13 November 2018

Back to India

Many years ago this blog began as PryorPostsIndia. In my initial forays into the world of blogging I posted about my experiences on my Spring 2009 Fulbright grant to teach at the National Law University in Jodhpur. You can read one of my early ones here.

As the well-wishes from Donald and Melania attest, I'll be heading back to India on a second Fulbright in Spring 2019. This time I'm traveling under a research grant to study the implementation of the Indian Insolvency and Bankruptcy Code of 2016. While my choice of topics might strike many as painfully dull, it's important to remember that functioning market economies require a system (and corresponding institutions) to deal with market failure.

I first posted on this subject in 2010 and thereafter (here, here, and here) continued to urge the Government of India to move toward a comprehensive bankruptcy law. While I am confident my blogging had nothing to do with what ultimately happened, I think it's important to understand the what's and the how's of this law. After all, in the not too-distant future an Indian firm subject to this statute will seek to administer assets in the United States and Chapter 15 of the U.S. Bankruptcy Code requires that American bankruptcy courts recognize the priority of Indian case and apply the Indian Bankruptcy Code to the extent it does not conflict with U.S. law.

I expect to post from India next year so stay tuned.


25 October 2018

Penultimate Law

In The Christian Theory of Law: An Introduction (here starting on page 4) Eric Enlow practices what he preaches.

While a good introduction catches our attention, gives us reason to trust the speaker, and hints at the argument to come ... it is not the argument. Confusing the bud with the flower, the child with the adult, the law with righteousness, or even justice with blessedness has proved a recurrent human error. Enlow's painstaking and painful introduction makes the point: good is not the Good and the Good is not God. What comes thereafter--the argument--orients us to and then from the Law to its Crown and Glory.

But read it for yourself. You'll see.

22 October 2018

Burgeoning Originalism (Slightly Expanded)

[New matter: For a delightful explanation of why we should believe that the U.S. Constitution (like Acts of Parliament) came embedded in a long-standing manner of thinking about the nature and sources of law (including rules of construction) go here to read the recent sermon by Sir Roger Scruton to the assembled lawyers at the Temple Church in London.]


Back in my law school days no one mentioned what is today the leading school of constitutional interpretation: originalism. This shouldn't be surprising because it really didn't exist in the late 1970's. Today, finding one's constitutional starting point by discerning the original public meaning of the constitutional text seems almost commonsense but back then it was simply not done. Rather, constitutional litigation was conducted in terms of an amalgam of snippets of text, precedent, and policy, not necessarily in that order.

I won't belabor the ongoing legal realist objection to originalism that relentlessly (if not tendentiously) argues that the quest for historical meaning is no more than a pretext for [fill in the blank, all of it bad*]. I won't belabor legal realism because, notwithstanding the reams of articles published in its name, it remains only a pretense of philosophical inquiry. As the step-child of American pragmatism, legal realism can claim neither originality nor depth of understanding.

In any event, Originalism 1.0 has matured as scholars concerned about the Constitution as an authoritative text have worked to expand the concepts and tools relevant to identifying its meaning. But original public meaning isn't limited to the meaning of specific textual terms. It includes, or so Randy Barnett and Evan Bernick argue, original rules of construction. Construction, as my Contracts II students will learn, is the process of determining the legal meaning of text when the text is uncertain or unclear with respect to a particular question. No text can specify the result in every conceivable circumstance. Thus, when confronting a textual hiatus, interpreters of an authoritative text must either throw up their hands and admit defeat or apply a principled "rule of construction" to extend the text to the unaddressed situation. What they should not do is decide on their own initiative and in their own judgment what the answer should be. After all, it's the parties' contract, not a judge's.

In The Letter and the Spirit: A Unified Theory of Originalism (download here), Barnett and Bernick assert and argue for the conclusion that the original public meaning of the Constitution would have included a robust set of rules of construction. Such a conclusion doesn't surprise me because there were certainly a substantial set of rules of construction for contracts deeply embedded in the English common law of the time.

Without using the term, I utilized the concept of a constitutional rule of construction when I argued here and here for a legitimate place for the authority of precedent in subsequent constitutional adjudication. Barnett and Bernick, of course, develop the historical and political warrant for such rules in depth and so it is to their work I heartily direct my readers' attention.

