Anzivino on the Disappointed Expectations Test

Ralph Anzivino has a new paper on SSRN entitled “The Disappointed Expectations Test and the Economic Loss Doctrine.”  This makes a trilogy of recent articles by Ralph on different aspects of the economic loss doctrine.  (The first two are here and here.)  The abstract for this most recent entry is as follows:

The economic loss doctrine is a judicially created rule that determines whether contract or tort law applies when a defective product causes damage. The doctrine’s starting premise is that contract law governs if the defective product causes economic loss and tort law governs when the defective product causes property damage. A common refrain is that the doctrine was created to prevent contract law from drowning in a sea of tort. However, as the rule has developed, courts have continued to expand contract coverage at the expense of tort coverage. First, when the defective product damages only itself, the courts concluded that such property damage should be resolved under contract law, not tort law. Next, when the defective product damages the system of which it was a component part, the courts concluded that such property damage should also be resolved under contract law, not tort law. Recently, another rule has begun to receive judicial acceptance that further expands the coverage of contract law at the expense of tort law. The rule is called the “disappointed expectations” test or the “reasonably foreseeable” rule. It provides that property damage that was reasonably foreseeable at the time of contracting is recoverable only under contract law, not tort law. The purpose of this Article is to examine the disappointed expectations rule and determine whether it is a positive addition to the legal landscape of the economic loss doctrine.

After surveying the development of the disappointed expectations test, which has been adopted by the Wisconsin Supreme Court, Ralph identifies several reasons why the test should be rejected.  He pointedly concludes, “The rule is the most recent progression of tort law drowning in a sea of contract law.”

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Seventh Circuit Criminal Case of the Week: What If the Defendant Thought He Was Breaking the Wrong Law?

seventh-circuit2When Doli Pulungan attempted to export 100 military-grade riflescopes to Indonesia in 2007, he knew he was breaking the law.  He was just wrong about which law.  His clients told him there was a ban on military exports to Indonesia, but the ban actually expired in 2005.  Instead, Pulungan violated a different law that requires a license in order to export “defense articles.”  Thus, his elaborate ruse of shipping through Saudi Arabia in order to evade the nonexistent Indonesia embargo did him no good.  A jury ultimately convicted him of “willfully” attempting to violate the export license law, and a judge sentenced him to four years’ imprisonment.

But was his violation truly “willful”?  On appeal, the government conceded that “willfully” means “with knowledge that a license is required,” but argued that the evidence established Pulungan had this knowledge.  The government relied chiefly on Pulungan’s dishonesty with business associates about what he intended to do with the riflescopes and his intent to violate the nonexistent embargo.  But Pulungan’s dishonesty is readily explained by his belief that he was violating the wrong law.  Thus, as the Seventh Circuit saw it in United States v. Pulungan (No. 08-3000), the government was really invoking the doctrine of transferred intent: “As the prosecutor sees things, an intent to violate one law is as good as the intent to violate any other.”  The court, per Chief Judge Easterbrook, was unmoved by this use of the transferred intent doctrine and overturned Pulungan’s conviction. 

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Why We Fight

united_we_win31I often wonder why it is that some people disagree with my political views.  My logic is unassailable, the breadth of my historical knowledge is unmatched, my moral foundation cannot be questioned, and I am far more charming and better looking than my opponents.  Why don’t they agree with me?

My summer project was to seek an answer to this mystery.  I chose three books to read that I thought would provide some insight into the ideological fault lines that seem to run through every facet of our daily lives (and indeed seem to run through this very blog).  What follows are the lessons that I have learned.  I suppose other readers might draw different lessons.  My recommendation is that you read these books for yourself.

My first goal was to understand why the “big government” charge persistently leveled by Republicans against the Obama Administration seems to resonate with some people, but not with others.  Some clues are provided by Gary Wills in A Necessary Evil: A History of American Distrust of Government.  Writing some ten years ago, Wills documents the origin and growth of the arguments against “big government” and in favor of individualism and local control over the course of our nation’s history.  Over time, he argues, these disparate strands of thought have coalesced into a more general anti-government creed.  The specifics of this creed – the belief that amateur, local and voluntary conduct creates greater public well being than professional, centralized, and mandatory regulation — resembles the political philosophy currently espoused by many of President Obama’s critics.

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