ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, September 2, 2016

KCON XII in Los Angeles - Book at the Special Hotel Rate and Save February 24-25 on Your Calendar!

Our friends at Southwestern Law School in Los Angeles are ramping up the next edition of this blog's favorite conference, The 12th Annual International Conference on Contracts. Or as we lovingly call it:

KCON12-Logo

KCON XII is shaping up to be one of the best gatherings of contracts scholars and teachers to date, but that is only possible with your attendance and participation. Here is the organizers' conference description:

Set in a meticulously restored Art Deco landmark at the heart of Los Angeles, the two-day conference is designed to offer an experience that combines novel ideas, cutting edge practical knowledge, and fun. KCON affords contracts scholars, teachers at all experience levels (including those preparing to enter the academy and those whose primary teaching appointment is not in a law school), and practicing attorneys an opportunity to present, discuss, and receive feedback on a wide range of contract-related scholarship and issues. Articles recently published or accepted-but-not-yet published, works in progress, thought experiments, pedagogical innovations, as well as practice-based cases/problems are all welcome. The conference also provides an eagerly anticipated annual opportunity to network with colleagues, potential collaborators, and mentors from around the country and other parts of the world.

Omni-los-angeles-hotel-exteriorBooking your hotel early at the fantastic Omni Los Angeles Hotel at California Plaza (pictured at left) is especially important to ensure that you have incredible accommodations at a discounted rate in the conference block of rooms.

In addition to the special hotel deals, conference registration is also now open for business. If you register for KCON XII now, you can get the early-bird rate of $250 for conference registration.

Stay tuned for more KCON XII information in the coming days, including a reveal of the keynote presentations, as well as the opportunities for you to submit a proposal for presentation or panel.

September 2, 2016 in Conferences | Permalink | Comments (0)

Thursday, September 1, 2016

Weekly Top Ten SSRN Contracts Downloads (September 1, 2016)

Special kudos this week to ContractsProf Blog Editor-in-Chief Myanna Dellinger for making both of this week's Top Ten lists! Now, without further ado:

TopTen Stamp-808x455

 

SSRN Top Downloads For SSRN Logo (small)
Contracts & Commercial Law eJournal

Rank Downloads Paper Title
1 238 Choice of Forum Agreements Under the Brussels I Recast and Under the Hague Convention: Coherences and Clashes
Matthias Weller
EBS Universität für Wirtschaft und Recht
2 211 The Mystery of Mutual Insurers in Lawyers Professional Liability Insurance
Tom Baker and Rick Swedloff
University of Pennsylvania Law School and Rutgers Law School
3 173 Trophy Hunting Contracts: Unenforceable for Reasons of Public Policy
Myanna F. Dellinger
University of South Dakota Law School
4 153 The Puzzle of PDVSA Bond Prices
Paolo Colla, Anna Gelpern and G. Mitu Gulati
Bocconi University - Department of Finance, Georgetown University Law Center and Duke University School of Law
5 128 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
6 116 Sizing up Private Law
Andrew S. Gold and Henry E. Smith
DePaul University College of Law and Harvard Law School
7 94 The Myth of Free
John M. Newman
University of Memphis - Cecil C. Humphreys School of Law
8 87 Are Validation Notices Valid? An Empirical Evaluation of Consumer Understanding of Debt Collection Validation Notices
Jeff Sovern and Kate E. Walton
St. John's University - School of Law and St. John's University - Department of Psychology
2016
9 86 Form and Substance in Equitable Remedies
Stephen A. Smith
McGill University - Faculty of Law
10 82 Causa and Consideration – A Comparative Overview
Dimitar Stoyanov
New Bulgarian University, Department of Law

 


SSRN Top Downloads For SSRN Logo (small)
Law & Society: Private Law - Contracts eJournal

Rank Downloads Paper Title
1 239 Choice of Forum Agreements Under the Brussels I Recast and Under the Hague Convention: Coherences and Clashes
Matthias Weller
EBS Universität für Wirtschaft und Recht
2 173 Trophy Hunting Contracts: Unenforceable for Reasons of Public Policy
Myanna F. Dellinger
University of South Dakota Law School
3 128 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
4 128 Does High Auditor Litigation Risk Discourage Corporate Innovation?
Mahfuz Chy and Ole-Kristian Hope
University of Toronto, Rotman School of Management, Students and University of Toronto - Rotman School of Management
5 94 The Myth of Free
John M. Newman
University of Memphis - Cecil C. Humphreys School of Law
6 86 Form and Substance in Equitable Remedies
Stephen A. Smith
McGill University - Faculty of Law
7 82 Causa and Consideration – A Comparative Overview
Dimitar Stoyanov
New Bulgarian University, Department of Law
8 78 The Role of Contract: Stewart Macaulay's Lessons from Practice
Brian Bix
University of Minnesota Law School
9 72 Coverage Information in Insurance Law
Daniel Schwarcz
University of Minnesota Law School
10 66 Justice Scalia's Jiggery-Pokery in Federal Arbitration Law
David S. Schwartz
University of Wisconsin Law School

September 1, 2016 in Recent Scholarship | Permalink | Comments (0)

Wednesday, August 31, 2016

Ownership of Steve Harvey's Comedy Tapes Is Ambiguous

Ambiguous contracts can be a nightmare to untangle, especially twenty years later. A recent case out of the Northern District of Texas, Cooper v. Harvey, Civil Action No. 3:14-CV-4152-B (behind paywall), illustrates just that. 

Steve Harvey, currently the host of "Family Feud," has been sued by Joseph Cooper over Harvey's attempts to curtail Cooper's use of performances Cooper taped at Harvey's comedy club in 1993. Cooper claims Harvey gave him permission to film the performances, paid Cooper to film them, and gave Cooper ownership of the videotapes and the right to use and display them. Since that time, Harvey and Cooper have had multiple disputes over the footage, most recently over Cooper's posting of some of it to YouTube. 

