Thursday, November 18, 2004
The various formulas by which courts purportedly calculate damages can be difficult to teach and confusing to students. In a forthcoming article in the AALS Contracts Newsletter, Jake Barnes (Seton Hall) and Debbie Zalesne (CUNY) offer a new and improved solution: the "surplus-based" approach to damages. The article is a handy guide; the theory is set out in an upcoming article in the Syracuse Law Review.
Click the link below for the full text.
A provision in the parties’ contract provided that a prevailing party would be entitled to attorneys’ fees "equal to 20% of the amount [determined to be] owing unless a court sets a smaller or larger fee." Massachusetts Superior Court Judge Mary-Lou Rup held that under the clause the plaintiff could recover $1,700 in legal fees plus another $370 in costs—leaving plaintiff only $430 worse off than if it had not sued.
Gibraltar Pools Corp. v. Matsuk, 2004 Mass. Super. LEXIS 355 (Mass. Super. Ct. Hampden, Oct. 1, 2004)
I was very impressed with the book . . . [which] uses graphs and flow charts to explain contracts concepts. For many years in contracts and other classes, I have used Venn Diagrams on the board and "sets" as we learned them in math class long ago. I have found these to be very helpful for many students. Some of my students have produced their own charts as well, engaging in the experience of internalizing the process of organizing the concepts. I asked Frank to write a brief description of his work for this column.
An at-will law firm associate who claims that his proffered $150,000 annual bonus was too small will have his chance to get to a jury. A New York appellate court has reinstated the claim by former Andreas & Berger associate Kevin Haverty that his work in winning a $3 million fee for the firm should have resulted in a higher bonus.
According to the New York Lawyer, Haverty was making $110,000 a year as an associate. The firm offered him a $150,000 bonus for his work, but Haverty rejected it as too "paltry." When the firm refused to go higher, Haverty quit and sued. Though he had no formal employment contract, the court held that he had the right to try to prove an implied contract for a bonus and to recover on quantum meruit grounds.
An 11-year-old boy who was promised a computer if he scored above a 94 on his schoolwork sued his mother when she reneged on the promise after he scored a 97.
The kicker is that this scenario didn’t even happen here in The Most Litigious Nation on Earth™—but in China. Apparently capitalism and denim jeans aren’t the only features of American culture that the Chinese are adopting.
The popular view of CEO employment contracts is that they are one-sided; the sycophants who populate the typical board give the top executive pretty much anything he or she wants.
Yet "despite all the ink spilled about executive compensation," write Stewart Schwab and Randall Thomas in a new paper, hardly anyone has actually examined these contracts systematically. Schwab and Thomas hope to rectify the omission in What Do CEOs Bargain For? An Empirical Study of Key Legal Components of CEO Employment Contracts. The study finds some things that both support and seem to conflict with the popular view.
It is a commonplace that similar kinds of activities activities can be organized within firms or between firms, and in the latter situation it is contract law that governs the relationship. A significant trend over the past twenty years has been the growth in outsourcing—turning to contractual relations to deal with business functions once done within the firm.
A new article from the Wharton Business School explores the process through an examination of IBM, which is trying to reinvent itself as a supplier of outsourcing services to other businesses.
Wednesday, November 17, 2004
It is one of the curious things about contract law that some of the most interesting cases involve the dullest of rules. There are few duller than the Parol Evidence Rule. And yet, as Hila Keren points out, the case that gave it birth is a fascinating story of love, death, and—well, deer.
Keren marks the 400th anniversary of the Parol Evidence Rule with a fascinating look back at The Countess of Rutland's Case. Click on the link below for the article.
A Burger King franchisee lost on a claim that it was harmed by the nearby arrival of a Wendy’s. The franchisee had bought land from Seller with a proviso that Seller would not sell land within 1,500 feet of the BK store to a competitor. But Seller subsequently sold land to a Wendy’s franchisee only 655 feet away.
Seller plainly breached its covenant, said the Florida First District Court of Appeal in a per curiam opinion. But dismissal of the franchisee’s claim was nevertheless appropriate because its damages evidence was too speculative. In addition to the new competition, the store’s profits were affected by several other things, including road construction, national marketing problems, and the store’s own internal operating difficulties.
A. R. Holland, Inc. v. Wendco Corp., 2004 Fla. App. LEXIS 14432 (Fla. Civ. App. 1st Dist. Oct. 1, 2004).
Singer Rod Stewart will have to return a $640,000 down payment and his business associates will have to pay more than $1 million in other damages after the singer was hit by a jury verdict in a breach of contract action.
The lawsuit arose out of a failed attempt to put together a Latin American tour. Under the proposed agreement, which was never signed, tour promoters were to pay Stewart $2.1 million. The promoters gave him a down payment of $780,000. When the tour did not materialize, Stewart refused to return the down payment, claiming that the promoters had failed to raised the necessary amounts.
A Los Angeles jury disagreed. According to a report by the Celebrity Justice web site, jurors did not believe there had been a final contract between the parties. One juror was quoted as saying that "without a signed deal, the jury felt Stewart shouldn't have kept the cash." Stewart's lawyer said the singer would appeal.
