Cathy Hwang

When corporations make commitments to stakeholders, they often do so voluntarily and without contracts. But perhaps unsurprisingly, they also regularly flip-flop on those voluntary commitments.

Take retailer Target. A few years ago, it rolled out a variety of initiatives aimed at diversifying its workforce and supporting Black entrepreneurs. Nobody forced Target to do so; it appeared to have done so in response to the zeitgeist. But in January of 2026, shortly after the new Presidential administration came into power, Target abruptly announced that it would roll those initiatives right back due to “the evolving external landscape.”

In Corporate Goodwill, Caley Petrucci considers corporations’ non-binding promises to stakeholders, which are “unmoored from durable, actionable commitment[s].” The article notes that because of this unmooring, corporations regularly and easily abandon their stakeholder promises during periods of transition, such as during a merger or acquisition (M&A), or when there is a change in the political winds. It then proposes a variety of mechanisms, including contractual ones, that might do a better job of holding corporations to their commitments.

This article contributes to one of the most important corporate law debates: What is the corporation’s role in society? Is it to maximize shareholder value, or is it to contribute to society? And if it’s the latter, what’s the mechanism by which contributions to society are determined, measured, and operationalized?

While many have written about these questions, Petrucci brings a nuanced understanding of M&A contracts to the discussion.

A novel review of M&A contracts reveals just how often environmental, social, and governance (“ESG”) issues are brought up in M&A contracts. Relying on data collected from FactSet on recently completed large M&As, the article reports that 37% of buyers and 100% of sellers made representations and warranties about labor and employment matters, including representations about discrimination and harassment. For example, about 13% of buyers and 46% of sellers made so-called “Weinstein clause” representations, in which they asserted that there have not been any recent material allegations of sexual harassment made against corporate leaders.

Representations and warranties are contractual provisions through which buyers and sellers make assertions about their status at the time a contract is signed. The most important of those reps and warranties are “brought down” at closing—that is, buyers and sellers must once again assert that those “fundamental” reps and warranties are true again before the money and assets change hands. But reps and warranties have no staying power after closing: Once the money and assets change hands, the buyer can do whatever it wants with the company it purchased.

The article finds that while ESG-related reps and warranties are common, those same ESG commitments disappear in post-closing covenants—the parts of the M&A contract that bind corporate behavior after the deal is completed.

In other words, while deal parties seem to care about buying (or being bought by) companies committed to ESG issues, these same deal parties are fine with ESG commitments disappearing after the deal is closed. And while one might argue that post-closing covenants are relatively rare in the kinds of public M&A deals that Petrucci analyzes, she notes that they are not unheard of: employees, for example, are “universally” protected by post-closing covenants (although those covenants have many exceptions).

This differentiation between ESG commitments found in reps and warranties vs. in covenants is itself a significant contribution: one that showcases Petrucci’s nuanced understanding of M&A agreements and how parties use them to cover numerous substantive issues at different times of corporate transition. But the paper goes beyond that.

It argues that changes to ESG policy at times of M&A do not necessarily signal abandonment of prosocial commitments (although Petrucci notes that there is an overall decrease in stakeholder commitment consideration). Rather, those changes reflect rearrangements in stakeholder priority. During M&A, for instance, financing parties (lenders) are the stakeholder group elevated above others. During other times, companies might elevate employees or other groups.

The article ends with several suggestions for making stakeholder commitments more durable. Among those is the idea that stakeholders might become third-party beneficiaries via contract. For example, it notes that employees might be able to enforce parts of the M&A agreement that relate to employee rights. These, and other regulatory and contracting solutions, offer some ideas for others to explore.

I greatly enjoyed this article. In recent decades, much has been said about how to incentivize corporations to elevate prosocial goals. But “prosocial” is in the eye of the beholder, and corporate changes within the last fifteen months have shown just how slippery it can be to rely on vague definitions of “prosocial.” Petrucci’s article is fresh—it considers stakeholder governance in the context of M&A contracting. And it is in this fresh recounting of corporate commitments in times of change that we have new insights about corporate commitments and how to make them mean something.

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Martha Ertman

Dorothy Brown’s new book Getting to Reparations: How Building a Different America Requires a Reckoning with our Past shows that “the legacy of slavery . . . is found in every nook and cranny of American life.” (P. 164.) So it’s hardly surprising to find actual contracts and extreme incursions on freedom of contract in the ongoing “trifecta” of “economic exploitation, mass incarceration, and racial violence” that white America has imposed on African Americans. Brown’s focus is post-13^th Amendment, arguing that slavery essentially “shape-shifted” through harms including forced labor (i.e., sharecropping and convict leasing), mob violence to punish blacks who built businesses, and, more recently, today’s subprime mortgages.

Brown succeeds in building a case for reparations that everyone – including contracts scholars – could and should embrace.

The book’s three sections together justify Brown’s Model Executive Order in the book’s appendix, which would establish a Presidential Commission on Post-Slavery Governmental Discrimination against Black Americans. (Pp. 205-210.) Undeterred by the Trump administration’s war on racial equality, Brown dares to imagine a federal government finally willing to acknowledge, investigate, and redress the centuries of anti-black harm. Her optimism heeds Toni Morrison’s observation that the “serious function” of racism is “distraction” that “keeps you explaining, over and over again, your reason for being.” (P. 197.) Reparations, according to Brown, would “finally enable black Americans to stop explaining “why there are racial disparities, why we are disproportionately poor, why we aren’t prone to criminal acts, why we aren’t further along economically.” (P. 197.)

Like any strong legal argument, the book starts with precedent: four instances when the U.S. government paid cash compensation to nonblack people “for harms similar to those experienced by black people:” (P. xxiv.)

• Enslavers in Washington, D.C., for the “harm” of the Emancipation Proclamation;
• Italian lynching victims;
• Tribal Nations for land theft and economic exploitation; and
• Japanese Americans for mass incarceration in World War II.

Part I’s material on white enslavers’ “payday” (P. 3) makes an outstanding contribution to the reparations literature. Many people know that the nation breached its 1865 promise to provide newly freed Americans with 40 acres and a mule (General Sherman’s Field Order 15), a breach that enabled former enslavers to coerce the newly freed men, women, and children back into slavery-like conditions. It’s likewise well known that African Americans suffered additional harms, including lynching, vote suppression, and racial discrimination in housing and education.

