ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, September 14, 2017

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (September 14, 2017)

Top-10-wArrowUp

Top Downloads For the Contracts & Commercial Law eJournal SSRN Logo2

Recent Top Papers (60 days) as of 16 Jul 2017 - 14 Sep 2017

Rank Paper Downloads
1.

How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?)

Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law
2,737
2.

Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems

European University Institute
167
3.

Relational Contracts of Adhesion

University of Pennsylvania Law School
167
4.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
166
5.

Aspects of Loyalty

McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
140
6.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
118
7.

Personal Data, Exploitative Contracts, and Algorithmic Fairness: Autonomous Vehicles Meet the Internet of Things

European University Institute
110
8.

Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture

Humboldt University of Berlin - Faculty of Law and European University Institute
108
9.

Amending Corporate Charters and Bylaws

University of Virginia School of Law and Columbia Law School
91
10.

Forum-Selection Provisions in Corporate 'Contracts'

New York University School of Law and New York University School of Law
112

 

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

Recent Top Papers (60 days) as of 16 Jul 2017 - 14 Sep 2017

Rank Paper Downloads
1.

Relational Contracts of Adhesion

University of Pennsylvania Law School
167
2.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
166
3.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
118
4.

Forum-Selection Provisions in Corporate 'Contracts'

New York University School of Law and New York University School of Law
112
5.

Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture

Humboldt University of Berlin - Faculty of Law and European University Institute
108
6.

Amending Corporate Charters and Bylaws

University of Virginia School of Law and Columbia Law School
91
7.

Taking Contracting Digital: Examination of the Smart Contracts Experiment

New York University (NYU), School of Law, Student
69
8.

The Rise of Automated Investment Advice: Can Robo-Advisers Rescue the Retail Market?

University of Nevada, William S. Boyd School of Law
69
9.

The Rise of Modern Commercial Arbitration and the Limits of Private Ordering

Yale University, Faculty of Arts & Sciences, Department of History, Students
63
10.

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
58

 

September 14, 2017 in Recent Scholarship | Permalink | Comments (0)

Wednesday, September 13, 2017

Why didn't the people in "Rent" just, like, pay their rent?

The other day, I happened to re-listen to "Rent." The 20th Anniversary Tour is coming to town next month, and I have my ticket in hand, and, excited about the upcoming show, I pulled the original Broadway cast album up on Spotify for a re-listen. The thing about "Rent" is its one of those shows that I find it difficult to be rational about. It has its flaws, but I was in high school the first time that I heard "Rent," and it blew me away then, and it still stays fresh to me. Even when I think it should have aged, I hear the first notes of "One Song Glory," and they get me every time, and by the end of my re-listen I'm sitting in floods of tears on my living room and thinking, ...Huh, this whole musical is about a breach of contract. 

Because it is!

If you don't know the plot, it's loosely a re-telling of "La Boheme" that revolves around a number of young New York artists struggling to survive in an age when AIDS is ravaging their community. The titular "Rent" is the first major song in the musical, and it's a reaction to one of the characters, Benny, going back on a promise he made to the main characters, Mark and Roger. Benny used to be roommates with Mark and Roger but now (with his rich bride's money behind him), he's become their landlord. However, when he bought their building the year before he told Mark and Roger they were "golden". Nonetheless, at the beginning of the play, he shows up and demands all of the previous year's rent, which Mark and Roger allege he led them to believe they didn't have to pay (and which Benny never really refutes). 

There are a lot of critiques of the characters of "Rent" and how annoying it can be to listen to the show as an "adult." Yes, you do find yourself asking why Mark can't just rake in some dough for a little while to pay off the debt. Isn't this what all adults have to do? We all have to go out and get jobs to pay for the roofs over our heads. But Mark and Roger shouldn't have been in the rent-money debt in the first place, because they had an agreement with Benny. Are there issues with the formation of this contract? Yes. It's pretty informally done, after all, because of their friendship. And it probably suffers from a consideration issue, because it seems like a gift from Benny to Mark and Roger (the musical doesn't spend a whole lot of time on the details of the transaction, tbh, but it seems like he made the offer because he was feeling generous toward his friends). But I think it could be saved by promissory estoppel. Benny made that promise to Mark and Roger, and he's got to know them well enough to know they were going to rely on it by not worrying much about a source of income for the year, which in fact Mark and Roger did. And now Benny is demanding an entire year's worth of rent all at once, which would be a lot for anyone to come up with, never mind starving artists with uncertain sources of income. 

So it's not entirely Mark and Roger's fault that they owe a year's rent. They were led to believe they didn't. But, more than that, the more I think about the critiques of "Rent," the more I think that actually that's the point of rent. Mark and Roger are annoying and entitled, yes, not just because they don't want to have to pay rent that their friend told them they wouldn't have to pay, but because they don't want to have pay rent going forward, because the payment of rent pushes them into making compromises regarding their art and the type of life they want to live. When you listen to "Rent" as a sixteen-year-old, it's different than listening to it as a thirty-six-year-old, and that difference is that yes, I grew up, and I realized that suddenly I'm no longer on the side of the artists who want to create and live their lives. And then that makes me think about the fact that I'm on the side of people not following dreams because I grew up and I compromised and I paid my rent. And I don't think it's a failing in "Rent" that it makes me pause to think about that, that there was a teenager in me who believed in La Vie Boheme who became an adult who didn't. I think that's the point. The story takes place in the middle of the AIDS epidemic, when these people are losing friends left and right, and so it makes sense that they don't feel like they have time to pretend to be other than what they are. Maybe the joke's on all of us that we feel like we do have time. 

