307/4099335","url":null,"abstract":"In this Article, Professor Lee argues that the Constitution vests in the Supreme Court original and exclusive jurisdiction over suits brought by foreign states against States alleging violations of treaties of the United States. The basis for nonimmunity is a peacekeeping theory of ratification consent: Just as, by ratifying the Constitution, the States agreed to suits by other States and the national sovereign to ensure domestic peace, they agreed to suits by foreign states in the supreme national tribunal for the sake of international peace. The Founders of the new Republic viewed state breach of the 1783 Treaty of Peace as the leading potential cause for a shooting or trade war. The Article’s thesis is supported by the text of Article III as amended by the Eleventh Amendment and by evidence of original intent, including the inaugural implementation of the Original Jurisdiction Clause by the Judiciary Act of 1789. Nor is it inconsistent with the principle of sovereign dignity for the semisovereign States to be sued by fully sovereign foreign states in the Supreme Court. Justices of the Court throughout the nineteenth and the first quarter of the twentieth centuries acknowledged this aspect of the Court’s original jurisdiction, but awareness was lost by the time of the 1934 decision in Principality of Monaco v. Mississippi when the Republic had become a world power. Reclaiming the Court’s lost jurisdiction today requires a narrowing of that decision, but makes sense given the resurgence of American federalism and the pace of globalization.","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"104 1","pages":"1765-1885"},"PeriodicalIF":2.9,"publicationDate":"2004-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2307/4099335","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68754907","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The essential elements of a wide range of social policies can be described in terms of responses to three basic questions. First, what burdens must the innocent carry? Second, what burdens must the blameworthy bear? And third, how does society assess blame? This Essay examines the increasingly successful efforts of a faction of social conservatives, called here the new moralizers, to reshape the resolution of each of these three issues and with them a wide range of social policies. Although the relative importance of these three questions has varied over time, the twentieth century saw a movement away from costly individualized adjudications of fault and toward efficiency as a guiding principle of lawmaking. Over the past decade, the new moralizers have sought to reverse this trend selectively, transforming law and social policy to increase reliance on individual assessments of virtue in place of rules of broad application. The new moralizers have imposed a range of per se rules that stigmatize and restrict unpopular groups without individualized findings of fault, while requiring individualized determinations of blameworthiness before restricting members of elites. Most remarkably, they have sought to create conditions in which providing less protection to the concededly innocent appears a moral imperative. The new moralizers' implicit assumptions about human nature are strikingly inconsistent with those of the law and economics movement, but they have received inadvertent aid from liberals. This Essay concludes that technical arguments cannot meet this agenda's considerable populist appeal. Its excesses, however, can be exposed and contained.
{"title":"THE NEW MORALIZERS: TRANSFORMING THE CONSERVATIVE LEGAL AGENDA","authors":"David A. Super","doi":"10.2307/4099339","DOIUrl":"https://doi.org/10.2307/4099339","url":null,"abstract":"The essential elements of a wide range of social policies can be described in terms of responses to three basic questions. First, what burdens must the innocent carry? Second, what burdens must the blameworthy bear? And third, how does society assess blame? This Essay examines the increasingly successful efforts of a faction of social conservatives, called here the new moralizers, to reshape the resolution of each of these three issues and with them a wide range of social policies. Although the relative importance of these three questions has varied over time, the twentieth century saw a movement away from costly individualized adjudications of fault and toward efficiency as a guiding principle of lawmaking. Over the past decade, the new moralizers have sought to reverse this trend selectively, transforming law and social policy to increase reliance on individual assessments of virtue in place of rules of broad application. The new moralizers have imposed a range of per se rules that stigmatize and restrict unpopular groups without individualized findings of fault, while requiring individualized determinations of blameworthiness before restricting members of elites. Most remarkably, they have sought to create conditions in which providing less protection to the concededly innocent appears a moral imperative. The new moralizers' implicit assumptions about human nature are strikingly inconsistent with those of the law and economics movement, but they have received inadvertent aid from liberals. This Essay concludes that technical arguments cannot meet this agenda's considerable populist appeal. Its excesses, however, can be exposed and contained.","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"104 1","pages":"2032-2096"},"PeriodicalIF":2.9,"publicationDate":"2004-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2307/4099339","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68755049","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"CARBON DIOXIDE: A POLLUTANT IN THE AIR, BUT IS THE EPA CORRECT THAT IT IS NOT AN \"AIR POLLUTANT\"?","authors":"N. Winters","doi":"10.2307/4099338","DOIUrl":"https://doi.org/10.2307/4099338","url":null,"abstract":"","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"104 1","pages":"1996-2031"},"PeriodicalIF":2.9,"publicationDate":"2004-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2307/4099338","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68754990","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Despite the fact that compensation is the governing principle in contract law remedies, it has tenuous historical, economic and empirical support. A promisor's right to breach and pay damages (which is subject to the compensation principle) is only a subset of a larger family of termination rights that do not purport to compensate the promisee for losses suffered when the promisor walks away from the contemplated exchange. These termination rights can be characterized as embedded options that serve important risk management functions. We show that sellers often sell insurance to their buyers in the form of these embedded options. We explain why compensation is of little relevance to the option price agreed to by the parties, which is a function of the value of the option to the buyer, its cost to the seller and the market in which they transact. We thus propose a novel justification for why penalty liquidated damages may be higher than seller's costs: they are option prices that reflect the value of the options to the buyer. The regulation of liquidated damages is thus tantamount to price regulation, which is outside the realm of contract law. Moreover, in light of the heterogeneity among optimal option prices, we also make the case against having an expectation damages default rule to begin with. In thick markets, we argue for enforcing the parties ex ante risk allocation with market damages. In thin markets, we propose that parties be induced to agree explicitly with respect to all termination rights, including breach damages, by the threat of specific performance of their contemplated exchange or, in the case of consumers, by a default rule that provides them a termination option at no cost.