But few appreciate that the federal government paid enslavers $993,406 (around $30 million today) for the “loss” of having to free 3100 people. (P. 9.) In my own reparations research, I have looked – without success – for details about which enslavers got paid, and how much, for freeing whom. Getting to Reparations provides that information, including the petition of D.C.’s second-largest enslaver, Margaret Catherine Adlum, for $22,550 (about $650,000 today), and how the U.S. Treasury paid her $9,351 (about $235,000 today). (Pp. 12-15.)

In contrast, the enslaved people – the ones truly wronged – never got paid. The remainder of Part I of Getting to Reparations describes the three more federal precedents for racial reparations: Sicilians for white lynch mob violence (Pp. 24-32); Tribal Nations for stolen land and economic exploitation (Pp. 32-38), and Japanese Americans for mass incarceration in World War II (Pp. 38-63).

Part II details the parallel mass harms suffered by African Americans at the hands of government and private actors: stolen labor; lynching; land theft and economic exploitation; and mass incarceration. Brown’s contribution is to illustrate the economic aspect of these harms, demonstrating how the country has repeatedly shunted wealth to whites at black Americans’ expense.

Brown defines reparations as “compensation for governmental harm inflicted directly, or indirectly due to their failure to prevent others from inflicting injury” (P. xviii). That focus on state action suggests that reparations are only a matter of public law. But contracts play a surprisingly important role. Take enslavement and its shape-shifting descendants, sharecropping and convict labor enabled by vagrancy laws. They all involve forced work, the very antithesis of freely chosen labor performed for compensation. In this view, contractual harms are central to white supremacy, as is clear from 42 USC § 1981’s declaration that all citizens have the same right to contract “as is enjoyed by white citizens.”

Even the crime of lynching includes economic losses. Brown documents how lynching required whole families and communities to abandon land, homes, and businesses. Indeed, as many as half of lynching victims owned land and other wealth-sustaining assets such as businesses, livestock, and equipment. (Pp. 85-86.) In short, lynch mobs and the government actors who cooperated or participated in racial terror forcibly deprived victims and their families of their freedom of contract.

Getting to Reparations concludes the analysis by debunking opposition to reparations for African Americans and contending that reparations could survive a constitutional challenge. Rather than rely on the 14^th Amendment, Brown contends that the 13^th Amendment, as originally intended, supports reparations. (Pp.187-188.) Anyone concerned with racial justice, including contracts professors who support freedom of contract, can draw on this book as a cautionary tale about the long history of some Americans enjoying more contractual freedom than others, coupled with an optimistic proposal for how law can and should evolve.

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David Hoffman

Forum selection clauses are so familiar that they rarely invite fresh questions. Courts mostly enforce them after lawyers litigate motions to dismiss or transfer, and the parties move on. One remedial question, however, has long sat in plain sight: when a party breaches a forum selection clause by suing in the wrong court, why is the remedy limited by default to correcting the venue error rather than compensating the counterparty for the cost of enforcing the clause?

In Limits on Damages for Breach of a Forum Selection Clause, John Coyle and Tanya Monestier take that question seriously—and show that it was never foreclosed for particularly good reasons. The article is valuable precisely because it is doctrinally grounded, methodical, and unspectacular in the best sense: it demonstrates that even in well-trodden territory, there remain basic remedial questions worth asking, and answering, with ordinary tools of contract law.

The article’s opening offers a familiar observation. When a plaintiff files suit in a non-designated forum, the defendant’s options are procedural. It can seek dismissal or transfer. What it cannot usually recover (without contractual authorization) are the attorneys’ fees incurred in persuading the court to enforce the clause. Courts routinely say this is barred by the American Rule or the election-of-remedies doctrine, and the conversation ends there.

Coyle and Monestier reopen that conversation. The article’s core claim—that attorneys’ fees incurred in enforcing a forum selection clause should be considered expectation damages—got less crazy the more I thought about it. After all, the promise was “litigate only in Forum X,” then litigation in Forum Y predictably imposes costs that would not have been incurred had the contract been performed. Transfer does not erase those costs, but merely prevents further ones.

Much of the paper is devoted to attacking two doctrinal hedges that have made courts reluctant to adopt a damages default. They argue that the election-of-remedies argument (which says you can get either money or an injunction but not both) by arguing that dismissal/transfer is materially different from specific performance. Courts enforcing forum selection clauses are not ordering parties to litigate anywhere; they are allocating adjudicatory authority under procedural rules. And, they argue, even if one insisted on characterizing transfer as a form of specific performance, basic remedial doctrine has long permitted supplemental damages where necessary to make the non-breaching party whole.

Coyle and Monestier think that the American Rule justification fares no better. That rule bars recovery of attorneys’ fees as the cost of litigation, not as damages caused by breach. Courts routinely award attorneys’ fees as damages where the broken promise concerns litigation conduct itself: covenants not to sue, settlement agreements, and duties to defend. A forum selection clause is a promise of that same kind. Treating enforcement costs as unrecoverable “fees” rather than recoverable “damages” is a labeling choice, not a doctrinal necessity.

The article thus shows that the conventional wisdom against damages is surprisingly shallow, presumably because it was built on a few examples at a time when choice of forum clauses were far more rare than they are today.

Coyle and Monestier wisely devote the second half of the article to identifying limits—cases in which damages should not be awarded even if a clause was technically breached.

Some of these limits are straightforward and persuasive. If a forum selection clause is invalid, inapplicable, or unenforceable, there is no breach and no basis for damages. Or, if a court refuses to transfer or dismiss based on public-interest factors, awarding damages would undermine the very reasons the court chose to retain jurisdiction. And obviously, if non-signatories invoke a clause under the “closely related” doctrine, awarding damages would extend contractual remedies beyond the parties who actually bargained for them. In each of these settings, restraint follows naturally from the interaction between contract doctrine and procedural law.