Because, let's face it, for all of "Rent"'s enduring genius as a musical achievement--and there's a lot of it--"Rent"'s story is also the story of all the music that its composer never got to write. Jonathan Larsen died suddenly and unexpectedly the night before the musical's Off-Broadway premiere. He left far too early and left us with just this one perfect masterpiece, about people with uncertain lives clinging stubbornly to their dreams. It's hard for you to reach the end of "Rent" without an appreciation for how lucky we are that some people live that way and give it their all in their time here on Earth. Jonathan Larsen only wrote the one masterpiece, and that's a tragedy, and he didn't live to see the huge success it became, which is an even bigger tragedy, but at least he got to write one, which meant he got to leave a legacy behind him that you've got to think he'd be pretty happy with. And how lucky we all are that he stuck with his art. 

None of which has anything to do with contracts law, oops. EXCEPT EVERYTHING HAS TO DO WITH CONTRACTS LAW. Including the entire plot of "Rent." The end, back to regularly scheduled cases, here, have a song:  

 

September 13, 2017 in Commentary, Film, Film Clips | Permalink | Comments (0)

Tuesday, September 12, 2017

Uber Arbitration Clause Win

The U.S. Court of Appeals for the Second Circuit recently reversed a district court’s decision to deny Uber’s move to compel arbitration in a contract with one of its passengers, Spencer Meyers.

The district court had found that Meyer did not have reasonably conspicuous notice of Uber’s terms of service (which contained the arbitration clause) when he registered a user, that Meyer did not unambiguously assent to the terms of service, and that Meyer was not bound by the mandatory arbitration provision contained in the terms of service.

The Second Circuit summed up the usual difference between clickwrap agreements, which require a user to affirmatively click on a button saying “I agree” and which are typically upheld by courts, and browsewrap agreements, which simply post terms via a hyperlink at the bottom of the screen and which are generally found unenforceable because no affirmative action is required to agree to the terms.

In the case, Meyer had been required to click on a radio button stating “Register,” not “I agree.” But in contrast to browsewrap agremeents, Uber also informed Meyer and other users that by creating an account, they were bound to its terms. Uber did so via a hyperlink to the terms on the payment screen.

Meyer nonetheless claimed that he had not noticed or read the terms. The Court thus analyzed whether he was at least on inquiry notice of the arbitration clause because of the hyperlink to the terms. This was the case, found the court, because the payment screen was uncluttered with only fields for the user to enter his or her payment details, buttons to register for a user account, and the warning and related hyperlink. Further, the entire screen was visible at once and the text was in dark blue print on a bright white background. Thus, the fact that the font size was small was not so important.

Mayer was bound to the arbitration clause because he had assented to that term after getting “reasonably objective notice.”

The case is Meyer v. Uber Technologies, Inc., No. 16-2750 (2d Cir. 2017).

 

September 12, 2017 in Current Affairs, E-commerce, Famous Cases, Recent Cases, True Contracts, Web/Tech | Permalink

Monday, September 11, 2017

Employment Contracts in France under Macron

As reported by the Los Angeles Times and others, the no. two economy in the Eurozone - France - may see its notoriously worker-friendly labor laws overhauled in favor of fewer restrictions soon.

One key measure proposed by the government trims the role of unions, notably in small- and medium-size companies — which the prime minister said make up nine out of 10 companies in France.  Under the reforms, companies with fewer than 50 employees would be able to negotiate work rules with an elected colleague — not unionized — and companies with fewer than 20 employees can negotiate directly with their workers.

Labor Minister Muriel Penicaud said the reforms aim to not just change France's work rules but "to change the behavior of social dialogue in our country."

Whether this will be a favorable turn of events for France on the national and international business stage remains to be seen.  For workers, however, "negotiating directly" with employers sounds an awful lot like the very unequal bargaining powers so frequently seen in the USA.  Here, such contractual bargaining and conditions have not resulted in improved incomes for the middle and lower classes, although other factors of course also weigh in.  Nonetheless, it is a basic tenet of contract law - and thus employment law - that one can only strike the bargain that one has leverage to strike.  Trade unions and labor regulations can contribute significantly and importantly to an otherwise very skewed bargaining situation, especially in times and locations of unemployment and for older workers.

But of course, France should do something to improve its equally notorious unemployment rate, currently at 10%.  The work environment in Europe is still so much more relaxed than in the USA that it is doubtful whether any employer would seriously expect workers to amass the very high amount of hours worked by Americans or the very few weeks of vacation.  Hence, a social dialogue may be what it takes in France.

 

September 11, 2017 in Commentary | Permalink

Friday, September 8, 2017

Conversations left open-ended don't rise to the level of an offer

In my head it's still the beginning of the school year, even though at my school we just finished our third week of classes already. This means that, because we only have a one-semester Contracts course, I'm just finishing up contract formation and moving on, and this case is kind of a nice little reminder review about the principles surrounding offers.

