Our Emperor, deliver us.

Tuesday, 24 September, Year 5 d.Tr. | Author: Mircea Popescu

Judges are rather pleasant company socially, mostly because they tend to have elegant conversation - a sorely forgotten art in these times of "progres". Take for example the case of Hon. G. E. Lynch (S.D.N.Y.) in a 2007 controversy between Johnson & Johnson and Guidant Corp. He says :

The Agreement provides that in the event of termination, no party shall be liable beyond the specific liabilities imposed in the Agreement (i.e., the termination fee), except “that no such termination shall relieve any party … from any liability or damages resulting from the wilful and material breach … by a party of any of its representations, warranties, covenants or agreements set forth in this Agreement.” J&J argues that defendants’ conduct was “wilful.” Whether a factfinder could so find depends on the meaning of that term as it is used in the Agreement. While defendants argue that a breach is only willful if it is committed with malice or in bad faith, plaintiff contends that “wilful” merely means “intentional.”


In support of their argument that the Agreement preserves liability only for malicious breaches, defendants argue that the word “willful” would be unnecessary unless it meant “malicious.” There is no reason to limit liability to breaches that are intentional, they claim, because any breach of this Agreement would be intentional—”heavily counseled parties to mega-mergers do not breach merger agreements out of inadvertence, negligence, or mistake.” As a factual matter, this claim is questionable. It could just as well be said that heavily counseled parties to mega-mergers do not sign merger agreements containing glaringly ambiguous terms that lead to avoidable litigation—but here we are.

To best comprehend this "heavily counseled parties to mega-mergers do not breach merger agreements out of inadvertence, negligence, or mistake" argument to [own perceived] grandeur, please turn the pages of your Tort 101 law manuals to that one case every young mind first meets on the long, arduous and ultimately pointless journey towards tortious englightenment : the Carlill v Carbolic Smoke Ball Company case, 1892.

115 years prior to the J&J vs Guidant case, someone was already arguing before the Lords that their client should be insulated from the effects of his own accts on account of... their client being pretty cool. That strange notion is preserved for us by Bowen for instance :

The first observation which arises is that the document itself is not a contract at all, it is only an offer made to the public. The defendants contend next, that it is an offer the terms of which are too vague to be treated as a definite offer, inasmuch as there is no limit of time fixed for the catching of the influenza, and it cannot be supposed that the advertisers seriously meant to promise to pay money to every person who catches the influenza at any time after the inhaling of the smoke ball. It was urged also, that if you look at this document you will find much vagueness as to the persons with whom the contract was intended to be made — that, in the first place, its terms are wide enough to include persons who may have used the smoke ball before the advertisement was issued; at all events, that it is an offer to the world in general, and, also, that it is unreasonable to suppose it to be a definite offer, because nobody in their senses would contract themselves out of the opportunity of checking the experiment which was going to be made at their own expense. It is also contended that the advertisement is rather in the nature of a puff or a proclamation than a promise or offer intended to mature into a contract when accepted. But the main point seems to be that the vagueness of the document shews that no contract whatever was intended.


But it was said there was no check on the part of the persons who issued the advertisement, and that it would be an insensate thing to promise 100l. to a person who used the smoke ball unless you could check or superintend his manner of using it. The answer to that argument seems to me to be that if a person chooses to make extravagant promises of this kind he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them.

So now. "Too big to fail" ? It's not exactly a novel concept. Fruits of the same root were being courageously promoted before the courts with very little effect a century before on the written record, and the tree probably predates human memory in its oral manifestations. Indeed, the only reason Carlill v Carbolic Smoke Ball Company is noteworthy and so very noted is the circumstance that for the first time that line of argumentation was set aside, certainly not that for the first time said "argumentation" was employed.

It appears to be natural in the human mind to expect the State to somehow intervene and relieve citizens and assorted private parties from the unbound effects of their acts and omissions, the same sort of cognitive process that feeds the "socialize losses, privatise profits" mechanic.

I often say State is a doomed entreprise, and one that certainly can't functionally survive after reaching a certain size. That size is the size at which this particularly sweet delusion of human foolishness can no longer be held in check by immediate observation of the puny size and ineffectual powerlessness of any Statei, and the reason is exactly the above : once State is large enough and perceived as sufficiently "powerful", citizens switch from protecting it to expecting to be protected by it, and in such a way and in such a place as no agency could ever lend any support. It is that meeting of the exponential with the logarithmic that brings all statal attempts down in due time.

PS. "It appears to me, therefore, that the defendants must perform their promise, and, if they have been so unwary as to expose themselves to a great many actions, so much the worse for them."

  1. Unavoidable and by definition necessary. []
Category: 3 ani experienta
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7 Responses

  1. Good day! This is my 1st comment here so I just wanted to give a quick shout out and say I truly enjoy reading your blog posts. Can you recommend any other blogs/websites/forums that go over the same topics? Thanks for your time!

  2. Mircea Popescu`s avatar
    Mircea Popescu 
    Friday, 22 November 2013

    Hardly, too many topics.

  3. wikipedia

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  4. [...] comes from Lord Justice Lindley's summation of the oldest and most celebrated case of torts : that involving the Carbolic Smoke Ball company. Then Bowen : But it was said there was [...]

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