Things keep getting more complicated for pop star Michael Jackson. He's now been sued by a "former associate" for breach of contract.
J. Mark Schaffel Jackson says he's owed $3 million for money he loaned to Jackson and for work Schaffel did in a pro-Jackson documentary. Jackson used some of the borrowed money, says the plaintiff, to buy jewelry for Elizabeth Taylor.
Schaffel, ironically enough, was also the executive producer of Jackson's 2002 single, What More Can I Give? The answer, apparently, is $3 million.
Click the link below for the article.
Is a bill of lading that covers both ocean and overland transport a "maritime contract" subject to the liability limitations of federal admiralty law? Yes, says the U.S. Supreme Court in a recent opinion. The holds that a railroad was entitled under admiralty law to the liability limitations of the original shipping contract where the carriage involved both land and sea transportation.
In the case, goods were destroyed in a train wreck on the last leg of a trip from Australia to Alabama. The original contract contained a Himalaya clause that purported to limit the liability of any third party whose services were used to perform the shipment. The railroad argued that it was entitled to the limitation under admiralty law, because the goods included ocean transport.
Justice O’Connor, writing for the court, agreed. Privity of contract is not required before a carrier can benefit from a shipping contract's liability limitations. The default rule, she wrote, is that any intermediary involved in the transportation contract is acting as an agent of the cargo owner for the purpose of extending liability limits to downstream carriers.
Norfolk Southern Railway Co. v. James N. Kirby, Pty Ltd., No. 02-1028 (U.S. Nov. 9, 2004)
The increasing use of laptop computers in the classroom has created the phenomenon of students who engage in E-mail conversations, play solitaire, download sports scores, and do other things in class. The problem is not so much that students are not paying attention—there have always been students who didn’t pay attention—but that such activities are often highly distracting to other students.
In a new paper, Paul Caron and Rafael Gely argue that the response is not outlawing laptops, but rather using technology in the classroom to foster active student learning. The paper, Taking Back the Law School Classroom: Using Technology to Foster Active Student Learning is forthcoming in the Journal of Legal Education.
Tuesday, November 16, 2004
The Internet Corporation for Assigned Names and Numbers has countersued Verisign in the running dispute over which entity gets to offer the lucrative Site Finder and Waiting List services. Verisign, which has the ICANN contract to administer the domain-name function, previously sued ICANN, claiming that ICANN was violating Verisign’s agreement by offering the services itself in competition with Verisign.
In today’s action, ICANN claims that the contract that authorizes Verisign to administer the domain-name process does not permit Verisign to offer the services. The key to the dispute is what the contract means by "registry services"—a phrase that apparently was adopted before anyone realized how lucrative the add-on services could be.
ICANN also is seeking to have the dispute moved from a California court to arbitration before the International Chamber of Commerce.
From the forthcoming issue of the AALS Contracts Newsletter, the curious connections between the well-known promissory estoppel case of Feinberg v. Pfeiffer Co., Ernest Hemingway, the Warner-Lambert Pharmaceutical Company, Frank Lloyd Wright, Marisa Berenson, and The Metropolitan Museum of Art . . . .
Fullback Martin Croft, who retired recently, says that the club induced him to sign a performance-based contract on which he would be paid based on the number of games he played—and then assigned him to a minor league affiliate, the Werribee Tigers of the Victorian Football League, so that he had no opportunity to perform. The assignment came immediately after a remarkable five-goal performance in a game against the Kangaroos.
The AFL Players Association has decided to back Croft on the claim, which is the first in the history of a league that goes back to 1896.
Does the equation change when we are talking about intellectual property? This is a matter of some controversy, and David Rice (Roger Williams) weighs in on the topic in a new article, Copyright and Contract: Preemption After Bowers v. Baystate, just out in the Roger Williams University Law Review. Rice (left) makes the case that federal copyright law preempts and displaces contract law, and that courts who approve software "licenses" that extend the scope of copyright protection are failing to carry out Congressional intent. (No link available.)
Several contracts teachers will be on the panel this January in San Francisco for Taking Christian Legal Thought Seriously. The day-long session, sponsored by Law Professors’ Christian Fellowship, the Journal of Catholic Social Thought, and Lumen Christi, runs concurrently with the AALS program and will be held a few blocks away at the Hotel Monaco.
Unfortunately, the afternoon part of the proceedings conflicts with the Section's meeting, which is scheduled for 1:30 on Saturday.
Among the panelists are John Breen (Loyola-Chicago), James Gordley (UC Berkeley), Scott Pryor (Regent), and Mark Scarberry (Pepperdine).
The faculty news publication from Southern Cal notes the death of longtime contracts teacher and scholar David W. Carroll.
Carroll, who was 72, overcame childhood polio that left him a triplegic, to become a successful practicing attorney and law professor at Toledo. He spent four years teaching in Nigeria and Uganda, before joining the USC law faculty in 1975. He retired in 1992.