The case out of New Jersey, Kristine Deer, Inc. v. Booth, No. C-29-16 (behind paywall), involved a luxury active wear company, K-DEER, for which the defendant, Booth, worked. Booth had several conversations over the course of her employment with K-DEER's sole shareholder, Kristine Deer, about Booth receiving possible equity interest in the company. However, every one of those conversations was fairly vague. Deer seemed to always finish the conversations with some kind of demurral: that she had to "think about" it more, or that she wasn't "ready to have the conversation." Eventually, Booth resigned with an e-mail that read "If you are not willing to pursue an active dialog about ownership I am not interested in working at K-DEER." 

The parties are now involved in litigation, which included, among other things, Booth's counterclaim for breach of contract. She alleged that "Deer led [her] to believe she was a partner and had a right to equity in K-DEER," because she "did not explicitly deny her requests for equity" and called her a "partner" at times. However, the court quoted at length from Booth's deposition, where she admitted that Deer did not offer her any equity and that, in fact, her unwillingness to do so was why she resigned. Under these circumstances, it was impossible to find an offer from Deer to Booth. There was no expression of commitment on Deer's part. In fact, all of Deer's statements seemed to evince the opposite. So the court found no contract existed between the parties. 

As I am teaching my students to do now, the court then moved on, examining Booth's claim for quantum meruit. However, Booth never alleged that she wasn't adequately compensated, just that she would have left K-DEER earlier had she realized Deer wasn't going to give her equity. That did not justify quantum meruit. The court found that Booth had been compensated for all the work she had performed, so there was no unjust enrichment on K-DEER's part.

September 8, 2017 in Labor Contracts, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (2)

Thursday, September 7, 2017

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (September 7, 2017)

Top-10 wStars

Top Downloads For the Contracts & Commercial Law eJournal SSRN Logo2

Recent Top Papers (60 days) as of: 09 Jul 2017 - 07 Sep 2017

Rank Paper Downloads
1.

How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?)

Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law
2,693
2.

Crypto Transaction Dispute Resolution

University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University
306
3.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
162
4.

Relational Contracts of Adhesion

University of Pennsylvania Law School
162
5.

Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems

European University Institute
145
6.

Aspects of Loyalty

McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
138
7.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
113
8.

Justice, Fault, and Efficiency in Contract Law

University of Florida - Levin College of Law
111
9.

Personal Data, Exploitative Contracts, and Algorithmic Fairness: Autonomous Vehicles Meet the Internet of Things

European University Institute
105
10.

Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture

Humboldt University of Berlin - Faculty of Law and European University Institute
100

 

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

Recent Top Papers (60 days) as of: 09 Jul 2017 - 07 Sep 2017

Rank Paper Downloads
1.

Crypto Transaction Dispute Resolution

University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University
306
2.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
162
3.

Relational Contracts of Adhesion

University of Pennsylvania Law School
162
4.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
114
5.

Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture

Humboldt University of Berlin - Faculty of Law and European University Institute
100
6.

Property and the Construction of the Information Economy: A Neo-Polanyian Ontology

Georgetown University Law Center
68
7.

Taking Contracting Digital: Examination of the Smart Contracts Experiment

New York University (NYU), School of Law, Student
66
8.

The Rise of Modern Commercial Arbitration and the Limits of Private Ordering

Yale University, Faculty of Arts & Sciences, Department of History, Students
61
9.

The Rise of Automated Investment Advice: Can Robo-Advisers Rescue the Retail Market?

University of Nevada, William S. Boyd School of Law
61
10.

Amending Corporate Charters and Bylaws

University of Virginia School of Law and Columbia Law School
60

 

September 7, 2017 in Recent Scholarship | Permalink

Tuesday, September 5, 2017

Crumbling foundations are happening all over Connecticut, and the insurance policy fights are underway

I'd been seeing a lot of insurance cases come across my alert dealing with crumbling house foundations in the District of Connecticut. This one, Roberts v. Liberty Mutual Fire Insurance Co., No. 3:13-cv-00435 (SRU) (behind paywall), tells us why. Apparently it's part of an epidemic across Connecticut that so far has affected at least four hundred homes and may ultimately affect as many as 34,000 (!). The mix used in the concrete to pour these foundations contained a naturally existing mineral called pyrrhotite that degrades rapidly, causing the issues the homeowners are seeing. You can read more about this horrible situation here

The Robertses are one of the homeowners caught up in the deteriorating foundation issue. They brought a claim under their homeowners' insurance policy, which was denied because the policy excluded coverage based on faulty construction, which Liberty Mutual explained was the problem at issue with the foundation. However, the policy did cover loss due to defective construction if it resulted in "collapse." The issue in this case revolved around the definition of the word "collapse." The Robertses claimed the cracks in the foundations will eventually cause the walls to give way and collapse and so they should be covered. 

The insurance policy did not define the term "collapse," and previous Connecticut precedent had found the term in homeowners insurance contracts to be ambiguous. Because insurance contracts are construed against the insurance company, these courts had concluded that "collapse" could be something beyond just "a catastrophic breakdown" to include the "substantial impairment of the structural integrity of a building." But what does "substantial impairment" mean? Does it mean the building has to be in "imminent danger" of falling to the ground? Precedent suggested no. Connecticut courts had allowed recovery under "collapse" where the house never caved in and indeed the homeowners continued to live in it. So this court concluded that "substantial impairment" means that the building would cave in without repair to the damage. The judge found that there were factual disputes in this case involving whether the Robertses' home was in this state and thus summary judgment was inappropriate. 

