April 16, 2005
Film clips: Paint Your Wagon
Haywood Holbrook: Dearly beloved. We have gathered together to grant this man, Ben Rumson, exclusive title to this woman, Mrs. Elizabeth Woodling, and to all her mineral resources. I have drawn up this Record of Claim which here and henceforth will be recognized as a certificate of marriage. So I ask you Ben, do you recognize this claim as a contract of marriage and do you take this woman to love honor and cherish?
Pardner: [after long silence] Oh, he does.
Haywood Holbrook: Elizabeth Woodling, do you take this man, Ben Rumson, to love, honor and obey him until death do you part?
Pardner: She does.
Haywood Holbrook: I now pronounce you claimed and filed as Mr. and Mrs. Ben Rumson.
From: Paint Your Wagon (Paramount 1969)
News in brief
Parents of a bride whose posh wedding was "ruined" by the sale of the hotel after the contract was signed, are suing for the extra $90,000 it cost them to move the thing, plus damages for their extreme emotional distress.
General Motors bonds hit a record low and may be headed to junk status, after the carmaker failed to get concessions from its labor unions.
A Kentucky industrial development agency and the insurance company that wrote a contractor's performace bond are locked in a dispute over who breached what.
Iraq may back out of a $500 million grain deal with Australia, citing contaminated wheat as the problem; the Aussies are hotly denying the charge.
Speculation in housing in Sarasota, Florida, is so hot that people are quitting their jobs to buy and "flip" houses and condos.
More than a hundred buyers of units at a Malaysian hostel development are suiing the developer which has failed to make promised payments.
EKU says ex-coach owes it money
There's a potentially interesting liquidated damages dispute brewing at Eastern Kentucky University, where the university says that men's basketball coach Travis Ford owes it some $225,000 for resigning before the end of his contract. Ford's contract runs through 2007, but he resigned recently to take the vacant job at the University of Massachusetts.
There's no buyout provision in his contract, but there is a clause that says that if he leaves early, he'll pay to EKU, as liquidated damages, an amount equal to the salary EKU would have paid him for the remainder of the agreement. There's no word from the school as to why they chose to set it up that way rather than to provide for a buyout.
Today in history—April 16
1178 BC: Odysseus finally reaches Ithaca on his journey back from the Trojan War.
1071: The last bit of the Roman empire expires in Italy, as Norman Robert Guiscard captures Bari.
1844: Writer Anatole France is born at Paris. His most famous line: "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."
1881: In Dodge City, Kansas, Bat Masterson fights his last gun battle. He will end his career as a sportswriter for the New York Morning Telegraph. "New York is the biggest boobtown in the world," he would say. "They'll buy any Goddamned thing here."
1915: Rhode Island Senator Nelson W. Aldrich dies at New York City. He's the man who introduced the constitutional amendment creating the Federal income tax. At the time of his death the maximum tax rate is 7 percent on amounts over $500,000 (or $9.2 million today).
1926: One of the most successful mail order businesses of all time, Harry Scherman's Book of the Month Club, ships its first selection, Lolly Willows by Sylvia Townsend Warner. It is credited with being the first step in the modern commodification of the book business.
1927: Joseph Cardinal Ratzinger, who will later teach successively at the Universities of Bonn, Münster, Tübingen, and Regensburg, and will be considered by many as a front-runner to succeed Pope John Paul II, is born at Marktl am Inn in Bavaria.
1943: Dr. Albert Hofmann discovers the psychedelic effects of LSD. It was, like, totally spiritual.
Listokin, Yair,"The Empirical Case for Specific Performance: Evidence from the Tyson-IBP Litigation"; (March 1, 2005). http://ssrn.com/abstract=679874.
This article provides an actual instance in which specific performance as a contract award increased market value. Thus, from a post-breach perspective, the common law's preference for damages may be misplaced. An interesting perspective on damages.
April 15, 2005
Happy 50th to the Titan of Fast Food
Today marks one of the great commercial and cultural milestones of the 20th century: the opening of Ray Kroc’s first McDonald's restaurant in Des Plaines, Illinois. It sells the 1955 version of health food: meat, potatoes, bread, cheese, and milk. On that first day, the store takes in $366.12.
The casebook of the future
Casebooks and Contracts go together like, well, horses and carriages. The first casebook was, of course, C.C. Langdell's work on Contracts. Through the years most of the titans of Contract law have written them. They've uniformly been big, square, heavy, and expensive. But are they destined to be that way forever?