The most contested, though politically attractive, limit is the one the authors themselves seem least confident about: consumer contracts. Coyle and Monestier argue that even if a consumer technically breaches a forum selection clause by suing at home, damages should generally be unavailable. The concern is familiar: asymmetric bargaining power, contracts of adhesion, and the risk that damages would further chill already fragile consumer claims. The claim is plausible—but noticeably less grounded than the rest of the paper. Unlike the earlier limits, it does not fall out of contract doctrine or remedial logic. But it seems obviously right as a default position, particularly when firms could otherwise contract into an attorney fee-granting rule.

The role of defaults generally is something the article usefully raises, without quite resolving: why should damages for breach of an FSC be the background rule rather than something parties must contract into explicitly? Sophisticated parties are perfectly capable of drafting fee-shifting provisions keyed to forum breach, and many already do. From that perspective, the case for a damages default—as opposed to mere permissibility—rests less on contract doctrine than on a judgment about under-deterrence and opportunism under existing law. The article gestures in that direction, particularly in its discussion of plaintiffs “taking a shot” in a favorable forum, but it never fully theorizes why courts should supply this remedy by default rather than leave it to private ordering.

The omission of a default rule equilibrium analysis is not fatal—indeed, it may reflect the authors’ deliberately modest ambitions—but it becomes more visible once the paper carves out categorical exceptions, especially for consumer contracts. At that point, the analysis quietly shifts from doctrinal reconstruction to institutional choice. But once it’s obvious that the damages rule here is merely a default, setting its baseline position poses complex questions of information exchange, bargaining power and social expectations.  I hope the authors return to these questions in future work.

A paper that combines doctrinal seriousness, calibrated ambition, and a willingness to identify where doctrine runs out is rare.  It is what makes Limits on Damages for Breach of a Forum Selection Clause worth reading, and lingering over, even for those who thought this area of law had little left to say.

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Nancy Kim

Brett Frischmann and Moshe Y. Vardi’s article, Better Digital Contracts with Prosocial Friction-in-Design, wrestles with perhaps the most vexing problem facing contract law today – what to do about the proliferation of digital contracts that infest our screens. Frischmann and Vardi tackle the problem from a different angle than most contracts scholars (perhaps not surprising given their background and expertise in technology). Rather than focusing exclusively on doctrinal or legislative solutions, they propose design-based solutions that reframe and reconceptualize assent (and consent).

Their article begins with a critique of digital contracting (while they use the term “digital contracting”, they are mostly concerned with wrap contracts, such as clickwraps and browsewraps, and not DocuSign-type documents). The failure of digital contracting as an aspirational ideal has to do with digital contracting systems, which they define as “the combination of law and code-based architecture that generates boilerplate.” (P. 4.) These systems fail not simply as implementation of the traditional model of contracts (two parties bargaining and reaching mutual assent or a “meeting of the minds”), but more tragically for humanity, they “generate contracting behavior and contractual relationships that are as far from the ideal as one can imagine.” (P. 4.)

The failure is of the systems, but the fault lies with “efficiency logic.” (P. 4.) which is a term that they use to refer to the logic that prioritizes optimization of systems above other social values: “For decades, the development, design, and deployment of digital contracting systems has followed a simple logic: optimize for efficiency, which involves minimizing transaction costs, eliminating friction, and increasing the speed, scale, and scope of technologically mediated interactions.” (P. 5.) Efficiency logic appeals to contract law which contorts to accommodate it and the consequence is the “ubiquitous digital boilerplate that people almost always automatically accept by clicking upon cue.” (P. 5.)

The objection they have is only partly rooted in the substance of one-sided boilerplate terms; they are primarily concerned with the dehumanizing effects of these digital contracting systems, which “undermine human autonomy and sociality.” (This is a topic that Frischmann (with Evan Selinger) has written about in a book, Re-Engineering Humanity, that I highly recommend and that I reviewed here).

Their solution is to combat efficiency logic by introducing friction in the design of digital contracting systems, “abolishing one-click contracting and related forms of digital boilerplate.” Rather than speeding up transactions, they want to slow them down by requiring firms to teach people what their terms mean. They argue that in the digital contracting environment, the duty to read is unfair because the unreadability of these terms is engineered. Websites are designed to nudge people to click to accept without reading the terms first. Imposing a duty to teach on firms would make it more costly for them to impose more terms simply because they can. Friction-by-design would have beneficial effects on society, improve user comprehension, and enhance a sense of autonomy.

Their article joins the growing chorus of voices that understand that adhesive digital terms are not just like adhesive paper contracts. In the digital context, form is substance. Accordingly, solutions to the mass proliferation of wrap contracts must grapple with the problem of form. Frischmann and Vardi’s proposals are consistent with the trend of recent court decisions determining wrap contract formation by evaluating aspects of website design, such as website flow. They conclude with a call for an interdisciplinary solution that goes beyond doctrine. The problem of digital adhesive terms was not created solely by contract doctrine, and it won’t be solved by doctrine alone.

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Daniel Barnhizer

This article by Professors Choi and Triantis hits close to home with how closely it models my personal experiences with oil and gas leases on my family’s farm during the leasing boom of the early 2000s. Specifically, the authors explore how parties can structure long-term contracts to maximize the expected value in the face of uncertainty regarding changes in relative bargaining power that may occur over the term of the contract by designing the contract to permit modification even if that modification merely redistributes the available surplus.

Beginning in about 2008-2010, discoveries in the Utica shale formation stretching from Quebec, Canada, down through Eastern Ohio, together with improved fracking techniques, led to a new oil boom.¹ I assisted my uncle in negotiating a lease for his farm. Based on oral histories of prior experiences, we were reluctant to enter long-term leases without substantial protections against exploitative dealings over the term of the contract. By delaying, we were able to wait until we had more bargaining power as demand for new oil & gas leases increased, and eventually my uncle executed a lease on substantially better terms than the early-moving neighbor. On the other hand, by delaying, we also missed out on almost two years of royalty payments.

