ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Tuesday, November 21, 2017

Desperate times for law schools

As widely reported elsewhere such as by  David Frakt in The Faculty Lounge, law schools seem to be turning desperate to hide their student recruiting practices and ABA communications (see, e.g., Desperation Times at Thomas Cooley).  That blog post was cited to by the ABA in its brief in opposition to a motion filed by the Cooley law school for a temporary restraining order and preliminary injunction in an attempt to prevent the ABA from publishing a letter online stating Cooley's noncompliance with at least one accreditation standard. Images

Of course, law students choosing to attend law school execute legally binding contracts with their schools.  So do employees choosing to work for these schools, many of which seem to be on the brink of discontinuation of operations.  For how much longer can we as law schools continue defending _not_ telling applicants the real truth about their prospects for passing the bar given our applicants' LSAT scores which are, we have to admit, highly determinative in predicting ultimate bar passage rates?  Is what we do ethical and professional?  Do we even follow contract laws against fraud in the inducement, or torts fraud laws, when we as schools have information that could and likely is crucial to applicants' decision-making?

David Frakt developed what he calls a "risk band" that correlates LSAT scores and students' risk of failing the bar.  Taking that even further, shouldn't applicants be told their _individual_, percent-wise chance of passing the bar?  If, for example, students know that with an LSAT score of 143 (this is just a random example), they have virtually zero chance of passing the bar, would they still execute a three-year contract with a law school that may cost them upward of $100,000?  I doubt it.  More honesty and transparency is clearly required in both the law school hiring and admissions world.

 

November 21, 2017 in Commentary, Contract Profs, In the News, True Contracts | Permalink

Thursday, November 16, 2017

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (November 16, 2017)

The Top Ten list returns after a week away: Happy Thanksgiving to our U.S. readers next week!

Top-10-wArrowUp

Top Downloads for the Contracts & Commercial Law eJournal SSRN Logo2

Recent Top Papers (60 days) as of 17 Sep 2017 - 16 Nov 2017

Rank Paper Downloads
1.

Deterring Holdout Creditors in a Restructuring of PDVSA Bonds and Promissory Notes (¿Cómo disuadir a acreedores 'holdout' en una restructuración de bonos y pagarés de PDVSA?)

Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law
290
2.

The Promise and Perils of Crowdfunding: Between Corporate Finance and Consumer Contracts

University of Oxford - Faculty of Law and University of Oxford Faculty of Law
217
3.

Tracing Equity: Realizing and Allocating Value in Chapter 11

University of North Carolina School of Law and Brooklyn Law School
172
4.

The Comments to the Uniform Voidable Transactions Act Relating to Self-Settled Spendthrift Trusts are Correct

Visiting Professor at Large
136
5.

Formalizing Contract Law for Smart Contracts

Tilburg Law School
134
6.

The Bureaucrats of Private Law

Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law
115
7.

Smart Contracts: Terminology, Technical Limitations and Real World Complexity

Singapore Management University
111
8.

Legal Certainty: A Common Law View and a Critique

Durham University
103
9.

Distributive Justice and Contract Law: A Hohfeldian Analysis

Stetson University College of Law
102
10.

Spite: Legal and Social Implications

University of Florida - Levin College of Law
99

 

Top Downloads for Law & Society: Private Law - Contracts eJournal SSRN Logo2

Recent Top Papers (60 days) as of 17 Sep 2017 - 16 Nov 2017

Rank Paper Downloads
1.

Formalizing Contract Law for Smart Contracts

Tilburg Law School
134
2.

The Bureaucrats of Private Law

Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law
115
3.

Smart Contracts: Terminology, Technical Limitations and Real World Complexity

Singapore Management University
111
4.

Creatures of Contract: A Half-Truth about LLCs

University of Oregon School of Law
110
5.

Legal Certainty: A Common Law View and a Critique

Durham University
103
6.

Distributive Justice and Contract Law: A Hohfeldian Analysis

Stetson University College of Law
102
7.

The Restoration Remedy in Private Law: A Novel Approach to Compensation for Emotional Harm

University of Chicago Law School and Tel Aviv University
99
8.

Abolishing Consideration: An Argument from Coherence

Harvard University, Law School, Students
95
9.

The Perfect Match? A Closer Look at the Relationship between EU Consumer Law and Data Protection Law

University of Amsterdam - Institute for Information Law (IViR), University of Amsterdam - IViR Institute for Information Law (IViR) and BEUC, The European Consumer Organisation
83
10.

