This paper briefly assesses defenses of the law of liquidated damages based on experimental evidence adduced by behavioral law and economics (BLE). It identifies three sorts of inference BLE frequently relies upon: a weak inference of rule design, a modest inference to limited application, and a strong inference to general application. BLE's lack of a unified and coherent theory of rational choice does not mean that its unconfirmed predictions are unsupportable. However, needed support must come indirectly, from defensible inferences drawn from experimental results. Because the defensible inferences from the results BLE relies on are limited to a restricted range of choice environments, they cannot support a broad legal rule that is to apply in most cases. Two consequences follow for the regulation of liquidated damages clauses. First, the inferences cannot support a rule of penalty regulation. At most, they justify exceptions that allow judicial oversight of liquidated damages clauses in particular circumstances. Because BLE's defensible inferences have a restricted range, they cannot themselves undermine the general presumption favoring the contracting parties' choice of value-maximizing terms. Second, the inferences cannot undermine arguments for limiting penalty regulation that do not rely on the processing of information. Arguments from measurement error resulting from restricted access to information about damages, such as Goetz and Scotts', are unaffected by findings of systemic cognitive failure in information processing.
Three established torts require the defendant’s behavior to be “offensive” or “highly offensive” in order to be actionable: offensive battery, public...
In the last few years, the Supreme Court has upended its doctrine of religious freedom under the First Amendment. The Court has explicitly rejected...
It has long been said that the common law "works itself pure" But in the law of torts, not always. This Article reveals and analyzes the...
The idea of institutionalism figures prominently in today’s debates about the role of federal courts in American democracy. For example, Chief Justice...
Long lines inside Bodo’s Bagels, congestion on Emmet Street and a seemingly endless stream of runners and scooters zooming past your car in early...
This article discusses the links between climate and debt sustainability by focusing on how climate mitigation and adaptation are paid for, and who...
Courts routinely use low cash bail as a financial incentive to ensure that released defendants appear in court and abstain from crime. This can create...
The question whether the term “set aside” in the Administrative Procedure Act (APA) authorizes a federal court to vacate a rule universally—as opposed...
I’m writing about a book of mine that may be of interest to the election law community. The title is Public Law and Economics, my coauthor is Robert...
Contract law has one overarching goal: to advance the legitimate interests of the contracting parties. For the most part, scholars, judges, and...
Do legal concepts alter how we understand the past and present? The jurisprudence of race suggests that they do. For several decades, federal courts...
Public nuisance has lived many lives. A centuries-old doctrine defined as an unreasonable interference with a right common to the public, it is...
This project is part of ALI’s ongoing revision of the Restatement Second of Torts. The Restatement Second recognized compensatory damages, injunctions...
An important administrative law doctrine developed by the lower federal courts, called remand without vacatur, rests on a mistaken premise. Courts...
At its meeting on January 19 and 20, 2023 the Council approved Council Draft No. 2, containing §§ 5, 11, and 12 of Topic 1, General Rules for...