Sales Law October 27, 2009 Winn

Sales Law October 27 Reading estimate for Thursday 10/29 – Problems 3-5 to 3-9 Introduction to Standards – What connection to Karl Lewellyn & Law Merchant? Unconscionabilty – Unconscionabilty versus Unfair Contract Terms

Does Usage of Trade Exist? Two of Karl Llewellyn’s big ideas about “law in action” – Judges need to engage in “grand style” judging by taking all the circumstances into account Rights revolution [Warren Court] for commercial law? – Institutions outside of the law can contribute to the law Modern research suggests that his theory of merchant custom came first and that he selectively collected evidence to support it Modern research suggests that merchants are more interested in clear rules and fast, cheap dispute resolution even if harsh than ambiguous rules and “grand style” judging – Minimize ex ante cost versus maximize ex post cost

Standards & Law Merchant: What Relationship? Freedom of Contract Usage of Trade Administrative Agency Regulations Voluntary Consensus Standards

Why are standards replacing merchant custom? Manage risk of products liability law Comply with administrative agency health & safety regulations Manage complexity/sophistication of products Meet demand for interoperability Increase certainty of communications with remote parties – Rise of “offshoring” (outsourcing across borders) Private 3 rd party enforcement in lieu of 2 nd party enforcement, government enforcement

Substantive versus Procedural Procedural Substantive

Unfair Contract Terms EU, Australia, Canada, New Zealand, Japan, other countries? Unfairness defined by statute – Consumer & merchant transaction – Not individually negotiated – Contrary to good faith causes – Significant imbalance in contract terms – To detriment of consumer Administrative agency jurisdiction – Review contracts ex ante – Enforce with administrative sanctions or in court