This choice between contracting early to avoid later uncertainty versus “wait-and-see” to avoid potential exploitation is the situation addressed by Professors Choi and Triantis in Designing Contract Modification. Facing uncertainty regarding both future changes in bargaining power affecting either party and facing uncertainty regarding good faith, willingness to breach, and statutory impacts on party bargaining power, how should parties contract to maximize the available surplus? Can the parties structure their contracts to promote the willingness of the parties to contract earlier in the transactional process despite uncertainties regarding future changes in party bargaining power? More importantly, should courts respect later contract renegotiations and modifications resulting from changes in party bargaining power, even if those changes are merely redistributive and do not result in any increase in total contract value? Professors Choi and Triantis answer these questions with a welcome take on the dynamic nature of bargaining power, not just at the moment of contracting but also over the course of the parties’ transactional relationship.

The authors describe the central problem in terms of “the parties’ flexibility to modify [contract] terms and its effect on their earlier contracting decisions.” (P. 2.) Renegotiation and modification of long-term contracts provide potential benefits in terms of re-aligning party rights and obligations in light of developments after contract execution, but also carry the risk that one party may exploit changes in bargaining power after contracting solely to extract a greater share of the bargaining surplus. As the authors note:

A modification of a contract can be valuable in promoting ex post efficiency—revising contractual obligations so that they are optimal in the (ex post) realized state of the world. Renegotiation, however, may be hazardous to ex ante efficiency because it presents an opportunity for one contracting party to “hold up” the other, who has made relationship-specific reliance investments. Renegotiation can further undermine ex ante efficiency if it upends the parties’ efficient allocations of risk. (P. 2.)

Professors Choi and Triantis begin by recognizing the reluctance of courts to enforce ex ante modifications that solely redistribute the contractual surplus. (Pp. 2-3.) They survey the “tortured path” taken by courts wrestling with doctrines surrounding contract modification (P. 7), including the pre-existing duty rule at common law, as well as the doctrine of good faith,² duress, and the Restatement (Second) of Contracts § 89 requirement that modifications be “fair and equitable.” (See Pp. 7-13.) With this base, the article moves to a brief description of the economics of contract renegotiation, noting that renegotiation has been viewed as either ex post efficiency enhancing (as where changed circumstances permit the parties to expand the transactional surplus through modification) or ex ante efficiency reducing (as where the threat of later modification reduces a party’s willingness to make relationship-specific investments). (Pp. 13-15.) In particular, as described in the next section, exogenous factors over the course of a long-term contract may significantly alter the relative bargaining power of the parties such that one party may demand renegotiation of the contract.

This recognition of the dynamic nature of bargaining power is what I found compelling about this article. To the extent that courts address relative bargaining power at all, they tend to focus solely on the moment of contracting and not on whether a party could have made bargaining power-related investments before contracting. Professors Choi and Triantis examine things in the other direction, observing that both exogenous and endogenous inputs may affect relative bargaining power over the contract term. (Pp. 15-16.) Focusing on exogenous inputs affecting bargaining power, the authors continue in the following sections with a series of models demonstrating that contracts structured to promote good faith or fair and equitable modifications in the face of such ex post shifts in relative power. Specifically, Professors Choi and Triantis present a compelling argument that parties should be more willing to enter contracts where they anticipate uncertain shifts in bargaining power caused by exogenous events by designing the contract to promote modifications through terms such as deliberately under-compensatory liquidated damages clauses and obligations to renegotiate in good faith. (Pp. 29-30.) In such cases, even if the modification is purely redistributional, the expected value to the parties and the willingness of the parties to make relationship-specific investments will be increased compared to situations in which such modifications are unavailable or unenforceable. This is a great article that explores the modification doctrine in a way courts rarely consider.

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Eliza Mik

Let’s start with a cliché: Kolt’s article is a must-read conversation starter. AI agents are proliferating around us, and the opportunities created by those technologies seem infinite. And so are the legal problems. The more powerful the technology and the higher its potential to make our lives easier, the greater the risks of its use. As Kolt puts it, “productivity and efficiency gains may come at the cost of unintended outcomes.” He also provides great illustrations of such risks, ranging from hallucinations (Hello Air Canada!) to unethical behavior in pursuit of the set goals. Ultimately, somebody will have to foot the bill. And it won’t be the AI agent. But – I am running ahead with myself!

If I were to provide a short summary of the article, here it is: Kolt explores the governance challenges presented by autonomous AI agents. The latter differ significantly from language models in their ability to independently plan and execute complex tasks. While established legal and economic frameworks, particularly the principal-agent theory and common law agency doctrine, provide insights into issues like information asymmetry, authority, and loyalty, Kolt shows how all such frameworks hit a wall when applied to non-human entities. Reinterpreting traditional theories and legal doctrines can only get us so far. Can we really speak of fiduciary duties with regard to software? Can we speak of “conflicts of interest” and “loyalty” – or should we speak of ill-defined objective functions, sloppy prompts, or simply bad programming? I can’t help but ask: who (or what!) is easier to control: a human or an AI agent? Of course, Kolts makes an important disclaimer: he uses structures, principles, and vocabulary developed in the common law of agency to shed light on the challenges involved in governing AI agents. The common law of agency is used as an analytic lens, but does not directly examine the legal application of agency law to AI agents. After all, the AI agent is not a discrete legal entity and cannot be held liable.

To address the governance concerns surrounding AI agents, Kolt proposes a three-pronged strategy focused on inclusivity, ensuring AI agents serve a broad range of societal interests beyond a single user, visibility, advocating for greater transparency into AI agent design and operation, and liability, establishing clear rules for accountability when harm occurs. Unsurprisingly, he also emphasizes the need for new technical and legal infrastructure to manage the burgeoning risks of accompanying this technology. Let me split this up.

Regarding inclusivity, Kolt uses this concept to address the alignment problem, that is, the challenge of ensuring that an AI agent’s goals and operations remain compatible with human values. The alignment problem, however, raises its own (seemingly insurmountable) challenges, mainly deriving from the difficulty of defining, formalizing, and encoding human values into an AI system. Values are difficult to capture in code. Whose values are we speaking of anyway? The developer’s or the user’s? The shareholders’ or the consumers’? In practice, an AI agent may extrapolate initial human preferences to achieve the desired objective, while also leading to harmful consequences. For example, a system tasked with increasing shareholder value may target vulnerable consumers with higher prices. Ultimately, we must acknowledge that any technology that operates with a high degree of autonomy and at inhuman speed will preclude humans from evaluating whether its operations are responsible or ethical in real time.

