November 30, 2004
From the archives of the Department of Contract Musicology comes another classic from Cheryl Preston (BYU), this one about everyone's favorite unnaturally hirsute appendage. (To hear the tune, click here.)
lyrics by Cheryl B. Preston
music by George Weiss, Hugo Peretti, and Luigi Creatore
[to the tune of I Can’t Help Falling in Love With You by Elvis Presley]
Wise men say
Only fools rush in.
But I couldn't help
Letting you operate.
Shall I sue?
Would it be a sin
If I can't bear
What you've done to it?
Like a furry bear
Covered all with hair.
Darling so it goes . . . .
This thing's not meant to be.
Take my hand,
Take my whole life too.
But I can't help
Filing a big lawsuit.
I've a major scar
Scratched across my heart.
Darling so it goes . . . .
Some things aren't meant to be.
Fix my hand;
Fix my whole life too.
For I can't help
Filing a big lawsuit.
For I can't help
Filing a big lawsuit.
Today in history—November 30
800: Ambassadors from Caliph Haroun al-Raschid present the keys to the Holy Sepulcher to King Charles the Great of the Franks, as part of an agreement to a Frankish protectorate over the Christians of Jerusalem
1016: King Edmund II (Ironside) dies suddenly at the age of 27, leaving England to the Norse dynasty founded by Canute.
1794: The German legal scholar Ferdinand Walter, author of System des deutschen Privatrechts (1855); is born in Wetzlar.
1866: At a cost of $500,000 (around $5.7 million in today’s dollars) the first highway tunnel under a river is completed in Chicago. The Chicago River tunnel is a quarter-mile long.
1875: The new post-Civil War Missouri Constitution comes into effect.
1886: A big advance in the commercialization of sex is made with the first Folies Bergere revue in Paris. The place had been producing operettas and such, but the success of the Revue demonstrated that scantily clad women were much more profitable.
1891: Pope Leo XIII issues Rerum Novarum (sometimes called "On the Condition of the Working Classes") an encyclical on the rights of workers in a capitalist society:
The oppressed workers, above all, ought to be liberated from the savagery of greedy men, who inordinately use human beings as things for gain. Assuredly, neither justice nor humanity can countenance the exaction of so much work that the spirit is dulled from excessive toil and that along with it the body sinks crushed from exhaustion. The working energy of a man, like his entire nature, is circumscribed by definite limits beyond which it cannot go.
1907: The Pike Place Market is dedicated in Seattle.
1954: Elizabeth Hodges of Sylacauga, Alabama, is hit by a meteorite that rips through the roof of her house while she is sleeping. She gets a "nasty bruise." Funny, but she doesn't seem to have sued anyone over it.
1960: A major step in the history of the Sport Utility Vehicle is taken with the introduction of the International Harvester Scout 4x4, the first true challenger to the Jeep.
1988: The RJR Nabisco board decides to accept the $25 billion dollar buyout offer from the leveraged buyout firm of Kohlberg, Kravis & Roberts.
1993: Restrictions on the sale of hand guns go into effect, requiring five-day waiting periods and background checks of purchasers.
"Reap What You Sow," not "Eat What You Kill"
No one who has ever practiced or observed law in a small town is likely to credit Milton Regan’s thesis that "deep, pervasive conflicts of interest" are somehow especially prevalent in modern large-scale corporate practice. But his new book Eat What You Kill is certainly of interest as a cautionary tale of how a seemingly intelligent lawyer can be so driven by success that he winds up losing everything and going to prison.
It’s also a useful lesson (which can't be repeated too often) about how something that appears to be a trivial and technical violation can—after the thing blows up and someone is howling for blood—become an indictable offense.
New and very expensive books from Ashgate
A new catalogue from British publisher Ashgate is printed in type far too small for a fat, middle-aged bespectacled law professor to read—we suspect their graphics designer moonlights doing boilerplate contract clauses for Gateway. The web site is a little easier to read.
In a forthcoming volume, Hobbes on Law (edited by Claire Finkelstein)—due out next March—there are three essays on Hobbes’s theory of contracts, by Grover Robinson, M.T. Dalgarno, and Larry May. At 560 pages and $137.95, Hobbes (left) is a bargain compared to its companion Kant on Law (edited by Sharon Byrd and Joachim Hruschka), which contains Byrd’s essay on Kant’s theory of contracts. The Kant work weighs in at 500 pages but a hefty $245.
Philosophy can’t hold a candle to the Internet, though—Brian Fitzgerald’s two-volume Cyberlaw is marked at a healthy $450, although it, too, only runs around 500 pages.