Borrowing in the Shadow of Death: Another Look at Probate Lending

University of California, Davis - School of Law
77

 

November 16, 2017 | Permalink

Wednesday, November 15, 2017

Closing date of the essence results in liquidated damages

I love when I reach the end of the semester teaching contracts because everything is still extra-fresh in my mind and every case starts to read like an exam hypo to me. This recent case out of New York, GB Properties NYC LLC v. Bonatti, 503564/2017, discusses time is of the essence issues in the context of a real estate contract. 

The parties entered into the contract on July 28, 2016, and while no date was set for closing in the contract, the contract stated it should take place within 60 days of the contract's execution or on some other mutually agreeable date. Sixty days after execution of the contract, the plaintiff had not provided the necessary information to close. Defendants' counsel informed plaintiff's counsel that the closing would be scheduled for December 6 and that the date was "of the essence." Plaintiff's counsel requested an extension, which was agreed to and set for December 28, but time was still deemed to be of the essence in the extension document. 

On December 28, the defendants appeared for the closing but the plaintiff never appeared. Two days later plaintiff's counsel requested an extension to January 12. The defendants agreed only if the plaintiff timely provided additional money to be held in escrow; otherwise they would consider the parties' contract to be concluded for violation of the time is of the essence condition and they would keep the money already in escrow (as had been provided in the contract by way of liquidated damages). The plaintiff did not provide extra money. On January 27 the defendants entered into a contract to sell the property to someone else. This lawsuit resulted, with the plaintiff seeking specific performance of the contract. 

The defendants maintained that both parties agreed that the December 28 date was of the essence and the plaintiff was not ready to fulfill its contractual obligations on that date. Therefore, the plaintiff breached the contract and the defendants were entitled to declare the contract terminated and maintain the down payment as liquidated damages. The plaintiff, however, alleged that the failure to close was the defendants' fault because the defendants had not provided clean title by the closing date and so the defendants were not ready to close on December 28.  

The court found that the defendants were ready to close on December 28 and that the extension negotiated between the parties unequivocally made the December 28 date of the essence. The plaintiff's failure to appear on that date was a breach of contract. The plaintiff itself admitted that it did not have the money for the closing on that date. Therefore, the plaintiff was in breach and the defendants were entitled to retain the down payment pursuant to the liquidated damages provision in the contract. 

November 15, 2017 in Recent Cases, True Contracts | Permalink | Comments (0)

Monday, November 13, 2017

Red Lobster's employee arbitration clause found enforceable

A recent case out of the District of New Mexico, Laurich v. Red Lobster Restaurants, LLC, No. CIV 17-0150 JB/KRS (behind paywall but you can read an article written about the complaint here), enforced an arbitration agreement between Red Lobster and a former employee, Laurich. Laurich was working at a Red Lobster when the restaurant chain was sold to the current corporate entity, the defendant in this case. When the defendant bought the restaurant chain, Laurich was informed during a shift that she had to look over an employment agreement. She asked for a paper copy but was told there were none and it was only available on the computer. She was also told that she had to sign the electronic document or she would be taken off the work schedule. So Laurich signed the document and went back to work. Unsurprisingly, the document contained an arbitration provision.

Laurich alleged that a fellow employee at Red Lobster eventually began harassing her on the basis of her race and sex, escalating to physical assault. She complained to her supervisors and eventually requested that the other employee not be there while she was there. She then learned that Red Lobster had terminated her employment. Laurich then filed this complaint and Red Lobster moved to compel arbitration under the agreement. 

Laurich argued that the arbitration agreement was both illusory and unconscionable. The court found that it was not illusory: Laurich agreed to arbitrate and Red Lobster agreed to continue employing Laurich. That was sufficient consideration on both sides. It wasn't as if Laurich was already working for this corporate entity when she was asked to sign the agreement "out of the blue." Rather, she was presented the agreement as soon as Red Lobster became her employee. 

Nor was the agreement unconscionable. The agreement was only half-a-page long and it was similar to one Laurich had been working under before. And the threat to be taken off the work schedule was only a temporary threat, not a threat of termination. So there was no procedural unconscionability, nor was the arbitration agreement substantively unconscionable. Both sides were bound by the clause, and Laurich was excused from paying arbitration fees. 

Therefore, the court enforced the arbitration agreement. 

