ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, June 23, 2017

Trade Usage vs. Express Terms in Lawsuit Against Hardware Stores

Two by FourWhen I teach "usage of trade" (UCC § 1-303) in Contracts or in Sales, I inevitably bring up the example of  "two-by-four" lumber. The example is a good one in that most students either already know first hand that a two-by-four board is smaller than two inches by four inches, or else they readily grasp the concept that terms in a contract can come from a widespread meaning that is at variance with its literal meaning. For years, I thought the point of the example was non-controversial--or at least less convoluted than more famous interpretive questions like, "What is 'chicken'?" or "Is a burrito a 'sandwich'?"

At least one litigant would disagree with my characterization of the lumber example as being obvious. This story in the Des Moines Register describes a lawsuit in which hardware chains Home Depot and Menards are accused of deceiving buyers by selling "four-by-four" lumber that is not four inches by four inches in dimension:

HomeDepot_svgThe retailers say the allegations are bogus. It is common knowledge and longstanding industry practice, they say, that names such as two-by-four or four-by-four do not describe the width and thickness of those pieces of lumber.

 Rather, the retailers say, those are “nominal” designations accepted in government-approved industry standards, which also specify actual minimum dimensions — 1½ inches by 3½ inches for a two-by-four, for example, and 3½ inches by 3½ inches for a four-by-four.

“Anybody who’s in the trades or construction knows that,” said Tim Stich, a carpentry instructor at Milwaukee Area Technical College.

True enough, said Yevgeniy (Eugene) Turin of McGuire Law, the firm that represents the plaintiffs in both cases.

However, Turin and his clients dispute that the differences between nominal descriptions and actual dimensions are common knowledge.

 

“It’s difficult to say that for a reasonable consumer, when they walk into a store and they see a label that says four-by-four, that that’s simply — quote unquote — a trade name,” Turin said in an interview.

Turin said his clients don’t argue that the retailers’ four-by-fours (and, in the Menards’ case, a one-by-six board as well) are not the correct size under the standards published by the U.S. Department of Commerce. The product labels, however, should disclose that those are “nominal” designations and not actual sizes, Turin said.

With some of Menards’ lumber products, both the nominal and actual size are shown, a document Turin filed in the case against Menards says. But the lumber in question is labeled only with a nominal size — "4 x 4 — 10’," for example — that consists of numbers “arranged in a way to represent the dimensions of the products,” the document says. That leaves the “average consumer” to conclude that the pieces measure four inches by four inches, Turin said.

Some Menards customers aren’t buying it.

“They haven’t measured four inches by four inches since the ‘50s,” said Scott Sunila after loading purchases into his pickup.

“My God, that’s crazy,” the 60-year-old bulldozer operator said of the lawsuits. “Let me on the jury. They ain’t winning. And they’re gonna pay me extra for my time.”

But an unscientific survey of 18 Menards shoppers found that about a third were unaware that "four-by-four" doesn’t represent actual dimensions of that piece of lumber.

The problem with defining terms by usage of trade is that the term usage must have "such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question." UCC § 1-303(c). The existence of the trade usage is not a question of law, but a question of fact when (as here) it is not embodied in a trade code, such codes rarely being applicable to or ratified by consumers. If a party cannot establish the existence of trade usage terminology, then express terms will typically prevail over trade usage. UCC § 1-303(e).

My initial take was that this lawsuit was a clear loser, but the fact that the burden of proof lies with the hardware stores suggests that the plaintiffs at least have a chance. Now, would I take this case on a contingent fee basis?  Er... no.

June 23, 2017 in Current Affairs, In the News, True Contracts | Permalink | Comments (0)

Thursday, June 22, 2017

“Bachelor in Paradise” – Or Contractual Hell?

An article on CNN Media posted on June 21 reads, in part: “A contract for the current season of ‘Bachelor in Paradise,’ which CNNMoney … has confirmed as authentic, provides a rare window behind the scenes of reality shows, in the ‘Bachelor’ franchise and beyond, revealing how they are able to manipulate ‘reality’ and create drama where none actually exists….” Shocker! More surprising, perhaps, is the extent to which the companies producing these types of TV shows seek to avoid liability in potential legal proceedings. Unknown

Whereas the “Bachelor in Paradise” contract requires participants to “refrain from unlawful behavior or harassment” and to acknowledge that the producers “do not encourage intimate or sexual contact with other contestants on the show,” the contract also tries to free the producers from any responsibility if a contestant is injured, even if that injury comes from “unwelcome/unwanted sexual contact or other interaction among participants.” Participants will also have to agree that the producers are not liable for almost anything that happens to them in the course of filming, whether they are injured, suffer emotional trauma, or catch a sexually transmitted disease.

Furthermore, the producers of the show can do nearly anything they want to the participants and their reputation, including filming them naked, airing the details of any part of the life they think is relevant, or flat out lying about them and things they have done. Nicole Page, a New York-based entertainment attorney with Reavis Parent, said that the contract means, from the producers' perspective, "I can basically take your image and do whatever I want with it and I own it and you have no recourse." Contracts like these are common in reality TV, she said. They "have been around since reality TV began," she added. Needless to say, should participants wish to pursue civil legal action, they will have to arbitrate. Unknown-2

Why would contestants want to agree to such far-reaching contracts? For their chance at 15 minutes of fame, of course. If a contestant tries to renegotiate the contract, plenty of other people are ready to take their place.

The contracts, however, may be so broad that they are not legally enforceable, according to one CNN/HLN legal analyst. Another commentator says that these contracts are “so one-sided it seems absurd, but this is the price people are willing to pay to be on television for whatever it is.” “It's not a two-sided contract," the CNN/HLN attorney says. "A contract is supposed to be what they call 'at arms length,' which means there is leverage on both sides and it's freely entered into and freely negotiated. But this is clearly a contract that is one-sided.”