Harvey disputes Cooper's claim. He says that he paid Cooper to tape the performances so that Harvey could use them "as study material," and that he never granted Cooper ownership or any rights in the videotapes. Harvey alleges that Cooper uses the video footage as a type of blackmail, essentially, knowing that Harvey might find the material on the videotape embarrassing to have made public. 

This case isn't just he-said/he-said, in that there does appear to be an actual written contract between the parties, even if there is some debate whether or not Harvey ever signed it. At any rate, seeking summary judgment, Harvey argues that the written contract is ambiguous and that the court can therefore hear parol evidence as to whether the parties intended for Harvey to bargain away all of his rights to the work in question. Cooper, for his part, argues that the contract is unambiguous and that, according to its terms, bargaining away all of his rights is exactly what Harvey did. 

The court agreed with Harvey that the contract is ambiguous in whether Cooper or the Comedy House was intended to own the videos under the contract. But, turning to the parol evidence, the court found that nothing Harvey had put forth shed any light on Cooper's intent in entering into the contract. Harvey provided an affidavit that he did not intend the contract to convey his ownership rights but that didn't resolve what the parties' intent was when they signed the contract in 1993. Therefore, the court denied summary judgment on the breach of contract claim. 

Which seems like, in the end, this written contract is going to come down to he-said/he-said. 

August 31, 2016 in Celebrity Contracts, Commentary, Film Clips, Recent Cases, Television, True Contracts, Web/Tech | Permalink | Comments (0)

Monday, August 29, 2016

“Trophy hunting” contracts – unenforceable for reasons of public policy

Allow me to highlight my most recent article on the questionable ecosystem viability and contractual common law validity of so-called “trophy hunting” contracts. With these contracts, wealthy individuals in or from, often, the Global North contract for assistance in hunting rare animals for “sport.” Often, these hunts takes place in the Global South where targeted species include giraffes, rhinos, lions, and other vulnerable if not outright threatened or endangered species.  Images
A famous example of this is Minnesota dentist Walter Palmer killing “Cecil the Lion” in 2015 causing widespread outcry in this country and around the world. Trophy hunting also takes place in the USA and Canada, where targeted animals include polar bears, grizzly bears, and big horn sheep.

Trophy hunting should be seen on the background of an unprecedented rate of species extinction caused by several factors. Some affected species are already gone; others are about to follow. Western black rhinoceroses, for example, are already considered to have become extinct in 2011.   The rest of the African rhinoceros population may follow suit within the next twenty years if not sufficiently protected. In the meantime, more than 1.2 million “trophies” of over 1,200 different kinds of animals were imported into the United States just between 2004 and 2015. In addition to the extinction problem, the practice may also have ecosystem impacts because, among many other factors, the trophies often stem from or consist of alpha animals.

UnknownOf course, no one is arguing that rare species should be driven to extinction, in fact, quite the opposite: both trophy hunters and those opposing the practice agree that such species should be conserved for the future. However, the question lies in how to do so. Some argue that trophy hunting creates not only highly needed revenue for some nations, but also brings more attention to the species conservation issue.

I argue that at least until there is much greater certainty than what is currently the case that the practice truly does help the species in the long run (and we don’t have much time for “the long run”!), legal steps must be taken against the trophy hunting. Even when positive law such as hunting laws and/or the Endangered Species Act (“ESA”) do not address the issue (yet), common law courts may declare contracts that have proved to be “deleterious effect upon society as a whole,” “unsavory,” “undesirable,” “nefarious,” or “at war with the interests of society” unenforceable for reasons of public policy. Images-2

In the case of Cecil, African lions had been proposed for listing under the ESA when the animal was killed, but the listing did not take effect until a few months later. The case, others like it, and several studies demonstrate that a sufficient and sufficiently broad segment of the population have come to find the killing of very rare animals so reprehensible that common law courts can declare them unenforceable should litigation on the issue arise. This has been the case with many other contracts over time. The same has come to be the case with trophy hunting. As long as doubt exists as to the actual desirability of the practice from society’s point of view – not that of a select wealthy individuals – the precautionary principle of law calls for nations to err on the side of caution. The United States prescribes to this principle as well.

The article also analyzes how different values such as intrinsic and existence values should be taken into account in attempts to monetize the “value” of the practice. Instead of the here-and-now cash that may contribute to local economies (much revenue is also lost to corruption in some nations), other practices such as photo safaris are found by several studies to contribute more, especially in the long term. (Note that Walter Palmer paid a measly USD 50,000 for his contract with the landowner and local hunting guide).

Finally, the article draws in arguments under the public trust doctrine and the state ownership of wildlife doctrine. Ethically, these animals belong to all of us (or none of us). Images-1

Trying to save rare animals by shooting them simply flies in the face of common sense. It also very arguably violates notions of national and international law.

August 29, 2016 in Commentary, Current Affairs, Famous Cases, In the News, Legislation, Recent Scholarship, Science, Travel, True Contracts | Permalink | Comments (0)

If You Contract for a $2 Million Watch, You Probably Want the Original Dial

A recent case out of the District of Arizona, Cavan v. Maron, No. CV-15-02586-PHX-PGR (behind paywall), concerns a deal for rare Patek Philippe watches. The plaintiff agreed to purchase two watches for almost $4 million, providing a down payment of almost $3 million. The defendant did not deliver the watches and, in fact, allegedly sold them to someone else, so the plaintiff demanded his down payment back. A watch broker negotiated between the two parties and they decided that, instead, the defendant would sell the plaintiff another rare Patek Philippe watch that was worth more than $2 million. 

