ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Saturday, December 4, 2004

Today in history—December 4

1154: Nicholas Breakspear becomes the first and only English pope, as Adrian IV.  He allegedly "gives " Ireland to the English King Henry II, but his reign is short and the documents on which the crown subsequently relies are questionable.

1674: The foundations of several great law schools are laid as Fr. Jacques Marquette, a Jesuit missionary, creates the first dwelling in what will become the city of Chicago.

1682: The Pennsylvania General Assembly holds its first meeting in Chester.

1781: The first Sunday newspaper, the Observer, is founded in Britain.  Comics come later.

1864: Jews in Romania are forbidden to practice law.

1902: The U.S. Senate confirms Oliver Wendell Holmes, Jr., to the Supreme Court.

1906: Seven new black students at Cornell University, aware that none of the black students from the previous year had returned, decide to create an organization for mutual support; they form the first black Greek fraternity, Alpha Phi Alpha.

Walter_johnson 1914: Baseball star Walter ("The Big Train") Johnson of the Washington Senators is threatened with a breach of contract action by team owner Clark Griffith, after Johnson accepts money from the Chicago Whales of the rival Federal League.

1961: The Museum of Modern Art hangs Matisse’s Le Bateau upside down. It is 47 days before someone notices.

1964: Major League Baseball votes to institute a free-agent draft.

1942: President Roosevelt disbands the Works Progress Administration; unemployment is no longer a problem.

1970 Speaking of departing news anchors, Frank Reynolds departs ABC News and co-anchor Howard K. Smith. Reynolds to Smith: "Due to circumstances beyond my control, the unemployment statistics rose yesterday."

1988: The Baltimore Orioles trade future Hall of Fame first baseman Eddie Murray to the Los Angeles Dodgers.

Pan_am 1991: Twenty-three years after director Stanley Kubrick showed it literally flying to the moon in his 2001: A Space Odyssey, Pan American airlines closes up shop.

2003: President Bush rolls back the protectionist steel tariffs he had previously imposed.

December 4, 2004 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Is steroid use a breach of a ballplayer's contract?

Barry_bonds Baseball is facing a neat little problem in contract construction in the wake of the steroid scandal, in which some prominent players, including seven-time-MVP Barry Bonds, left, have recently admitted using the performance-enhancing substances.

Some baseball teams are considering trying to cancel the contracts of some players who have allegedly used steroids—the New York Yankees and the huge contract of star infielder Jason Giambi have been mentioned.  But this may be a tough sell, even though it’s a good contracts hypothetical. The contract clauses at issue reportedly say:

The player must agree to keep himself in first-class physical condition and adhere to all training rules set by the club.

The use or misuse of illegal or prescription drugs can be interpreted to mean the player is not keeping himself in first-class physical condition.

The clubs, goes the argument, can claim that the players who used steroids "misused" the drugs, and thus they can "interpret" that as not keeping the player in "first-class physical condition."  One problem with the argument is that these are performance-enhancing substances, and the odds are that the players performed much better than they would have had they avoided the substances.  Bonds and a couple of allegedly steroid-using stars (Mark McGuire and Sammy Sosa) have annihilated the single-season home run record that had stood for nearly 40 years.  At least nine MVP awards in the past ten years have been won by admitted steroid users, and there are suspicions about others.

The players will presumably argue that the clause is meant to apply to things like cocaine or other drugs that cause players to perform at less than their peak.

December 4, 2004 in In the News | Permalink | Comments (1) | TrackBack (0)

Boston Scientific and former venutre partner battle over contract

Stent_2 The breach of contract dispute between two former venture partners is going forward.  Boston Scientific Corp. was sued in 2001 by Medinol, Ltd., which claims that Boston Scientific set up its own stent manufacturing facility in violation of the parties’ licensing agreement. Stents are tubes inserted into blocked arteries to unblock them.

The parties apparently had a five year relationship under which Boston Scientific agreed to be the distributor for Medinol’s Nir brand stents.  That relationship fell apart in 2000, and Medinol says Boston Scientific then copied Medinol’s machinery and set up its own competing manafacturing facility in Ireland.

Judge Alvin Hellerstein of the Southern District of New York this week dismissed counts for theft of trade secrets but ruled that Medinol's contract claims could go forward.  He set a hearing for January 13.