With all due respect to the CNN/HLN attorney, the mere argument that the contract is “one-sided” is, of course, not very strong unless the contracting procedure reaches the level of unconscionability. Yes, this might be a “take-it-or-leave-it” type of contract, but those are, as we all know, also widely used in numerous other industries and companies where courts have upheld them. I think it highly unlikely that contestants on a famous TV show will prevail on an argument that their contracts were so one-sided as to reach the level of unconscionability under contract law. After all, the TV contestants really don’t need to be on these shows at all; they choose to do so on their own free volition, typically for a rather vain chance at fame and fortune (I know that that is not a legal argument, but we all know what this would look like in court…).

Much worse are the alleged attempts by the companies to have the participants sign away their rights under criminal law. That they might very well not be able to do. "If the contract requires you to release any claims you have that you were sexually assaulted, which is a crime, then the contract may or may not be enforceable under the public policy of the state of California [where this contract was drafted]," said entertainment litigator Josh Schiller of Boies Schiller Flexner. "Law enforcement could get involved and bring charges ... would we want to enforce a contract that no one would be liable if they were filmed being sexually assaulted? That would create a real problem." No kidding. In other cases, contestants should closely consider what this type of deal really involves. Unknown-1

For the rest of us, we live in times when lines between fact and fiction are blurred significantly. It seems that an increasing amount of people are comfortable dismissing facts as “fake” when the converse is true. I’ve encountered that numerous times after the most recent presidential election myself, both in South Dakota and even “liberal California.” In addition to the usual climate change denial in the Midwest, I encountered a “crazy cat lady” in Los Angeles the other day claiming that highly established Audobon studies and Smithsonian studies demonstrating how feral cats kill numerous birds and other small wildlife is “not true”! Sigh.

We should consider how we best teach our students to account for this new reality in contract and other law. I think we also need to increasingly point out to them that what they see in the media is not necessarily true. Granted, with reality TV shows, that is obvious, but I have had to undertake rather serious discussions with my own students recently about what “news” really is and what it is not! What we have taken as granted as law professors even in recent years may no longer be the case or may be changing.

 

June 22, 2017 in Celebrity Contracts, Current Affairs, Film, In the News, Television | Permalink | Comments (0)

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (June 22, 2017)

Top-10-gold-logo

 

SSRN Top Downloads For SSRN Logo2
Contracts & Commercial Law eJournal

RECENT TOP PAPERS for all papers first announced in the last 60 days
23 Apr 2017 through 22 Jun 2017

Rank Downloads Paper Title
1 1,008 Surveying the Law of Emojis
Eric Goldman
Santa Clara University - School of Law
2 218 Henry Maine's 'Modern Law': From Status to Contract and Back Again?
Katharina Isabel Schmidt
Princeton University - Department of History, Students
3 119 Presiding Over Municipal Bankruptcies: Then, Now, and Puerto Rico
Melissa B. Jacoby
University of North Carolina (UNC) at Chapel Hill - School of Law
4 118 Complexity, Standardization, and the Design of Loan Agreements
Bernhard Ganglmair and Malcolm Wardlaw
University of Texas at Dallas - Managerial Economics and University of Texas - Dallas
5 110 Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy
Hannah L. Buxbaum
Indiana University Bloomington Maurer School of Law
6 91 Essentiality and Standards-Essential Patents
Jorge L. Contreras
University of Utah - S.J. Quinney College of Law
7 84 A New Dawn for the Law of Illegality
Andrew Burrows
University of Oxford - Faculty of Law
8 73 Paternalism and Contract Law
Péter Cserne
University of Hull
9 69 Consumer Expectations in Digital Content Contracts – An Empirical Study
Madalena Narciso
Tilburg Law School
10 65 The Failures of State Insurance Regulation
Daniel Schwarcz
University of Minnesota Law School

 

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

RECENT TOP PAPERS for all papers first announced in the last 60 days
23 Apr 2017 through 22 Jun 2017

Rank Downloads Paper Title
1 218 Henry Maine's 'Modern Law': From Status to Contract and Back Again?
Katharina Isabel Schmidt
Princeton University - Department of History, Students
2 118 Complexity, Standardization, and the Design of Loan Agreements
Bernhard Ganglmair and Malcolm Wardlaw
University of Texas at Dallas - Managerial Economics and University of Texas - Dallas
3 110 Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy
Hannah L. Buxbaum
Indiana University Bloomington Maurer School of Law
4 90 Delaware's Fall: The Arbitration Bylaws Scenario
Lynn M. LoPucki
University of California, Los Angeles (UCLA) - School of Law
5 73 Paternalism and Contract Law
Péter Cserne
University of Hull
6 72 Politicized Dispute Settlement in the Pre-Investment Treaty Era: A Micro-Historical Approach
Jason W. Yackee
University of Wisconsin Law School
7 69 Consumer Expectations in Digital Content Contracts – An Empirical Study
Madalena Narciso
Tilburg Law School
8 63 The Design of Staged Contracting
Albert H. Choi and George G. Triantis
University of Virginia School of Law and Stanford Law School
9 55 Customary Principles Regarding Public Contracts Concluded with Foreigners
Regis Bismuth
Sciences Po Law School (Ecole de Droit de Sciences Po)
10 48 Costs Allocation Under the Amended Indian Arbitration Law: A Critique
Badrinath Srinivasan
Independent

June 22, 2017 in Recent Scholarship | Permalink | Comments (0)

Wednesday, June 21, 2017

Grammatical Rules Shed Little Light on Contract Provision

More fun with ambiguity! I like this recent case out of Pennsylvania, BL Partners Group, L.P. v. Interbroad, LLC, No. 465 EDA 2016, because it really delves into grammatical rules in a way that pleases the 13-year-old me who enjoyed learning how to diagram sentences. (I did. I can't help it. I admit it publicly here.)