The defendant gave the plaintiff the promised watch, and a few years later, when the plaintiff was considering selling the watch, he brought it to an auction house for valuation. The auction house raised questions that the watch's dial had been replaced. A "world renowned watch expert" agreed and pronounced the new dial "inferior," meaning that the watch was now worth significantly less than it would have been with its original dial. 

This lawsuit resulted. The defendant argued that the agreement between the parties never expressly required that the watch had to be sold with its original dial. The court doesn't let the defendant off on that technicality, though. The court notes that it was plausible that the parties intended, when they negotiated to buy and sell a watch worth more than $2 million, that the watch would have all of its original parts, and that a disclosure to the contrary might have been necessary. 

This decision was just surviving a motion to dismiss. Stay tuned for more exciting developments in the luxury watch contract world. 

August 29, 2016 in Recent Cases, True Contracts | Permalink | Comments (0)

Sunday, August 28, 2016

Amazon’s Arbitration Clauses: A Hyperlink May Suffice

The Second Circuit just ruled in a case involving Amazon that "reasonable minds could disagree on the reasonableness of the notice" of the arbitration agreement provided by Amazon. Unknown

In 2013, the plaintiff, Dean Nicosia, bought diet pills on Amazon containing the ingredient sibutramine, a controlled substance that was withdrawn from the market by the FDA in 2010 because of concerns over severe health risks. Mr. Nicosia stated that the presence of sibutramine was not disclosed to him and that he was never notified nor offered a refund, even after Amazon stopped selling the product. Amazon moved to dismiss on the grounds that Nicosia's claims were covered by a mandatory arbitration provision. The district court granted that motion, finding that Nicosia had constructive notice of the arbitration clause.

When Nicosia bought the product, the final checkout screen stated “Review your order” and “[b]y placing your order, you agree to Amazon.com’s privacy notice and conditions of use.” The words “conditions of use” were hyperlinked to the actual text of the terms including the arbitration agreement, but were “not bold, capitalized, or conspicuous in light of the whole webpage.” Proximity to the top of a webpage also does not necessarily make something more likely to be read in the context of an elaborate webpage design. ImagesAdditionally, said the court, “[a]lthough it is impossible to say with certainty based on the record, there appear to be between fifteen and twenty‐five links on the Order Page, and various text is displayed in at least four font sizes and six colors (blue, yellow, green, red, orange, and black), alongside multiple buttons and promotional advertisements. Further, the presence of customers’ personal address, credit card information, shipping options, and purchase summary are sufficiently distracting so as to temper whatever effect the notification has.”

The court made the further analogy:

“It is as if an apple stand visitor walks up to the shop and sees, above the basket of apples, a wall filled with signs. Some of those signs contain information necessary for her purchase, such as price, method of payment, and delivery details, and are displayed prominently in the center of the wall. Others she may quickly disregard, including advertisements for other fruit stands. Among them is a sign binding her to additional terms as a condition of her purchase. Has the apple stand owner provided reasonably conspicuous notice? We think reasonable minds could disagree.”

The court cited to Nguyen v. Barnes and Noble (Ninth Circuit), which found that the inquiry of “whether a website puts a reasonably prudent user on inquiry notice of the terms of the contract … depends on the design and content of the website … Where the link to a website’s terms of use is buried at the bottom of the page or tucked away in obscure corners of the website where users are unlikely to see it, courts have refused to enforce” the disputed term. However, “where the website contains an explicit textual notice that continue use will act as a manifestation of the user’s intent to be bound, courts have been more amenable to enforcing [the] agreements.”  (Mr. Nguyen is a former Contracts student of mine. It’s a small world.) Images-1

The Amazon case raises some interesting questions, I think. First and as always: is an online customer – a consumer in this case - truly put on notice just because of a hyperlink on a website? The Second Circuit will now get a chance to resolve that issue. Second, and perhaps much more troubling here is the weight the district court gave to the mere fact that Mr. Nicosia had “signed up for an account” with Amazon. In today’s day and age, we all sign up for numerous accounts to conduct all sorts of life matters from the simple to the complex. I, for one, don’t like to shop or conduct much other business online, but I have an entire spreadsheet full of usernames and passwords to various websites that I have used or still sometimes use. In and of itself, that hardly means that I am aware of any contractual terms contained anywhere on those websites. In my opinion, holding users to such “notice” is unreasonable and unrealistic in today’s busy world (it is simply too time-consuming to study all possible legal requirements listed on all these website in detail to do by far most of the things I do online, and I am sure many other consumers are in my situation.). Even worse, the district court seemed willing to hold consumers to the very high burden of having to familiarize themselves with perhaps frequently changing terms online after having created an online account with a certain company. Again, that is just not realistic with the modern barrage of necessary and/or required website usage. Finally, the court found that users do not actually have to read the terms to be bound by them. It is apparently enough that they could have “inquired” of these terms. That’s giving an online company tremendous legal weight and, arguably, presents split authority in comparison with that of the Ninth Circuit.

The case is Nicosia v. Amazon.com, Inc.

Hat tip to Matthew Bruckner of Howard Univesity School of Law for bringing this story to my attention. http://www.law.howard.edu/1831

August 28, 2016 in E-commerce, Famous Cases, In the News, Web/Tech | Permalink

Friday, August 26, 2016

Ryan Lochte and Morals Clauses

I have witnessed with interest the evolving story of what exactly happened in Rio involving Ryan Lochte the morning of August 14. Initially Lochte claimed he had been robbed at gunpoint. I later heard through the gossip mill that that story was untrue and that Lochte had in fact beat up some security guards. That turned out, it seems, just to be rumor-mongering, but the story has continued to evolve from there, with both Lochte and the Rio police making statements that later seem untrue, or only partially true, or exaggerated. Slate has a good run-down of the changing versions of Lochte's story, although it's from a week ago. Now Lochte has been charged with filing a false police report, since it does seem clear at this point that no robbery happened. Even that, however, is confusing to parse if you read a lot of articles about it: It seems like the crime is more accurately making a false communication to police, as some articles have eventually stated, since there are conflicting reports about whether a police report was ever filed. 

