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We show that the fundamental legal structure of a well-written financial contract follows a state-transition logic that can be formalized mathematically as a finite-state machine (specifically, a deterministic finite automaton or DFA). The automaton defines the states that a financial relationship can be in, such as “default,” “delinquency,” “performing,” etc., and it defines an “alphabet” of events that can trigger state transitions, such as “payment arrives,” “due date passes,” etc. The core of a contract describes the rules by which different sequences of events trigger particular sequences of state transitions in the relationship between the counterparties. By conceptualizing and representing the legal structure of a contract in this way, we expose it to a range of powerful tools and results from the theory of computation. These allow, for example, automated reasoning to determine whether a contract is internally coherent and whether it is complete relative to a particular event alphabet. We illustrate the process by representing a simple loan agreement as an automaton.

We show that the fundamental legal structure of a well-written financial contract follows a state transition logic that can be formalized mathematically as a finite-state machine (also known as a finite state automaton). The automaton defines the states that a financial relationship can be in, such as “default,” “delinquency,” “performing,” etc., and it defines an “alphabet” of events that can trigger state transitions, such as “payment arrives,” “due date passes,” etc. The core of a contract describes the rules by which different sequences of event arrivals trigger particular sequences of state transitions in the relationship between the counter parties. By conceptualizing and representing the legal structure of a contract in this way, we expose it to a range of powerful tools and results from the theory of computation. These allow, for example, automated reasoning to determine whether a contract is internally coherent and whether it is complete relative to a particular event alphabet. We illustrate the process by representing a simple loan agreement as an automaton.

Developments in cognitive neuroscience are providing new insights into the nature of normative judgment. Traditional views in such disciplines as philosophy, religion, law, psychology and economics have differed over the role and usefulness of intuition and emotion in judging blameworthiness. Cognitive psychology and neurobiology provide new tools and methods for studying questions of normative judgment. Recently, a consensus view has emerged, which recognizes important roles for emotion and intuition and which suggests that normative judgment is a distributed process in the brain. Testing this approach through lesion and scanning studies has linked a set of brain regions to such judgment, including the ventromedial prefrontal cortex, orbitofrontal cortex, posterior cingulate cortex and posterior superior temporal sulcus. Better models of emotion and intuition will help provide further clarification of the processes involved. The study of law and justice is less well developed. We advance a model of law in the brain which suggests that law can recruit a wider variety of sources of information and paths of processing than do the intuitive moral responses that have been studied so far. We propose specific hypotheses and lines of further research that could help test this approach.

Legal practice and legal education are both at challenging inflection points, where much of how and what we do as lawyers and how and what we have taught as legal educators comes under scrutiny. Legal technology is an important factor in driving the challenges we face. As we reform our curriculums in this moment of change, we should be guided by considerations of value added, values added, and economic sustainability. Law and technology is an area that is ripe for expansion in our teaching, with the possibility of satisfying all of these criteria. It also provides ample room for scholarly examination. Creating opportunities for learning how technology is shaping legal practice should be a priority for any school looking to provide a useful education for the lawyers of the present, let alone the future.

The United States economy is struggling to recover from its worst economic downturn since the Great Depression. After several huge doses of conventional macroeconomic stimulus - deficit-spending and monetary stimulus - policymakers are understandably eager to find innovative no-cost ways of sustaining growth both in the short and long runs. In response to this challenge, the Kauffman Foundation convened a number of America’s leading legal scholars and social scientists during the summer of 2010 to present and discuss their ideas for changing legal rules and policies to promote innovation and accelerate U.S. economic growth. This meeting led to the publication of Rules for Growth: Promoting Innovation and Growth Through Legal Reform, a comprehensive and groundbreaking volume of essays prescribing a new set of growth-promoting policies for policymakers, legal scholars, economists, and business men and women. Some of the top Rules include: • Reforming U.S. immigration laws so that more high-skilled immigrants can launch businesses in the United States. • Improving university technology licensing practices so university-generated innovation is more quickly and efficiently commercialized. • Moving away from taxes on income that penalize risk-taking, innovation, and employment while shifting toward a more consumption-based tax system that encourages saving that funds investment. In addition, the research tax credit should be redesigned and made permanent. • Overhauling local zoning rules to facilitate the formation of innovative companies. • Urging judges to take a more expansive view of flexible business contracts that are increasingly used by innovative firms. • Urging antitrust enforcers and courts to define markets more in global terms to reflect contemporary realities, resist antitrust enforcement from countries with less sound antitrust regimes, and prohibit industry trade protection and subsidies. • Reforming the intellectual property system to allow for a post-grant opposition process and address the large patent application backlog by allowing applicants to pay for more rapid patent reviews. • Authorizing corporate entities to form digitally and use software as a means for setting out agreements and bylaws governing corporate activities. The collective essays in the book propose a new way of thinking about the legal system that should be of interest to policymakers and academic scholars alike. Moreover, the ideas presented here, if embodied in law, would augment a sustained increase in U.S. economic growth, improving living standards for U.S. residents and for many in the rest of the world.

To investigate how individual differences in moral judgment competence are reflected in the human brain, we used event-related functional magnetic resonance imaging, while 23 participants made either socio-normative or grammatical judgments. Participants with lower moral judgment competence recruited the left ventromedial prefrontal cortex and the left posterior superior temporal sulcus more than participants with greater competence in this domain when identifying social norm violations. Moreover, moral judgment competence scores were inversely correlated with activity in the right dorsolateral prefrontal cortex (DLPFC) during socio-normative relative to grammatical judgments. Greater activity in right DLPFC in participants with lower moral judgment competence indicates increased recruitment of rule-based knowledge and its controlled application during socio-normative judgments. These data support current models of the neurocognition of morality according to which both emotional and cognitive components play an important role.

Consent, a critical concept for law, often rests upon the ability of people to create binding changes of legal status, rights, and obligations. The law typically presumes complete and un-buffered adult capacity for binding legal consent. However, the realities of flawed information, inexperience, a lack of attention, and evidence of human limitation frequently refute notions of complete capacity. This Article posits that the law should reserve the presumption of complete and unfettered adult capacity for special cases. A more nuanced view of our actual capacities rests, in part, on the understanding that neuroscience and psychosocial evidence provides. This perspective suggests that jurists should match rules and jurisprudential approaches to the variable capacities that people exhibit in different contexts and stages of life. The strategic recognition and use of neurojuridical tools identifies at-risk parties and circumstances and sheds light on the problematic nature of consent offered on some occasions. Such a view helps jurists to develop and deploy effective enhancers and buffers around consent that reflect a more realistic treatment of capacity. This Article examines the myth of consent to add some of the tools and insights of cognitive neuroscience and social psychology to the traditional staples of psychology, economics, politics, and philosophy. It proffers innovative approaches, such as the framework of legal assent, explored in prior work and summarized in this Article. Legal reforms prompted by new defaults will facilitate optimum consensual relations and ultimately foster the Pareto enhancing goals, now mistakenly linked to a more radical vision of consent.

Cognitive neuroscience is challenging the Anglo-American approach to criminal responsibility. Critiques, in this issue and elsewhere, are pointing out the deeply flawed psychological assumptions underlying the legal tests for mental incapacity. The critiques themselves, however, may be flawed in looking, as the tests do, at the psychology of the offender. Introducing the strategic structure of punishment into the analysis leads us to consider the psychology of the punisher as the critical locus of cognition informing the responsibility rules. Such an approach both helps to make sense of the counterfactual assumptions about offender psychology embodied in the law and provides a possible explanation for the human conviction of the existence of free will, at least in others.