Regarding visibility, Kolt refers to the ability to understand the AI agent’s operations. Such understanding is largely precluded by the fact that many AI agents operate as black boxes so that neither those who developed them nor those who deployed them can fully comprehend their internal operations. This problem seems unsolvable, at least from a technical perspective. LLMs, which form the “brain” of AI agents, are inherently stochastic and unpredictable. We may be able to understand how the technology works in general, but we cannot determine the “reasoning” underlying the individual outputs or “decisions” made by the AI agent. Technical issues aside, we must be realistic. Can we assume that, if provided with adequate technical information about the capabilities of a given AI agent, the average user would familiarise him or herself with such information?

Regarding accountability, Kolt’s article leads straight into the broader and not-so-novel territory of liability for the operation of computer programs, or software in general. For the cacophony of sensationalistic headlines about the imminent arrival of AGI, Agentic AI (or whatever new term appears on the cover of Wired) must not distract us from the simple truth that AI agents are software—computer programs of varying complexity and reliability that interact with each other in unexpected ways. Computer programs do not always execute as intended or operate as instructed. Sometimes it is the “fault” of their creators (bad programming or training); sometimes it is their users who are to blame (using the technology without proper safeguards or for a purpose it was not intended for). Users of AI agents must understand the risks of their, well, use.

There is no sugarcoating: the risks – at least for the time being – may outweigh the benefits. At present, AI agents should not be left to operate without ongoing human supervision. In order to achieve the set goals, such as making restaurant reservations or booking flights, they need login information as well as payment details. How many of us are willing to provide such information to a nascent technology that, as Kolt points out, operates as a black box and is inherently unpredictable? If we are willing to do so, do we deserve protection? We must also remember that software is always provided “as-is,” without many (if any!) guarantees as to its reliability and uptime. As indicated, notwithstanding the new label, AI agents are pieces of software, and software has the tendency to “disobey” the instructions of its users. The instructions themselves may also be unclear or ridden with programming errors. Who provided the instructions? Who decided on the degree of autonomy? Everything leads back to the old problem of “many hands” and the challenges of allocating liability among the many actors involved in developing and deploying the AI agent.

I love the paper for its appreciation of the complexities involved and for its attempt to use “time-tested analytic frameworks” to understand and characterize the tradeoffs arising from the use of AI agents: the economic theory of principal-agent problems and the common law of agency. After all, before setting out to create something new, we should first test existing legal and conceptual frameworks. I do not, however, have Kolt’s confidence to use the term AI agent without a gazillion caveats. After all, the legal meaning of the term agent differs from its technical meaning, as acknowledged by Kolt himself. We must also remember that the concept of “autonomous agents” is not new and concerns a particular way of thinking about how one component of a software program relates to other components. Kolt sees AI agents as actors, not tools. There may be a fine line between tool and actor, a line that needs to be carefully drawn to make this distinction as clear as possible. After all, crossing this line is supposed to trigger a different legal regime and require a discrete governance framework. Kolt defines AI agents as “autonomous systems that can plan and execute complex tasks with only limited human involvement” and regards them as actors, not tools. He leaves some questions underexplored, though. When does a tool become an actor? When does it act autonomously? What is autonomy, then? Is it absolute? Or –is it a question of degree? Kolt’s article confirms the importance of technical details as well as the difficulty of falling back on established legal principles without a full understanding of the complexities involved.

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Eboni Nelson

Although often eclipsed by the prominence of large companies, small businesses play a critical role in helping to grow our economy. Their size, market footprint, resources, experience, and sophistication levels are as varied as the goods and services they provide. In her thought-provoking article The Small Business Dilemma, Professor Rachel G. Ngo Ntomp argues that contract law fails to take these variances into account when considering the contractual relationships between small businesses and other companies. She asserts that small businesses can find themselves caught in a catch-22 by being perceived and treated as “big fish” in dealings with both consumers and businesses when, in fact, they are “small fish” when contracting with companies with more resources and often more bargaining power. Considering that this bargaining power imbalance can result in unfair terms that harm small businesses, Professor Ntomp convincingly draws upon U.S. and international law to advocate for proposals including “a reformulation of the unconscionability doctrine under Section 2-302 of the UCC [Uniform Commercial Code] to provide a fairer and more equitable treatment of small businesses in their contractual relations with larger entities.”

Professor Ntomp situates the issue of small business protection within the broader context of consumer protection. She notes that the weaker party rationale for protecting consumers in contractual relationships is rarely applied to small businesses when they engage in commercial dealings with other businesses even though many small businesses find themselves in vulnerable positions with a lack of bargaining power similar to consumers.

Before advocating for greater protections for small businesses, Professor Ntomp defines “small business” for purposes of her article as “any business with very few to no employees.” She acknowledges the lack of uniformity in defining which entities qualify as a small business and provides examples of various metrics, such as employee counts and financial performance, that the U.S. Small Business Administration and others use to define small businesses. She asserts that “whatever criterion or combination of criteria is used, the general idea remains that these businesses are distinguishable from large enterprises because of their economic or informational inferiority,” which can lead to the imposition of unfair terms that can harm small businesses.

Professor Ntomp grounds her discussion of unfair terms and contracts in the U.S. doctrine of unconscionability and in various fairness tests that are applied internationally. After setting forth an operational definition of “unfair terms” as those “that allocate the risks of the contract to the most vulnerable party or otherwise create a significant imbalance in the parties’ rights and obligations to the detriment of that party,” she argues why rationales commonly used to justify protecting consumers against businesses can also serve as justifications for protecting small businesses against their larger, more powerful counterparts.

One such rationale is related to the prevalent use of standard-form contracts in both consumer and commercial transactions. According to Professor Ntomp, small businesses often have less bargaining power than larger entities who draft form contracts to best serve their interests and present them to small businesses on a “take-it-or-leave-it” basis affording them little or no opportunity to negotiate or change unfair terms that may be hidden therein. In situations involving non-standard-form agreements, Professor Ntomp asserts that “small businesses too often lack the necessary experience, resources, expertise, and legal knowledge to negotiate favorable contract terms and adequately assess the risks of a term.” Unlike businesses with greater financial resources, having the financial means by which to engage legal counsel during the negotiation to strengthen their bargaining position or explain various terms is often a challenge for small businesses that may impede their ability to obtain fairer or more favorable terms.

