LAW & ECONOMICS COLLOQUIUM
presents
Thomas W. Merrill
Columbia Law School
The Economics and Law of Leasing
Tuesday, November 13, 2018
4:10 - 5:45
Room FL219 / John Willis Classroom
78 Queen's Park
The general topic of this paper is leasing – the acquisition of assets for a limited time period, typically in return for periodic payments of rent. Leasing is an increasingly dominant form of holding assets, especially personal property leases, including auto, airplane, and business equipment leases. This paper is in two parts, with the aspiration that each part will shed light on the other. The first part consists of a synthesis of the economic reasons persons may prefer to lease rather than own assets (most typically by borrowing funds secured by the asset). I collect these reasons under four headings: the financing advantages of leases; the risk management feature of leases; the division of labor made possible by leases; and the capacity of leases to manage or limit externalities. The second part consists of a discussion of the legal rules that govern leases. A particular focus here is the divergent rules that apply to real property leases – which treat leases as a form of property – and personal property leases – which are governed by doctrine originally applied to bailments for hire and consequently have a much more contractual flavor. I argue that for lease law effectively to serve the economic functions discussed in the first part, it should draw upon certain features from each of these traditions. In particular, personal property leasing should adopt the covenant of quiet enjoyment, which allows lessees in compliance with lease obligations to obtain specific performance of leases. Real property leases should adopt the treatment of warranties found in personal property lease law, most prominently Article 2A of the Uniform Commercial Code, which treats warranties as default rules. I also discuss the appropriate treatment of leases in bankruptcy.
Thomas W. Merrill is the Charles Evans Hughes Professor of Law at Columbia Law School, where he teaches property, torts, and administrative law. He previously taught at Northwestern University School of Law and Yale Law School. He has undergraduate degrees from Grinnell College and Oxford University and a law degree from the University of Chicago. He clerked on the D.C. Circuit (for Chief Judge David Bazelon) and the U.S. Supreme Court (for Justice Harry Blackmum) and served as the Deputy Solicitor General U.S. Department of Justice (from 1987 to 1990). Professor Merrill is the author of Property: Principles and Policies (Foundation Press, 3rd ed. 2017) (with Henry E. Smith); The Oxford Introductions to U.S. Law: Property (2010) (also with Smith); and Property: Takings (Foundation Press 2002) (with David Dana); as well as numerous articles on propertytheory and takings of property. He is a member of the American Law Institute, where he serves as a co-reporter on the Restatement (4th) of Property, and the American Academy of Arts and Sciences.
For more colloquium information, please send an email to events.law@utoronto.ca.
