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Tuesday, October 12, 2010
Contracts Not Respected By Obama Administration
An interesting op-ed today about the trend of eroding respect for the sanctity of contracts. This trend has become increasingly obvious with courts more inclined to show "compassion" towards various parties breaking contracts at will and expecting -- and receiving -- leniency from the courts.
We told you first. Crime, Politics and Policy was among the first to remark on this trend back in March 2010 when the Obama Administration was pushing mortgage forbearance, and more recently in September 2010 (about NHL opposition to the Ilya Kovalchuk contract),
The uncertainty over whether a country's legal system will honor contracts is one of the distinguishing features of Third World countries or totalitarian regimes which have trouble either attracting foreign investment and capital, or retaining their own. The growing American trend of having the same type of uncertainty will discourage capital investment and at least some degree of ordinary business activity.
In addition, unintended consequences are likely to include businesses refraining from more and more activities -- like hiring people -- which carry any risk of being sued.
In short, the trend away from the enforceability of contracts is a scoundrel's dream. Con artists, ripoff artists and those who enter contracts, with no genuine desire to abide by them and every malevolent desire to induce their counterparty's performance (that is, to get their victim to honor the contract) will love this.
Society benefits when contracts are enforced. Encouraging people to disregard or break contracts will undermine our entire economy and create another moral hazard whereby responsible parties are left vulnerable to the dishonorable behavior of the irresponsible.
Eric Dixon is the president of Eric Dixon LLC, headquartered in
. Mr. Dixon has been a New York City lawyer since graduating in 1994 from New York . Mr. Dixon handles litigation counseling and litigation stress management for those who are the subject of lawsuits, have been threatened or expect to be sued or investigated. Mr. Dixon has extensive knowledge of corporate governance, the federal securities laws (including the many anti-fraud provisions and related issues) and election law, and significant experience in representing businesses and their owners and managers in litigation, government investigations, settlement negotiations, complex due diligence investigations and business formations. Mr. Dixon has also represented over two dozen political campaign committees and candidates for public office, including presidential and gubernatorial campaigns, on ballot access issues. Mr. Dixon may be reached for a confidential consultation and case assessment at 917-696-2442 or via e-mail at edixon@NYBusinessCounsel.com. Yale Law School