December 4, 2004 in In the News | Permalink | Comments (0) | TrackBack (0)

Friday, December 3, 2004

Interesting answer

This response to a classic contracts class hypothetical, from the law student blogger of When I Was Rational:

My contracts professor who loves to abuse the fact that I am not a morning person, threw me a scenario in class today. He had a friend who entered into a contract to buy a condo, contingent on her satisfaction with the terms of the condo rules. Well, after she had entered into that contract, she realized that in order to meet the mortgage payments on her condo, she would end up living in abject poverty. And my professor's question was, knowing the terms of the contract, what would my advice be to this woman if I were her lawyer.

And I said, (mildly grouchy due to having to be awake before noon) that she should just say she is dissatisfied, and leave it at that.

And the question then, is this an ethics violation?

I said no. For the reason that as long as my client keeps her mouth shut, and does not go blabbing the "ruse" around town, there is no way the condo board can prove that she was in fact satisfied with the terms of the condo rules.

December 3, 2004 in Teaching | Permalink | Comments (0) | TrackBack (0)

Today in history—December 2

1684: Scandinavian historian Ludvig Holberg, author of Introduction to Natural and Popular Law and regarded as the "father of Danish literature" is born at Bergen, Norway.

1818: Illinois is admitted to the Union as the 21st state.

1901: President Theodore Roosevelt harangues the House of Representatives, demanding that Congress enact new laws to control trusts.

1929: President Hoover tells Congress that the worst effects of the October stock market crash are over.  This is an overstatement.

1964: Some 800 students are arrested at the University of California-Berkeley after they take over the administration building.  Ah, those were the days, huh?

Steve_harris 1965: Actor Steve Harris (left), who plays partner Eugene Young on The Practice, is born

1967: The epitome of modern transportation luxury, the Twentieth Century Limited, completes its last run along the rails from from New York to Chicago.

1984: A leak rom a Union Carbide pesticide plant in Bhopal, Madhya Pradesh, India, kills more than 3,800 people injures up to 600,000 others.

1997: An international treaty prohibiting manufacturing, sale, and deployment of antipersonnel mines, is signed by 121 nations who mostly don’t use them anyway. The U.S. does not sign the agreement, but President Clinton says that America will stop using them except in places where we need to, like Korea.

December 3, 2004 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Thursday, December 2, 2004

She’s almost certainly going to cite Ortelere v. Teachers Retirement Board

Antoinette_millard The former investment banker who posed as a Saudi princess and Victoria’s Secret model and ran up $951,000 in debt to American Express has countersued the credit card company.  "Princess" Antoinette Millard (the one in the middle, at left) claims she was mentally incompetent when she opened her AmEx account, and says that the company "should have known she was acting impulsively and irrationally" because of "anorexia, depression, panic attacks, [and] head tumors."

Millard, who used the credit to live a lavish New York society lifestyle (for a while, anyway) is now free on bail after having been jailed for an attempted insurance fraud. AmEx sued her for the amount she owes; Millard is claiming $2 million in damages from the company for letting her get into such difficulties and for lying about how "flexible" the repayment terms would be.

December 2, 2004 in In the News | Permalink | Comments (0) | TrackBack (0)

Obligatory Christmas season story

Christmas_package Okay, it doesn’t have very much to do with contracts (though it does involve sales of goods) but a new paper from the good folks at the Wharton School in their Knowledge at Wharton E-letter, tells you what you already know: people don’t like the gifts you pick out as much as they like the stuff they choose themselves.

In The Efficiency of Gift Giving: Is It Really Better to Give than to Receive?, business prof Joel Waldfogel, among other things, asks students whether they prefer the CDs their parents bought them or the ones they picked out themselves. Turns out that gift recipients value their gifts 18% less than similar goods that they bought themselves.  Waldfogel told the recipients to exclude the sentimental aspects of the gift to make the comparison apples-to-apples.

Waldfogel suggests that recipients be allowed to register at stores, like newlyweds do, so that loved ones can order from items on the wish list.  "Buying things without knowing what people want," he concludes, "is a recipe for buying things people don’t want."

Science marches on . . . .

December 2, 2004 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Today in history—December 2

1547: Hernán (or Hernando) Cortés, a young man who will disappoint his family by refusing to follow his grandfather’s profession of barrister, is born in Castile.

