Module/Week 6 -- discussion

Foundations of Law: Week 6

Key Principle of Vow/Promise

• God fulfills His promises, and as creatures made in His image, we should do the same. – Genesis 1:26. “Let Us make man in Our image,

according to Our likeness;” – Numbers 23:19. God is not a man that He should

lie, nor a son of man that He should repent. Has He said and will He not do, or has He spoken and will He not make it good?

Key Issue

• Contract law, like all law, flows from God. This chapter asks the question, “to what extent is man held to his promises?”

• The Bible provides few releases for a person who makes a promise. Modern laws have provided more justifications for breaking one’s promise. We will assess these modern doctrines to see if they comport with the Laws of Nature and of Nature’s God.

Ogden v. Saunders

• SCOTUS by a vote of 4-3 upheld a NY law that required all future contracts to be subject to state bankruptcy law.

• John Marshall dissented b/c he believed that the right to contract was established by God and that the government could not undo a contract through a bankruptcy law.

Source of Contract Law

• The source of contract is God. • Contract law is not the creature of society b/c

it existed before society. • The obligation/right of contract comes from

LONANG. • It is an unalienable right bestowed upon us by

God. • Accordingly, while the state may enforce

contracts, it may not impair them.

Sanctity of Promise

• Numbers 30:2. “This is the thing which the Lord has commanded: If a man makes a vow to the Lord, or swears an oath to bind himself by some agreement, he shall not break his word; he shall do according to all that proceeds out of his mouth.

• Matthew 5:37. “But let your ‘Yes’ be ‘Yes,’ and your ‘No,’ ‘No.’ For whatever is more than these is from the evil one.”

God is a Promisekeeper

• God fulfills His promises, and as creatures made in His image, we should do the same. – Genesis 1:26. “Let Us make man in Our image,

according to Our likeness;” – Numbers 23:19. God is not a man that He should

lie, nor a son of man that He should repent. Has He said and will He not do, or has He spoken and will He not make it good?

Fletcher v. Peck

• GA legislature granted 35 million acres of land to speculators for low price – January 1795: GA  Gunn – August 1795: Gunn  Greenleaf – September 1795: Greenleaf  Prime

• February 13, 1796:GA legislature repeals initial grant – February 27, 1796: Prime  Phelps – 1800: Phelps  Peck – 1803: Peck  Fletcher

• Fletcher demands his money back, arguing that Peck cannot convey good title

Fletcher v. Peck (cont’d)

• The Court ruled that Georgia could not repeal its grant of the land because it was a contract.

• Georgia is held to its contracts the same way a person is held to his contracts.

Hypo 1

• Q1: So does a law permitting a debtor to be absolved from His debts “impair the obligation of contracts” if contracts are a right created by civil society?

• Q2: Does a law permitting a debtor to be absolved from his debts “impair the obligation of contracts” found in the common law and the LONANG?

Release

• Deuteronomy 15:1-4. ““At the end of every seven years you shall grant a release of debts. 2 And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD’s release. 3 Of a foreigner you may require it; but you shall give up your claim to what is owed by your brother, 4 except when there may be no poor among you;.”

Grounds for release from promise/contract?

• Does fraud release someone from a contract? – Does not seem so according to the Bible. See Israel’s treaty with

Gibeonites. Joshua 9:1-19. Israel was held to the treaty even though the Gibeonites tricked them into making the treaty.

– Modern law and common law release one from a promise induced by fraud

• Unlawful purpose? – Yes. Exodus 23:1 and other passages condemn entering into

agreements to do unlawful actions. – This is one of the few clear Biblical grounds for excusing oneself

from a contract. If someone promises to do something illegal, they can recant that promise.

– Modern law and common law release one from promises to perform unlawful actions

Hypo 1

• Q: Are bankruptcy laws (which permit a debtor to be absolved from his debts) consistent with LONANG?

• Consider the debt release in Mosaic law: Deuteronomy 15:1-4. “At the end of every seven years you shall grant a release of debts. 2 And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the LORD’s release. 3 Of a foreigner you may require it; but you shall give up your claim to what is owed by your brother, 4 except when there may be no poor among you;.”

Impossibility in Common Law

• General Rule: – Party must perform or pay damages, even if

performance is impossible. • Exceptions

– Contract must be absolute; parties can expressly or impliedly agree to certain conditions that might excuse performance

– Contracts in which performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance. (215)

Impossibility: Modern Rule

• Courts will release one from a contract for impossibility or impracticability

• “a thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost.”

Impossibility in Bible/LONANG? • Impossibility does not appear to be a justification for

release from a contract: – Psalm 15:4. The righteous person “swears to his own hurt and

does not change.” – Proverbs 22:26-28. Do not be a surety for debts “if you have

nothing with which to pay, Why should he take away your bed from under you?”

– Ecclesiastes 5:5. Better not to vow than to vow and not pay. – Matthew 18:24, 34. [Parable of the Unforgiving Servant] Servant

owed 10,000 talents (insurmountable amount). Initially forgiven, but then when he failed to forgive another, he was thrown in prison until “he should pay all that was due to him.”

Unconscionability

• Doctrine – Courts will release one from a contract where that

contract is “unconscionable” – Whether in light of general commercial

background . . . the clauses are so one-sided as to be unconscionable under the circumstances at the time of the making of the contract.