The appellant leased billboard space on the rooftop of a building owned by the appellee. The appellee decided to demolish the building and sent the appellant a termination notice. The appellant argued that the termination notice was invalid under the terms of the lease and that it would not vacate the premises. The provision in question was: 

"In the event that Lessor's building is damaged by fire or other casualty and Lessor elects not to restore such building, or Lessor elects to demolish the building, Lessor may terminate the Lease . . . ."

The trial court found that this provision gave the appellee the right to demolish the building for any reason, finding that the comma preceding the "or" indicated that it was an independent basis for termination and was not dependent upon the building first being damaged by fire or other casualty. This appeal followed. 

The appellate court began its analysis by looking to the dictionary definition of the word "or," and then finding that the placement of a comma before the word "or" joins two independent clauses. Nonrestrictive phrases separated by commas are construed as parentheticals, "supplemental to the main clause." The appellate court then concluded that the intent of the contracting parties was not clear. The appellate court said that the trial court's reading actually read words into the contract, i.e., "In the event that Lessor's building is damaged by fire or other casualty and Lessor elects not to restore such building, or in the event that Lessor elects to demolish the building, Lessor may terminate the Lease . . . ." The appellate court said it was unclear if that reading was correct, or if in fact the clause should be read in conjunction with the previous clause, and therefore the meaning could not "be determined definitively from the particular terms, grammar, or structure" of the provision. Both parties offered reasonable interpretations, and therefore extrinsic evidence had to be examined for the true meaning of the provision. 

June 21, 2017 in Recent Cases, True Contracts | Permalink | Comments (0)

Tuesday, June 20, 2017

June 2018 conference: “To Teach is to Learn Twice: Fostering Excellence in Transactional Law and Skills Education"

From our friends at Emory Law:

 

Emory’s Center for Transactional Law and Practice cordially invites you to attend its sixth biennial conference on the teaching of transactional law and skills. The conference, entitled “To Teach is to Learn Twice: Fostering Excellence in Transactional Law and Skills Education,” will be held at Emory Law, beginning at 1:00 p.m. on Friday, June 1, 2018, and ending at 3:45 p.m. on Saturday, June 2, 2018.

We welcome you to share your experiences teaching any aspect of transactional law and skills, focused primarily on what general approaches, teaching methods, and specific exercises have been the most effective. Additionally, we want to know how you have implemented the ABA’s standards on learning outcomes and assessment and whether your teaching has changed as a result.

A formal request for proposals will be distributed in the fall.

Note: For this Sixth Biennial Conference, we will be offering a discounted registration rate for new teachers as well as for adjunct professors. Please encourage your colleagues to attend.

Looking forward to seeing all of you in June of 2018!

Sue Payne                                                 Katherine Koops

Executive Director                                      Assistant Director

sue.payne@emory.edu                                katherine.koops@emory.edu

June 20, 2017 | Permalink

Monday, June 19, 2017

David Mamet's Last-Minute License Term

 

Puyallup High School Auditorium.jpg
Public Domain, Link

This story is a few weeks old, but I think it's an interesting one still deserving of discussion. Apparently, one of the terms of licensing one of David Mamet's plays to perform is that the theater not host any "talk backs" within two hours of the show. It's interesting to me first because talk backs are fairly common within the theater industry, and I'm not sure most theater companies would assume there were restrictions around them. This makes me wonder if other playwrights have similar policies and how much theater companies check into those specific terms. 

Another thing that struck me about this, though, was that apparently this talk-back-prohibiting term was not in the original terms of the license. The theater company detailed in the article received a new contract with the new licensing term just four hours before the show opened. Do we think that was a valid modification of the original license terms? There is no discussion of this in the article, but do you think that the theater company, threatened with fines of $25,000, felt compelled to agree to the new term after having sold tickets and invested time in rehearsing the play? Was the new term in that license enforceable? 

Finally, apparently Mamet's agent will ensure that the clause is included in license terms from this point on. Generally, parties can enter into any contractual terms they wish (within certain bounds of reason). Presumably if Mamet's no-talk-back provision is disliked by theater companies, Mamet's plays could fall out of fashion and the market could handle the situation. However, if other playwrights start demanding similar terms, then there might not be as much pushback from the theater companies. So far it seems that Mamet's clause just prohibits discussion within two hours of completion of the play, so that could allow an enterprising theater company to just hold a talk back two and a half hours later. It could be interesting to see what effect, if any, this situation has on theater talk backs going forward. Anyway, it was an interesting little contract story, so I thought I'd pass it along. 

(h/t to Rebecca for bringing the article to my attention!)