In the wake of this whole mess, Lochte has lost several of his sponsorship deals (although he's also picked one up). It's unclear, because the contracts don't seem to be public, whether this is a choice of just not renewing the contract (apparently that's the case with Ralph Lauren) or if a violation of a morals clause is being invoked to allow cancellation of the contract (which might be what's going on with Speedo). All of this provokes an interesting morals-clause conversation to me, and we had a bit of discussion about it on the Contracts Professors listserv. It seems clear that Lochte engaged in some sort of inappropriate behavior, and it seems also clear that whatever that behavior was, even the most minor version of the story is arguably a violation of any morals clause out there.

What is most clear is that, no matter what really happened, this has definitely served to tarnish his reputation, and that's is what's striking to me. This story has taken on an enormous life of its own, with many differing versions of it floating around the Internet. This situation has been caused, of course, by Lochte's many differing stories, together with some apparent conflicting statements by the Rio police, coupled with reporting that may have been less than precise itself in describing what was going on. One online story details all the conflicting information and asks the individual reader what they believe about the story.

While this particular maelstrom seems to have some basis in fact, it's not difficult to imagine something like this getting out of control without such justifying behavior at the root of it. Morals clauses tend to be about perception, but does that mean you can manipulate the perception of someone, through no real fault of their own? Take, for instance, the "Ted Cruz is the Zodiac Killer" meme that was popular on the Internet earlier this year. Ted Cruz wasn't born until after some of the Zodiac killings had happened, so he obviously could not have been the Zodiac Killer, and in fact some people interviewed about the meme noted that was the point: what they were saying was impossible. Nevertheless, it was reported that polls indicated 38% of those surveyed thought he might, in fact, be the Zodiac Killer, despite the impossibility. If a substantial number of people start thinking you did something you absolutely did not do, is that enough for a morals clause to be violated, because of the perception that you did it? 

August 26, 2016 in Celebrity Contracts, Commentary, Current Affairs, Games, In the News, Sports, Travel, True Contracts, Web/Tech, Weblogs | Permalink | Comments (0)

Thursday, August 25, 2016

Rent-to-Own Contracts: Caveat Emptor or Unconscionable Behavior?

The New York Times reports here (paid access) on the increasing use of so-called “rent-to-own” housing contracts. Under these contracts, companies from big Wall Street giants to a slew of small landlords hoping to strike it rich lend or, should I say, purport to sell homes to tenants who contractually commit to make all repairs on the homes no matter how major or minor (yes, you read that right: all repairs… and it gets more extreme than that, read on!). Typically, tenants under such contracts are not told what repairs are needed, yet face a contractual deadline for making sure that the houses in question are brought up to local code. Unlike most typical home purchases, rent-to-own contracts do not require the tenant/buyer to obtain an independent home inspection.  Images-2

We probably all know how many things can go wrong with older homes, even newer ones. Examples of how bad things can go in this context thus abound. One tenant moved into a home not having been told that it had several unresolved building code violations and had to remain vacant by city order. Another moved into a home that had no heat, no water, and major problems with its sewage system that led to nearly $10,000 in repairs (many of these homes have been purchased by the lender for less than $10,000 and are not worth very much more than that, if any). A third example describes a woman moving into a home with her three children and partner in Michigan, living in the house during cold winter with the only heat sources being one electric heater and a wood-burning stove in the kitchen, only to be evicted and charged $3,100 in overdue rent after she stopped paying rent because of the heat issue.

Unknown
People who accept these kinds of contracts often do not qualify for mortgages. Banks have virtually stopped making mortgages on homes worth less than $100,000, which leaves millions of people with few options for - now or one day - owning their own homes.

One company that rents homes on a rent-to-own basis does so “as is,” calling the contracts “hybrid leases” that allow people to build up “implied equity.” If tenants are evicted during the contract (typically of a seven-year-duration), they get no credit for money spent on repairs or renovations. Neither do they receive any equity unless they actually end up buying the home at the end of the contract term. At that point, they still need financing for the home which, as mentioned, many people just cannot obtain.

A number of legal questions arise in this context, among them several contractual ones such as the role of caveat emptor vs. the violation of a possible duty to disclose. If the landlords know of the problems from which many of these houses suffer, should they disclose this knowledge? On the other than, shouldn’t these potential (long-term) buyers be presumed to have at least enough savvyness to not promise to bring a home that they do not own outright up to Code by a certain deadline? Then again, are landlords fraudulent in their dealings with these folks when the landlords require such potentially extensive repairs when, as the owners of the homes, they presumably if not actually have actual knowledge of the problems from which these houses suffer? What about the statement that renters get “implied equity?” What in the world does that mean, if anything? Do low-income folks that may never have been homeowners truly understand what it means to bring a home “up to Code” and buying “as is?” Does it matter? And what about the doctrine of unconscionability, which is alive and well in some states such as California? If nothing else, this case seems to smack of both procedural and substantive issues. Images

In some states, landlords are required to keep homes and apartments in habitable condition. But rent-to-own contracts have, for good reason, been said to reside in a gray area of the law: are they rental contracts? - Or purchase contracts? Or something else?

Further, rent-to-own contracts may, to some extent, resemble contracts for deeds. However, the latter are subject to basic consumer-lending regulations such as the Federal Truth in Lending Act.

The housing market again seems to host highly questionable practices. This story almost reads as a contract or property law issue-spotting exam. Meanwhile, housing sharks seem to be swimming relatively freely in some areas of the nation.

For further information, see Alexandra Stevenson and Matthew Goldstein, Rent-to-own Homes: A Win-Win for Landlords, a Risk for Struggling Tenants, the New York Times, Aug. 21, 2016.