November 13, 2017 in Food and Drink, Recent Cases, True Contracts | Permalink | Comments (0)

Friday, November 10, 2017

Accord and satisfaction requires good faith dispute

When I teach accord and satisfaction, I always remind my students, "Don't forget, for this to work, there has to be a good faith dispute!" A recent case out of Illinois, Piney Ridge Properties, LLC v. Ellington-Snipes, Appeal No. 3-16-0764, carries the same reminder. The defendant took out a mortgage of almost $26,000. Although his monthly payment was over $600, he paid only $354 a month, which he did for a little over a year, and then stopped paying altogether. The mortgage company filed a foreclosure action and asserted that the defendant owed around $10,000 on the mortgage. The defendant by letter to the mortgage company's counsel agreed that that was the amount he owed. However, about a year later, while the foreclosure action was still in progress, the defendant sent the mortgage company a check for $354 on which he wrote "Acceptance of this check constitute [sic] payment in full of account." The mortgage company cashed the check. The defendant then filed a motion to dismiss the foreclosure action, arguing that his check constituted an accord and satisfaction on the mortgage debt. 

The parties agreed that the check had a conspicuous statement that it was to fully satisfy the mortgage debt, and they agreed that the mortgage company cashed the check. However, the court noted that an accord and satisfaction can only be successful if there is a bona fide good faith dispute about the debt. The defendant had already admitted that he owed around $10,000; he was not disputing the amount. The court, in fact, concluded that it was likely that the defendant's action was done "in hopes of deceitfully escaping his larger mortgage debt." There being no good faith dispute between the parties, an accord and satisfaction did not occur here. 

November 10, 2017 in Recent Cases, True Contracts | Permalink | Comments (0)

Thursday, November 9, 2017

The Weinstein Protection Machine Was Fueled by Contracts

I mean, our entire society is filled with contracts, so it's no surprise that Harvey Weinstein was surrounded by a web of contracts designed to protect himself from accusations. Not just the NDAs I've previously discussed, but also contracts with his lawyer and with the investigators they hired. Not to the mention the interaction between his contracts with the National Enquirer's publisher and the National Enquirer's information. Because Dylan Howard at the National Enquierer's publisher considered himself to have to act in Weinstein's best interests because of other business deals, it affected the way National Enquirer used the information gained by its reporters. 

You can read the whole story here. It's extremely lengthy and I have not done it justice at all in this tiny blog entry, but it's got a lot about contracts there: what they said, why they existed, what was being done under them, etc. Just...a lot of contracts. All of them to keep people silent. 

November 9, 2017 in Celebrity Contracts, Commentary, Current Affairs, In the News, Labor Contracts, True Contracts | Permalink | Comments (0)

Sunday, November 5, 2017

St. Vincent de Paul trademark battle falters on breach of contract and promissory estoppel, but unjust enrichment survives

I think there is sometimes an impression out there that implied-in-fact contracts can be used to save all situations where formal contracts weren't executed, but that is definitely not the case. Implied-in-fact contracts still require some allegation of contractual intent between the parties. A recent case out of the Western District of Wisconsin, National Council of the U.S. Society of St. Vincent de Paul, Inc. v. St. Vincent de Paul Community Center of Portage County, Inc., 16-cv-423-bbc, reiterates this. (Actually, this case dates from late May, but just crossed my inbox now. No idea why, but I'll blog it for you anyway!)

The case is a trademark dispute over several trademarks owned by the plaintiff. The plaintiff sued the defendant for trademark infringement and the defendant asserted a number of counterclaims, including breach of contract. The defendant's breach of contract claim was based on a "contract implied in fact" because the plaintiff allegedly knew (either constructively or actually) about the defendant's use of the marks and the course of dealing between the parties created an implied contract regarding this use. But the complaint failed to show any intention to contract between the parties. Rather, its allegations illustrated that the parties coexisted but that they did so independent of each other. 

Even if there was an implied-in-fact contract, though, it would be terminable at will, meaning that the plaintiff could terminate it when it objected to the arrangement. The court refused to infer that any implied-in-fact contract waived the plaintiff's trademark rights against defendant in perpetuity, considering that there was so little evidence of any contractual intent in the first place. 

The defendant next asserted promissory estoppel but there was no allegation the plaintiff had ever made any promise that the defendant could rely on. The defendant's unjust enrichment claim, however, was allowed to proceed. The defendant had alleged that the plaintiff would benefit unjustly from the goodwill the defendant had built up in the community and that was enough to survive the motion to dismiss. 

November 5, 2017 in Commentary, Recent Cases, True Contracts | Permalink | Comments (0)

Saturday, November 4, 2017

Al Hirschfeld's art galleries didn't have the right to reproduce giclees

A recent case out of the Southern District of New York, Al Hirschfeld Foundation v. The Margo Feiden Galleries Ltd., 16 Civ. 4135 (PAE) (the decision is behind a paywall, but you can read a news account of it here), is another contract interpretation case, this one involving a contract between the late cartoonist Al Hirschfeld and the art galleries that represented him. There are many things at issue in the case, among them the galleries' sale of giclees, "high-quality photostatic reproductions of existing works." The Foundation argued that the Galleries did not have the right under the contract to sell these giclees. The Galleries of course argued that they did. 