In detailing the potentially devasting consequences that the enforcement of unfair terms can have on small businesses, the vast majority of which are solo ventures or have fewer than twenty employees, Professor Ntomp makes a compelling case for why small businesses should be afforded greater protections against the operation of such terms despite their commercial rather than consumer status. Such consequences include the loss of substantial private assets and financial savings, diminished credit scores, increased debt, and bankruptcy filings.

Her argument for reforms is further strengthened by her discussion of small businesses’ dual identity dilemma “as ‘big fish,’ when dealing with consumers, and ‘small fish,’ when dealing with bigger businesses.” Central to this dilemma is the role of bargaining power disparities that can exist for “small fish” businesses in contractual relationships and the consideration, if any, that courts and policymakers are willing to give to such imbalances so as to justify interventions and greater protections for small businesses.

Professor Ntomp identifies the foundational contract principles of autonomy and freedom of contact and the advent of a hands-off “‘laissez-faire’ approach” to help explain courts’ present-day reluctance to intervene in the enforcement of contracts, particularly those entered into by businesses. She then engages in a very thorough discussion refuting arguments raised by Professors Max Helveston and Michael Jacobs in their article The Incoherent Role of Bargaining Power in Contract Law that led them to conclude that “all considerations of unequal bargaining power should be removed from contract law.” Professor Ntomp argues that bargaining power inequality can and should continue to be a relevant factor in determining the enforceability of contracts and serves as “a solid foundation for protecting certain contractual parties,” such as small businesses when they are contracting in their “small fish” rather than “big fish” capacity.

Professor Ntomp asserts that current consumer protection and relevant contract law jurisprudence rests on the assumption that “every and any business is presumed to be sophisticated, regardless of size, nature, experience, or resources, and irrespective of its co-contracting party’s identity,” which belies reality and contributes to small businesses’ lack of protections from unfair and harmful contract terms. In an effort to debunk this “‘myth of sophistication,’” she details how small businesses have to contend with similar issues as consumers, ranging from information asymmetries to limited resources and choices, that detrimentally impact the fairness of their bargains and can lead to harmful consequences.

In Professor Ntomp’s assessment, “U.S. contract law fails to protect weaker parties, including small businesses, from unfair terms;” therefore, she proposes amending the unconscionability statute codified in UCC Section 2-302 and adding a “small business” definition to Section 1-201 to enhance small businesses’ protection against unfair terms. The language and rationale for her proposals stem from domestic and international models such as the Texas Deceptive Trade Practices and Consumer Protection Act’s definition of “consumer,” which broadly applies to entities acquiring goods and services regardless of the purpose of the acquisition. By expanding the consumer concept beyond the conventional purpose of buying goods or services for personal, family, or household uses, courts and policymakers can provide greater protections to small businesses in their commercial dealings. Similar to models adopted in the Netherlands and Australia that expand protections beyond consumer contracts by expressly referencing small businesses in their statutes, Professor Ntomp advocates for revising Section 2-302 to arm courts with the ability to intervene in the enforceability of a contract “[i]f the court as a matter of law finds the contract or any clause of the contract to have been unconscionable to the detriment of a consumer or small business at the time it was made.” (emphasis in original) Such revisions are necessary, according to Professor Ntomp, to help prevent the harms that often befall vulnerable small businesses due in part to the bargaining power disparities that can exist as they engage in contractual relationships with other businesses.

I greatly enjoyed reading Professor Ntomp’s article, and I applaud her for penning such an ambitious and excellent paper that draws our attention to an important yet rarely discussed issue. Her informative discussion of the small business dilemma highlights the critical role small businesses play in our society and their vulnerabilities that necessitate greater protection against unfair and unconscionable terms. Professor Ntomp’s well-written piece makes a significant contribution in advocating for such protection, and I look forward to reading more of her work in this area in the future.

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• Haggai Porat, Behavior-Based Price Discrimination and Data Protection in the Age of Algorithms, available at SSRN (Oct. 31, 2022).
• Haggai Porat, Bargaining with Algorithms: An Experiment on Algorithmic Price Discrimination and Consumer and Data Protection Laws, available at SSRN (Apr. 29, 2025).

Omri Ben-Shahar

A central interest in consumer law is the harm AI algorithms might cause to consumers. Firms are increasingly gaining the power to target individual consumers in manipulative ways and charge prices tailored to each buyer’s ability to pay. People may end up buying things they do not need or regret, at prices exceeding those in the pre-algorithmic market. Rivers of academic ink are spilled in describing the potential harms and recommending urgent regulatory action. Some of that work is very good, although the entire genre is suffering from an acute oversight: it ignores the documented benefits pricing algorithms are bringing to consumers. Personalized prices have been repeatedly shown in the empirical economic literature to benefit low-income consumers (and why not? The easiest thing for these algorithms to infer is individual purchasing power, calibrating the price to match it).

An assumption that runs through much of the legal literature on pricing algorithms is the passivity of consumers. Short of anonymizing themselves by changing the privacy settings (and good luck with that), there is nothing consumers can do to blur their profiling by sellers’ algorithms. Consumers, in other words, are price-takers, and are said to be in peril.

In a recent two-paper project, Haggai Porat challenges this view. Consumers, Porat shows, can fight back. According to Porat, the basic feature that consumers could exploit is the tendency of pricing algorithms to rely on the information conveyed by prior purchasing behavior. Specifically, algorithms assign a higher price to returning consumers who revealed a higher willingness to pay through their past purchases, and a lower price to other consumers who previously refused to buy. Consumers, in turn, if aware of this pattern, may strategically decline early purchases to secure lower prices in the future. In this way, consumers “bargain” with algorithms.