1694: William Shirleyis born in Sussex.  Shirley will become a lawyer, move to Boston, and become King’s Advocate for New England and then Colonial Governor of Massachusetts.

1817: Heinrich von Sybel, German historian and pupil of the jurist Friedrich Karl von Savigny, is born at Düsseldorf.

1915: Albert Einstein publishes his General Theory of Relativity.  Einstein's influence on modern physics is nearly as profound as his impact on law, where he has been cited or quoted nearly 700 times in American law reviews.

Learnedhand 1924: President Coolidge appoints Billings Learned Hand (left) to the U.S. Court of Appeals for the Second Circuit.

1930: Nobel Prize-winning economist Gary Becker is born in Pottsville, Pennsylvania.  Becker will go on to team with Judge Richard Posner on the most anticipated new academic blog in world history.

1980: The Missouri Court of Appeals for the Western District issues the decisioni in Katz v. Danny Dare, Inc., used in some casebooks in lieu of Feinberg v. Pfeiffer Co.

1927: Ford Motor Co. announces its first new car in 19 years—the Model A.

1930: President Hoover goes before Congress to ask for a $150 million public works program to help generate jobs and stimulate the economy.

1939: La Guardia Airport opens in New York City.

1993: One of Colombia’s most successful businessmen, drug lord Pablo Escobar, is shot and killed in Medellín.

December 2, 2004 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

An empirical look at Hadley v. Baxendale

Gloucester_mills One hundred and fifty years later, the consequences of the broken mill shaft at the City Flour Mills (left) are still being studied.  Now, a new paper on SSRN from George Geis (Alabama), Empirically Assessing Hadley v. Baxendale.

Geis, a former management consultant who obviously is familiar with the marketing science literature, notes the theoretical battle over whether Hadley’s foreseeability rule makes economic sense or not.  He then goes on to try to determine emprically  whether it does.  He uses the "willingness-to-pay" approach common in marketing schools to evaluate the rule under three different scenarios.

Conclusion? Hadley’s rule ultimately seems superior to the alternative full-damages approach—but that may not be true in many situations and further study is needed. Prediction: There will be further study.  For the abstract, click the link below.

Continue reading

December 2, 2004 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Recent developments in suing car dealers

Nobody likes car dealers, and at the Overlawyered blog they’re detailing the litigation tactics plaintiffs lawyers are using against them.

December 2, 2004 in In the News | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 1, 2004

We know we promised, but times change

Confederate_hall Vanderbilt University has raised a novel defense in a breach of contract action: academic freedom.  Vanderbilt, it seems, very much wants to keep its valuable Confederate Memorial Hall dormitory, but doesn’t want to have to keep using that name, which it claims has racist overtones and costs it students every year.

Problem is, the contract with the original donors, the Tennessee Division of the United Daughters of the Confederacy, specifies that the building must always be called "Confederate Memorial Hall," and the Daughters have no intention of agreeing to the change.  They sued Vanderbilt but lost at the trial court, the judge ruling that it would be "unduly burdensome" for Vanderbilt to stick to the terms of the agreement, and that it was free to ignore that part of the contract.  Academic freedom, argues the University, allows it to bar the "Confederate" name whatever the contract says.

The Confederate Daughters, who no doubt dislike having the world "Confederate" banned from the school as much as they dislike welshers, have appealed; a hearing is set for January 12.

December 1, 2004 in In the News | Permalink | Comments (0) | TrackBack (0)

Court holds Congress breached contract with tribe

Dakota Representatives of the Mdewakanton Dakota tribe are celebrating after a federal court held that Congress breached an 1886 agreement with the tribe.

The claimants are descendants of the "Loyalist" Dakotas who pledged loyalty to the United States in 1862. In 1886 Congress conveyed land to the Loyalists, but an 1980 act of Congress conveyed it to three other Dakota groups. Judge Charles Lettow of the Federal Court of Claims held that the subsequent act breached the contract.

The dispute has significant economic overtones because the disputed land is the site of several very profitable Indian casinos.