The contract language at issue was a clause giving the Galleries the ability to reproduce works "in connection with [the Galleries'] promotion, advertising and marketing in furtherance of [the Galleries'] rights under this . . . Agreement." But the court found that this was a limited carve-out that did not extend to giclees. The reproductions done under this clause were meant to further the rights of the Galleries, not to be freestanding rights, which the giclees were. There was no indication that the parties intended the Galleries' ability to reproduce works to be extended to include the giclees

There were lots of other issues in this case. I've just confined myself to this one in the interest of space. 

November 4, 2017 in Celebrity Contracts, Current Affairs, In the News, Recent Cases, True Contracts | Permalink | Comments (0)

Friday, November 3, 2017

Registration is Now Open for the 13th Annual International Conference on Contracts (KCon XIII) – Orlando, FL

Registration is now open for the International Conference on Contracts, February 23-24, 2017, hosted by Barry University School of Law (Orlando, Florida). Registration and all of the conference details can be found here: http://www.barry.edu/kcon/.

The two-day conference is “designed to afford contracts scholars and teachers at all experience levels (including those preparing to enter the academy and those whose primary teaching appointment is not in a law school) an opportunity to present/demonstrate and discuss (formally and informally) recently-published and accepted-but-not-yet-published scholarship, works-in-progress, thought experiments, as-yet-fully-formed ideas for scholarship, and pedagogical innovations and to network with colleagues—and potential collaborators or mentors—from around the country and other parts of the world.”

A block of hotel rooms at a conference rate is being held by Embassy Suites in downtown Orlando. Shuttle service to and from the hotel and the law school will be provided. You are encouraged to book your hotel room early, as there are a limited number of rooms being held.

Please direct any questions to the conference organizer, Professor Dan O’Gorman at dogorman@barry.edu.

November 3, 2017 | Permalink

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (November 3, 2017)

Top-ten-greenTop Downloads For Contracts & Commercial Law eJournal SSRN Logo2

Recent Top Papers (60 days) as of 04 Sep 2017 - 03 Nov 2017

Rank Paper Downloads
1.

Smart Contracts and the Cost of Inflexibility

University of Pennsylvania Law School - Student/Alumni/Adjunct
289
2.

Deterring Holdout Creditors in a Restructuring of PDVSA Bonds and Promissory Notes

Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law
196
3.

The Promise and Perils of Crowdfunding: Between Corporate Finance and Consumer Contracts

University of Oxford - Faculty of Law and University of Oxford Faculty of Law
179
4.

Tracing Equity: Realizing and Allocating Value in Chapter 11

University of North Carolina School of Law and Brooklyn Law School
160
5.

The Comments to the Uniform Voidable Transactions Act Relating to Self-Settled Spendthrift Trusts are Correct

Visiting Professor at Large
134
6.

Consent and Contracts

University of Minnesota Law School
129
7.

Formalizing Contract Law for Smart Contracts

Tilburg Law School
116
8.

The Bureaucrats of Private Law

Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law
104
9.

Spite: Legal and Social Implications

University of Florida - Levin College of Law
97
10.

Legal Certainty: A Common Law View and a Critique

Durham University
96

 

Top Downloads For Law & Society: Private Law - Contracts eJournal SSRN Logo2

Recent Top Papers (60 days) as of 04 Sep 2017 - 03 Nov 2017

Rank Paper Downloads
1.

Smart Contracts and the Cost of Inflexibility

University of Pennsylvania Law School - Student/Alumni/Adjunct
289
2.

Consent and Contracts

University of Minnesota Law School
129
3.

Formalizing Contract Law for Smart Contracts

Tilburg Law School
116
4.

The Bureaucrats of Private Law

Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law
104
5.

Legal Certainty: A Common Law View and a Critique

Durham University
96
6.

Creatures of Contract: A Half-Truth about LLCs

University of Oregon School of Law
94
7.

Distributive Justice and Contract Law: A Hohfeldian Analysis

Stetson University College of Law
93
8.

U.S. Unconscionability and Article 1171 of the New French Civil Code: Achieving Balance in Statutory Regulation and Judicial Intervention

Arizona State University (ASU) - Sandra Day O'Connor College of Law
77
9.

Smart Contracts: Terminology, Technical Limitations and Real World Complexity

Singapore Management University
76
10.