August 25, 2016 in Commentary, Current Affairs, In the News, Legislation, Miscellaneous, True Contracts | Permalink | Comments (0)

Weekly Top Ten SSRN Contracts Downloads (August 25, 2016)

Top-10

SSRN Top Downloads For SSRN Logo (small)
Contracts & Commercial Law eJournal

Rank Downloads Paper Title
1 206 The Mystery of Mutual Insurers in Lawyers Professional Liability Insurance
Tom Baker and Rick Swedloff
University of Pennsylvania Law School and Rutgers Law School
2 149 The Puzzle of PDVSA Bond Prices
Paolo Colla, Anna Gelpern and G. Mitu Gulati
Bocconi University - Department of Finance, Georgetown University Law Center and Duke University School of Law 
3 123 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
4 89 Sizing up Private Law
Andrew S. Gold and Henry E. Smith
DePaul University College of Law and Harvard Law School
5 86 Are Validation Notices Valid? An Empirical Evaluation of Consumer Understanding of Debt Collection Validation Notices
Jeff Sovern and Kate E. Walton
St. John's University - School of Law and St. John's University - Department of Psychology
6 83 Form and Substance in Equitable Remedies
Stephen A. Smith
McGill University - Faculty of Law
7 82 Contractual Arbitrage
Stephen J. Choi, G. Mitu Gulati and Robert E. Scott
New York University School of Law, Duke University School of Law and Columbia University - Law School
8 75 The Art of Promise and Power of Contract
Robin Bradley Kar
University of Illinois College of Law
9 75 Causa and Consideration – A Comparative Overview
Dimitar Stoyanov
New Bulgarian University, Department of Law
10 69 Consumer Protection in the Age of Big Data
Max N. Helveston
DePaul University - College of Law

 

SSRN Top Downloads For SSRN Logo (small)
Law & Society: Private Law - Contracts eJournal

Rank Downloads Paper Title
1 123 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
2 112 Does High Auditor Litigation Risk Discourage Corporate Innovation?
Mahfuz Chy and Ole-Kristian Hope
University of Toronto, Rotman School of Management, Students and University of Toronto - Rotman School of Management
3 83 Form and Substance in Equitable Remedies
Stephen A. Smith
McGill University - Faculty of Law
4 82 Contractual Arbitrage
Stephen J. Choi, G. Mitu Gulati and Robert E. Scott
New York University School of Law, Duke University School of Law and Columbia University - Law School
5 75 The Art of Promise and Power of Contract
Robin Bradley Kar
University of Illinois College of Law
6 75 Causa and Consideration – A Comparative Overview
Dimitar Stoyanov
New Bulgarian University, Department of Law
7 74 The Role of Contract: Stewart Macaulay's Lessons from Practice
Brian Bix
University of Minnesota Law School
8 68 Coverage Information in Insurance Law
Daniel Schwarcz
University of Minnesota Law School
9 65 Justice Scalia's Jiggery-Pokery in Federal Arbitration Law
David S. Schwartz
University of Wisconsin Law School
10 56 Taking Stewart Macaulay and Hugh Collins Seriously
John Gava
Adelaide Law School

August 25, 2016 in Recent Scholarship | Permalink | Comments (0)

Monday, August 22, 2016

Microsoft Does Marijuana

In a move that demonstrates how contracts for various aspects of marijuana products and services are going mainstream, Microsoft Corp. has accepted a contract to make marijuana-tracking software available for sale on its cloud computing platform. The software is developed by “cannabis compliance technology” Kind Financial and allows regulators to track where and how much marijuana is being grown, sold or produced in real time. In turn, this lets the regulators know how much sales and other tax they should be collecting and from whom (maybe this is the beginning of the end of some growing marijuana plants in state and national parks to hide their activities from the government). Medical-marijuana-colorado

This contract – called a “breakthrough deal” because it is the first time that Microsoft ventures into the marijuana business - may end up enabling the software developer to capture as much as 60% of this very lucrative market. (Other companies with government contracts often end up with such a large market share.)

How did the company strike such a lucrative deal? You guessed it: by networking. Kind’s CEO was introduced by a board member to an inside contact in Microsoft.

Happy semester!

August 22, 2016 in Commentary, Current Affairs, Food and Drink, Government Contracting, In the News, Miscellaneous, True Contracts, Web/Tech | Permalink | Comments (0)

Sunday, August 21, 2016

Does “Similar Quality” Reflect a $17,100 Reduction in Car Resale Value?

Plaintiff William Baldwin’s almost new Toyota Tundra pickup truck was badly damaged when, while parked, the cars of two other men slammed into it. This decreased the car’s future resale value by more than $17,100. Mr. Baldwin filed suit against his insurance company, AAA, among others. He wanted either the pre-accident value of the car or a sum which would allow him to repair the pickup truck to its original pre-accident condition. He contended that the truck did not match such condition with respect to safety, reliability, mechanics, cosmetics, and performance. Unknown

The interpretation of an insurance contract is, in California, a matter of law. This insurance policy provided that AAA “may pay the loss in money or repair.” Further, under the Limits of Liability, that AAA’s coverage responsibility for car damage would “not exceed the lesser of those two options,” namely paying “the actual cash value of the damaged property or the amount necessary to repair the property … with similar kind and quality.” (My emphasis).

The court found that the insurance policy “ambiguously gave the insurer the right to elect to repair the insured’s vehicle to a “similar condition if repair costs would be less than the actual cash value of the vehicle.”

In other words, the court supported AAA’s reading that a car with a realistic loss in value of $17,000 was in a “similar condition” to its almost-new value. You can see why this lawsuit came about. On the other hand, the car was repaired and was fully functional. Should insurance companies then additionally have to pay out a sum that would correspond to an arguably hypothetical resale value (the owner may never sell the car at the relevant moment in time)? Arguably, that would drive up insurance prices too much. Note too that this case is from California where cars are almost members of one’s family…

The case is Baldwin v. AAA Northern California, et al., 1 Cal.App.5th 545 (Cal. Ct. App. 2016).