December 1, 2004 in In the News | Permalink | Comments (1) | TrackBack (0)

Students sue school over admission of men

Wells_college Two Students at little Wells College who claim they were promised that the women-only school would not go coeducational during their time there, have sued for breach of contract and deceptive trade practices.  The students, a freshman and a sophomore, have asked a state court in Cayuga County, New York, to prohibit the school from bringing in men until 2008, after present students have graduated.

A lawyer for the students says that the Auburn school deliberately misled the students, because plans for admitting men were being made even while the school was assuring prospective students that it would remain a women’s college.  It is alleged that those giving tours to prospective students were instructed to answer "no" if asked whether men were going to be admitted.

December 1, 2004 in In the News | Permalink | Comments (0) | TrackBack (0)

Today in history—December 1

1135: Henry I ("Beauclerc"), whose contributions to English law earned him the sobriquet "The Lion of Justice," dies of food poisoning at St. Denis le Fermont in Normandy.

1523: Leo X (Giovanni de Medici) dies at age 46 at Rome.  Leo is the pontiff whose wholesale marketing of indulgences for profit helped spark the Lutheran uprising.

1844: Alexandra of Denmark, the future consort of King Edward VII. and whose coronation troubles will be studied by generations of law students, is born at Copenhagen.

Dr_pepper 1885: The first glass of Dr. Pepper is served in Waco, Texas.  Connoisseurs know that the original formula, using cane sugar instead of corn syrup, is still available from the original Dr. Pepper bottling plant in Dublin, Texas.

1913: The first moving assembly line is introduced at Ford Motor Company; it cuts the time to build a car from 12.5 hours to less than 3.

1981: Richard Allen Posner receives his commission as judge of the U.S. Court of Appeals for the Seventh Circuit

1987: NASA announces contracts to four companies to build the International Space Station: Boeing, General Electric, McDonnell Douglas, and Rockwell International.

1998: Exxon announces plans to buy Mobil Oil for $73.7 billion deal; this will create the world’s largest oil company.

1978: Brad Delson, lead guitarist of Linkin Park is born.  We mention this so that you can impress your students with how hip you are, despite the box of Bee Gees 8-tracks in your closet.

December 1, 2004 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Glasgow moves to stop Internet scalping

Snow_patrol The Glasgow City Council has sent a "cease and desist" letter to the online seller eBay, demanding that it stop ticket scalpers from advertising tickets on its site.

The furor arises from this year's holiday "Hogmanay" concert in George Square, an event headlined by comes out of a concert by the band Snow Patrol (pictured).  Ticket prices were set at £2.50, but the concert quickly sold out and sellers are getting £70 for the tickets online.

The Council is also trying to go after the individual sellers, but hopes to pressure eBay into simply banning the sales.  An eBay spokesperson says that the legal department is looking into it.

December 1, 2004 in In the News | Permalink | Comments (0) | TrackBack (0)

Posner, Becker to start their own blog

Posner_1 Love to read Richard Posner but you can’t wait ten minutes for the next article?  Relax—you’ll now be able to get an instant fix.  Posner and Nobel Prize-winning economist Gary Becker are starting the their own blog.  The Becker-Posner Blog site is up, but the content is "coming soon."

No word as to the blog’s topic, but it is expected to have something to do with law or economics, or maybe both.

December 1, 2004 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Springtime in Athens

Parthenon_1 Need a reason to go to Greece this summer?  How about the Second Annual International Conference on Industrial Organization, Law, and Economics, which will be held June 9-11 in Athens.  The event is sponsed by the Athens Institute for Education and Research.  Among the events is a one-day cruise among the Greek isles.

(Thanks to Paul Caron at TaxProf Blog for letting us know about the announcement.)

Click on the link below for the Call for Papers (deadline is January 17), or visit the Conference web site.

Continue reading

December 1, 2004 in Conferences | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 30, 2004

Contracts Songbook

Cherylpreston_1 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.)

Continue reading

November 30, 2004 in Famous Cases | Permalink | Comments (0) | TrackBack (0)

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.

Samuelchase 1804: The impeachment trial of Supreme Court Justice Samuel Chase (left) begins.  He is not convicted and goes on to serve 15 years as an associate justice.

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.

November 30, 2004 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

"Reap What You Sow," not "Eat What You Kill"

Eatwhatyoukill 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.

November 30, 2004 in Books | Permalink | Comments (0) | TrackBack (0)