The Restoration Remedy in Private Law: A Novel Approach to Compensation for Emotional Harm

University of Chicago Law School and Tel Aviv University
76

 

November 3, 2017 in Recent Scholarship | Permalink

Thursday, November 2, 2017

Shenanigans with a fake ruby at an auction

This recent case out of Nevada, Edy v. McManus Auctions, No. 70737 (behind paywall), caught my eye because it has facts that sound like a hypo. Basically, Edy attended a McManus auction. Prior to the auction, he examined what was purported to be a ruby pendant with a certificate estimating its value as $127,500. At the auction, Edy won the pendant with a bid of $15,842. However, when he brought the pendant to be appraised, he learned it was not a ruby and was only valued at $8,675. 

Edy sued for breach of contract, unjust enrichment, and fraudulent misrepresentation, inter alia. However, his fraudulent misrepresentation claim was struck after he failed to submit a timely damages calculation pursuant to a court order. On an incomplete appellate record, the court found that the district court did not abuse its discretion in striking these claims. That left a contract claim without any allegations of misrepresentation, and the court found that the contract entered into at the auction was valid and binding. So Edy lost. 

However, a concurrence in this case talked more about the misrepresentation allegations. The concurrence agreed that the district court's striking of the allegations was not an abuse of discretion, but the concurrence went on to analyze those allegations as if they have been permitted. McManus, at trial, admitted that the pendant was shown before the auction with a certificate claiming it was a ruby worth $127,500, just as Edy had claimed. McManus also testified that it knew there was a reserve price of $10,000, meaning that was the minimum acceptable bid, which was obviously far lower than the estimated value. Nevertheless, McManus did not independently verify the pendant nor did it disclose to the bidders that it might not be genuine or that it had such a low reserve price nor did it allow the bidders to get independent appraisals before the auction. Representations of value, the concurrence noted, are usually tricky bases for fraud, but here the pendant was unequivocally presented as a genuine ruby worth $127,500. The concurrence thought that was sufficient to constitute representations on behalf of McManus, had those allegations not been struck. But, without an adequate appellate record, the concurrence agreed that the district court's decision could not be reversed. 

This case is a little tragic to me. I'm not sure what happened at the district court level, but it seems like the concurrence thinks the auction company was behaving questionably here. The concurrence stands as a warning to the auction company to be cautious about its practices in the future. 

November 2, 2017 in Commentary, Recent Cases, True Contracts | Permalink | Comments (0)

Wednesday, November 1, 2017

Court finds terms are not ambiguous when their dictionary definitions are consistent with the contract

We just finished talking about contractual ambiguity in my contracts class, so I was happy to see this recent case out of the Fourth Circuit, SAS Institute, Inc. v. World Programming Ltd. ("WPL"), No. 16-1808 No: 16-1857 (behind paywall), discussing that very issue in the context of a software license agreement. This is actually part of a much larger case with important copyright implications for computer software code, but, given the subject matter of this blog, I'm focusing on the contract claims. You can read the opinion of the Court of Justice of the European Union on the copyright questions here

Among other things, the parties were fighting over the interpretation of a few of the contractual terms between them. However, the court reminded us that mere disputes over the meaning of a contract does not automatically mean that language is ambiguous. In fact, the court found here based on ordinary dictionary definitions that none of the terms were ambiguous. 

First, the parties were fighting over a prohibition on reverse engineering. The court looked to dictionary definitions of "reverse engineering" to arrive at a definition that also made sense in the context of the contract. WPL tried to introduce extrinsic evidence on the meaning of the term but the court found there was no reason to turn to extrinsic evidence since the term was not ambiguous. 

The parties were next fighting over the meaning of the license being for "non-production purposes only." The court construed this to have its "ordinary meaning" as forbidding "the creation or manufacture of commercial goods." WPL argued that the phrase had a technical meaning in the software industry, but the court did not find that the parties had intended to use this technical meaning. The dictionary definitions supported the court's construction of the phrase as unambiguous. 

November 1, 2017 in Current Affairs, Famous Cases, In the News, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Tuesday, October 31, 2017

Arbitration clause declared unconscionable because of its one-sidedness and limited discovery

A recent case out of California, Diaz v. Hutchinson Aerospace & Industry, Inc., B271563, has a nice, organized unconscionability analysis that leads to finding an arbitration clause unenforceable. 

The case concerns an employment agreement signed by Diaz with his employer Hutchinson. The employment contract was indisputably an adhesion contract, because it was distributed pre-printed to employees with no opportunity to negotiate. That does carry some degree of procedural unconscionability but the court characterized it as minimal, since it was not accompanied by any other elements of surprise or sharp dealing. Given the low degree of procedural unconscionability, the court required a high degree of substantive unconscionability. 