• Purposes – Prevent oppression and unfair surprise

Unconscionability and LONANG • Genesis 25:29-34 • 29 Now Jacob cooked a stew; and Esau came in from the

field, and he was weary. 30 And Esau said to Jacob, “Please feed me with that same red stew, for I am weary.” Therefore his name was called Edom.

• 31 But Jacob said, “Sell me your birthright as of this day.” • 32 And Esau said, “Look, I am about to die; so what is this

birthright to me?” • 33 Then Jacob said, “Swear to me as of this day.” • So he swore to him, and sold his birthright to Jacob. 34 And

Jacob gave Esau bread and stew of lentils; then he ate and drank, arose, and went his way. Thus Esau despised his birthright.

Unconscionability and LONANG cont’d

• Hebrews 12:16-17. “lest there be any fornicator or profane person like Esau, who for one morsel of food sold his birthright. For you know that afterward, when he wanted to inherit the blessing, he was rejected, for he found no place for repentance, though he sought it diligently with tears.”

Do minimum wage laws violate LONANG?

• Deuteronomy 24: 14-15. “You shall not oppress a hired servant who is poor and needy, whether one of your brethren or one of the aliens who is in your land within your gates. Each day you shall give him his wages, and not let the sun go down on it, for he is poor and has set his heart on it; lest he cry out against you to the Lord, and it be sin to you.

• Jeremiah 22:13. “Woe to him who builds his house by unrighteousness And his chambers by injustice, Who uses his neighbor’s service without wages And gives him nothing for his work,”

• James 5:4. “Indeed the wages of the laborers who mowed your fields, which you kept back by fraud, cry out; and the cries of the reapers have reached the ears of the Lord of Sabaoth.”

Minimum Wage Laws Cont’d

• Matthew 20:1-16. “But he answered one of them and said, ‘Friend, I am doing you no wrong. Did you not agree with me for a denarius? Take what is yours and go your way. I wish to give to this last man the same as to you. Is it not lawful for me to do what I wish with my own things? Or is your eye evil because I am good?”

Jones v. Star Credit Corp.

• Welfare recipients purchased $300 freezer for $900 ($1234.80 with sales tax, credit charges, and insurance)

• Recipients fell behind on payments after paying $619.88.

Jones v. Star Credit Corp. cont’d

• Rule: Court can undo an unconscionable contract. Court can consider the resources of the parties, and the mathematical disparity b/t the charged price for the item and its actual value.

• Held: The contract for the purchase of the freezer was unconscionable.

Biblical Remedies for Problem of Unconscionability

• Eccl. 5:5. Better not to vow than to vow and not fulfill it.

• Luke 6:34-35. lend money to the poor without expecting payment.

• Proverbs 14:31. Those who oppress the poor insult their Maker.

• Proverbs 22:22. Do not oppress the poor, “for the Lord will plead their cause.”

Unconscionability Conclusion

• As evidenced by the story of Jacob and Esau, LONANG does not seem to provide an exception for unconscionability. When one makes a promise, he is bound to it, not matter how unwise that promise is. However, in Israel, the financial implications of an unwise contract were mitigated by the seven year release. For example, if one took out a loan to invest in a business that failed, the debtor would be released from the remaining balance on the loan in the seventh year.

Impracticability

• The doctrine of Impracticability releases one from his contract when the thing becomes “impracticable” = when it can only be done at an excessive and unreasonable cost.

• Is this doctrine consistent with LONANG? – Appears the answers is no. – Psalm 15:4. A righteous man swears to his own hurt – Matthew 18:24, 34. Unforgiving Servant held

accountable for his insurmountable debt

LONANG Framework for Assessing the Validity of Laws that Regulate

Contracts 1. Does law interfere with the duty to fulfill

one’s promise/the right to contract? 2. If it does, the law is presumed to violate the

rule of contracts. 3. But can the law be justified on some other

ground in the Scriptures? [Does law fall into one of the few Biblical exceptions that release one from his promise?]

Do minimum wage laws violate LONANG?

• Deuteronomy 24:14-15. “You shall not oppress a hired servant who is poor and needy, whether one of your brethren or one of the aliens who is in your land within your gates. Each day you shall give him his wages, and not let the sun go down on it, for he is poor and has set his heart on it; lest he cry out against you to the Lord, and it be sin to you.

• Jeremiah 22:13. “Woe to him who builds his house by unrighteousness And his chambers by injustice, Who uses his neighbor’s service without wages and gives him nothing for his work,”

• James 5:4. “Indeed the wages of the laborers who mowed your fields, which you kept back by fraud, cry out; and the cries of the reapers have reached the ears of the Lord of Sabaoth.”

Minimum Wage Laws Cont’d

• Matthew 20:1-16. “But he answered one of them and said, ‘Friend, I am doing you no wrong. Did you not agree with me for a denarius? Take what is yours and go your way. I wish to give to this last man the same as to you. Is it not lawful for me to do what I wish with my own things? Or is your eye evil because I am good?”

Allgeyer v. Louisiana

• LA law makes it unlawful for any person to procure insurance within the state from any insurance company that has not first complied with LA laws with respect to the doing of the insurance business there.

• DEFs, in the cotton export business, applied to NY insurance company that had not complied with LA insurance laws.

• DEFs fined for violating statute.