June 19, 2017 in Commentary, Current Affairs, In the News, True Contracts | Permalink | Comments (0)

Thursday, June 15, 2017

Weekly Top Ten SSRN Contracts and Commercial Law Downloads (June 15, 2017)

Top-ten-green

SSRN Top Downloads For SSRN Logo2
Contracts & Commercial Law eJournal

RECENT TOP PAPERS for all papers first announced in the last 60 days
16 Apr 2017 through 15 Jun 2017

Rank Downloads Paper Title
1 994 Surveying the Law of Emojis
Eric Goldman
Santa Clara University - School of Law
2 255 A New Perspective on FRAND Royalties: Unwired Planet v. Huawei
Jorge L. Contreras
University of Utah - S.J. Quinney College of Law
3 205 Henry Maine's 'Modern Law': From Status to Contract and Back Again?
Katharina Isabel Schmidt
Princeton University - Department of History, Students
4 158 In Defense of the Restatement of Liability Insurance Law
Tom Baker and Kyle D. Logue
University of Pennsylvania Law School and University of Michigan Law School
5 118 Presiding Over Municipal Bankruptcies: Then, Now, and Puerto Rico
Melissa B. Jacoby
University of North Carolina (UNC) at Chapel Hill - School of Law
6 113 Complexity, Standardization, and the Design of Loan Agreements
Bernhard Ganglmair and Malcolm Wardlaw
University of Texas at Dallas - Managerial Economics and University of Texas - Dallas
7 108 Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy
Hannah L. Buxbaum
Indiana University Bloomington Maurer School of Law
8 76 A New Dawn for the Law of Illegality
Andrew Burrows
University of Oxford - Faculty of Law
9 75 What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes
Jeffrey Lynch Harrison
University of Florida - Levin College of Law
10 73 Essentiality and Standards-Essential Patents
Jorge L. Contreras
University of Utah - S.J. Quinney College of Law

 

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

RECENT TOP PAPERS for all papers first announced in the last 60 days
16 Apr 2017 through 15 Jun 2017

Rank Downloads Paper Title
1 205 Henry Maine's 'Modern Law': From Status to Contract and Back Again?
Katharina Isabel Schmidt
Princeton University - Department of History, Students
2 113 Complexity, Standardization, and the Design of Loan Agreements
Bernhard Ganglmair and Malcolm Wardlaw
University of Texas at Dallas - Managerial Economics and University of Texas - Dallas
3 108 Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy
Hannah L. Buxbaum
Indiana University Bloomington Maurer School of Law
4 88 Delaware's Fall: The Arbitration Bylaws Scenario
Lynn M. LoPucki
University of California, Los Angeles (UCLA) - School of Law
5 75 What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes
Jeffrey Lynch Harrison
University of Florida - Levin College of Law
6 70 Politicized Dispute Settlement in the Pre-Investment Treaty Era: A Micro-Historical Approach
Jason W. Yackee
University of Wisconsin Law School
7 66 Consumer Expectations in Digital Content Contracts – An Empirical Study
Madalena Narciso
Tilburg Law School
8 65 Paternalism and Contract Law
Péter Cserne
University of Hull
9 49 Customary Principles Regarding Public Contracts Concluded with Foreigners
Regis Bismuth
Sciences Po Law School (Ecole de Droit de Sciences Po)
10 47 Costs Allocation Under the Amended Indian Arbitration Law: A Critique
Badrinath Srinivasan
Independent

June 15, 2017 in Recent Scholarship | Permalink | Comments (0)

Disclaimer Saves a Faculty Handbook from Being Considered a Contract

I've blogged before about whether a faculty handbook creates a binding contract between a university and its faculty. A recent case out of Indiana, Dodson v. Board of Trustees of Indiana University, Court of Appeals Case No. 45A03-1611-CT-2703, found that disclaimers contained within the faculty handbook can protect it from being considered a binding contract. 

Dodson had alleged that she had been denied tenure in contravention of the faculty handbook, and that this constituted a breach of contract on behalf of the university. The university, however, pointed out that the handbook had a disclaimer that it was not be a construed as a contract, and as a result Dodson's claim failed. The disclaimer was evidence that the university never intended the handbook to be part of its contract with Dodson. 

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

Wednesday, June 14, 2017

Empirical Study Shows Diagrams Made a Contract Easier to Use and Understand

BrianNLarsonThis guest post highlights some fascinating empirical scholarship relating to business contracts and is written by my soon-to-be colleague, Brian N. Larson (at left). Brian will join Texas A&M University School of Law this fall as associate professor of law. He comes to Texas A&M from Georgia Institute of Technology, where he has been assistant professor of rhetoric and technical communication and founder of the Responsible End-User Licensing Lab. Enjoy! - MEB

_____________________________________________

Passera, A. Kankaanranta & L. Louhiala-Salminen, Diagrams in Contracts: Fostering Understanding in Global Business Communication, 60 IEEE Transactions on Professional Communication 118–146 (2017). Available from IEEE.

Stefania Passera and her colleagues performed an experimental study to assess the value of diagrams in a complex business-to-business contract. They provided 122 subjects, experts on contracts drawn from an international pool with a wide variety of mother tongues, two versions of the same commercial contract in English. They were identical except that the version the “treatment” group used included diagrams, and the one the “control” group used was text only. Participants performed location and comprehension tasks the researchers specified.

Here are the key takeaways:

  • The group using the version with diagrams found relevant information and solved comprehension tasks significantly more quickly than the control group.
  • The treatment group also performed tasks significantly more accurately than those using text-only contracts.
  • The previous two effects worked together, so participants in the treatment group performed with significantly higher efficiency (a function of objective performance and subjective, perceived mental effort) than the control group.
  • Cognitive style—whether the participant was a “visualizer” or “verbalizer”—did not interact with the treatment. In other words, cognitive style did not have a statistically significant effect on results, but the sample size here is probably too small to rule it out.

Given the study’s careful statistical analysis of data, it is a little disappointing that the authors did not report the sizes of the effects they measured. (Statistical significance is different than practical significance, after all.) Nevertheless, the study adds to an existing literature that supports the idea that good visual design improves comprehension and suggests that contracts are no exception to that rule.

Passera et al Fig8

Above: an excerpt of fig. 8 from the article shows an example of a diagram accompanying text.