This series of cases is painful to read and made me walk around my house worrying about what's not covered by my howeowners insurance that could destroy it...

September 5, 2017 in Commentary, Current Affairs, True Contracts | Permalink | Comments (0)

Saturday, September 2, 2017

Fighting over Buck Rogers

Buck Rogers

(Source: Wikipedia)

There's an interesting case out of the Eastern District of Pennsylvania, The Dille Family Trust v. The Nowlan Family Trust, Civil Action No. 15-6231, dealing with issues around the trademark BUCK ROGERS. But it also has a breach of contract angle that requires us to learn the history of Buck Rogers. So let's dive in!

Philip Nowlan wrote a story called Armageddon 2419 A.D. that appeared in August 1928, starring a character named Anthony Rogers. In 1929, Nowlan wrote a sequel to the story, also starring Rogers. Nowlan, identified as the "creator of . . . 'Buck' Rogers," entered into a contract in 1929 with a newspaper service owned by John F. Dille to syndicate the comic strip "Buck Rogers." This contractual relationship seemed to survive through the 1930s, until Nowlan died in 1940. Nowlan's widow, Theresa Nowlan, then sued the newspaper service alleging underpayment under the contracts. The parties settled in 1942, which is where the breach of contract claim in the current case arises from. The agreement provided that Theresa Nowlan and her "heirs, executors, or administrators" released all claims against the newspaper service related to Buck Rogers and also conveyed all intellectual property interest in Buck Rogers to Dille. 

Neither the Dille Family Trust nor the Nowlan Family Trust were parties to this settlement agreement. They were not even in existence until decades after it was signed. However, the Dille Family Trust asserted that it is the successor in interest to John Dille and that the Nowlan Family Trust is the successor in interest to Theresa Nowlan. Therefore, it contends that it can sue the Nowlan Family Trust for breach of the 1942 settlement agreement. 

The court, however, disagreed. While there was no dispute that the trustee and beneficiaries of the Nowlan Family Trust were descendants of Theresa Nowlan, that was not enough to establish that the Nowlan Family Trust was an "heir, executor, or administrator" or otherwise a successor in interest to Nowlan's obligations under the 1942 settlement agreement. The Dille Family Trust did not show any sort of transfer of the agreement to the Nowlan Family Trust, nor did it introduce any other document (such as Theresa Nowlan's will) that might have indicated that the rights and obligations of the 1942 settlement agreement passed to the descendants in question. Therefore, the Dille Family Trust could not maintain a breach of contract action against the Nowlan Family Trust based on the 1942 settlement agreement. 

September 2, 2017 in Celebrity Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Thursday, August 31, 2017

Reminder: To materially modify terms, the other party has to agree

I just taught modification of terms earlier today so this recent case out of Missouri, Andes v. Dickey, Docket Number WD80135 (behind paywall), caught my eye. It involves an agreement regarding a jointly-owned residence between a woman and her daughter, which to me tinges the entire litigation with an extra layer of tragedy over the fact that they ended up in litigation against each other. 

Andes and Dickey bought a house together and reached an agreement with each other (unsurprisingly not involving legal counsel) regarding use of the house, payment for the house, etc. One of the terms of this agreement between Andes and Dickey was that Andes would buy Dickey out through payment of monthly installments of $2,000 until the amount of $66,875.50 was reached (roughly thirty-three months of payments). The parties reduced this agreement to writing and signed it. They then also obtained a line of credit together to make the extensive renovations and repairs that the house turned out to need. 

Andes and Dickey began clashing over the terms of their joint ownership of the house. Andes threatened to terminate Dickey's access to the line of credit and then suggested that Dickey take the remaining balance in the line of credit (around $70,000) as satisfaction of the buy-out provision, giving Andes the house. Dickey rejected Andes's proposal that she accept the line of credit as buy-out. Instead, worried that Andes would cut off her access to the line of credit, she withdrew the remaining balance of the line of credit and deposited it in a different account that she claimed she intended should still be used for renovations. Andes, finding out that Dickey had withdrawn the balance, asserted several times that Dickey should accept the line of credit balance as buy-out under their agreement. Every time, Dickey continued to state that she would not so accept it and that the money should continue to be used to renovate the house. 

This led Andes to sue, claiming that she had bought out Dickey and seeking specific performance that Dickey's interest in the house be transferred to Andes. The trial court found that the buy-out provision had been satisfied and gave Andes the title to the house. Dickey appealed. 

The appeal centers on whether or not the original buy-out provision was effectively modified so that the line-of-credit balance would satisfy it. This was not a situation where Andes simply tried to accelerate payment. Both Andes and Dickey were obligors under the line of credit. So, in giving Dickey the line-of-credit balance, Andes was not paying funds from herself to Dickey, as the parties had agreed. Instead, Andes was promising to assume sole liability for the line of credit. This, the court found, was materially different from the terms the parties had reached and so Dickey needed to accept the new terms. Both parties agreed that Dickey had consistently rejected Andes's proposals regarding the line of credit, so there was no acceptance, so there was no effective modification. No buy-out happened and the original buy-out terms remained in effect.  

At any rate, the new supposed deal regarding the line of credit concerned real estate and so should have been in writing, which it was not. 