Dawson named associate dean
The University of Florida’s "Report from the Faculty" in the mail today notes that George Dawson has taken over as associate dean for academic affairs, a position he previously held from 1996-2000. Congratulations.
This week's AP law school rankings
The nation's top law schools this week, ranked by the Associated Press:
1. University of Southern California
2. University of Oklahoma
3. University of California–Berkeley
4. University of Utah
5. University of Texas
6. University of Louisville
7. University of Georgia
8. University of Miami
9. University of Iowa
10. Louisiana State University
11. University of Michigan
12. University of Tennessee
13. Florida State University
14. University of Wisconsin
15. University of Virginia
16. University of Pittsburgh
17. University of Florida
18. Arizona State University
19. Boston College
20. Texas Tech University
21. Ohio State University
22. University of West Virginia
23. University of Toledo
24. University of Colorado
25. University of Memphis
Rankings are based on performance of the school's football team, which is probably as good a measure as any.
Frisco hotel strike over
You've probably already heard by now, but the San Francisco hotel strike that threatened to disrupt some of the activities at the AALS Annual Meeting is on hold. The Mother Ship is back on course with meetings scheduled at the Hilton San Francisco (left). If you haven't registered yet, you can drop by the AALS web site to sign up.
November 29, 2004
Barnett isn't stoned, but court is stony
Bob Dylan famously remarked once that "Everybody must get stoned," but that fate didn't befall Randy Barnett (Boston University) at today's argument before the Supreme Court in the medical marijuana cases. The story is here.
Initial reports suggest that it may be a tough sell, since the conservatives don't like marijuana and the liberals don't like federalism . . . .
Today in history—November 29
1484: Tomás de Torquemada, first Inquisitor General of Spain, convenes an assembly of inquisitors to present the statute governing their activities.
1780: Maria Theresa, the great Habsburg empress who created the first supreme court for the Empire, dies from a cold caught while hunting in the rain.
1781: The famed Jesuit law school at the University of Innsbruck is closed when the university is suppressed by Emperor Joseph II.
1868: Pierre-Antoine Berryer, the eminent French advocate avocat, dies at Augerville. Berryer was so gifted as an advocate that he lectured on eloquence at the Société des Bonnes Etudes and famous actors studied his style. His secret? "The ex tempore speaker has repeated the same thing to himself twenty or a hundred times."
1870: Compulsory education is announced in the United Kingdom.
1933: The Pennsyvania state government begins its liquor monopoly, opening the first state liquor stores. People in Philadelphia can drive to Delaware or Jersey, but those in Pittsburgh are stuck.
1942: The U.S. government for some reason decides to ration coffee, although there is no shortage. A black market immediately develops, and rationing is halted in 1943.
1948: The first Australian car is produced, the Holden FX. Holden is still going strong.
1962: In one of the great pieces of Anglo-French commercial cooperation, the two countries agree to jointly develop and deploy the Concorde supersonic airliner.
1973: Reeling Chrysler Corp. announces plans to halt production at seven plants and lay off as many as 38,000 workers.
1975: Baseball free agency is heating up, as outfielder Reggie Jackson signs with George Steinbrenner’s New York Yankees.
And they say business law isn't sexy
There are relatively few sales-related legal questions that involve constitutional law, but our colleagues over at AntitrustProf have spotted one: state restrictions on on-line sales of wine. Booze, the Internet, the Constitution—maybe we can get on TV, too.
Mark your calendars
As usual, Lawrence Solum has the week’s schedule of legal theory related workshops and presentations over at the Legal Theory Blog—always a good place to start your Monday. Among the goodies are two of particular interest to Contracts teachers, both on Thursday, December 2.
At Yale, Elizabeth Warren of Harvard debunks the myth that today’s families spend too much on frivolous luxuries in a workshop presentation on The Over-Consumption Myth and the Other Tales of Economics, Law and Morality.
At the opposite end of the country, her colleague Steven Shavell presents The Law as a Remedy for the Problem of Contractual Holdup as part of the Stanford Law & Economics program.
Good faith as an “Empty Vessel”
The question of whether and how the state should impose "good faith" duties on contracting parties is obviously a hot issue in Contracts scholarship. Emily Houh (Cincinnati) offers a different take on the question in a new paper, The Doctrine of Good Faith in Contract Law: A (Nearly) Empty Vessel?, forthcoming in the Utah Law Review. Her ambitious goal "to re-conceive and reinvigorate the private law doctrine of good faith as one that might assist in effecting the public law norm of equality."
For the Abstract, click below.