Matthew Bodie of Hofstra (left) doesn't think so. In a new paper, The Future of the Casebook: An Argument for an Open-Source Approach, argues that modern open source technology allows for a much more collaborative approach to classroom materials, that will simultaneously allow for greater collaboration and more individuality. Click on the link for the abstract.
Despite dramatic technological change, the thick, attractively bound casebook remains ensconced as the written centerpiece of legal education. That will soon change - but its replacement has not been established. This paper argues that the legal academy should take this opportunity to implement an open source" approach to future course materials. Guided by analysis and examples of commons-based peer production such as open source software, professors could establish electronic commons casebooks with a myriad of materials for every course. These joint databases would unshackle individual creativity while engendering collaboration on levels previously impossible. Although there may be concerns that such a project would not draw any interest, or might be swamped by too much interest, the successes of other peer-production projects demonstrate that such concerns are generally unwarranted or manageable. Copyright ultimately poses the biggest difficulty, but even that barrier can be circumvented to greater and lesser degrees. Although as yet an untried experiment, an open source approach has the potential to open a new era in legal pedagogy.
Where does the Pope get his hats?
In case you wondered how the Pope goes about buying clothes, it’s apparently traditional for him to enter into an exclusive-dealing requirements contract with one of the old tailor shops in Rome.
Today in history—April 15
1452: Renaissance man Leonardo da Vinci is born, coincidentally, during the Renaissance. He is widely regarded as genius, but he didn’t know squat about contract law.
1858: Sociologist/educationist David Émile Durkheim is born at Épinal, France.
1865: Tailor Andrew Johnson becomes the first regular working person—not a lawyer, wealthy planter, or war hero—to become President of the United States.
1883: Barrister Stanley Melbourne Bruce, who will become the 8th Prime Minister of Australia, is born at Melbourne, Victoria.
1920: Somebody murders a shoe company’s paymaster and guard and makes off with some $16,000. Ballistics tests will later show that the killer was Nicola Sacco, but his friend Bartolomeo Vanzetti may well have been innocent.
1920: Future lawyer and German president Freiherr Richard von Weizsäcker is born at Stuttgart, the son of a prominent Nazi diplomat.
1924: Rand McNally publishes its first road atlas.
1927: In a splendid publicity stroke, owner Sid Grauman has Douglas Fairbanks, Mary Pickford and Norma and Constance Talmadge put their hand- and footprints in wet cement in front of his new Chinese Theater in Hollywood.
1952: The plaintiff in Lonergan v. Scolnick claims a contract was made.
1980: Existentialist Jean-Paul (Nausea) Sartre dies in Paris. His life may mean something, or it may not.
1983: The House of Mouse hits Asia, as Tokyo Disneyland opens its doors. It’s not actually owned by Disney, but by Oriental Land Company, Ltd., which licenses the "theme" from Disney.
1994: After eight years of discussion, the Uruguay Round of trade talks ends with the signing of the Marrakesh Agreement, which among other things creates the World Trade Organization.
2002: Byron Raymond White, the only former Pittsburgh Steelers player to serve on the U.S. Supreme Court, dies at age 84.
Two Articles on the Border
Georgetown Journal of Legal Ethics Spring, 2005
FREE THE LAWYERS: A PROPOSAL TO PERMIT NO-SUE PROMISES IN SETTLEMENT AGREEMENTS by Gillers.
Although this article deals most closely with no sue promises, it shows how pervasive contract law can be in other fields.
Practising Law Institute Commercial Law and Practice Course Handbook Series
PLI Order Number 5989, March-April, 2005
27th Annual Current Developments in Bankruptcy & Reorganization
EXECUTORY CONTRACTS AND LEASES
Arnold M. Quittner
This article shows how executory contracts and leases are dealt with in bankruptcy and is useful for those who may be drafting contracts where such matters should be of serious concern.
April 14, 2005
Law professors work too hard
Over at the Conglomerate blog, Gordon Smith of Wisconsin has gathered some data about teaching loads at leading law schools, which show that the 12-hour load is an anachronism at those levels. There are a number of comments. One interesting thing about the discussion is that no one mentions the impact on students.
Hey, in a few more years, maybe full-time faculty won't have to teach at all. [Ed. note: I forgot; teaching "informs" our scholarship, so we probably should continue to do at least a bit of it.]