This cat-and-mouse price war between AI algorithms and feisty consumers can help some consumers enjoy lower prices, but it could also end up with other consumers paying higher prices. Overall, it could either enhance or reduce total consumer welfare. This is the lesson from Porat’s benchmark model. So outright bans on personalized pricing may not be smart. Mandated disclosure to consumers of the sellers’ algorithmic pricing practices is also a double-edge sword. Yes, it allows consumers to finagle lower prices; but unfortunately, it also triggers unpleasant counterstrategies by sellers, such as raising early-period prices.

Is it at all plausible to expect consumers to play this patient and calculated game of withholding early purchases only to secure better future prices? In a second leg the multi-paper inquiry, Porat offers novel empirical support, devising a clever laboratory experiment in which consumers make purchases over several rounds, with prices adjusting based on each consumer’s purchasing decisions in preceding rounds. In the lab, consumers were shown to indeed “bargain” with the algorithm, avoiding early purchases to secure better subsequent deals, and even more so if explicitly informed how the pricing algorithm works. Will they also do this with Uber, Amazon, and United Airlines?

It is perhaps premature to celebrate consumers’ arms-length bargaining power vis-à-vis AI algorithms, and Porat is endlessly cautious to use notions like “negotiation” and “bargain” only metaphorically. And yet, such inquiry could not be more timely. We are entering an era in which consumer-side AI agents are developed to assist people in maximizing individual preferences—in navigating the entire web to find low prices and suitable products. As these algorithmic consumers burgeon, longstanding goals of consumer law would become out of touch. Mandated disclosures would be redundant, dark patterns would pose no harm, and data privacy protection would be less necessary and might in fact backfire by handicapping these agents (who perform best when they know a lot about their human masters). Competition law’s burning worry of price collusion among sellers’ algorithms could, who knows, be offset by algorithmic consumer “cartels” coordinating to purchase at prices below sellers’ marginal costs. The deep-rooted conception of a “vulnerable” consumer would have to be categorically rethought.

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Robert Hillman

Professors D’Onfro and Hwang’s new article, Tortious Interference Revisited, brings the reader almost up to date on the nature of tortious interference and, in doing so, adds to each of their impressive contributions to contract scholarship. I use the word “almost” in the title and the first sentence here advisedly because the final paragraph of their article calls “for more sophisticated empirical treatments” (P. 54) of the subject and announces their intention to investigate recent cases.

Still the reader can learn a lot about tortious interference with contract and with other business relationships and opportunities (as do D’Onfro and Hwang, I will refer to the subject matter, often treated as separate torts, singularly as “tortious inference”). Relying on cases and secondary literature, the article offers numerous insights into the nature of and issues engendered by tortious interference.

The article begins with a brief history of the tort and follows with a rich analysis of its development. Perhaps motivating the authors to write this article, they observe that the frequency of tortious interference cases has recently “exploded” (P. 7) and they supply interesting examples of the tort’s recent usage. In simplified form here, these include in corporate debt cases, where a debtor breaks a pledge not to take on additional debt and liability focuses on a third party influencer, employment at-will and non-compete cases, where courts recognize a duty in third parties not to interfere, and Title IX harassment cases, where a party accused of sexual misconduct in an educational setting brings a tortious interference action against a university administrator.

The authors also isolate and respond in helpful detail to general issues raised by tortious interference, such as the tort’s many ambiguous elements and whether the cause of action is efficient and necessary. For example, the tort’s tension with the beneficial goal of competition leads to a discussion of whether the tort must be malicious or merely a lesser impropriety. As for efficiency, by deterring a prospective employer from making a competitive offer to an employee of another firm, for example, tortious interference interferes with the possibility of an efficient breach. In response to whether the tort is superfluous, the authors raise the issue thusly: “A harmed plaintiff can claim against the breaching party and can already be made whole in contract, so why should they have the right to sue an unrelated third party for even more damages in tort?” (P. 3.)

But the authors see the value of the tort as well. Tortious interference justifiably benefits an injured party if their immediate wrongdoer is judgment proof or able to avoid service of process. The tort also allows for injunctive relief before the harm occurs. Further, some scholars have argued, correctly in my view, that “tortious interference is consistent with tort theory generally . . . and not a made up or inherently redundant cause of action.” (P. 19.) After all, the “common thread” in tort cases “is the idea of unreasonable interference with the interests of others.”¹ In response to the alleged redundancy of the remedy, the authors could have added that the availability of punitive damages and other tort remedies ensures that the tort consists of a “safety valve that relieves the pressure on contract to punish bad behavior.”² I would also urge that eliminating the tort because of the range of difficult issues it raises would cast doubt on the wisdom of much of private common law.

Perhaps the most intriguing aspect of Tortious Interference Revisited is its framework for analyzing the tort. The authors observe that the tort contributes to the larger theme of third parties’ interests in contracts: “[I]f third parties can have an interest in other people’s private contracts, then those third parties might sometimes also incur liability because of those same contracts.” (P. 25.) Drawing on two articles, co-authored by Professor Hwang, which emphasize that “the private law of contract is not wholly private” and that “private law affects the public,” (P. 27) Tortious Interference Revisited argues that the tortious interference is the “flip side” of doctrine that enables third parties to express their interests in others’ private contracts. In sum, if third parties have some rights arising from private contracts, they may have some liabilities as well.

This framework sheds helpful but modest light on tortious interference. The authors note that third-party interests and rights are limited in the courts and in scholarly articles on these rights. Accordingly, their framework calls for “keep[ing] tortious interference analogously modest” as well. (P. 28.) The article therefore suggests a series of limitations on the doctrine. For example, as noted above, tortious interference currently extends beyond contract to interference with business or economic opportunity claims. However, the authors suggest limiting the interference tort to contracts to create a much cleaner bright line. In addition, the authors note that a requirement of actual malice would help clarify the distinction between the right to compete and the duty not to interfere. Further, the authors sometimes prefer alternative strategies instead of tortious interference. For example, to ensure that a sexually harassed employee who has agreed to arbitration of employment disputes has her day in court against an harasser, the authors point to Federal law barring enforcement of arbitration agreements in the context of sexual harassment claims by employees.

