DOC PREVIEW
UW-Madison ECON 522 - Logistics

This preview shows page 1-2-3-23-24-25-26-47-48-49 out of 49 pages.

Save
View full document
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
View full document
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 49 pages.
Access to all documents
Download any document
Ad free experience

Unformatted text preview:

Econ 522 Economics of LawLogisticsLast Wednesday…Derogation of public policyDiscussion questionSlide 5Contracts based on faulty informationFraudWhat if you trick someone by withholding information?Duty to disclose under common lawSlide 11What if both parties were misinformed?Slide 13Another principle for allocating risks efficiently: uniting knowledge and controlMutual vs. Unilateral MistakeUnilateral mistakeUnilateral mistake: Laidlaw v Organ (U.S. Supreme Court, 1815)Unilateral mistake: productive versus redistributive informationSlide 18Vague contract terms“Shrink-wrap” licensesWhat if a party chose not to review the contract?Slide 23Contracts of adhesionWhat if you signed a contract that was dramatically unfair?Unconscionability: Williams v Walker-Thomas Furniture (CA Dist Ct, 1965)Slide 27Slide 28Slide 28Three broad types of remedy for breach of contractExpectation damagesReliance damagesOpportunity cost damagesExample: expectation, reliance, and opportunity cost damagesSlide 35Ranking damagesHawkins v McGee (“hairy hand case”)Slide 38Other court-ordered remediesSlide 40Expectation damages vs. specific performanceSlide 42Think about Peevyhouse in terms of penalty defaultsParty-designed remediesPenalty DamagesLiquidated damagesPenalty damagesPenalty clausesSlide 49Econ 522Economics of LawDan QuintFall 2011Lecture 132HW3 is online, due next Thursday (Nov 3)Second midterm is Wednesday Nov 9Cumulative – covers everything up to end of contract lawMore weight on more recent material (contracts)Logistics3Regulations/immutable rulesDerogation of public policyFormation defenses and performance excusesIncompetence (but not drunkenness)Duress and necessityImpossibility, and determining the efficient bearer of a riskToday: more ways to get out of a contract, and remedies for breachLast Wednesday…4Derogation of public policy5Old urban legend:A man bought a box of extremely rare and expensive cigars, and insured them against loss or damage.After smoking them, he filed an insurance claim, saying they had been destroyed in 20 separate small fires.The insurance company refused to pay, the man sued and won.But as he was leaving the courtroom, he was arrested on 20 counts of arson.Serious question:If the intent of a contract is clear, but different from the literal meaning, which should be enforced?Discussion question6Contracts based onbad information7Four doctrines for invalidating a contractFraudFailure to discloseFrustration of purposeMutual mistakeContracts based on faulty information8Fraud: one party was deliberately trickedFraudsource: http://www.wyff4.com/r/29030818/detail.html9Under the civil law, there is a duty to discloseIf you fail to supply information you should have, contract will be voided – failure to discloseLess so under the common lawSeller only has to share information about hidden dangers……not information that makes a product less valuable but not dangerousException: new products come with “implied warranty of fitness”Another exception: Obde v SchlemeyerWhat if you trick someone by withholding information?10Under common law, seller required to inform buyer about hidden safety risks, generally not other informationBut…Obde v Schlemeyer (1960)Seller knew building was infested with termites, did not tell buyerTermites should have been exterminated immediately to prevent further damageCourt in Obde imposed duty to discloseDuty to disclose under common law11Under common law, seller required to inform buyer about hidden safety risks, generally not other informationBut…Obde v Schlemeyer (1960)Seller knew building was infested with termites, did not tell buyerTermites should have been exterminated immediately to prevent further damageCourt in Obde imposed duty to discloseSome states require used car dealers to reveal major repairs done, sellers of homes to reveal certain types of defects…Duty to disclose under common law12Frustration of PurposeChange in circumstance made the original promise pointlessCoronation Cases“When a contingency makes performance pointless, assign liability to party who can bear risk at least cost”What if both parties were misinformed?13Frustration of PurposeChange in circumstance made the original promise pointlessCoronation Cases“When a contingency makes performance pointless, assign liability to party who can bear risk at least cost”What if both parties were misinformed?Mutual MistakeMutual mistake about factsCircumstances had already changed, but we didn’t knowLogger buys land with timber on it, but forest fire had wiped out the timber the week beforeMutual mistake about identityDisagreement over what was being sold14Hadley v Baxendale (miller and shipper)Hadley knew shipment was time-criticalBut Baxendale was deciding how to ship crankshaft (boat or train)A general principle about information: efficiency generally requires uniting knowledge and controlContracts that unite knowledge and control are generally efficient, should be upheldContracts that separate knowledge and control may be inefficient, should more often be set asideAnother principle for allocating risks efficiently: uniting knowledge and control15Mutual mistake: neither party had correct informationContract neither united nor separated knowledge and controlUnilateral mistake: one party has mistaken informationI know your car is a valuable antique, you think it’s worthlessYou sell it to me at a low priceContracts based on unilateral mistake are generally upheldMutual vs. Unilateral Mistake16Mutual mistake: neither party had correct informationContract neither united nor separated knowledge and controlUnilateral mistake: one party has mistaken informationI know your car is a valuable antique, you think it’s worthlessYou sell it to me at a low priceContracts based on unilateral mistake are generally upheldContracts based on unilateral mistake generally unite knowledge and controlAnd, enforcing them creates an incentive to gather informationUnilateral mistake17War of 1812: British blockaded port of New OrleansPrice of tobacco fell, since it couldn’t be exportedOrgan (tobacco buyer) learned the war was overImmediately negotiated with Laidlaw firm to buy a bunch of tobacco at the depressed wartime priceNext day, news broke the


View Full Document

UW-Madison ECON 522 - Logistics

Documents in this Course
Lecture 4

Lecture 4

46 pages

Lecture 5

Lecture 5

31 pages

Lecture 7

Lecture 7

39 pages

Lecture 9

Lecture 9

24 pages

Lecture 7

Lecture 7

13 pages

Lecture 6

Lecture 6

14 pages

Logistics

Logistics

35 pages

Logistics

Logistics

41 pages

Logistics

Logistics

36 pages

Lecture 8

Lecture 8

21 pages

Lecture 8

Lecture 8

47 pages

Lecture 9

Lecture 9

49 pages

Lecture 6

Lecture 6

46 pages

Load more
Download Logistics
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Logistics and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Logistics 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?