Article

Taking Information Seriously: Misrepresentation and Nondisclosure in Contract Law and Elsewhere

Contract law attempts in various ways to regulate the information that contracting parties exchange. However, most contract law doctrines (and most contract law scholars) have yet to come to grips with the practical issues involved in regulating information. For instance, the disclosure of information can produce costs as well as benefits, by distracting parties from other, more important information; so it is often hard to decide which information should have been disclosed in any given case. Similar costs and benefits are often involved even in cases involving false statements (misrepresentations), where liability might seem less controversial.

While these issues are underappreciated in contract law, they are much more familiar in federal consumer protection law, especially in cases involving false advertising; and they are beginning to be recognized in products liability cases involving the duty to warn. This Article suggests various ways to improve contract law’s handling of misrepresentation and nondisclosure, all of which involve closer attention to the relevant costs and benefits.

Exclusionary Amenities in Residential Communities

This article identifies an important mechanism by which segregation arises in new residential developments. The Fair Housing Act and other antidiscrimination laws closely regulate real estate sales, advertising, and racial steering. As a result of these laws and other factors, purchasers of homes often lack accurate information about the likely demographic makeup of a new neighborhood or condominium building. Yet these laws have not eroded the incentives for housing consumers to obtain this data. This article argues that developers can circumvent fair housing laws by embedding costly, demographically polarizing amenities within a new development and recording covenants mandating that all homeowners pay for those amenities. Its central claim is that developers will select common amenities not only on the basis of which amenities are inherently welfare-maximizing for the residents, but also on the basis of which amenities most effectively deter undesirable residents from purchasing homes in the development. The article dubs this approach the exclusionary amenities strategy and shows how it causes sorting and focal point mechanisms to act in concert, thereby engendering substantial residential homogeneity. The inability to exclude functions as an inducement to spend. 

During the 1990s, the United States experienced a boom in the construction of residential developments built around costly golf courses. This occurred at a time when golf participation functioned as a noticeably better proxy for race than income, wealth, or virtually any other characteristic. Curiously, substantial numbers of Americans who purchased homes in mandatory-membership golf communities played no golf. This article offers circumstantial evidence suggesting that by purchasing homes in these communities, homeowners may simply have been paying a premium for residential racial homogeneity. The article then identifies a number of other examples where developers, or even municipalities, appear to be pursuing an exclusionary amenities strategy. It also identifies instances in which the use of exclusionary amenities may further neutral, or even laudable, objectives. 

The article then notes the possibility of inclusionary amenities, and shows how a few developers, common interest communities, and municipalities have used these amenities to achieve greater residential heterogeneity than would otherwise have been possible. It concludes by evaluating the law’s current stance of leaving exclusionary amenities largely unregulated, and examines various strategies for curbing the use of exclusionary amenities to achieve racial homogeneity.  

A Jurisprudence of Risk Assessment: Forecasting Harm among Prisoners, Predators, and Patients

Violence risk assessment routinely takes place in criminal sentencing, in the civil commitment of people with mental disorder, and in the commitment of sexually violent predators. In the past, courts rarely have had to confront the legitimacy of using specific risk factors for violence, because actuarial instruments with scientific validity at assessing violence risk did not exist. Now they do. Among the empirically valid risk factors risk factors that are candidates for inclusion on these instruments are those that pertain to what the person is (age, gender, race/ethnicity, and personality), what the person has (major mental disorder, personality disorder, and substance abuse disorder), what the person has done (prior crime and violence), and what has been done to the person (being raised in a pathological family environment and being physically victimized). This Article argues that in criminal law, with its emphasis on blameworthiness for actions taken, the use of scientifically valid risk factors is properly constrained to those that simultaneously index blameworthiness, i.e., to the defendant’s prior criminal conduct. In law authorizing the involuntary civil hospitalization of people with mental disorder—a legal determination in which blameworthiness plays no part—the use of violence risk factors should be unconstrained, except for the use of classifications subject to strict Equal Protection scrutiny, which here is limited to the individual’s race or ethnicity. Finally, if commitment as a sexually violent predator is properly categorized as civil commitment, the use of violence risk factors in implementing such commitments should parallel the use of violence risk factors in traditional civil commitment. Disagreement with the substantive merits of sexually violent predator statutes does not justify depriving those statutes of the only kind of evidence—empirically-validated actuarial violence risk assessment—that can effectuate their controversial goals.

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