* For an exploration of why the Progressive misreading of originalism is just that--a misreading--see Lawrence Solum, Surprising Originalism (download here).

17 October 2018

Unconscionability Part 5

(Part 1, Part 2, Part 3, and Part 4.)

In the course of less than a century--the nineteenth--unconscionability died in the United States. Notwithstanding its venerable history and theological grounding, unconscionability fell prey to an increasingly utilitarian, market-oriented frame of reference that overwhelmed the tenuous connection between virtue and law. As I observed in my chapter Unconscionability: Reciprocity and Justice (download here):
"By 1820 . . . [American] law was no longer conceived of as an eternal set of principles expressed in custom and derived from natural law.” Substituting policy in place of a formal connection to justice, American courts and jurists found no warrant for the principle of fairness in exchange apart from grants of equitable relief.
But then ... came Article 2 of the Uniform Commercial Code, which has become the law for the sale of goods in every state (except Louisiana) in the United States. UCC 2-302 provides that 
(1) If the court as a matter of law finds the contract or any clause thereof to have been unconscionable at the time it was made the court may refuse to enforce the contract, of it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.
One might have expected the drafters of this provision to define an important word like "unconscionability" given its virtual absence from the preceding 100 years of the law of contracts. Alas, they did not, which has caused courts to scramble to define it on their own. I won't trouble my readers with the varieties of judicial understandings of unconscionability but notwithstanding its undefined state, "unconscionability has provided twentieth- and twenty-first-century contract parties with mixed success. That success, however, has not come with clarity or predictability." Without a tether to the long-standing Christian tradition of virtue in law "legal opinions applying unconscionability have had a difficult time explaining it."

Five hundred-plus years of the Western legal tradition, drawing on biblical, Roman law, and Aristotelian insights, provided a clear understanding of unconscionability. Avoiding sales for double the market (or purchases for less than half) price gave the market enough space but couldn't address collateral contract terms. Yet, such a straightforward rule enjoyed the benefits of clarity and predictability. Quoting my conclusion, 
This genealogy of the birth, growth, blight, and revitalization of unconscionability demonstrates at least two truths. First, no matter its current configuration, unconscionability is an unmistakably Christian doctrine of law. ... Second, shorn of any recollection of its historical roots, contemporary legal thought finds itself the heir of a rule of contract law without any clear idea of why the law should be or how it can be applied.
Finally, I'll end here as I ended there:
Tracing the history and lineaments of unconscionability should give those who acknowledge the truths of God’s revelation in Scripture, as well as in keen observations of the world, confidence to assert the doctrine of unconscionability when the occasion demands. ... The struggle for contractual justice was and is a real one and that the classical Christian tradition provides a powerful platform from which to seek the just result.

11 October 2018

Unconscionability Part 4

(Part 1 here, 2 here, and 3 here.)

Whatever legal rule may have been recognized on the Continent providing a remedy for a grossly unbalanced exchange, no comparable principle existed in the writ-driven world of the English common law. Of course, Church courts applying canon law maintained an active contract docket for many centuries until some time after the rupture with Rome, and Church courts applying canon law would have recognized unconscionability. And English courts of equity, while not acknowledging unconscionability as such, deployed similar concepts in cases within their jurisdiction. Courts of equity, however, rarely had occasion to deal with contract cases that were ensconced in the royal courts.

Yet, as I observe in my chapter, Unconscionability: Reciprocity and Justice (download here), there is good reason to believe that English common law juries would have applied the moral principle of justice in exchange when assessing damages:
Instructions to jurors in the sixteenth century focused on their consciences: “[D]o in this matter as God will give you grace, according to the evidence and your conscience"; "[D]oe that which God shall put in your mindes to the discharge of your consciences."
Jurors in the sixteenth century and earlier took their consciences seriously and conscience then was understood as a faculty, not the whisperings of a singing cricket:
The conscience of jurors was not an amalgam of free-floating moral intuitions. It was the faculty by which moral truths filtered through the law would be applied to the facts of a case. And until modern times the faculty of conscience would have been trained in terms of Christian moral doctrine.
Had they paid attention to their pastors and priests, English jurors would have known that  a sale for more than double (or less than half) the market price revealed a vicious heart and that, following the court's instruction, they should not compound a party's sin by betraying their own consciences by concurring.