The study leaves unexplored two issues important for law professors: (1) How can lawyers and law students acquire the communicative competence to create effective contract diagrams? (2) In the absence of that competence, what happens if the text and diagram appear to be at odds?

- Brian N. Larson

June 14, 2017 in Recent Scholarship | Permalink | Comments (1)

Tuesday, June 13, 2017

5-hour ENERGY + 3-year delay could = laches

5-hour ENERGY is one of those products that I feel like an entire class could be built around. I already teach a couple of 5-hour ENERGY cases in trademark, and here's a contracts case (that seems to also have patent and trade secret implications). The case is Innovation Ventures, LLC v. Custom Nutrition Laboratories, LLC, Case No. 12-13850 (behind paywall), out of the Eastern District of Michigan. 

The heart of the allegations currently at issue in this most recent litigation revolve around a previous settlement agreement between the parties, under which the defendant agreed not to use certain 5-hour ENERGY ingredients in any formulas for other energy shots. The defendant didn't deny that it did in fact use those prohibited ingredients. However, it raised a laches defense to try to shield it from liability, alleging that the plaintiff delayed filing the lawsuit for three years, during which the defendant was openly using the ingredients at issue, with the plaintiff's knowledge. During the time period that the plaintiff delayed suit, the defendant alleged that it developed and sold other products that it would have developed differently had the plaintiff indicated that it had an issue with the defendant's activities. The plaintiff's response, however, was that, because it brought suit within the applicable statute of limitations, laches can't apply. 

The plaintiff's argument was unavailing. The court noted that Michigan had again and again reiterated that statute of limitations not having run alone cannot be enough to defeat a valid laches defense. The defendant alleged that the plaintiff knew that the defendant was selling products with the prohibited ingredients and sat back and waited for more products to be developed and further damages to accrue before bringing suit. This behavior, if true, could support a finding of laches. 

(There were lots of other issues, allegations, and defenses in this litigation. I've focused on this one small piece.)

June 13, 2017 in Food and Drink, Recent Cases, True Contracts | Permalink | Comments (1)

Monday, June 12, 2017

Adding to Quatar’s Woes: Loss of FIFA Soccer Contract?

On Monday June 5, 2017, Saudi Arabia, Egypt, Bahrain, Yemen, Libya, the United Arab Emirates and the Maldives all severed diplomatic ties with Qatar. While only a small period of time has passed, the small Arab nation has been left with some pressing issues. Almost immediately the people of Qatar rushed to supermarkets to stock up on food. Many fear that with their only land border shut (that between Qatar and Saudi Arabia), food supplies will run short and prices will skyrocket. The Philippines have already begun restricting migrant workers from going to Qatar for fear that migrant workers will be more marginalized if food shortages become an issue in a country that does not produce any of its own food. Migrant workers have been a source of conflict in Qatar for years and this current crisis could worsen or better the landscape. Unknown

On December 2, 2010, Qatar became the first Middle Eastern country to win a World Cup bid. That World Cup is set for 2022. In preparation, massive construction projects have begun in Doha and the surrounding area, including building new stadiums, renovating old ones, building new ports and rail systems, and renovating current city areas to make Qatar appear a modern metropolis in the heart of a desert. While all of that sounds good, it has come at a steep humanitarian cost. Many migrant workers have died and many modern governments have reprimanded Qatar for its inhumane treatment of people. Unknown

However, the current climate of Qatar is one of isolation from its neighbors—Emirates and Etihad airlines have ceased all travel to Qatar. Migrant workers are already starting to lose jobs. While FIFA, the governing body of soccer worldwide, has stated that the World Cup will continue as planned, if construction materials and workers cannot enter the country, the small country cannot hope to continue hosting the World Cup. No country has ever lost a FIFA World Cup contract after being awarded the bid, but the consequences could be astronomical. Qatar is looking to spend almost $200 billion for the World Cup, and while not all or even most of that money will be recovered by hosting the event, there is an expectation of gain for local businesses and hopefully an increase in tourism following the event. Without the World Cup, Qatar would be out the money and potentially enter a massive contract suit with FIFA. Currently, we can only wait and see how the situation works itself out, but it will be at the forefront of many people’s minds until the current diplomatic situation is resolved.

June 12, 2017 in Commentary, Current Affairs, Sports | Permalink | Comments (0)

Thursday, June 8, 2017

Weekly Top Ten SSRN Contracts and Commercial Law Downloads (June 8, 2017)

Top10-Electric

 

SSRN Top Downloads For SSRN Logo2
Contracts & Commercial Law eJournal

RECENT TOP PAPERS for all papers first announced in the last 60 days
9 Apr 2017 through 8 Jun 2017

Rank Downloads Paper Title
1 954 Surveying the Law of Emojis
Eric Goldman
Santa Clara University - School of Law
2 242 A New Perspective on FRAND Royalties: Unwired Planet v. Huawei
Jorge L. Contreras
University of Utah - S.J. Quinney College of Law
3 201 Henry Maine's 'Modern Law': From Status to Contract and Back Again?
Katharina Isabel Schmidt
Princeton University - Department of History, Students
4 156 In Defense of the Restatement of Liability Insurance Law
Tom Baker and Kyle D. Logue
University of Pennsylvania Law School and University of Michigan Law School
5 138 Boilerplate's False Dichotomy
James Gibson
University of Richmond School of Law
6 114 Presiding Over Municipal Bankruptcies: Then, Now, and Puerto Rico
Melissa B. Jacoby
University of North Carolina (UNC) at Chapel Hill - School of Law
7 111 Complexity, Standardization, and the Design of Loan Agreements
Bernhard Ganglmair and Malcolm Wardlaw
University of Texas at Dallas - Managerial Economics and University of Texas - Dallas
8 104 Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy
Hannah L. Buxbaum
Indiana University Bloomington Maurer School of Law
9 73 What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes
Jeffrey Lynch Harrison
University of Florida - Levin College of Law
10 68 Essentiality and Standards-Essential Patents
Jorge L. Contreras
University of Utah - S.J. Quinney College of Law