Empty Vessel explores both the positive and normative questions of what the contractually implied obligation of good faith does and should require of contracting parties. The Article attempts to assess and evaluate the ways in which courts are currently employing the good faith doctrine in contract disputes, as part of a larger project whose goal is to re-conceive and reinvigorate the private law doctrine of good faith as one that might assist in effecting the public law norm of equality.
Empty Vessel identifies two dominant theoretical approaches to how to define good faith, which I refer to as the fairness (or, Restatement) and the economic (or, foregone-opportunities) approaches. Further, it argues that, to the extent courts have applied and/or referenced the economic and/or fairness models of good faith in their decisions, they have rendered the two approaches operationally and functionally indistinguishable by employing both approaches as analytical proxies for material breach. Empty Vessel is divided into three parts. Part I explains the good faith doctrine, and explores in some depth the theoretical differences between the fairness and economic approaches to good faith. By examining exemplary good faith decisions in the contexts of "vanilla" commercial contracting, commercial lending, contractor cases, and commercial real estate leasing, Part II argues that contemporary courts employ the good faith doctrine not as a truly implied contractual obligation, but as a rhetorical framework for analyzing underlying issues of what constitutes material breach.
In conclusion, Empty Vessel argues that the good faith doctrine might be given new life in two different ways: first, vis-a-vis its applicability to bad faith conduct in contract formation and negotiation (presently the obligation applies only to the performance and termination of contract); and, second, with respect to performance and termination, vis-a-vis its applicability in the employment context. While the scholarship relating to the former is quite rich, that relating to the latter remains relatively unexplored. As a result, I explore in other articles how good faith might be used in the employment context to remedy presently non-cognizable forms of discrimination.
Holday weekend roundup
Two new papers on the economics of contract intepretation and incomplete contracts.
A Mississippi litigant who refused to adhere to a forum selection clause loses an $80 million jury verdict.
A real estate developer is pleased to discover that sometimes "clear and ambiguous" language really works.
Credit card companies breath easier after a court rules that British consumer protection laws don’t extend to overseas purchases.
ERISA does not bar hospitals for pursuing state breach of contract claims against union health care benefits groups.
November 28, 2004
Mississippi town pays plumber twice
The town of Gautier, Mississippi, will have to pay double for some plumbing work on the reconstruction of U.S. Route 90. The town, which owed $1,006 to Nelson Plumbing, accidentally paid the money to Nelson's subcontractor, Alabama Precast.
The problem arose because Alabama Precast filed a notice of lien with the town, which mistook it for a garnishment notice and paid the money over. Nelson may owe the money to the sub, but that's for the courts to sort out. In the meantime, the town will pay the $1,006 to Nelson, which is about 80 percent through the task of installing water and sewer lines for the highway project, and which had threatened to stop work as a result of the town's breach.
It's a smart move for the town—Nelson is already 5 months behind schedule and in the penalty phase of its contract.
Today in history—November 28
1520: One of the world’s great commercial voyages hits a milestone, as Ferdinand Magellan’s expedition emerges from All Saints Channel (now the Straits of Magellan) into the Pacific. Only one of the original five ships will make it back to Spain, but its cargo of 50,000 pounds of cloves will make the whole venture profitable.
1582: William (Merchant of Venice) Shakespeare marries Anne Hathaway.
1660: The Royal Society is formed in London.
1820: Friedrich Engels is born.
1907: A scrap metal dealer named Louis B. Mayer opens his first small movie theater in Haverville, Massachusetts. He later will be one of the founders of Metro-Goldwyn-Mayer and one of Hollywood’s most powerful men.
1929: Motown founder Berry Gordy, Jr., (left) is born in, well, Motown. In 1959 he'll borrow $800 to start the record label. First hit? Barrett Strong's Money (That's What I Want)—co-written by Gordy.
1963: The Beatles’ "I Want to Hold Your Hand" becomes the first record to sell a million copies before it’s even released
1988: Pablo Picasso’s "Acrobat & Harlequin" sells for $38.5 million.
1989: Outfielder Rickey Henderson signs a then-record $3 million-a-year contract with the Oakland A’s baseball team.
Mandatory arbitration clauses in employment: Assessing the risks
Clauses that require arbitration of all employer-employee disputes are becoming ever more common in employment contracts. In a new essay, A Risk-Based Approach to Mandatory Arbitration, Scott Baker (North Carolina) analogizes such clauses to property insurance—both are methods for reducing risk.
"Using a risk analysis," he writes, "the essay reexamines (1) the repeat player effect in arbitration, (2) why employers do so well in the litigation of discrimination disputes, and (3) the ‘adequacy’ requirement for arbitral forums. In particular, I consider whether mandatory arbitration accounts for the problems of moral hazard and adverse selection endemic to any risk management scheme."