August 21, 2016 in Recent Cases, Travel, True Contracts | Permalink | Comments (0)

Scholarship Spotlight - "Undermining Justice: The Two Rises of Freedom of Contract and the Fall of Equity" (Hila Keren - Southwestern Law School)

Voldemort-SpellThe number of United States Supreme Court cases whose names have crossed over into becoming widespread epithets is relatively few, but the leading contender from this group that also has contract-law implications is surely Lochner v. New York. Indeed, in a fit Harry Potter-inspired analysis a few years ago (which you can read here if you are so inclined), I actually had the chance to write:

Lochner!” cried Voldemort, striking the bakery workers with a bolt of green light. . . . Harry had seen Professor Moody demonstrate the Unforgivable Doctrines, but nothing in the classroom prepared him to see substantive due process used on human beings.

More recently and more seriously, however, Hila Keren at Southwestern Law School has raised the possibility of "neoliberal-Lochnerism" at the intersection of the doctrines of arbitration and freedom of contract. She suggests that the result can be unjust in the same vein as were the much castigated doctrines of the early twentieth century. Here is her abstract:

 

Hila Keren (Southwestern)This article explores a crucial moment in American legal history, known as the Lochner era, in which the rise of freedom of contract was sharp enough to defeat equity concerns, and then argues that a second rise of the freedom of contract has recently been developed by the Supreme Court in the domain of arbitration agreements. It contends that this second rise is not only a revival of Lochnerism but also, and more so, what the article names “neoliberal-Lochnerism”: a process of legal dissemination of neoliberal common sense outside of the world of contracts. Via close reading of leading recent cases, the article demonstrates that the genus of arbitration agreements now allowed by the US Supreme Court represents an assault on fairness, morality, and justice that is larger than the eye can see at first glance. The result, it is argued, is “law without equity”, a form of neoliberal jurisprudence that allows, and even incentivizes, humans who have accumulated enough power to act opportunistically. Without equity’s restraining power, the article concludes, those possessing a combination of economic means, political influence, and intellectual sophistication can and will exploit the legal rules to undermine justice.

Professor Keren's article, "Undermining Justice: The Two Rises of Freedom of Contract and the Fall of Equity," has been published in the Canadian Journal of Comparative and Contemporary Law and is available for SSRN download here.

August 21, 2016 in Recent Scholarship | Permalink | Comments (0)

Saturday, August 20, 2016

My Least Favorite Contractual Relationship at the Moment Is with AT&T

I apologize for my lack of blogging lately, but, you see, AT&T was supposed to have my Internet connected last Monday and still hasn't managed to get around to it,  after a series of delayed appointments, canceled appointments, and appointments where no technician ever showed up. On Wednesday evening when I called to express my displeasure about all of this, I was told that my failure to accept the delays without complaining meant that they were now pushing my installation back even further, so that now I am looking at sometime next week. 

Naturally, at a time when I will be teaching, so the Saga of Internet-less may drag on for a while. 

I would love to examine my AT&T contract in detail to see what my rights (if any) are,  but, of course, the contract requires me to have Internet access to get to it! So for the time being I am keeping my mouth shut and hoping AT&T decides to show up next week and then I will return to my regularly scheduled blogging!

August 20, 2016 in Commentary, True Contracts, Web/Tech, Weblogs | Permalink | Comments (2)

Friday, August 19, 2016

Scholarship Spotlight - "Arrested Development: Rethinking the Contract Age of Majority for the 21st Century Adolescent" (Wayne Barnes - Texas A&M)

Amongst a litany of fuzzy-on-the-margins doctrines like promissory estoppel and unconscionability, the age of majority for contractual capacity stands out as a relatively settled and bright-line topic. Or does it? In a piece forthcoming in the Maryland Law Review, my Texas A&M colleague Wayne Barnes argues that increasing evidence suggests that the mass movement of the age of majority from 21 to 18 was ultimately a misguided reform. Here is his abstract:

Barnes_wayne1The contract age of majority is currently age 18. Contracts entered into by minors under this age are generally voidable at the minor’s option. This contract doctrine of capacity is based on the policy of protecting minors from their own poor financial decisions and lack of adultlike judgment. Conversely, the age of 18 is currently set as the arbitrary age at which one will be bound to her contract, since this is the current benchmark for becoming an “adult.” However, this article questions the accuracy of age 18 for this benchmark. Until comparatively recently, the age of contract majority had been 21 for centuries. The age was reduced to 18 in the aftermath of protest over the military draft of 18-year-olds during the Vietnam War during the 1960s and 1970s, and the enactment of the Twenty-Sixth Amendment which lowered the voting age from 21 to 18. However, the appropriate age for the military draft bears little to no relation to the appropriate age for voting, or contracting. Moreover, other evidence points in the direction of age 21 as a more appropriate age of majority. First, scientific evidence of brain development has advanced to the point that we now know the brain does not stop developing until well into the 20s, which means the powers of cognition and decision-making are not fully developed until then. Second, sociological evidence suggests that most people do not perceive the full attributes of adulthood as having been reached until at least 21, if not older. Third, other areas of the law have experiences in coming back to age 21 as an appropriate marker of adulthood --- these include the age for purchasing alcohol, the age for obtaining a credit card, and soon (it appears) the age for purchasing cigarettes. This confluence of evidence suggests that the contract age of majority was always appropriately set at age 21, and a return to that age of capacity for contracts will correct a historical misstep in the law.

