Coercion
Contracts
March 15, 2016
Where are we?
1. ¢
2. Formation – Offer/acceptance
3. “Policing” (Defenses; invalidation)
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Capacity
Equity, Duress
Fraud
Unconscionability
4. Remedies
Alaska Packers Ass’n v. Domenico
Alaska PackersAss’n v. Domenico
• Facts
• Procedural History
Alaska Packers
• What is admiralty?
• What is a libelant?
Consideration issue
What was the consideration for the K signed by
the individual seamen?
Alaska
Packers
Sailors
The modification
K1: SF Contract
Alaska
Packers
$50 plus
piece rate
Work hard,
do what the
boss says
Sailors
K2: Alaska
Contract
Alaska
Packers
$100 plus
piece rate
Work hard,
do what the
boss says
Sailors
K2: Alaska
Contract
Alaska
Packers
$100 plus
piece rate
Is there
anything new
or extra
coming from
the sailors?
Work hard,
do what the
boss says
Sailors
What were the circumstances of the renegotiation?
• Where did it take place?
• What were the bargaining positions of the parties?
Quick review: Transaction Cost Economics
Oliver Williamson, Markets and Hierarchies
(1975); The Economic Institutions of Capitalism
(1985)
Oliver Williamson, UC Berkeley
“Asset Specificity”
When “sunk cost” investments lock one party
into a contract, make it difficult to recoup
investment if the other party does not
perform
Could the sailors ever win?
• See 2000 Utah L Rev 185 “A Fish Story”
Schwartzreich, p. 363
• Novation: rescission and then re-contracting
• Disfavored: see why?
§ 89. Modification Of Executory Contract
A promise modifying a duty under a contract not fully performed on
either side is binding
(a) if the modification is fair and equitable in view of circumstances not
anticipated by the parties when the contract was made; or
(b) to the extent provided by statute; or
(c) to the extent that justice requires enforcement in view of material
change of position in reliance on the promise.
Watson and Son v. Carrig
Watson and Son v. Carrig
• Facts
• Procedural History
Was the hardrock foreseeable?
• Stretching rescission
• For good or ill?