In other words,
The absence of laesio enormis [unconscionability] in English law does not mean that commutative justice [equality in exchange] had no place. Multiple jurisdictions—ecclesiastical, equitable, and legal—each with its own mode of adjudication and with its own body of procedural and substantive law, meant that sometimes commutative justice functioned openly, at other times obliquely, or perhaps entirely hidden in a jury’s general verdict.
Next time we'll see that unconscionability disappeared from the common law over the next two centuries as the connection of law and virtue faded. And what to makie of unconscionability's return in the 20th-century Uniform Commercial Code will bring my survey to an end.

10 October 2018

Unconscionability Part 3

(Part 1 here and Part 2 here.)

If by the 1200s the medieval scholastic synthesis to combined Christian and Classical virtues (fidelity and fairness as well as commutative justice) with Roman law, what happened next? In my chapter Unconscionability: Reciprocity and Justice (download here), I go on to make two points. First, jurists took a dim view of lawyers' efforts to draft around the rule of unconscionability (permitting avoidance of contracts for sale for more than double or for less than half of market value). And second, the civil law on this issue did not change notwithstanding the Reformation.

Addressing the first point requires recalling another virtue: generosity. Being generous does not require being just; after all, a gift is imbalanced by its very nature. Thus armed, some cagey lawyers suggested that the "fine print" of a contract could provide that any portion of the price that exceeded the two-times-market-value standard of unconscionability was really a gift. Not so fast, the jurists concluded: “in a sale there is no reason to believe that the parties intend to make a donation. The intention of the contracting parties is directed towards obtaining a mutually advantageous sale contract, there is nothing they want less than to make a gift.” Nice try but still a loser of an argument.

While the Reformation was a big deal on many fronts, it was irrelevant to the doctrine of unconscionability. Such Reformed theological stalwarts as John Calvin and the drafters of the Westminster Larger Catechism agreed that a Christian's moral conscience required justice in contracts. And by justice they meant rough equality in exchange. Such thoroughly Protestant jurists like Hugo Grotius and Samuel Pufendorf agreed from the law side of the fence.

Yet there remains the nagging question of England and its common law. There was no place for the defense of unconscionability in the common law's writ system, was there? We shall see..

09 October 2018

Unconscionability Part 2

(Part 1 here.)

To sustain interest I'll collapse my summary of the next three parts of Unconscionability: Reciprocity and Justice (download here) into a single post: Aristotle to Justinian to the scholastic synthesis in seven paragraphs.

If, as I argued, contract law is absent from the Hebrew Scriptures yet those same scriptures frame the social practice of contracting in light of two virtues--fidelity and fairness--we pick up the path of the legal tradition of unconscionability with Aristotle's analysis of commutative justice. Justice for Aristotle was still a virtue and not (necessarily) a matter of law. Given the social nature of human beings, the virtue of justice entailed not taking anything from another person involuntarily. A virtuous person would of course not steal but neither would such a person engage in an otherwise voluntary transaction that was imbalanced. Why such a big deal? Because
political community can exist only when there is exchange among its members. Exchange, however, would be stifled without some assurance of reciprocity. Equality in exchange is thus foundational to social life and injustice—inequality in exchange, a failure of reciprocity—threatens the fabric of society.
Nice sounding, perhaps, but since when has virtue been the foundation of law? Well, as we shall see, until relatively recently law and virtue have been conceived in meaningful relationship to each other.

We have to wait another 800 years to see the law--the Code of Justinian in 534--pick up the notion of commutative justice and make it an express part of the law, at this time the law of the Eastern Roman (Byzantine) Empire. Or at least so it seems because the Code provides an example of a particularly unbalanced transaction that could be set aside: "Code 4.44.2 provided a remedy for certain sellers of land who received less than half the value of property sold. The seriously shortchanged seller could rescind the transaction (and return the purchase price) unless the buyer paid the full value of the property."