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

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (August 31, 2017)

Top-10-gold-logo

Top Downloads For: Contracts & Commercial Law eJournal SSRN Logo2

Recent Top Papers (60 days) as of: 02 Jul 2017 - 31 Aug 2017

Rank Paper Downloads
1.

How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?)

Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law
2,640
2.

Crypto Transaction Dispute Resolution

University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University
298
3.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
157
4.

Relational Contracts of Adhesion

University of Pennsylvania Law School
150
5.

Aspects of Loyalty

McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
136
6.

Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems

European University Institute
135
7.

Justice, Fault, and Efficiency in Contract Law

University of Florida - Levin College of Law
106
8.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
105
9.

Personal Data, Exploitative Contracts, and Algorithmic Fairness: Autonomous Vehicles Meet the Internet of Things

European University Institute
96
10.

Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture

Humboldt University of Berlin - Faculty of Law and European University Institute
90

 

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

Recent Top Papers (60 days) as of: 02 Jul 2017 - 31 Aug 2017

Rank Paper Downloads
1.

Crypto Transaction Dispute Resolution

University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University
298
2.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
157
3.

Relational Contracts of Adhesion

University of Pennsylvania Law School
150
4.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
105
5.

Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture

Humboldt University of Berlin - Faculty of Law and European University Institute
90
6.

Property and the Construction of the Information Economy: A Neo-Polanyian Ontology

Georgetown University Law Center
67
7.

The Rise of Modern Commercial Arbitration and the Limits of Private Ordering

Yale University, Faculty of Arts & Sciences, Department of History, Students
57
8.

Forum-Selection Provisions in Corporate 'Contracts'

New York University School of Law and New York University School of Law
53
9.

The Quantitative Study of Privacy-Policy Decisions in the Draft Restatement of Consumer Contracts

Georgetown University Law Center
51
10.

Taking Contracting Digital: Examination of the Smart Contracts Experiment

New York University (NYU), School of Law, Student
50

August 31, 2017 in Recent Scholarship | Permalink | Comments (0)

Saturday, August 26, 2017

A quick reminder about third-party beneficiaries

There has to be some evidence that you were intended to be a third-party beneficiary in order to be able to enforce the contract. 

This reminder courtesy of a recent case out of the Southern District of New York, Fashion One Television LLC v. Fashion TV Programmgesellschaft MBH, 16-CV-5328 (JMF), where Fashion One Television tried to sue on a contract between the defendant and Fashion One LLC. Fashion One LLC was a "direct affiliate" of Fashion One Television, with the same owner and principal place of business. However, that doesn't change the fact that Fashion One Television was still a separate legally distinct entity who did not sign the contract, and nothing on the face of the contract indicated that Fashion One Television was an intended beneficiary of the contract entitled to enforce the contract. The contract had a merger clause and a clause that prohibited it from being assigned. So, Fashion One Television was not an intended third-party beneficiary, could not enforce the contract, and lacked standing, and its complaint was dismissed. 

August 26, 2017 in Recent Cases, Television, True Contracts | Permalink | Comments (0)

Friday, August 25, 2017

Beware starting work on a property before you own the property

When I poke through recent contracts cases trying to find ones to blog about, I tend to decide pretty quickly whether I want to spend time reading an opinion or not. This recent case out of Virginia, American Demolition and Design v. Pinkston, CL16000199-00 (behind paywall), caught my eye because the very first paragraph sounds like a hypo: 

This case arises out of a contractual negotiation for sale of real property . . . from . . . Pinkston to . . . Sweet. The negotiations never resulted in a final contract for sale of the property and no conveyance of the real property ever resulted. After the parties entered into contractual negotiations, but before the parties terminated contractual dealings, with oral permission from Pinkston, Sweet began preliminary construction on the property for the purpose of improving parts of the farmhouse located on the property. Although Pinkston discovered that Sweet’s work on the property had exceeded the scope of their discussions, Pinkston never stopped Sweet from performing further work on the property. Finally, when Sweet and Pinkston learned that a lien against the property hindered Pinkston from conveying title, Sweet stopped all work on the property. The property was subsequently rendered to be worth only a fraction of what it was previously worth before Sweet began working on the property.

So, naturally, I stopped to read the rest. Sweet brought the suit quantum meruit, for recovery of the value of his work performed on the property.  

The court acknowledged that there was no written contract about Sweet's work on the property, but the parties did make oral agreements on the subject that the court used in evaluating the quasi-contract claim. The work that Sweet performed on the property apparently brought the value of the property down, raising the question of whether it conferred a benefit on Pinkston as is required for recovery. However, the court noted that Pinkston knew Sweet was doing the work and did nothing to prevent him from doing it. In fact, they negotiated that Sweet would do the work. Therefore, the court found the work was a benefit that Sweet conferred on Pinkston with Pinkston's knowledge, despite the effect of the work on the value of the property at issue. 

But mere rendering of the services is not enough to merit recovery. The circumstances also must indicate that it would be inequitable for Pinkston to retain the benefit of Sweet's work without compensating him for it. There was no evidence that the parties ever thought Pinkston would pay Sweet for his labor. It was very clear that Sweet, expecting to buy the property, was in fact performing the work for himself, not Pinkston. Not only did Sweet not expect Pinkston to pay him, he expected to have to pay Pinkston when he bought the house. Therefore, the circumstances did not indicate that Pinkston needed to pay Sweet for his work. 