Unfortunately for Hutchinson, that high degree of substantive unconscionability was met. First, the arbitration provision was one-sided: only claims against the employer were required to go to arbitration, not claims against the employee. Second, the arbitration provision limited discovery in such a way as to make it impossible for the employees to vindicate their rights. 

Because this high degree of substantive unconscionability combined with the procedural unconscionability rendered the arbitration clause unenforceable, the court was justified in finding the entire agreement "permeated by an unlawful purpose" and refusing to enforce it. 

October 31, 2017 in Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Monday, October 30, 2017

Whitefish Energy Contract Terminated

As widely reported in the general media today, Puerto Rico terminated the $300 contract it had otherwise executed with tiny Montana company Whitefish.  As reported by the New York Times, a federal investigation of the contract award process had been initiated just as the power authority had appointed a trustee to review contract bidding.  The Puerto Rico Governor stated that no wrongdoing had been discovered, but that the contract had become a “distraction” and that attention had to be refocused on restoring service to the island.

October 30, 2017 | Permalink

The Culpability of NDAs in Perpetuating Sexual Assault Culture

In the wake of the Weinstein revelations, everyone is talking about it: NDAs seem to be part of the problem. They were used consistently to silence people from speaking out. The NDA seemed to be how you could get away with it, as Weinstein's last-ditch offer to Rose McGowan to keep the lid on the story seems to illustrate. You can read criticisms of NDAs at Vox, Variety (and again), CNN (and again), the New York Daily News, Above the Law, and Forbes. And that was just my first page of Google results. I've been blogging about the danger of them for a while. It's not just the rich and powerful using them; college campuses are also using them in the sexual assault context. And they're not just being used to cover up sexual abuse; Amber Heard's NDA restricted her from apparently ever even mentioning domestic abuse at all. It's easy to see why NDAs are popular among the powerful (the President also loves them). They allow complete and total control of the narrative. An NDA can make it a legal breach for you to tell the truth; an NDA can indeed make it legally enforceable for you to lie, basically. And, in this way, the fuzzy line between truth and fiction becomes fuzzier and fuzzier. And people get victimized and feel alone and the culture of contractual silence makes them lonelier, depriving them of support systems. 

NDAs also exist for lots of valid and important reasons. But they are also being widely and abusively used and we as a society need to confront that. The question isn't why less powerful people sign these NDAs. Until we can fix power imbalances (and we're a long way from that), it's always going to happen. But we should really question the public policy justifications for NDAs in certain circumstances. These past couple of weeks have spotlighted lots of troubling systemic issues in our society. This is one of them. 

October 30, 2017 in Celebrity Contracts, Commentary, Current Affairs, In the News, Labor Contracts, Law Schools, True Contracts | Permalink | Comments (0)

Sunday, October 29, 2017

Whiteboard and Black-Letter: Visual Communication in Commercial Contracts

Jay A. Mitchell

Stanford Law School

Date Written: October 22, 2017

Abstract

Scholars are increasingly exploring the intersections of visual expression with law and legal practice. This attention is welcome. Visual thinking and communication are unusually valuable tools for lawyers, including lawyers who plan transactions, design and draft contracts, and advise clients about their performance. Commercial relationships are often complex, the individuals involved of diverse backgrounds and roles, and the documents difficult to comprehend. Visual methods, as demonstrated through research in a number of fields, facilitate comprehension and collaboration across disciplines and social communities, and few business people will prefer contract text over timeline. That said, visual executions are not often observed in contract documents, and formal use of visual presentation by commercial lawyers faces substantial cultural and practical hurdles. This article begins taking on those hurdles. It explains why visual methods are useful in transactional work, identifies barriers to use of visual executions in contracts, and assesses recent scholarship encouraging such use in view of a characterization of contracts as managerial objects that operate across multiple inter-firm, intrafirm, and interdisciplinary communities over time. The article then examines two core questions about the use of visual presentation in contracts and related materials: treatment under contract interpretation and evidentiary principles, and characteristics of transactional situations where visual executions may be especially helpful. It concludes by suggesting a number of research streams, model creation, and other actions intended to build the case for such use. Visuals work in deal work; we should use the best tools for the job.

 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3057075 

October 29, 2017 | Permalink

Whitefish Energy - Strongarming Puerto Rico into Contractual Acceptance and Compliance?