Where Justinian's codifiers really got this idea is opaque and what Roman judges actually did with it is unknown. In fact, Justinian's Code wasn't even "law" in the vast swaths of Western Europe that were no longer under Roman (Byzantine) control. So how can an unenforced law from another jurisdiction help account for unconscionability?

Fast-forward another 500+ years to the turn of the 11th century when three or so factors came together. What happened in about the year 1080 in Bologna, Italy? Combine the creation of the first university in Western Christendom and the rediscovery of the Code of Justinian and you get a new course of study--law--with a place to study it. And how would it be studied? With the analytic framework provided by Aristotle millennia before:
In 1080, long after the collapse of the Roman Empire in Western Europe, scholars at the University of Bologna rediscovered the complete text of the Corpus iuris civilis. With this “new” text, the study of law first became part of the curriculum in a Western university. The rediscovered Corpus iuris civilis, the Scriptures, and the works of Aristotle together formed the foundation of the new field of legal science.
Standing alone, this medieval legal science would be no more than an antiquarian interest. Except that over the next two centuries the insights and conclusions of this new legal science became the law. And what was this law as it pertained to unconscionability?
Early scholastic jurists applied Aristotle’s dialectic method to synthesize Roman law—including Code 4.44.2—at a high level of abstraction and then applied the result to contemporary situations. At a very early date they extended the logic of Code 4.44.2 “to sellers as well as buyers and to parties to analogous contracts.” The expanded remedy for unbalanced transactions is still known by its Latin name—laesio enormis—in countries in the civil law tradition. More importantly, what began as an object of academic study eventually became reality as over the succeeding centuries large parts of Western law became rationalized in Roman law terms.
In other words, by 1200 the law of contracts throughout much of Western Europe (but not England!) had a straightforward doctrine of unconscionability: a sale for more than double (or less than half) the market price demonstrated not only a lack of virtue, it was a legal wrong giving rise to a legal remedy.

But what happened over, say, the following 400 years? Did unconscionability survive the changes wrought by the growing market economies of Western Europe? The Reformation? And what about England with its common law? Stay tuned.

05 October 2018

More on a Place for Precedent

Years ago I posted here and here about the legitimacy of weighing precedent in constitutional adjudication. Drawing on the work of Jeremy Waldron I observed that "the rule of law is a 'principle that commands judges to work together to articulate, establish, and follow general legal norms.'" My earlier post goes on to address other precedent-related matters but here I wish  to draw some theological support for the place of precedent by quoting Oliver O'Donovan at length from "The Ways of Judgment"
Courts are not wholly dependent on another power of government [i.e., the legislature] for their law. They have the law of God, natural and revealed, and they have the customary law of society. They also have a tradition of interpreting both of these which they themselves have developed by their decisions. ... But since judgment is not a series of separate and discrete decisions but an institution, the law of each case is discerned in relation to the law of the preceding cases. No act of judgment can simply invent law de novo, since that would defeat one of the canons of judgment which is proportion. A law of precedent derived from many cases stands over and behind each new decision. Such a law requires no distinct legislator or statute. Divine law, natural or revealed, and mediated through traditions of right innate in the society, is sufficient to allow courts to develop law by way of their own judgments. (Emphasis added.)
Of course, as I wrote here, precedent can be misguided:
Law in a rule-of-law polity is not of the immutable "law-of-the-Medes-and-Persians" variety. Legislatively enacted laws are often changed. ... So too with judicially crafted law. Per Waldron three or so reasons justify overturning precedent: the rule laid down by the earlier court may have been misconceived because it did not accurately reflect the cognate legal materials from which the earlier judge articulated a universalizable norm. Or the cognate materials may themselves have changed. Or, third, it may be clear to all that the original decision has lead to bad results.
O'Donovan again provides a theological rationale for disregarding the precedent that forms the tradition of judgment of which judicial interpretation is a part:
All legal tradition may need correction from time to time. The obligation of the courts to maintain self-consistency makes them reluctant to innovate, but innovations may be necessary. That may be for either of two reasons: the legal tradition may have may have deviated from natural right; or it may be ill-adapted to the practical possibilities within society. ... [On one hand] there are idealist reforms that attempt to correct our unchecked vices; [on the other hand] there are compromise reforms that make some kind of settlement with them. Either kind of reform may be necessary since acts of judgment must be at once truthful and effective. (Emphasis added.)
The place of precedent in a polity in which common law precedent plays a substantial part is a significant one. Precedent is, as it were, part of the scales that form the balance on which justice is administered. Yet it is justice that the scales measure, not simple consistency.