 


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

RECENT TOP PAPERS for all papers first announced in the last 60 days
9 Apr 2017 through 8 Jun 2017

Rank Downloads Paper Title
1 201 Henry Maine's 'Modern Law': From Status to Contract and Back Again?
Katharina Isabel Schmidt
Princeton University - Department of History, Students
2 138 Boilerplate's False Dichotomy
James Gibson
University of Richmond School of Law
3 111 Complexity, Standardization, and the Design of Loan Agreements
Bernhard Ganglmair and Malcolm Wardlaw
University of Texas at Dallas - Managerial Economics and University of Texas - Dallas
4 104 Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy
Hannah L. Buxbaum
Indiana University Bloomington Maurer School of Law
5 81 Delaware's Fall: The Arbitration Bylaws Scenario
Lynn M. LoPucki
University of California, Los Angeles (UCLA) - School of Law
6 73 What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes
Jeffrey Lynch Harrison
University of Florida - Levin College of Law
7 68 Politicized Dispute Settlement in the Pre-Investment Treaty Era: A Micro-Historical Approach
Jason W. Yackee
University of Wisconsin Law School
8 60 Consumer Expectations in Digital Content Contracts – An Empirical Study
Madalena Narciso
Tilburg Law School
9 57 Paternalism and Contract Law
Péter Cserne
University of Hull
10 55 Hybrid Transactions and the Internet of Things: Goods, Services, or Software?
Stacy-Ann Elvy
New York Law School

June 8, 2017 in Recent Scholarship | Permalink | Comments (0)

Wednesday, June 7, 2017

Looking for Some Unambiguous Insurance Policy Language? Here's Some

Insurance contracts often provoke disputes over language interpretation. A recent case out of West Virginia, Erie Insurance Property & Casualty Co. v. Chaber, No. 16-0490, overturns on appeal the lower court's finding of ambiguity, declaring that the language at issue was in fact unambiguous.

The Chabers had an insurance policy that excluded "earth movement," which was defined as including "landslide . . . whether . . . caused by an act of nature or . . . otherwise caused." Soil and rock slid down a hill behind the Chabers' property and damaged it. The insurance company refused to pay out, pointing to the exclusion of landslides. The Chabers alleged that the landslide was caused by improper excavation, not natural causes, and thus shouldn't have been excluded under the policy. The lower court found that the insurance policy was ambiguous, and that the Chabers might have expected that landslides caused by actions of humans were covered. The appellate court, however, disagreed. 

The appellate court found that previous cases had found ambiguity in insurance policies that excluded events arising "from natural or external forces." In contrast, the Chabers' insurance policy language was the much more general "act of nature or . . . otherwise caused," losing the word "external" that had been considered ambiguous. The language in the Chabers' policy was relatively new but the few courts that had considered it had found it to be unambiguous. Therefore, the appellate court found the policy was unambiguous and covered landslides, whether human-triggered or naturally occurring. 

I always find it interesting when courts disagree regarding ambiguity, because the very fact of courts disagreeing seems to indicate ambiguity! However, this policy does seem to be unambiguous in its breadth of exclusions. Possibly the lower court just felt bad for the Chabers. 

June 7, 2017 in Commentary, Recent Cases, True Contracts | Permalink | Comments (0)

Monday, June 5, 2017

Prince's Music: More Contract Disputes

I've already blogged about the contractual disputes around the music that the late artist Prince left behind when he died unexpectedly. They continue with another case in the District of Minnesota, Paisley Park Enterprises, Inc. v. Boxill, Case No. 17-cv-1212 (WMW/TNL). In this dispute, Boxill, a consultant and sound engineer who worked with Prince, had announced that he would release five Prince recordings in his possession on the anniversary of Prince's death. Prince's estate sued, seeking a preliminary injunction against the release, which the court granted. One of the causes of action revolved around the Confidentiality Agreement that Boxill had entered into with Prince. Under the terms of the agreement, Boxill was allowed to enter Prince's home and work with Prince and disclaimed any property interest connected with this work. Yet when Prince's estate demanded return of the recordings in Boxill's possession, he refused to turn them over. This was sufficient to demonstrate a likelihood of success on the merits for breach of the contract. 

Boxill's main argument was that the Confidentiality Agreement only covered his work consulting on the remodel of Prince's music studio; the Confidentiality Agreement did not cover Boxill's work as a sound engineer recording music with Prince. Boxill's reasoning on this was that the Confidentiality Agreement prohibited him recording any of Prince's performances, but he was required to do so when he was working with Prince as a sound engineer. The Prince estate's response to this was that it had waived the recording portion of the Confidentiality Agreement but the rest stayed in force and covered all of Boxill's activities. The Court concluded that either interpretation was plausible, and that Prince's estate had a "fair chance" of prevailing on the merits. 

A motion to dismiss is currently pending in the case, so we'll see what happens!

June 5, 2017 in Celebrity Contracts, Current Affairs, In the News, Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Sunday, June 4, 2017

Morals Clauses in NFL Contracts

The morals clause originated with the Fatty Arbuckle case in 1921.   Roscoe "Fatty"Arbuckle, a silent film star, just signed to a $3 million contract, was charged with manslaughter in the death of actress Virginia Rappe.  Arbuckle was ultimately acquitted by a jury, but his reputation was destroyed by the publicity.  Theaters canceled showings of his film, Crazy to Marry, and his career never recovered costing the studio millions.  