As reported on The Hill and in several other national and international news outlets, tiny Montana energy company Whitefish Energy – located in Interior Secretary Ryan Zinke’s very small hometown – stands to profit greatly from its contract with the Puerto Rico Electric Power Authority. That’s fine, of course. However, highly questionable issues about the contract have surfaced recently.   For example, Whitefish very famously prohibited various government bodies from “audit[ing] or review[ing] the cost and profit elements of the labor rates specified herein.” DNHKNDgW4AACWYJ

What were those? The Washington Post reports that under the contract, “the hourly rate was set at $330 for a site supervisor, and at $227.88 for a ‘journeyman lineman.’ The cost for subcontractors, which make up the bulk of Whitefish’s workforce, is $462 per hour for a supervisor and $319.04 for a lineman. Whitefish also charges nightly accommodation fees of $332 per worker and almost $80 per day for food.” Another news source notes that “[t]he lowest-paid workers, according to the contract, are making $140.26 an hour. By comparison, the minimum wage in Puerto Rico is $7.25 an hour … [T]he average salary for a journeyman electrical lineman is $39.03 per hour in the continental U.S. However, a journeyman lineman on Whitefish Energy's Puerto Rico project will earn $277.88 per hour.”

Little wonder why the company did not want anyone to “audit or review” its labor rates. If it wasn’t for the apparent “old boy”/geographical connections that seemed to have led to this contract to have been executed in the first place, hopefully no Puerto Rican official would have accepted this contract in the form in which it was drafted.

But it doesn’t end there. When the San Juan mayor called for the deal to be “voided” and investigated, Whitefish representatives tweeted to her, “We’ve got 44 linemen rebuilding power lines in your city & 40 more men just arrived. Do you want us to send them back or keep working?”

To me, this entire contract to violate several established notions of contract law such as, perhaps, undue influence or duress (in relation to contract formation but perhaps also, if possible, to continued contractual performance), bad faith, perhaps even unconscionability, which is a alive and well in many American jurisdictions.

This could work as an interesting and certainly relevant issue-spotter for our contracts students. It also gives one a bad taste in the mouth for very obvious reasons. It will be interesting to see how this new instance of potentially favoring contractual parties for personal reasons will pan out.

October 29, 2017 in Commentary, Contract Profs, Current Affairs, Famous Cases, Government Contracting, In the News, Labor Contracts, True Contracts | Permalink | Comments (0)

Friday, October 27, 2017

Contract Cancellation as Punishment for Sexual Harassment

As reported by CNN, Penguin Press has just cancelled a contract with sexual-predator-of-the-day Mark Halperin, formerly of ABC News and recently a host of "Showtime" on HBO.  HBO has also cancelled its plan to create a mini-series based on his book.

Can a contract be cancelled for this reason?  I have not seen the actual contract, but it undoubtedly contained a provision allowing the publisher to do so.  If not, does it matter?  Clearly not.  Halperin and others like him well deserve the contractual outcomes of their incredibly poor behavior.  I doubt it that Halperin will dispute this legally too.

What in the world is going on with all these allegations and facts demonstrating sexual harassment, gender harassment, and other vile power games in the work place?  Sorry, gentlemen, but clearly, many men in the workplace and elsewhere still suffer from an almost incredible sense of entitlement to power over women.  "Almost" because history shows that this has apparently always been the case.  One would think that in 2017, things would be different, but quite evidently not.  Just look at our own industry, legal education, and how many men still dominate that field in the acquisition of job positions, promotions, presentations at conferences, etc.  Yes, it is still a man's world.  Yes, glass ceilings still exist.  How sad to think that as a society, we have not come further than this.  

A good aspect of this current revelation trend is that women are finally speaking up against what has happened.  It's doubly troubling that not only were they discriminated against, but also did not find it feasible to bring these issues up until now, apparently.

October 27, 2017 in Commentary | Permalink

Thursday, October 26, 2017

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (October 26, 2017)

Top Ten Infinity

Top Downloads For Contracts & Commercial Law eJournal SSRN Logo2

Recent Top Papers (60 days) as of 27 Aug 2017 - 26 Oct 2017

Rank Paper Downloads
1.

Smart Contracts and the Cost of Inflexibility

University of Pennsylvania Law School - Student/Alumni/Adjunct
265
2.

Amending Corporate Charters and Bylaws

University of Virginia School of Law and Columbia Law School
171
3.

Tracing Equity: Realizing and Allocating Value in Chapter 11

University of North Carolina School of Law and Brooklyn Law School
155
4.

The Promise and Perils of Crowdfunding: Between Corporate Finance and Consumer Contracts

University of Oxford - Faculty of Law and University of Oxford Faculty of Law
150
5.

The Comments to the Uniform Voidable Transactions Act Relating to Self-Settled Spendthrift Trusts are Correct

Visiting Professor at Large
132
6.

