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Coercion

Coercion. Contracts – Prof. Merges March 8, 2011. Where are we?. ¢ Formation – Offer/acceptance “Policing” (Defenses; invalidation) Capacity Equity, Duress Fraud Unconscionability 4. Remedies. Alaska PackersAss’n v. Domenico. Alaska PackersAss’n v. Domenico. Facts Procedural History.

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Coercion

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  1. Coercion Contracts – Prof. Merges March 8, 2011

  2. Where are we? • ¢ • Formation – Offer/acceptance • “Policing” (Defenses; invalidation) • Capacity • Equity, Duress • Fraud • Unconscionability 4. Remedies

  3. Alaska PackersAss’n v. Domenico

  4. Alaska PackersAss’n v. Domenico • Facts • Procedural History

  5. Alaska Packers • What is admiralty? • What is a libelant?

  6. Consideration issue • What was the consideration for the K signed by the individual seamen?

  7. Alaska Packers Sailors

  8. The modification

  9. K1: SF Contract Alaska Packers $50 plus piece rate Sailors Work hard, do what the boss says

  10. K2: Alaska Contract $100 plus piece rate Alaska Packers Sailors Work hard, do what the boss says

  11. K2: Alaska Contract $100 plus piece rate Alaska Packers Sailors Work hard, do what the boss says Is there anything new or extra coming from the sailors?

  12. What were the circumstances of the renegotiation? • Where did it take place? • What were the bargaining positions of the parties?

  13. Quick review: Transaction Cost Economics

  14. Oliver Williamson, Markets and Hierarchies (1975); The Economic Institutions of Capitalism (1985)

  15. Oliver Williamson, UC Berkeley

  16. “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

  17. Paul Jaskow: “Markets for Power”

  18. “Take or pay” clauses “Objective” price escalation clauses; long-term contracts

  19. “Take or pay” clauses

  20. A Property Rights Example Private parcels

  21. Could the sailors ever win? • Mid. P. 328 • See 2000 Utah L Rev 185 “A Fish Story”

  22. Schwartzreich, p. 332 • Novation: rescission and then re-contracting • Disfavored: see why?

  23. § 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.

  24. Watson and Son v. Carrig

  25. Watson and Son v. Carrig • Facts • Procedural History

  26. Was the hardrock foreseeable? • Stretching rescission • For good or ill?

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