The NFL issues with player misconduct have been well documented.  Not only is the image of the League harmed by such instances, but individual teams may pay out millions to players not on the field.  The Dallas Cowboys have had several suspended players the past couple of seasons.   

The NFL has a Player Misconduct Policy.  NFL contracts may also include a "conduct detrimental to the team" type of clause.  By way of example, a copy of Arian Foster's contract with the Houston Texans can be found here.  With respect to personal conduct, the contract provides that "if Player has engaged in personal conduct reasonably judged by Club to adversely affect or reflect on Club, then Club may terminate this contract."  This is very broad language as opposed to the specificity in other morals clauses.  For comparison, Professor Eric Goldman has posted sample morals clauses on his website.  

Teams already indirectly address such circumstances in individual player negotiations.  In 2012, the then-St. Louis Rams drafted a player with off the field concerns.  Janoris Jenkins's rookie contract negotiations included discussions with the Club for him to use a financial adviser.  Greg Hardy's contract with the Dallas Cowboys included bonuses for games played in order to address his suspension.  While subject to renegotiations with the NFL Players Association, teams could use a form of morals clause tied to salary cap relief.  However, such a scenario could more likely lead to abuse from teams seeking to get out of a bad contract.

June 4, 2017 | Permalink | Comments (0)

Friday, June 2, 2017

You Must Be Joking . . . Ha Ha Ha

While the film Suicide Squad was a commercial hit with mixed critical reception, one fan threatened to sue Warner Bros. for false advertising.  The film's marketing campaign allegedly used deleted footage of The Joker to his chagrin.  The controversy over the cut footage involving the iconic DC villain has been well documented.  

Analyzing this from a contract law perspective, the situation appears to be more of an alleged breach.  The studio made its offer to enter into a contract in the form of the purchase of a movie ticket.  There was no meeting of the minds because our injured party entered into the contract for a Joker movie.  It delivered a film emphasizing the Suicide Squad, not the Clown Prince of Crime (although he still figures prominently into the story).  The systemic problem here is that the "contract" is for a film.  Warner Bros. fulfilled its contractual promise by providing the movie going experience.  It would probably be easier to just ask for your money back.

 

June 2, 2017 | Permalink | Comments (0)

Thursday, June 1, 2017

Central States Law Schools Association 2017 Scholarship Conference Coming October 6-7, 2017

Souther Illinois U - entrance

Calling all scholars in contracts and commercial law!  And yes, scholars in other disciplines that we on this blog may find somewhat less interesting.

Mark your calendar now. The Central States Law Schools Association 2017 Scholarship Conference will be held on Friday, October 6 and Saturday, October 7 at the Southern Illinois University School of Law in Carbondale, Illinois.

CSLSA LogoCSLSA is an organization of law schools dedicated to providing a forum for conversation and collaboration among law school academics. The CSLSA Annual Conference is an opportunity for legal scholars, especially more junior scholars, to present working papers or finished articles on any law-related topic in a relaxed and supportive setting where junior and senior scholars from various disciplines are available to comment. More mature scholars have an opportunity to test new ideas in a less formal setting than is generally available for their work. Scholars from member and nonmember schools are invited to attend.

Registration will formally open in July, but the special hotel blocks and rates are now available for reservation:

Holiday Inn Conference Center
$109/night
To reserve a room, call 618-549-2600 and ask for the SIU School of Law rate or book online and use block code SOL.
Note: SIU School of Law will provide shuttle service to and from the Holiday Inn & Conference Center for conference events.

Marion Holiday Inn Express
$107/night
To reserve a room, call (618) 993-5602 and ask for the SIU School of Law rate.
Shuttle service will not be available.

For more information as it becomes available, consult the CSLSA Website.

 

June 1, 2017 in Conferences | Permalink | Comments (0)

Weekly Top Ten SSRN Contracts and Commercial Law Downloads (June 1, 2017)

TopTen Stamp-808x455

 

SSRN Top Downloads For SSRN Logo2
Contracts & Commercial Law eJournal

RECENT TOP PAPERS for all papers first announced in the last 60 days
2 Apr 2017 through 1 Jun 2017

Rank Downloads Paper Title
1 906 Surveying the Law of Emojis
Eric Goldman
Santa Clara University - School of Law
2 229 Directors’ Duties and Legal Safe Harbours: A Comparative Analysis
Matthew Conaglen and Jennifer G. Hill
The University of Sydney Law School and The University of Sydney Law School
3 225 A New Perspective on FRAND Royalties: Unwired Planet v. Huawei
Jorge L. Contreras
University of Utah - S.J. Quinney College of Law
4 195 Henry Maine's 'Modern Law': From Status to Contract and Back Again?
Katharina Isabel Schmidt
Princeton University - Department of History, Students
5 146 In Defense of the Restatement of Liability Insurance Law
Tom Baker and Kyle D. Logue
University of Pennsylvania Law School and University of Michigan Law School
6 134 Boilerplate's False Dichotomy
James Gibson
University of Richmond School of Law
7 113 Presiding Over Municipal Bankruptcies: Then, Now, and Puerto Rico
Melissa B. Jacoby
University of North Carolina (UNC) at Chapel Hill - School of Law
8 97 Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy
Hannah L. Buxbaum
Indiana University Bloomington Maurer School of Law
9 94 Complexity, Standardization, and the Design of Loan Agreements
Bernhard Ganglmair and Malcolm Wardlaw
University of Texas at Dallas - Managerial Economics and University of Texas - Dallas
10 77 The Many Faces of Contractual Consent
Orit Gan
Sapir Academic College - School of Law