Of course, the relationship between tort and contract has a long and challenging history. Think, for example, of the debate over the differences between strict tort and the implied warranty of merchantability (are the terms “defective” and “unmerchantable” identical?),³ of the consternation over when a contract performance is sufficiently egregious to be tortious,⁴ and of Gilmore’s observation that “‘contract’ is being reabsorbed into the mainstream of ‘tort.’”⁵ D’Onfro and Hwang have done an admirable job bringing back tortious interference into the mainstream of recent scholarship. If the authors do pursue additional research on the subject, as they intimate they might, perhaps broadening their scope to include more on the relationship between tort and contract would yield additional insights into the meaning of tortious interference.

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Martha Ertman

Sabine Tsuruda’s article Race, Unconscionability, and Contractual Equality illustrates shortcomings of current unconscionability doctrine in contract law and proposes an alternative to enable the contract law to avoid complicity with beneficiaries of race discrimination in credit markets. Her proposed update to unconscionability doctrine, which she dubs a “best interests” approach, essentially makes a contract term substantively unconscionable if it runs contrary to a party’s “basic interests and inalienable rights” such as privacy, having a home, accessing justice, and being free from race and gender discrimination. (P. 206.)

Consistent with unconscionability’s roots in equity – and thus morality or fairness that justice requires –Tsuruda aims to “match unconscionability doctrine to the moral category of objectionable racial subordination.” (P. 192.) As such the article fits within unconscionability’s longstanding role of naming abuses of power that undermine the core assumptions that parties are free and equal. For example, the holding in the canonical unconscionability case of Williams v. Walker Thomas, 350 F.2d 445 (DC Cir 1965), led the drafters of the UCC and federal regulators to ban or sharply limit the blanket security interest that enabled the Walker Thomas Furniture Store to repossess Mrs. Williams’ bureau, bed, and stereo when they were nearly paid off. (UCC § 9-204 & Fed. Trade Comm’n Credit Practices Rule).

Race, Unconscionability, and Contractual Equality will change how I teach unconscionability, and also enrich the materials in the 3rd edition of the casebook that my coauthors and I are now editing. (Ertman, Houh, Sjostrom & Threedy, Contract Law (2nd ed. 2023 Foundation Press)). It also enriches my current writing project on reparations for racial injustice in real estate contracts by providing another doctrinal justification for the restitution-based remedy that I propose.

Race, Unconscionability, and Contractual Equality builds on Dylan Penningroth’s influential article Race in Contract Law, 170 U. Pa. L. Rev. 1199 (2022), extending his comprehensive account of African-Americans’ long history of deploying contract law to exercise agency in highly constrained circumstances of white supremacy. Like Penningroth, Tsuruda critiques the tendency of conventional pedagogy re: Williams v. Walker Thomas, 350 F.2d 445 (DC Cir 1965) to focus on impaired decision-making capacity as grounds to refuse to enforce a term or the entire contract. According to Tsuruda, instead of focusing on Ora Lee Williams’ 8th grade education and poverty, we ought to situate installment sales as an essential element of residential race segregation and racial wealth disparities by virtue of the way that these contracts put ownership – of goods or of a home – “just out of reach.” (P. 187.)

Tsuruda also contends that we should move away from worrying about whether contract law should prevent a mother of seven on public assistance to buy an expensive stereo on credit. Instead, she points out that Mrs. Williams may have rationally chosen this transaction to create a home that was “more than a mere shelter” and to enable the family “to bring music and other aspects of the broader culture into her home.” (P. 184.) In addition to honoring her decision-making capacity, Tsuruda would have us remember that other contracts in the past systemically shunted wealth to whites and away from African Americans through restrictive covenants, redlined mortgage lending, and installment contracts for residential real estate. To this day, lenders routinely extend more favorable terms to white than African-American borrowers.

Tsuruda’s solution is for contract law to recognize systemic bargaining disadvantages, many of which are creatures of earlier contracts and contract doctrine. Instead of taking refuge in unconscionability’s traditional refusal to “disturb the allocation of risks due to superior bargaining power,” (UCC § 2-302 Comment 1), Tsuruda’s improved unconscionability doctrine treats systemically constrained credit choices based on race as falling within the traditional categories of “overly harsh” and “unduly oppressive” terms that courts refuse to enforce on grounds of unconscionability. She explains the role of past installment contract sales in goods and real estate in creating and sustaining today’s tenfold racial wealth gap:

[They] created a set of authority relationships . . . that left [installment buyers] . . . basic interests – in having a home, being free of abject poverty, in maintaining personal and familial boundaries – dependent on the good will of their co-contractors.” (P. 205.)

That contract-created dependency, Tsuruda asserts, has a profound impact, far beyond the contracting parties or particular transactions. In her words, it is “emblematic and partially constitutive of the subordinate position [that installment buyers like Mrs. Williams] occupied in an unjust and racially stratified society.” (P. 205.) In doctrinal terms, therefore, those terms are unconscionable even if other sellers insist on the same unjust terms. The contracts are, in the language of unconscionability doctrine, so unsavory that contract law – and the courts that enforce it – ought to recoil from enforcing them.

Race, Unconscionability, and Contractual Equality concludes with a discussion of how the private law doctrine of unconscionability could and should evolve to reflect the changes she proposes based on the private dispute resolution context of arbitration. This discussion relies on caselaw from caselaw that interprets substantive unconscionability broadly, such as Dale v. Comcast, 498 F.3d 1216 (11th Cir. 1216) and Narayan v. The Ritz-Carleton Dev. Co., 400 P.3d 544 (Haw. 2017), which deems employment discrimination or condominium-purchase claims non-arbitrable. This view, which Tsuruda recognizes as a minority, reflects the logic of unconscionability caselaw in Canada and England on which she also relies.

The Federal Arbitration Act – especially Supreme Court caselaw since 2011 that strongly favors enforcement of arbitrability clauses – shapes unconscionability doctrine in the U.S. Tsuruda’s compelling material and reasoning points the way for unconscionability doctrine to evolve around that restriction. Race, Unconscionability, and Contractual Equality points the way for unconscionability to perform the essential equitable function of adapting to current understandings of unfairness by policing contracts that unreasonably favor one, powerful party, especially when that power is based on race.

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