Conservative & Libertarian Legal Scholarship: Commercial & Bankruptcy Law

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IX. Commercial & Bankruptcy Law

Commercial Law

JONATHAN MACEY & GEOFFREY MILLER, BANKING LAW & REGULATION (3rd ed., 2001). This casebook deals with a fair range of regulatory issues in the banking area, often providing the law and economics rationale for deregulation.

Bruce L. Benson, The Spontaneous Evolution of Commercial Law, 55 S. ECON. J. 644 (1989). Professor Benson, an economist, traces the development of the law merchant in medieval Europe as an example of the spontaneous development of private law, without the aid of government. This is an enormously important concept for the student to appreciate, and Benson does an excellent job in developing it.

Frank H. Easterbrook, Symposium: Regulation and Responsibility: A Note on Banking, 77 CORNELL L. REV. 1079 (1992).  A proposal for banking reform that calls for overhauling FDIC-insured financial institutions and allowing market competition to regulate which financial institutions thrive and which fail.

Robert D. Cooter, Decentralized Law for a Complex Economy, 23 SW. U. L. REV. 443 (1994). Discusses the “new law merchant” that is being generated privately by actors in specialized business communities. Professor Cooter argues that lawmakers should show the same kind of deference to this private lawmaking as English common-law courts showed the old law merchant: “The English judges did not know enough about . . . specialized businesses to evaluate alternative rules. Instead of imposing rules, . . . English judges tried to find out what practices already existed among the merchants and enforce them.” Cooter argues that “as economies become more complex, efficiency demands more decentralized lawmaking, not less.” For a more technical version of this argument, see Robert D. Cooter, Structural Adjudication and the New Law Merchant: A Model of Decentralized Law, 14 INT’L REV. L. & ECON. 215 (1994).

Internet resources: A very useful "Uniform Commercial Code Locator" is available at

Bankruptcy Law

DOUGLAS G. BAIRD, THE ELEMENTS OF BANKRUPTCY (1992). A clear, concise text, written primarily for law student use.

THOMAS JACKSON, THE LOGIC AND LIMITS OF BANKRUPTCY LAW (1986). An ambitious book, now the standard work on the subject. Argues that “Bankruptcy law, at its core, is debt-collection law.” As such, it is said to possess an intellectual coherence that should be understood and then applied “to a variety of issues while testing the current provisions of the Bankruptcy Code against them.” Professor Jackson argues against alternative, ad hoc approaches to the subject.

Douglas G. Baird, Bankruptcy’s Uncontested Axioms, 108 YALE L.J. 573 (1998).  An exploration of the underlying rationales for bankruptcy law that divide bankruptcy scholars into two camps: traditionalists and proceduralists.  Baird takes a pessimistic view that further empirical work will bridge the divide between the two camps of bankruptcy scholars, but concludes that both camps generally agree that current bankruptcy law consists of sound policy.

Michael W. McConnell & Randal C. Picker, When Cities Go Broke: A Conceptual Introduction to Municipal Bankruptcy, 60 U. CHI. L. REV. 425 (1993).  An introduction to municipal bankruptcy law with recommendations for decentralizing the current federal legislation.  The article nicely demonstrates the incompatible goals of bankruptcy by questioning what remedies are available to creditors against an insolvent municipality. 

Kevin A. Kordana & Eric A. Posner, A Positive Theory of Chapter 11, 74 N.Y.U.L.REV. 161 (1999).  A seminal work of economic analysis on bankruptcy.  The current Chapter 11 bankruptcy rules are compared unfavorably to alternative auctions from an economic efficiency perspective, even as the Professors caution that the Chapter 11 rules may have benefits not yet determinable within economic analysis.

Todd Zywicki, An Economic Analysis of the Consumer Bankruptcy Crisis, 99 NW. U.L. REV. 1463 (2005); Todd Zywicki, Institutions, Incentives, and Consumer Bankruptcy Reform, 62 WASH & LEE L. REV. 1071 (2005).  Two articles critiquing the current state of bankruptcy and proposing an alternative.  The first examines the trend of the previous 25 years whereby consumers no longer generally treat bankruptcy as a last-resort option, and the second proposes an alternative bankruptcy system based on economic analysis principles.

Elizabeth Warren, Bankruptcy Policymaking in an Imperfect World, 92 MICH. L. REV. 336 (1993). Professor Warren takes issue with the vision of bankruptcy law announced by Professors Baird and Jackson, supra. These two articles contain much of her critique, and her competing views of bankruptcy’s proper goals.

DAVID A. SKEEL, JR., DEBT’S DOMINION: A HISTORY OF BANKRUPTCY LAW IN AMERICA (2003).  Skeel’s book examines the political economy of bankruptcy legislation in America, focusing particularly on the interactions between the three forces that he sees as animating the path of bankruptcy legislation in American history: (1) creditors, (2) the organized bankruptcy bar, and (3) ideology, particularly a longstanding pro-debtor ideology in the American ethos.  Historically, these forces have interacted to create the most debtor-friendly bankruptcy regime (for both consumer and corporate bankruptcy) in the world.  In a book review, The Past, Present, and Future of Bankruptcy Law in America, 101 MICH. L. REV. 2016 (2003), Todd Zywicki applies Skeel’s framework to the politics surrounding the efforts to reform the bankruptcy laws in the mid-2000s, exploring how Skeel’s framework can explain the scaling back of the bankruptcy code’s generosity in that law.

Keith Sharfman, Derivative Suits in Bankruptcy, 10 STAN. J. OF LAW, BUS. & FIN. 1 (2004). This article addresses whether creditors have or should have standing to bring lawsuits derivatively on behalf of a bankruptcy estate. It argues that such suits are neither authorized by the Bankruptcy Code, nor reflected in recent pre-Code practice, nor necessarily wise to allow as a matter of bankruptcy policy.

Stephen J. Ware, Security Interests, Repossessed Collateral, and Turnover of Property to the Bankruptcy Estate, 2002 UTAH L. REV. 775. This article discusses the relevance of two different conceptualizations of “property”—as either a thing that is owned by someone or as a bundle of rights held against people with respect to things—and their relevance to the interpretation of the law governing secured transactions in bankruptcy.  Prof. Ware argues that courts have been led astray from the attempt to properly construe Section 542(a) of the federal Bankruptcy Code by why variations in state law, which he argues are not relevant to bankruptcy cases of goods that have been repossessed but not yet sold at foreclosure

Marcus Cole, The Federalist Cost of Bankruptcy Exemption Reform, 74 AM. BANKR. L. J. 227 (2000).  This article discusses the “market for deadbeats” by considering how variations in law can facilitate exit strategies for certain kinds of debtors.

For an overview of the law and economics literature on lending law and bankruptcy, consult chapter 14 of Richard Posner, Economic Analysis of Law (see infra p. 73).

Internet resources: A very useful “Uniform Commercial Code Locator” is available at

Last updated January 2009

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