 

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

RECENT TOP PAPERS for all papers first announced in the last 60 days
2 Apr 2017 through 1 Jun 2017

Rank Downloads Paper Title
1 195 Henry Maine's 'Modern Law': From Status to Contract and Back Again?
Katharina Isabel Schmidt
Princeton University - Department of History, Students
2 134 Boilerplate's False Dichotomy
James Gibson
University of Richmond School of Law
3 97 Determining the Territorial Scope of State Law in Interstate and International Conflicts: Comments on the Draft Restatement (Third) and on the Role of Party Autonomy
Hannah L. Buxbaum
Indiana University Bloomington Maurer School of Law
4 94 Complexity, Standardization, and the Design of Loan Agreements
Bernhard Ganglmair and Malcolm Wardlaw
University of Texas at Dallas - Managerial Economics and University of Texas - Dallas
5 77 The Many Faces of Contractual Consent
Orit Gan
Sapir Academic College - School of Law
6 76 Delaware's Fall: The Arbitration Bylaws Scenario
Lynn M. LoPucki
University of California, Los Angeles (UCLA) - School of Law
7 71 What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes
Jeffrey Lynch Harrison
University of Florida - Levin College of Law
8 67 Politicized Dispute Settlement in the Pre-Investment Treaty Era: A Micro-Historical Approach
Jason W. Yackee
University of Wisconsin Law School
9 59 The Lost Volume Seller, R.I.P.
Victor P. Goldberg
Columbia Law School
10 56 Consumer Expectations in Digital Content Contracts – An Empirical Study
Madalena Narciso
Tilburg Law School

June 1, 2017 in Recent Scholarship | Permalink | Comments (0)

Wednesday, May 31, 2017

Alleging Medical Necessity Under a Health Insurance Contract

We are by now probably all familiar with the modern phenomenon of GoFundMes to cover medical care. Those funds likely aren't just to cover situations where the parties didn't have health insurance, but also situations where the parties did have health insurance and the health insurance refused to pay. Sometimes because of the terms of the particular health insurance policy, but also sometimes without adequate justification. A recent case out of the Southern District of Florida, Grewal v. Aetna Life Insurance Co., Case No. 17-cv-80318-MIDDLEBROOKS (behind paywall), seems like the latter situation, based on the allegations of the complaint. 

Grewal, who had Aetna health insurance, also had a six-year-old son, A., who became seriously and unexpectedly ill. He was eventually diagnosed with a rare and very dangerous condition that required long-term care and inpatient rehabilitation. A.'s doctors determined that he should be transferred to a different hospital that could properly treat A. The hospital where A. had been was unable to handle the specialized care A.'s condition required. (In fact, there were allegations the hospital had allowed A. to lay in his own vomit for long periods of time, which seems...alarming???)

Aetna refused to clear A.'s flight transfer, finding that it was not medically necessary, but A.'s condition grew increasingly serious, so A.'s father decided to go through with the flight. He then filed a claim with Aetna to pay for the flight, which Aetna refused within days, without examining A. or the hospitals in question. This refusal left A.'s father with a bill over $300,000. 

Aetna's motion to dismiss required the court to determine if the complaint had sufficient allegations that A.'s flight between hospitals was indeed "medically necessary." And the court determined that it did. The complaint alleged that, at the time that A. was transferred, ground transportation was unsafe because of the seriousness of A.'s condition. Therefore, if A. had to be transported, it had to be by flight. And the complaint further alleged that A.'s current hospital was so inadequate to treat A. that it was a life-threatening situation for A. Finally, the complaint alleged that A.'s doctors, those medical professionals most familiar with A.'s condition, recommended the flight transfer. Those allegations were all sufficient to establish that the transfer was "medically necessary" and thus covered by the health insurance policy. Therefore, taking the facts in the complaint as true, a breach of contract was alleged. 

We'll see how this case plays out, but I can't help but feel intense sympathy for A.'s father, having to make this decision. Imagine your six-year-old son being suddenly, unexpectedly, very seriously sick, and your son's doctors saying he needed to be transferred to have any chance at recovery. How rational do you think you would be dealing with your insurance company in your situation? Would you really consider it time to have a debate over contractual language? 

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

Tuesday, May 30, 2017

Circumstances Where a State-Owned Enterprise Can Declare Force Majeure Based Upon the Actions of Its Own State

In contract law, a party may be discharged from its obligations under a contract where an unforeseen event prohibits continued performance.  This is referred to as a force majeure or "Act of God."  My article, The Ability of a State-Owned Enterprise to Declare Force Majeure Based Based Upon Actions of the State, discusses the unique circumstances in private international law where a State-owned enterprise is able to avail itself of a force majeure clause in a contract by the actions of its own State.  Such a situation is not prohibited under the law as State-owned companies are generally treated as any other private entity.  

However, arbitration panels views these situations with circumspect, and will closely scrutinize the circumstances surrounding the events.  They weigh three factors to determine whether the State enterprise may be discharged from performance.  As discussed in the article, they are:

(1) the state enterprise must possess a legal identity distinct from that of the state in commercial transactions; (2) the state enterprise must not be in collusion with the host state to bring about the action that precipitated the force majeure; [or] (3) the action of the host state must be either an act of state or a political decision of national sovereignty outside of the state’s purely pecuniary interest in the commercial transaction.

The concern is that States will collude with their wholly owned companies to get out of unfavorable contract situations leading to inequitable results.  

May 30, 2017 | Permalink | Comments (0)