It’s hard to imagine American life today functioning without contracts—those often unread agreements that are central to the smooth working of everything from daily credit card transactions to the purchase of a home. Yet how contracts are designed and how contract law is taught to law students have, until recently, not been subject to critical review and improvement. Shedding new light on this central area of law in everyday life is George G. Triantis, JSD ’89, who joined the faculty from Harvard this summer.
Triantis has done pathbreaking work by pioneering the application of options theory to the study of contracts and commercial law and developing innovative principles of contract design that bring this important area of the law into the 21st century.
“First-year contract law generally takes the agreement as given and, on that basis, examines how the court resolved a later dispute between the parties,” he says, “In fact, you miss insights when you look only at the dispute resolution stage and not the entire process, starting with negotiations, leading to the bargain, performance, and ending perhaps with litigation.”
This soup-to-nuts view of contract design takes into account how a contract will be enforced in court. “The design of a contract should anticipate the various features of dispute resolution,” he says, “which is not a question of contract law alone: rules of procedure, evidence, burdens of proof, the likelihood of settlement, for example, should be borne in mind when designing a contract.” For example, “is it better to frame an obligation as a precise rule or a vague standard that is costly to litigate? In some cases, the parties might want to reduce the likelihood of costly litigation; in others, they might want it to be a more serious threat. The design of the agreement can anticipate behavioral responses to the rules of litigation.”
The application of option theory to contracts (something Triantis was inspired to consider by his brother, Alex, PhD ’88, who chairs the finance department at the University of Maryland) can have a wide variety of interesting and innovative applications. Once businesses see that they can create value by “selling” flexibility that they develop in their operations, they can give customers the option to terminate a purchase or to change their minds after contracting—all at a price set in advance. Triantis wonders, as an example, why airlines do not take better advantage of this strategy. “You can be creative in designing these options and generate a lot of value in contracts. Airlines are charging for baggage items, blankets, food and seat positions,” he observes. “They could profit even more by offering economy passengers a broader range of rights to cancel or change schedule.”
With expertise in contract, corporate, and commercial law—and scholarship that spans the fields of bankruptcy law, contracts, corporate finance, and secured transactions—it is not surprising that Triantis has been described by other leading figures in these fields as the “pre-eminent scholar of his generation,” “one of the brightest academic stars in business law,” and “the leading figure in the world of private law.” What is perhaps surprising though is that he only reluctantly chose this career path.
When Triantis was in high school, he was determined not to become a lawyer or an economist. Both of his parents were lawyers, and his father was also an economist. He attended high school at Upper Canada College in Toronto, graduated early, and matriculated at the University of Toronto when he was just 15. Perhaps because he was young, he veered toward mathematics in college. “I lacked the maturity for the humanities, and math seemed much more accessible,” he says. “Before I knew it, I broke my first vow by graduating with a degree in economics.” He proceeded to break his second vow by going to law school and graduating with an LLB at the age of 21. Despite his earlier determination to find his own way rather than follow in his parents’ footsteps, their influence was invaluable.
“My father had a great inquisitive mind. And my mother had a very grounded moral sense. I realize now that they led by example. And this, of course, shaped me,” he says.
After a couple of years of transactional practice in a corporate law firm, Triantis decided to take a break from serving clients to think more deeply about the questions that had come across his desk. He was admitted into Stanford Law School’s graduate program to study debt contracts, and he subsequently stayed on as a teaching fellow. Robert Weisberg, Edwin E. Huddleson, Jr. Professor of Law, JD ’79, was his supervisor and trusted advisor. “Bob was a tremendous resource for me during those years. He kept me focused and gave me invaluable counsel in my dissertation, even though my research wasn’t in his area. And he coached me well when I was looking for my first job,” he says.
Triantis began his teaching career in 1989 as an assistant professor at the University of Toronto Faculty of Law and Faculty of Management and since then he has also been a chaired professor at each of the law faculties of Virginia, Chicago, and most recently, Harvard, where he was the Eli Goldston Professor of Law.
And now Triantis has come full circle, returning to the law school from which he launched his teaching career. “I enjoy the students here at Stanford Law. And I have known and admired many of the faculty here over the years. This really is an outstanding community,” he says.