{"title":"Embedded Options and the Case Against Compensation in Contract Law","authors":"R. Scott, George G. Triantis","doi":"10.7916/D8PR7VQ7","DOIUrl":"https://doi.org/10.7916/D8PR7VQ7","url":null,"abstract":"Despite the fact that compensation is the governing principle in contract law remedies, it has tenuous historical, economic and empirical support. A promisor's right to breach and pay damages (which is subject to the compensation principle) is only a subset of a larger family of termination rights that do not purport to compensate the promisee for losses suffered when the promisor walks away from the contemplated exchange. These termination rights can be characterized as embedded options that serve important risk management functions. We show that sellers often sell insurance to their buyers in the form of these embedded options. We explain why compensation is of little relevance to the option price agreed to by the parties, which is a function of the value of the option to the buyer, its cost to the seller and the market in which they transact. We thus propose a novel justification for why penalty liquidated damages may be higher than seller's costs: they are option prices that reflect the value of the options to the buyer. The regulation of liquidated damages is thus tantamount to price regulation, which is outside the realm of contract law. Moreover, in light of the heterogeneity among optimal option prices, we also make the case against having an expectation damages default rule to begin with. In thick markets, we argue for enforcing the parties ex ante risk allocation with market damages. In thin markets, we propose that parties be induced to agree explicitly with respect to all termination rights, including breach damages, by the threat of specific performance of their contemplated exchange or, in the case of consumers, by a default rule that provides them a termination option at no cost.","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"104 1","pages":"1428-1491"},"PeriodicalIF":2.9,"publicationDate":"2004-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"71367442","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this Commentary, Professor Franke offers an account of the Supreme Court's decision in Lawrence v. Texas. She concludes that in overruling the earlier Bowers v. Hardwick decision, Justice Kennedy does not rely upon a robust form of freedom made available by the Court's earlier reproductive rights cases, but instead announces a kind of privatized liberty right that allows gay and lesbian couples the right to intimacy in the bedroom. In this sense, the rights-holders in Lawrence are people in relationships and the liberty right those couples enjoy does not extend beyond the domain of the private. Franke expresses concern that Lawrence risks domesticating the gay and lesbian civil rights movement. She argues that the limited scope of the Lawrence opinion, as well as the gay community's reaction to it, can be traced, in large part, to the palimpsestic presence of Bowers in the opinion and in the political organizing that has followed it.
{"title":"The Domesticated Liberty of Lawrence v. Texas","authors":"Katherine M. Franke","doi":"10.7916/D84X57SP","DOIUrl":"https://doi.org/10.7916/D84X57SP","url":null,"abstract":"In this Commentary, Professor Franke offers an account of the Supreme Court's decision in Lawrence v. Texas. She concludes that in overruling the earlier Bowers v. Hardwick decision, Justice Kennedy does not rely upon a robust form of freedom made available by the Court's earlier reproductive rights cases, but instead announces a kind of privatized liberty right that allows gay and lesbian couples the right to intimacy in the bedroom. In this sense, the rights-holders in Lawrence are people in relationships and the liberty right those couples enjoy does not extend beyond the domain of the private. Franke expresses concern that Lawrence risks domesticating the gay and lesbian civil rights movement. She argues that the limited scope of the Lawrence opinion, as well as the gay community's reaction to it, can be traced, in large part, to the palimpsestic presence of Bowers in the opinion and in the political organizing that has followed it.","PeriodicalId":51408,"journal":{"name":"Columbia Law Review","volume":"104 1","pages":"1399-1426"},"PeriodicalIF":2.9,"publicationDate":"2004-05-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"71364297","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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