Reality Check

Once in a while, one needs to be reminded of just how partial the electronic tools are, and how much we’ll continue to need old-fashioned libraries.

Let’s get away from the grand abstractions and make this very concrete.
Here was the issue. We had to consider whether a contract was binding. It had been made on April *, 200*. But we discovered that one of the parties named in the contract hadn’t been incorporated until May *, 200*. If it wasn’t yet in existence, could it validly contract?

If this were just involving Canadian parties, the answer would have been clear. Both the Canada Business Corporations Act and the Ontario Business Corporations Act have provisions dealing with pre-incorporation contracts. It’s CBCA section 14, which is discussed at http://www.cra-arc.gc.ca/E/pub/tp/it454/it454-e.html.
But our question involved a company based in Chicago. So the issue was whether there was anything in American law that would be equivalent to section 14? We’d no time to contact a Chicago firm on an agency basis, so we had to look ourselves; and if we neeed later to be sure, we could then confirm. So: American law on pre-incorporation contracts.

How tough could it be to find that? Well surprisingly, in the limited time we had, neither FindLaw nor the Cornell LII could give us clear answers in the Illinois or Delaware Codes or Session Laws [at this point, we weren’t sure whether it was an Illinois company]. Googling wasn’t much help either. We got law school notes there that seemed to suggest post-creation ratification and adoption would work, but we still would welcome the clear cut answer that a statutory provision like the Canadian ones would provide. Half an hour on the open web hadn’t produced clear answers.

So I had two routes ahead, Lexis or Westlaw. But instead, since I had five minutes before another meeting at my old firm, I went into their library, since I knew there were some overview texts on American corporate law, Williston on Contracts, and an annotated version of the Model Business Corporations Act. And I knew my way around these books. Within five minutes, I had tabbed references in all these sources for photocopying. They gave me the relevant section in the Illinois Code (that was not brought up by any of the searches we had run). Williston gave me relevant case law, and the MBCA a good summary of the practical issues.

Quite extraordinary how much faster and more relevant checking the traditional sources proved to be. And zero disbursement costs, as opposed to the $100-$200 that the publishers electronic tools would have been.

I tell my students that perhaps their children may live to see the end of books in a law library. This example just demonstrated that the electronic tools haven’t yet reached the standard of perfection we might claim or hope.