The case stands as a word of warning: be careful expending time and effort on a piece of real estate before negotiations for it have concluded. 

August 25, 2017 in Commentary, Recent Cases, True Contracts | Permalink | Comments (2)

Thursday, August 24, 2017

Is Amazon Selling Products or Services?

As first reported on Above the Law, the Federal Circuit Court of Appeals has just ruled that Amazon is nothing but a simple purveyor of “online services” and does not make “sales” of goods. Although the issue in the case was one of intellectual property infringement and thus not the UCC, the differentiation between “goods” and “services” is also highly relevant to the choice of law analyses that our students will have to do on the bar and practitioners in real life. Unknown

How did the Court come to its somewhat bizarre decision? Amazon, as you know, sells millions, if not billions, of dollars worth of tangible, physical products ranging from toilet paper to jewelry, books to toys, and much, much more. They clearly enter into online sales contracts with buyers and exchange the products for money. “Amazon” is the name branded in a major way in these transactions whereas the names of the actual sellers – where these differ from Amazon itself – are listed in much smaller font sizes. Often, it is Amazon itself that packages and ships the products to the buyers, whereas at other times, third party buyers are responsible for the shipping. Amazon “consummates” the sale when the buyer clicks the link that says “buy” on the Amazon website. Amazon then processes the payments and receives quite significant amounts of money for this automated process.

Clearly a “sale,” right? Nope. I guess “a sale is not a sale when a court says so.” As regards the IP dispute, the crucial issue was whether or not Amazon could control the acts of the third-party vendors. You would think that even that would clearly be the case given the enormous control Amazon has over what is marketed on its website and how this is done. Amazon, however, argued that it sells so many items that it cannot possibly police all of them. Thus, it won on its argument that it was not liable under IP law for a knock-off item that had been sold on the Amazon website as the real product (cute animal-shaped pillowcases). Unknown

Had this been an issue of contracts law and had the court still found that the transaction was not a sale of goods under UCC Art. 2, would it have erred? Arguably so. Under the “predominant factor test” used in many, if not most, jurisdictions, courts look at a variety of factors such as the language of the contract, the final product (or service) bought and sold, cost allocation, and the general circumstances of the case. When you buy an item on Amazon, it is true that you obtain the service of being able to shop from your computer and not a physical location, but at the end of the day, it is still the product that you want and buy, not the service. Apart from the relatively small service fee (which gets deducted from the price paid to the seller), the largest percentage of the sales price is for the product. Modernly, online buyers have become so used to that “service” being provided that it is arguably not even that much of a service anymore; it is just a method enabling buyers to buy… the product. Clearly, it seems to me, a “sale” under Art. 2.

Again, this was not a UCC issue, but it does still show that courts apparently still produce rather odd holdings in relation to e-commerce, even in 2017.

The case is Milo & Gabby LLC v. Amazon.com, Inc., (Fed. Cir. 2017)

August 24, 2017 in Commentary, Current Affairs, E-commerce, True Contracts, Web/Tech | Permalink | Comments (0)

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (August 24, 2017)

Welcome, for many of our readers, to the first weekly Top Ten list of the new academic year. For those new to ContractsProf Blog, the Top Ten list is a longstanding feature we post to help stay on the abreast of trends and hot topics in the areas of contracts and commercial law. If anything on the list piques your interest, consider clicking through to the SSRN page and giving the author another download. Authors like downloads.

Top10DeskSign

 

Top Downloads For: SSRN Logo2

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 25 Jun 2017 - 24 Aug 2017

Rank Paper Downloads
1.

How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?)

Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law
2,536
2.

Crypto Transaction Dispute Resolution

University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University
287
3.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
149
4.

Relational Contracts of Adhesion

University of Pennsylvania Law School
146
5.

Aspects of Loyalty

McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
128
6.

Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems

European University Institute
122
7.

Justice, Fault, and Efficiency in Contract Law

University of Florida - Levin College of Law
100
8.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
96
9.

Over-Reliance Under Contractual Disgorgement

Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem
90
10.

Personal Data, Exploitative Contracts, and Algorithmic Fairness: Autonomous Vehicles Meet the Internet of Things

European University Institute
87

  

Top Downloads For: SSRN Logo2

Law & Society: Private Law - Contracts eJournal 

Recent Top Papers (60 days)

As of: 25 Jun 2017 - 24 Aug 2017

Rank Paper Downloads
1.

Crypto Transaction Dispute Resolution

University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University
287
2.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
149
3.

Relational Contracts of Adhesion

University of Pennsylvania Law School
146
4.

Property and Sovereignty Imbricated: Why Religion Is Not an Excuse to Discriminate in Public Accommodations

Harvard Law School
99
5.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
96
6.

Over-Reliance Under Contractual Disgorgement

Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem
90
7.

Springwell-watch: New Insights into the Nature of Contractual Estoppel

London School of Economics - Law Department
78
8.

Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture

Humboldt University of Berlin - Faculty of Law and European University Institute
76
9.

Property and the Construction of the Information Economy: A Neo-Polanyian Ontology

Georgetown University Law Center
62
10.