Professor Barnes's article, "Arrested Development: Rethinking the Age of Majority for the 21st Century Adolescent," is currently available here on SSRN, where the article is also part of the newly-launched Texas A&M University School of Law Legal Studies Research Paper Series.

August 19, 2016 in Recent Scholarship | Permalink | Comments (0)

Thursday, August 18, 2016

Hiring announcement

THE UNIVERSITY OF ALABAMA SCHOOL OF LAW seeks to fill entry-level/junior-lateral tenure-track positions for the 2017-2018 academic year. Candidates must have outstanding academic credentials, including a J.D. from an accredited law school or an equivalent degree (such as a Ph.D. in a related field). Entry-level candidates should demonstrate potential for strong teaching and scholarship; junior-lateral candidates should have an established record of excellent teaching and distinguished scholarship. Although positions are not necessarily limited by subject, applications from those who study and teach commercial law (including contracts and sales) or torts (including products liability) are especially welcome; business law, family law, and insurance law are also areas of interest. We welcome applications from candidates who approach scholarship from a variety of perspectives and methods (including quantitative or qualitative empiricism, formal mode ling, or historical or philosophical analysis). The University of Alabama embraces diversity in its faculty, students, and staff, and we welcome applications from those who would add to the diversity of our academic community. Salary, benefits, and research support will be nationally competitive. All applications are confidential to the extent permitted by state and federal law, and interested applicants should apply at facultyjobs.ua.edu; the positions remain open until filled. Questions should be directed to Professor Heather Elliott, Chair of the Faculty Appointments Committee (facappts@law.ua.edu). The University of Alabama is an Equal Employment/Equal Educational Opportunity Institution. All qualified applicants will receive consideration for employment without regard to race, color, religion, national origin, sex, sexual orientation, gender identity, gender expression, age, genetic information, disability, or protected veteran status, and will not be discriminated against because of their protected status. Applicants to and employees of this institution are protected under federal law from discrimination on several bases. Follow this link to find out more: “EEO is the Law”.

August 18, 2016 | Permalink

Weekly Top Ten SSRN Contracts Downloads (August 18, 2016)

Top-10-gold-logo

SSRN Top Downloads For SSRN Logo (small)
Contracts & Commercial Law eJournal

Rank Downloads Paper Title
1 177 The Mystery of Mutual Insurers in Lawyers Professional Liability Insurance
Tom Baker and Rick Swedloff
University of Pennsylvania Law School and Rutgers Law School
2 143 The Puzzle of PDVSA Bond Prices
Paolo Colla, Anna Gelpern and G. Mitu Gulati
Bocconi University - Department of Finance, Georgetown University Law Center and Duke University School of Law
3 133 Optimal Defaults in Consumer Markets
Oren Bar-Gill and Omri Ben-Shahar
Harvard Law School and University of Chicago Law School
4 122 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
5 72 The Art of Promise and Power of Contract
Robin Bradley Kar
University of Illinois College of Law
6 68 Sizing up Private Law
Andrew S. Gold and Henry E. Smith
DePaul University College of Law and Harvard Law School
7 120 The Jurisprudence of Paper Clips
Robert A. James
Pillsbury Winthrop Shaw Pittman LLP
8 81 Are Validation Notices Valid? An Empirical Evaluation of Consumer Understanding of Debt Collection Validation Notices
Jeff Sovern and Kate E. Walton
St. John's University - School of Law and St. John's University - Department of Psychology
9 80 Contractual Arbitrage
Stephen J. Choi, G. Mitu Gulati and Robert E. Scott
New York University School of Law, Duke University School of Law and Columbia University - Law School
10 74 Form and Substance in Equitable Remedies
Stephen A. Smith
McGill University - Faculty of Law

 

SSRN Top Downloads For SSRN Logo (small)
Law & Society: Private Law - Contracts eJournal

Rank Downloads Paper Title
1 122 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
2 120 The Jurisprudence of Paper Clips
Robert A. James
Pillsbury Winthrop Shaw Pittman LLP
3 103 Does High Auditor Litigation Risk Discourage Corporate Innovation?
Mahfuz Chy and Ole-Kristian Hope
University of Toronto, Rotman School of Management, Students and University of Toronto - Rotman School of Management
4 80 Contractual Arbitrage
Stephen J. Choi, G. Mitu Gulati and Robert E. Scott
New York University School of Law, Duke University School of Law and Columbia University - Law School
5 74 Form and Substance in Equitable Remedies
Stephen A. Smith
McGill University - Faculty of Law
6 72 The Art of Promise and Power of Contract
Robin Bradley Kar
University of Illinois College of Law
7 65 The Role of Contract: Stewart Macaulay's Lessons from Practice
Brian Bix
University of Minnesota Law School
8 65 Justice Scalia's Jiggery-Pokery in Federal Arbitration Law
David S. Schwartz
University of Wisconsin Law School
9 60 Coverage Information in Insurance Law
Daniel Schwarcz
University of Minnesota Law School
10 55 Taking Stewart Macaulay and Hugh Collins Seriously
John Gava
Adelaide Law School

August 18, 2016 in Recent Scholarship | Permalink | Comments (0)

Thursday, August 11, 2016

Computerized Contracting

In times when everything seems to have to be fully automated and computerized, perhaps even the driving of our cars, might contract drafting and execution become fully computerized as well?

Perhaps, but likely not in the near future, according to this article in the Economist.

How would computerized contracting even work? It might thorught so-called “blockchains,” pieces of software that represent a business arrangement and execute themselves automatically under pre-determined circumstances. For example, agricultural rainfall policies could retrieve weather data and pay the farmers automatically if a damagingly low amount of rainfall has fallen in the area and time period in question.

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However, such contracts have also been called “candy for hackers.” “Once contracts are set in cryptographic stone, the whole idea is that they cannot be changed, even though updates are usually how software matures … But that creates more problems: if code is law, so are bugs in the code—and correcting them may itself mean a breach of contract.”