04 October 2018

Unconscionability Part 1

Over a few posts I'll summarize the main arguments I make in a book chapter you can read for yourself by downloading it here. Cribbing from my abstract:
Written at an introductory level, this chapter aims to demonstrate that the contract law doctrine of unconscionability finds its warrant in the virtues of reciprocity and justice. These virtues came to be part of the Western tradition of law in the eleventh century as scholastic theologians and jurists wove together strands of biblical revelation, Roman law, and Aristotelian commutative justice. The culmination of this project--the civil law doctrine of laesio enormis (rough equality in exchange)--remained unaffected by the Protestant Reformation. Because justice in exchange was a matter of conscience as well as law, it played a role even in the common law tradition. The gradual subjectivization of conscience and the displacement of justice in contract law by notions of utility and autonomy through the course of the nineteenth century lead to the disappearance of unconscionability in the common law. Unconscionability was resuscitated in Article 2 of the Uniform Commercial Code but its application has proved uncertain and unpredictable. A return to a virtue-centered understanding of unconscionably--rough equality in exchange--would make unconscionability more certain and predictable.
In typical Protestant fashion, Phase 1 of my argument that unconscionability has identifiable content, that is, it was (and is, or at least should be, more than "the length of the chancellor's foot") begins with Torah. Here we immediately run into a problem: there is no contract law in Torah. As I explained in Principled Pluralism and Contract Remedies (download here or here), "a search of the Hebrew or Christian Scriptures provides little in the way of a specific divine warrant for a legal remedy for breach of contract." (Emphasis added.) Those same texts, however, provide a principled basis for contract law (and remedies) as a means of implementing the grant of human dominion over the earth with the goal of bringing the entire creation into the Sabbath rest enjoyed by God.

Granting the lack of a biblical contract law, however, doesn't mean that Torah has nothing relevant to unconscionability.  As I elaborate at length in the chapter, "Torah presents two fundamental principles that are crucial to contract law: the virtues of fidelity and fairness." Fidelity, or reciprocity, describes the promisor-oriented virtue of promise-keeping (fides est servanda) while fairness (justice) recognizes the reciprocal duty of a promisee not use misuse power to the disadvantage of another. In other words, "just as Torah emphasizes the virtue of fidelity, it also prohibits various vices that could arise in the practice of exchange. . . An exchange of substantially unequal values could fall within the scope of oppression." 

When all is done, the biblical text opens the door to judicially-recognized limits on unfair bargains but doesn't provide a specific answer to the question of when mere inequality reaches the level of oppression. We will see the answer to the question of how the Western moral and legal tradition came to know when "how unfair is too unfair?" in a future post.

02 October 2018

A Road Not Yet Taken: Personal Bankruptcy in India

Long ago, during and shortly after my first Fulbright to India, I posted here and here about some serious problems with Indian insolvency/bankruptcy laws as they then existed. In short, before 2017 Indian law provided no effective means by which to wind up the affairs of a failing corporation, pay its creditors with whatever was left, and re-deploy the corporate assets to more efficient uses.

India's ineffective corporate insolvency laws were replaced with a new Insolvency and Bankruptcy Code in 2016. I plan to return to India on another Fulbright in January to investigate how the new law is working with respect to corporate debtors. But what about individuals? Shouldn't there be some means by which they also can get the benefits of a "fresh start" in financial life?

In fact, the Indian Insolvency and Bankruptcy Code does provide for individual bankruptcy. However, unlike statutes passed by Congress in America that take effect whenever the statute provides, laws passed by India's Parliament (Lok Sabha) come into effect only when the Government (India's parliamentary executive) officially "notifies" the law. And no such notification has taken place with respect to the individual bankruptcy provisions of the 2016 law. (Nor, according to folks on the ground in India, does notification seem to on the Government's agenda in the near term.)