Consent and Contracts

University of Minnesota Law School
124
7.

The Bureaucrats of Private Law

Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law
103
8.

Formalizing Contract Law for Smart Contracts

Tilburg Law School
99
9.

Spite: Legal and Social Implications

University of Florida - Levin College of Law
97
10.

Legal Certainty: A Common Law View and a Critique

Durham University
92

 

Top Downloads For Law & Society: Private Law - Contracts eJournal SSRN Logo2

Recent Top Papers (60 days) as of 27 Aug 2017 - 26 Oct 2017

Rank Paper Downloads
1.

Smart Contracts and the Cost of Inflexibility

University of Pennsylvania Law School - Student/Alumni/Adjunct
265
2.

Amending Corporate Charters and Bylaws

University of Virginia School of Law and Columbia Law School
171
3.

Consent and Contracts

University of Minnesota Law School
124
4.

The Bureaucrats of Private Law

Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law
103
5.

Formalizing Contract Law for Smart Contracts

Tilburg Law School
99
6.

Legal Certainty: A Common Law View and a Critique

Durham University
92
7.

Distributive Justice and Contract Law: A Hohfeldian Analysis

Stetson University College of Law
90
8.

U.S. Unconscionability and Article 1171 of the New French Civil Code: Achieving Balance in Statutory Regulation and Judicial Intervention

Arizona State University (ASU) - Sandra Day O'Connor College of Law
76
9.

Superior Bargaining Power: The Good, the Bad and the Ugly

Shanghai Jiao Tong University (SJTU) - KoGuan Law School
75
10.

Borrowing in the Shadow of Death: Another Look at Probate Lending

University of California, Davis - School of Law
74

 

October 26, 2017 in Recent Scholarship | Permalink

Wednesday, October 25, 2017

Diamonds are Also a Man’s Best Friend – Just Remember the Writing

Here is your classic Parol Evidence Rule and oral contracts case, diamonds, faulty translations, millions of dollars, and all.

In 2009, David Daniel invested $3.35 in a 50% ownership interest in the jewelry and coin business Continental Coin, thus co-owning it with Nissim Edri. The partnership agreement was oral only. In 2014, Daniel sought to sell his interest. Edri agreed to pay half of the initial contribution as well as some other amounts for a total of $4.2 million. Edri could not pay this amount and thus suggested Daniel taking approx.. 95 diamonds from the inventory instead. This time, the parties did get a writing that, however, was in Hebrew. Images

The problem with that was that Edri could not understand the first two pages and subsequently did not agree with the poorly translated version of the contract. This stated, among other things (my emphasis): Unknown

“We the undersigned, David Daniel and Nissim Edri, hereby declare, in full faith, that the merchandise to be collected today, Friday, 2/21/2014 from CONTINENTAL COIN & JEWLERY CO is and [sic] a payment in full complete repayment for David Daniel's investment in CONTINENTAL COIN & JEWELRY in the sum total of $4,000,000.

“This agreement is signed with a complete understanding that, in the event there are any adjustments to be made between David Daniel and Nissim Edri, they will be handled with good will and in complete consent by both parties.

“David takes from the partnership four million dollars in merchandise that was evaluated by the company while he was a partner[.]”

ImagesOf course, a dispute arose as to the true value of the 95 diamonds collected. Daniels claims they were worth less than $2 m. Edri responded that if Daniel was not satisfied with the diamonds, he could return the merchandise in its entirety whereupon Edri would sell them and pay Daniels as each was sold. Daniels brought suit, citing to their prior oral agreement to deliver diamonds worth $4m and to an agreement on the valuation method, which was to be settled in good faith.

As you can guess, the court made short shrift of Daniels’ attempt to bring in any prior oral agreements on what was to happen if the diamonds delivered were actually not worth $4 m. Said the court: “Daniel contends the merchandise he collected upon signing the written agreement was worth substantially less than $4 million under the valuation method specified in the parties' former oral agreement. In direct conflict with that claim, the written agreement provides that “the merchandise” he collected was “a payment in full complete repayment For David Daniel's investment in CONTINENTAL COIN & JEWELRY in the sum total of $4,000,000.” Because Daniel's claim was premised on a purported oral agreement that was inconsistent with the integrated terms of a final written agreement, the trial court properly rejected his breach of oral contract claim under the parol evidence rule.

So there. Perhaps out $2m. Goes to show that you can never really trust anyone in contractual processes, not even apparent friends.

The case is David Daniel v. Nissim Edri, et al., 2017 WL 4684347

October 25, 2017 in Contract Profs, Miscellaneous, True Contracts | Permalink