Few concepts have been more pivotal to contract law scholarship over the last forty years than the opportunism attributed ex ante and ex post to contracting parties, yet the lawful form of opportunism identified by Nobel Laureate Oliver Williamson in 1991 remains surprisingly overlooked in favor of the blatant forms of opportunism that result from “self-interest seeking with guile.” This Article extends Williamson’s inchoate account of lawful opportunism and reports the first empirical study of the phenomenon.
The conceptual analysis of lawful opportunism is developed with reference to the bargaining underlying the classic impossibility decision, Taylor v. Caldwell. Three component elements are shown when combined to open “cracks” in contracts that tempt lawful opportunism: (1) the background doctrine of literal enforcement plus (2) a highly consequential disturbance that (3) strikes at the naïveté of the bargain. Because lawful opportunism leverages the legal entitlement to sue for breach of contract, its efficacy presupposes the counterparty’s express awareness, which makes the concept categorically different from the blatant forms of opportunism prevalent in the scholarship. This premise grounds the Article’s conclusion that the defining character of lawful opportunism is a strong enough sense of entitlement to choose to openly press for damages based on the letter of contract, notwithstanding the potentially punishing consequences to the counterparty of doing so under the circumstances.
The empirical study reported in this Article was designed to explore the individual-level factors that motivate participants to resort to lawful opportunism rather than cooperative—or blatantly opportunistic—alternatives. Our findings show, inter alia, that participants who viewed themselves as more entitled (the top 25% of all participants) were three times more likely to choose a lawfully opportunistic behavior in the crack of the contract. Lawful opportunism springs from a sense of entitlement, the way guile fuels blatant opportunism.
Gastón de los Reyes Jr. & Kirsten Martin,
Not from Guile but from Entitlement: Lawful Opportunism Capitalizes on the Cracks in Contracts,
Buff. L. Rev.
Available at: https://digitalcommons.law.buffalo.edu/buffalolawreview/vol67/iss1/1