Liberal Contract Theory and Actually Existing Contracts

New York University (NYU) - Furman Center for Real Estate and Urban Policy
57

August 24, 2017 in Recent Scholarship | Permalink | Comments (0)

Monday, August 21, 2017

"We Built This City" (that was just to give you the earworm)

This case, out of the Northern District of California, Chaquico v. Freiberg, Case No. 17-cv-02423-MEJ, concerns a fairly common entertainment law issue that results when bands lose and gain members: who gets to still use the band name? Jefferson Starship has a fairly rocky naming history, having originally been called Jefferson Airplane and later morphing into Starship after a prior fight over the name. Because band name ownership can be a tricky thing to decide under intellectual property law, and because it might result in rulings that the band members (current and former) might not like, bands frequently try to handle these disputes by contract. Like with any contract, the efficacy of this approach differs based on the wording of the particular contract, which is what happens with the contract claims in this case: based on wording and timing and the interplay of other contracts, the court dismisses all of them but those that happened after January 2016.  

(If you're interested in this sort of thing, Rebecca Tushnet writes up another of these cases, this one involving the band Boston.)

August 21, 2017 in Celebrity Contracts, Current Affairs, In the News, Recent Cases, True Contracts | Permalink | Comments (0)

Sunday, August 20, 2017

Beauty Salon's Customer Lists Weren't Confidential When They Were on Social Media (and more beauty salon rulings)

A recent case out of New York, Eva Scrivo Fifth Avenue, Inc. v. Rush, 656723/2016, stems from the defendant, Rush, being discovered working for a rival beauty salon, Marie Robinson, while still employed by the plaintiff, Scrivo. Scrivo terminated Rush upon learning of this. Rush spoke to two clients in the Scrivo salon before exiting the salon, allegedly saying she would get in touch with them, and at least one of the clients left the salon, refusing to be serviced by anyone but Rush. Rush also posted a note on her personal Instagram saying that she would be moving to Marie Robinson and people should get in touch with her for appointments. 

Scrivo sued alleging, among other things, breach of contract, based on the restrictive covenant contained in the Employment Agreement, which prohibited Rush from, among other things, soliciting Scrivo's clients and disclosing confidential information and trade secrets. Scrivo sought to enjoin Rush from soliciting, communicating with, or providing services to anyone she serviced while working for Scrivo, for a period of one year. 

Unfortunately for Scrivo, the court denied its motion. The court noted that the noncompete needed to protect Scrivo's legitimate interests, avoid undue hardship on Rush, and be in the public interest. The court found that Scrivo failed to demonstrate the that noncompete was necessary to protect its interests. There was nothing about Rush's services that were "unique or extraordinary," and Rush was replaceable. Scrivo's customer lists were not confidential information, because the identity of its customers was pretty readily available online in social media posts and Scrivo never attempted to hide any of it. None of the skills Rush used in cutting hair were confidential, either. Rush claimed to be self-taught, claimed not to have taken any customer lists, and claimed that any clients that followed her did so of their own accord and initiative and that she did not solicit them. 

Not only was the court dubious that Scrivo had legitimate interest to protect, the court also thought the sought injunction was unduly burdensome on Rush. Scrivo provided evidence that Rush had serviced 900 clients over the course of six years at Scrivo. Rush would surely have to therefore affirmatively ask each person who came to Marie Robinson if they had ever been serviced at Scrivo in order to ascertain if there was a possibility Rush had worked on them. Scrivo wanted Rush to turn away clients who came in independently, and the noncompete had only required Rush to refrain from soliciting clients. 

Finally, the court didn't think Scrivo would suffer any irreparable harm without injunctive relief. If Scrivo could prove Rush violated the noncompete, then Scrivo could get the value of the services the client didn't purchase from Scrivo. 

August 20, 2017 in Labor Contracts, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Los Angeles Allegedly Violates Free Speech Rights with Entertainment Contracts

Pershing Square in downtown Los Angeles is an outdoor area that is regularly the home of free summer concerts and demonstrations of various kinds throughout the year. You would think you could snap as many photos as you wanted of events there since it is an outdoor, public area, right? Cropped_26394084682_722974dd19_k.0

This past summer, the answer was no. A photojournalist wanted to take pictures of, among others, the B-52s. However, he was informed of a policy that had been set up with the performers per contractual agreement. The policy barred professional photography equipment, albeit not cell phone usage, from the square during concerts.

ACLU has complained to the Los Angeles City Attorney and the General Manager of the Department of Recreation and Parks, claiming that the city does not have a right to contract away the general public’s First Amendment rights because some performers want it that way.

How do you see contractual rights intersecting with the First Amendment in the government contracting context? Comment below!

August 20, 2017 in Current Affairs, Government Contracting, In the News, Miscellaneous, Music, True Contracts | Permalink | Comments (0)

Saturday, August 19, 2017

Things to Think About Before You Put Your Project on Kickstarter

The Internet has encouraged so many cool and interesting ways of creating. Scrolling through Kickstarter, to pick just one website, can expose you to an incredible variety of artistic endeavors that you can support, many of which involve board games. In fact, several of my friends have Kickstartered several board games, and I own several other Kickstarter board games that didn't come from friends at all.

I have never asked my friends how they document their collaborations on the board games they list on Kickstarter, but you can imagine that many people throw ideas up there to see what happens without bothering to hire lawyers or formalize relationships. This, of course, can turn out poorly if you have an eventual falling-out with your friend, but it can also turn out poorly if something even more horribly tragic happens and one of the collaborators dies suddenly and unexpectedly, which may be what happened in the case of the Kickstarter game Divorce! The story is sad and heartbreaking and I read all about it over on The Outline. It's tangled and convoluted and has devolved into a series of oral accusations in large part because there is nothing in writing. And that could be evidence that the parties in question had no collaborative relationship regarding the board game, but it could also be evidence that the parties in question were friends in their twenties who never anticipated that one of them was going to go away for a fun weekend and never come home. 