For some of the reasons why the Government has not acted you can go here to read a piece by Adam Feibelman, Legal Shock or False Start? The Uncertain Future of India's New Consumer Insolvency and Bankruptcy Regime.  Feibelman starts by observing that, compared with the corporate bankruptcy provisions of the Indian Bankruptcy Code, relatively little regard was paid by the drafters to the details of the consumer side of things. The result is three forms consumer of debt relief (the "fresh start," comparable to below-median-income Chapter 7 in the U.S.), a consumer insolvency proceeding (comparable to Chapter 13), and then bankruptcy (for failures in connection with a consumer insolvency proceeding). It's not that such a three-fold approach is wrong but that the three parts do not fit together in some significant respects.

Second, Feibelman notes that the availability of consumer debt relief under the Indian Code is very narrowly circumscribed for the "fresh start" proceeding. For a consumer insolvency proceeding, on the other hand, creditors are given a predominant role but that bias swings back to the consumer in the event the consumer insolvency proceeding fails. Taken together, these inconsistencies would make uniform administration very difficult which, in turn, may explain why the Government hasn't chosen to notify the consumer provisions of the Code.

Some form of consumer debt relief is necessary in a modern consumer-credit driven economy. Consumer debt is not yet the primary driver of India's consumer economy so the failure to notify the consumer portions of the new law is not a crisis. At least not yet. It will probably take further growth and then a collapse of the Indian consumer economy to bring personal bankruptcy to the fore in India. Until then, the Government should use this hiatus to improve the consumer portions of the Indian Bankruptcy Code.

27 September 2018

Two for One: "The Maw of the Market" Meets "Purposeful Corporate Thoughts"

A few weeks ago, shortly after the appearance of the meme-generating Nike Apparel ad campaign featuring Colin Kaepernick proclaiming "Believe in something. Even if it means sacrificing everything," I posted some thoughts here. In brief, I observed that Kaepernick had turned a political principle into an opportunity for corporate gain.

But not only Kaepernick, mind you, but "Big Eva" American Evangelicalism. After all, just as consumer-capitalism happily turns political principles into a means to sell more and more stuff, it is also the case that "much of evangelicalism is built around the reality of the self-expressive, individualistic, and autonomous religious consumer." American Evangelicalism is as market-oriented as any other consumer "product."


Some might wonder, however, if the Kaepernick co-opt was actually beneficial to Nike. After all, at least one institutional buyer of athletic apparel threatened to drop its Nike affiliation.


But don't shed a tear for Nike, it's doing just fine notwithstanding the internet blowback about its decision to feature Kaepernick as one of its public faces. Go here to read that as of September 20 the market value of Nike stock had increased by $6 billion since the debut of the Kaepernick campaign. (Of course, Kaepernick wasn't Nike's only featured celebrity but he was certainly the most newsworthy.) . In addition, quoting the linked post, "'The company has sold out 61 percent more merchandise since releasing its Kaepernick ad,' Reuters reported. Nike also discounted fewer products in the 10-day period after the ad compared to the 10-day period before its release."

Such a commercial success should certainly warm the hearts of those for whom increasing the shareholder bottom-line is the the final purpose of a corporation. I posted about this point here where I critiqued the view that corporate purpose should be reduced to maximizing wealth. What I find ironic are folks who decry Kaepernick as un-American, who threaten to boycott Nike, and who at the same time believe that corporations have any duty not to grow their bottom lines. Moralism at one end of public discourse should, one might think, lead to some moral judgment at the other. Unless, of course, one's notions of morality ends at one's 401(k).

26 September 2018

More on Thomas Cromwell



Three and a-half years ago I commented here on a Christmas gift, "Thomas Cromwell: The Untold Story of Henry VIII's Most Faithful Servant." A few days ago I read here in The Guardian of what should be the final word for many years on the life and times of one of the principal agents of reform in the Church of England. But for the King himself, no one was more responsible than Thomas Cromwell for the form of the reformation of the Church of England in the first half of the sixteenth century. And, like a number of others close to the King, Cromwell's work was requited with a beheading.

Diarmaid MacCulloch's 752-page biography of the first Cromwell, "Thomas Cromwell: A Life" is due out soon. I'm not sure when I'll get a chance to read it but I expect the effort would prove worthwhile.