This discussion continues and is not new. In 1994, Nick Szabo coined the term “smart contracts” for the process. 20+ years later, we have progressed some in this area, but not all that much. In similarity, computers were also thought to be able to translate documents, eliminating the need for human translators. That has only become reality to a very rough and limited extent. The issue there as well as in computerized contracting is the level of complexity of human communication and intent. For many of us, it’s probably also still a matter of resisting jobs taking over what could be jobs for some of our students, many of whom in today’s job market may prefer even a relatively monotonous job (as is thought to be the case with computerized contracting) over no legally relevant job at all. Of course, it is not a matter of what we and our students prefer, it’s a matter of what the market develops and adopts. Time will tell how much of this is hype and how much reality.

(On a side note about self-driving cars: those may also not be as safe as previously thought. This past summer, a “passenger” in a self-driving Tesla famously got killed in Florida when his car's cameras failed to distinguish the white side of a turning tractor-trailer from a brightly lit sky and didn't automatically activate its brakes.)

August 11, 2016 | Permalink

Contracting Against Your Dad Embarrassing You

Which is exactly what Australia's swimming sisters Bronte and Cate Campbell have tried to do. Apparently after their father gave a number of effusive interviews to the press, the sisters turned to contract law in an attempt to protect them from further such events. As this article reports, the sisters entered into a contract with their father in which he promised, "to the best of [his] ability," "not to embarrass [his] daughters on national television."

No word on what their father received in exchange for this promise.

 

August 11, 2016 in Current Affairs, Games, In the News, Sports, Television, True Contracts | Permalink | Comments (0)

Book: European Law on Unfair Commercial Practices and Contract Law

From Hart Publishing Co.: "This book examines the ambiguous relationship between the European law on unfair commercial practices and contract law. In particular, the manuscript demonstrates that the Directive 2005/29/EC on unfair commercial practices (UCPD) has had a major impact on contract law, despite the declaration concerning the formal independence between the two branches of law established by Article 3(2) UCPD. The insights and conclusions identified in the book contribute to a better understanding of European private law and the general process of Europeanisation of private law in the European Union, and in particular of contract law."

The book is written by Mateja Durovic who is an Assistant Professor at the School of Law of the City University of Hong Kong.

August 11, 2016 | Permalink

Wednesday, August 10, 2016

Weekly Top Ten SSRN Contracts Downloads (August 10, 2016)

This week's Top Ten lists come a day early due to travel tomorrow by yours truly. Enjoy!

Top-ten-green

SSRN Top Downloads For SSRN Logo (small)
Contracts & Commercial Law eJournal

Rank Downloads Paper Title
1 131 Optimal Defaults in Consumer Markets
Oren Bar-Gill and Omri Ben-Shahar
Harvard Law School and University of Chicago Law School
2 123 The Puzzle of PDVSA Bond Prices
Paolo Colla, Anna Gelpern and G. Mitu Gulati
Bocconi University - Department of Finance, Georgetown University Law Center and Duke University School of Law
3 117 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
4 116 The Jurisprudence of Paper Clips
Robert A. James
Pillsbury Winthrop Shaw Pittman LLP
5 84 Enhancing Moral Relationships Through Strict Liability
Seana Shiffrin
University of California, Los Angeles (UCLA) - School of Law
6 76 Contractual Arbitrage
Stephen J. Choi, G. Mitu Gulati and Robert E. Scott
New York University School of Law, Duke University School of Law and Columbia University - Law School
7 76 Are Validation Notices Valid? An Empirical Evaluation of Consumer Understanding of Debt Collection Validation Notices
Jeff Sovern and Kate E. Walton
St. John's University - School of Law and St. John's University - Department of Psychology
8 69 The Art of Promise and Power of Contract
Robin Bradley Kar
University of Illinois College of Law
9 68 Form and Substance in Equitable Remedies
Stephen A. Smith
McGill University - Faculty of Law
10 60 Justice Scalia's Jiggery-Pokery in Federal Arbitration Law
David S. Schwartz
University of Wisconsin Law School


SSRN Top Downloads For SSRN Logo (small)
Law & Society: Private Law - Contracts eJournal

Rank Downloads Paper Title
1 117 The Moral Impermissibility of Efficient Breach
Adam Rigoni
Arizona State University (ASU) - Barrett, the Honors College
2 116 The Jurisprudence of Paper Clips
Robert A. James
Pillsbury Winthrop Shaw Pittman LLP
3 96 Does High Auditor Litigation Risk Discourage Corporate Innovation?
Mahfuz Chy and Ole-Kristian Hope
University of Toronto, Rotman School of Management, Students and University of Toronto - Rotman School of Management
4 84 Enhancing Moral Relationships Through Strict Liability
Seana Shiffrin
University of California, Los Angeles (UCLA) - School of Law
5 76 Contractual Arbitrage
Stephen J. Choi, G. Mitu Gulati and Robert E. Scott
New York University School of Law, Duke University School of Law and Columbia University - Law School
6 69 The Art of Promise and Power of Contract
Robin Bradley Kar
University of Illinois College of Law
7 68 Form and Substance in Equitable Remedies
Stephen A. Smith
McGill University - Faculty of Law
8 60 Justice Scalia's Jiggery-Pokery in Federal Arbitration Law
David S. Schwartz
University of Wisconsin Law School
9 56 The Behaviour of the Average Consumer: A Little Less Normativity and a Little More Reality In CJEU's Case Law? Reflections on Teekanne
Hanna Schebesta and Kai P. Purnhagen
Wageningen UR - Law and Governance Group and Wageningen UR - Law and Governance Group
10 56 The Fiduciary Gap
Kelli Alces Williams
Florida State University - College of Law

August 10, 2016 in Recent Scholarship | Permalink | Comments (0)