(h/t to Aja Romano)

August 19, 2017 | Permalink | Comments (0)

Friday, August 18, 2017

Brian O'Conan Hypo

Having disappeared for a couple of weeks into frantic preparation for the new semester, I thought I would re-emerge by sharing a hypo that I do with my students on the first day of class, based on Conan O'Brien's contract dispute with NBC from a few years ago. The hypo goes something like this: 

Brian O’Conan is a comedic host who has helmed a show on CBN, Later at Night, for sixteen years. Later at Night airs at 12:30, and Brian has always wanted to “move up” in the world of late night hosts to host a show at the earlier time of 11:30. Five years ago, in order to keep Brian at the network, CBN promised to give Brian hosting duties for its legendary 11:30 show, Somewhat Late at Night, as soon as Len Jayo’s current contract was up. Somewhat Late at Night is a flagship show that has aired in its time slot on CBN for 43 years; prior to that, it started at 11:15 for 14 years. For its entire 57-year existence, Somewhat Late at Night has begun directly after the late local news.

Brian and CBN enter into a contract with the following terms:

  • Brian is guaranteed that he will be the host of Somewhat Late at Night.
  • Both Brian and CBN promise to act in good faith in executing the contract.
  • Both parties will mitigate any damages caused by a breach of contract, but CBN agrees that it will pay Brian $40 million if it breaches the contract.
  • Brian is prohibited from being a late-night host on any other network in the event of a breach of the contract.

As promised by the contract, Brian becomes host of Somewhat Late at Night. After a strong start, Brian’s ratings trail off. Six months into Brian’s stint as host, CBN makes a public announcement that Somewhat Late at Night will be moved to start at midnight. It will use the 11:30 time slot for a new late-night show with old Somewhat Late at Night host Len Jayo.

Brian, learning all of this for the first time from the public announcement, tells CBN it has breached the contract, demands payment of $40 million, and also opens discussions with a competing network, Wolf, to host a new late night show at 11:30.

***

I like this hypo because, even though it was several years ago now, most students recognize the real-life situation this problem was based on and so feel somewhat engaged with it. In addition, even though I have taught them literally nothing about contract law at this point, I think they gain a lot of confidence from being able to examine the problem and come up with ideas for how the analysis should begin. I usually split them up and assign them a side to represent and have them make arguments on their client's behalf, and then allow them time for rebuttal. Along with discussing the contract's terms around the show itself, the students get into discussions about good faith, mitigation of damages, and just basic fairness. When we're done with the discussion, I then ask them how they felt about the side they had been assigned to, and if any of them had wished they'd had the other side. I think it is a good basic introduction to the task of being lawyers that I find relaxes them a little on the first day: If they can already talk about this problem on the first day, imagine how much better they'll be once they know some law!

If you're starting school years like I am, good luck!

August 18, 2017 in Celebrity Contracts, Commentary, Current Affairs, In the News, Law Schools, Teaching, Television, True Contracts | Permalink | Comments (2)

Thursday, August 17, 2017

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (August 17, 2017)

Top10-Electric

Top Downloads For: SSRN Logo2

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 18 Jun 2017 - 17 Aug 2017

Rank Paper Downloads
1.

How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?)

Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law
2,349
2.

Crypto Transaction Dispute Resolution

University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University
263
3.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
145
4.

Relational Contracts of Adhesion

University of Pennsylvania Law School
121
5.

Aspects of Loyalty

McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
121
6.

Justice, Fault, and Efficiency in Contract Law

University of Florida - Levin College of Law
95
7.

Over-Reliance Under Contractual Disgorgement

Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem
89
8.

Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems

European University Institute
86
9.

Disclosure Rules in Contract Law

Harvard Law School and Tel Aviv University
84
10.

Springwell-watch: New Insights into the Nature of Contractual Estoppel

London School of Economics - Law Department
77

 

Top Downloads For: SSRN Logo2

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 18 Jun 2017 - 17 Aug 2017

Rank Paper Downloads
1.

Crypto Transaction Dispute Resolution

University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University
263
2.

The Choice Theory of Contracts (Introduction)

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
145
3.

Relational Contracts of Adhesion

University of Pennsylvania Law School
121
4.

Property and Sovereignty Imbricated: Why Religion Is Not an Excuse to Discriminate in Public Accommodations

Harvard Law School
99
5.

Over-Reliance Under Contractual Disgorgement

Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem
89
6.

Disclosure Rules in Contract Law

Harvard Law School and Tel Aviv University
84
7.

Springwell-watch: New Insights into the Nature of Contractual Estoppel

London School of Economics - Law Department
77
8.

Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture

Humboldt University of Berlin - Faculty of Law and European University Institute
73
9.

What Law Governs Forum Selection Clauses

Willamette University - College of Law
73
10.

Property and the Construction of the Information Economy: A Neo-Polanyian Ontology

Georgetown University Law Center
61

 

 

August 17, 2017 in Recent Scholarship | Permalink | Comments (0)