November 27, 2004
Is it a gift or a contract?
As donors to colleges and universities seek to place more strings on their gifts, and to more vigorously enforce their desires, disputes between donors and recipients are becoming more common, reports the New York Times today. And the question whether the money arrives as a conditioned gift or as part of a contract -- treated almost 80 years ago by Chief Judge Cardozo in the classic case Allegheny College v. National Chautaqua County Bank of Jamestown, 159 N.E. 173 -- seems likely to be back on the table. As reported in the Times, Paul Glenn, a major donor to the University of Southern California, doesn't call what he does "giving" any more. "Instead, he likes to say that he strikes deals with universities for the betterment of humanity, then polices them with all the ardor of a businessman who has been burned, badly. . . We now know that there's got to be a quid pro quo here. This is not a donation. It's a contract, and both parties have to live up to it." Whether the courts will see a quid pro quo or a condition remains to be seen. In the meantime, colleges and their donors are drafting more precise agreements to govern at least the larger gifts, specifying more clearly the expectations of both parties to the transaction.
Real life exam question of the day
Singer Jennifer Lopez likes white rooms—we mean, really white rooms. The singer/actress’s contract rider specifies that she must be provided: “White room, white flowers, white tables and/or tablecloths, white drapes, white candles, white couches.”
These were part of her requirements for her work in making a “charity” video to benefit African AIDS victims. Unfortunately, the couch provided was apparently “greenish,” not white.
Questions: Since Lopez is donating her time, is there a contract between the parties? If so, is the greenish couch a material breach of the contract that would excuse Lopez from performing? If not, what damages should she receive for breach? If those damages would be inadequate, would she be entitled to specific performance? Would your answer change if the promoters could have given her a white couch, but put the greenish one in the room to annoy her?
Today in history—November 27
1703: James Delancey, the British chief justice of New York who presided over the prosecution of newspaper entrepreneur Peter Zenger, is born.
1746: Robert Livingston is born. The lawyer-turned-diplomat goes on to negotiate one of the biggest deals in U.S. history, the purchase of French Louisiana for $15 million—about $242 million in today’s dollars. He will also be one of the principal backers of Robert Fulton’s newfangled steamboat, and with Fulton will enjoy a legislative monopoly on steamboat travel on the Hudson.
1779: The College of Pennsylvania is promoted to the University of Pennsylvania.
1839: The American Statistical Association is organized in Boston. At least, we have detected a close correlation with this date.
1874: One of the great-grandfathers of the law and economics movement, historian Charles (An Economic Interpretation of the Constitution of the United States) Beard is born
1910: Pennsylvania Station, the largest railway station in the world, opens in New York. All the trains are late, setting a tradition.
1995: The nation’s biggest health care firm is formed by the merger of AmHS/Premier and SunHealth Alliance.
Your assignment, Mr. Phelps . . .
When do parties prefer that their contract obligations be assignable? When do they not? A new article by Jared Kramer, When Should Contracts be Assignable? An Economic Analysis, seeks to bring some rigor to the discussion, by analyzing the different situations under which parties may choose assignability or non-assignability.
The abstract follows.
This Article explores the economic logic of contracting parties' choice between making contract rights and obligations assignable and making them non-assignable. The analysis derives from the principle that parties will choose assignability, non-assignability, or something in between when that choice maximizes the joint value of the contract to the parties and therefore is mutually beneficial.
The Article proceeds by discussing the reasons why in certain contexts restricting assignment may be more valuable to the parties than allowing it. Three of the reasons involve contexts where assignment can harm the non-assigning party by decreasing the value of a performance received or increasing the cost of an obligation owed. First, this may occur when one party's desired conduct is costly or impossible to specify by contract. Second, it may occur when the effectiveness of remedies against a promisor varies among potential promisors. Third, it may occur when one party bears another's non-conduct-related risk. Two other reasons are not concerned with the cost or value of performance— parties may restrict assignment to facilitate price discrimination, or to avoid assignment's administrative costs.
The Article also discusses considerations that can make assignability particularly valuable—such as the ability to overcome holdout problems that could frustrate transactions; or long-term contracts where one party's valuation of the contract may change drastically over time. In discussing each consideration favoring or disfavoring assignability, this Article presents numerous examples of actual contracts, discussing whether these contracts restrict assignment, and why the parties would write them as they did. The result is a more comprehensive and nuanced explanation of actual practices in contract assignment than exists in the current literature.