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Insincere Evidence

Proving a violation of law is costly. Because of the cost, minor violations of law often go unproven and thus unpunished. To illustrate, almost everyone drives a little faster than the speed limit, but rarely are we ticketed for doing so. Failure to enforce the law against minor infractions is justifiable from a cost-benefit perspective. The cost of proving a minor violation—for example, that a driver broke the speed limit by one mile per hour—outstrips the benefit. But systemic non-enforcement has the downside of underdeterrence. People drive a little too fast, pollute a little too much, and so on.

This Article explores how insincere rules, meaning rules that misstate lawmakers’ preferences, might reduce proof costs and improve enforcement. To demonstrate the argument, suppose lawmakers want drivers to travel no more than 55 mph. A sincere speed limit of 55 mph may cause drivers to go 65 mph, while an insincere speed limit of 45 mph may cause drivers to drop down to, say, 60 mph—closer to lawmakers’ ideal. Insincere rules work by creating insincere evidence. In the driving example, the reduction in proof costs achieved by an insincere rule is akin to adding an artificial 10 mph to the reading of every radar gun.

The logic of insincere evidence is not confined to speed limits. The conditions necessary for insincerity to work pervade the legal system. We distinguish insincere evidence from familiar concepts like over-inclusive rules, prophylactic rules, and proxy crimes. We connect insincere evidence to burdens of persuasion, showing how it can offset the effects of higher burdens. Finally, we consider the normative implications of insincere evidence for trials, truth, and law enforcement.

Right to Be Educated or Right to Choose? School Choice and Its Impact on Education in North Carolina

Today, states face the challenge of how best to educate their citizens in light of state constitutional obligations to provide public education. Lawmakers must decide between investing more in traditional public schools or pursuing educational alternatives for students and their families. The school choice movement advocates for legal reform creating alternatives such as charter schools and school vouchers. This Note examines the ongoing doctrinal and social effects of school choice in North Carolina.

Doctrinally, school choice has successfully shifted the debate about what the purpose of state education law should be. As recently as one decade ago, statutory and decisional law was primarily premised on the idea that public education was a societal good designed to educate the citizenry and was governed by the costs and benefits to the community. Now, North Carolina education law increasingly emphasizes the importance of creating distinctive, varied school options and the benefits individual students accrue by accessing educational alternatives.

The change in North Carolina education law raises serious practical concerns. Rationalizing the benefits of publicly sponsored education in terms of individual gain leaves some students behind and produces negative social outcomes, such as segregation of schools. Charter schools and private schools funded by vouchers also have incentives to recruit high-performing students and not accommodate various disadvantaged groups within North Carolina. Unless the State is careful in considering the needs of all individual students, legalizing more state-sponsored school choice alternatives will exacerbate the relationship between family resources and educational opportunity.

Faux Contracts

In deals, parties sometimes enter into agreements that look like contracts but lack the legal bite of formal contracts. What value can these agreements add that formal contracts cannot? This Article shows how parties use these agreements to mitigate so-called mundane transaction costs and to build a small relational ecosystem for future steps in the same transaction.

Parties use non-binding agreements in a variety of unsurprising contexts, like when binding agreements are too expensive or illegal, or when informal enforcement suffices. Use of non-binding agreements is puzzling, however, when parties are sophisticated—that is, when parties have the financial means and technical sophistication to enter into real, binding legal contracts, but choose to use non-binding ones instead. Early-stage mergers and acquisitions (“M&A”) is one such situation: parties enter into non-binding term sheets, which often look like contracts, but intentionally opt out of formal enforcement. Informal enforcement is also unlikely, because many M&A parties are not repeat players in the market. Yet, despite lack of enforcement, parties abide by the terms of the non-binding term sheet.

This Article makes two contributions to the literature. First, it shows that sometimes, enforcement is not necessary or even preferred: rather, parties prefer to decouple ex ante contracting from ex post enforcement through “faux contracts” like M&A term sheets. In doing so, parties can leverage the benefits of engaging in a contracting exercise, without actually subjecting themselves to enforcement. Because complex business deals are highly collaborative design processes, using a contract-like tool, even (or especially) without enforcement, helps parties organize, clarify, and understand the metes and bounds of their deals and obligations, whether or not they plan to, or can, enforce them. Second, through original interviews, this Article shows how parties use these early agreements and other activities to build a small relational ecosystem in which they feel enough trust to make further investments. Ultimately, parties’ reputations still matter to them—not on the broader M&A market, but within the individual deal.

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