Interpretation: "Gather" v. "Transport"
The Fifth Circuit issued a new decision yesterday wiith a nice interpretation issue. True, it’s statutory, not contractual, but it’s interesting to watch the court try to figure out whether a particular 10-mile pipeline "transports" natural gas—which means it’s regulated by the feds—or only "gathers" it. The court finds FERC’s decision on the point to be wrong. The decision is Jupiter Energy Corp. v. FERC, No. 04-60041 (5th Cir. Apr. 12, 2005).
Contract and tort in warranty law
Warranty law is one of those areas where contract and tort law seem to be joined at the hip. At one point it might have seemed that strict liability in tort and the accompanying discovery rule would eliminate any role for contract. It hasn't happened though. In a new paper, Defective Products and Product Warranty Claims in Minnesota, Dave Prince of William Mitchell argues that warranty law is still "an important supplement" to tort rules. It's unfortunately one of those articles that will be useful to actual practicing lawyers and judges, but don't let that dissuade you. Click on the link for the abstract.
Warranty law is an important supplement to tort law principles governing liability for defective products. Warranties arise from promises or assertions associated with either the sale of a product or some other transfer of a product for value. Such promises or assertions about a product may be express, made in the form of the seller's statements about the qualities or attributes of the product, or they may simply be implied as a matter of policy.
Although warranty law is generally regarded as part of the body of contract law, the origins of warranty lie in tort. Important developments in contract law form a critical part of the developmental history of products liability law. Once tort law rejected privity as a limitation on the negligence law duty to foreseeable victims of personal or property injuries resulting from defective products, contract law incorporated the idea of warranties implied as a matter of law to make product manufacturers strictly liable for harms caused by defective products. This led ultimately to the recognition that the manufacturer's strict liability was not based on an agreement between the manufacturer and the plaintiff but imposed instead by law for reasons of policy. "[T]he liability is not one governed by law of contract but by the law of strict liability in tort."
Warranty law as it relates to the sale of products evolved as a matter of common law and then was eventually codified. In Minnesota, warranty law is expressed in chapter 336 of the Minnesota Statues, Minnesota's version of the Uniform Commercial Code (U.C.C.), and in judicial interpretations of that statute, particularly Article 2 governing the sale of goods. Additional important sources of warranty law in Minnesota include state statutes designed to protect consumers gainst certain deceptive and unfair trade practices and the federal Magnuson-Moss Warranty Act.
There is substantial similarity between Minnesota warranty law under the U.C.C. and products liability in tort, but there are also important differences.
Loan sharks v. Walker-Thomas
Strictly speaking, the new Bankruptcy Act is outside the bailiwick of this blog, but things like credit card terms aren’t. Thus, those interested in a law-and-economics approach to things like usury limits might want to check out a post by Todd Zywicki (George Mason) over at the Volokh Conspiracy blog.
Today in history—April 14
1759: Georg Friedrich Händel, who against his father’s wishes gave up the study of law for a musical career, dies at London.
1828: Noah Webster copyrights the first edition of his new Dictionary.
1860: Working for the Central Overland California & Pikes Peak Express Co., the first "Pony Express" rider reaches Sacramento, ten days after leaving St. Joseph, Missouri.
1865: John Wilkes Booth becomes the first actor to become prominent in American politics when he assassinates President Lincoln.
1910: President Taft becomes the first president to throw out the first ball on baseball’s opening day, at a game between the Washington Senators and the Philadelphia Athletics.
1914: The city of Irving, Texas, is incorporated, a matter of relatively little importance unless you’re a Dallas Cowboys fan.
1917: Dr. Ludovic Lazarus Zamenhof, the ophthalmologist who is best known for inventing the Esperanto language, dies at age 57. Today Esperanto is the official language of the World Esperanto Association.
1975: Actor Fredric March, who played the bigoted buffoon in Inherit the Wind (1960), dies at Los Angeles, California.
1977: Actress Sarah Michelle Gellar is born in New York City. Her first real acting job will be a Burger King commercial at age 4.
1986: The heaviest hailstones ever recorded—2.2 pounds each—hit Bangladesh.
April 13, 2005
Tell us what you really think
What do you hate most about commercial law? The pointless circularity of some UCC definitions? The pathological reliance on "reasonableness"? The definition of "finance lease"? Llewellyn's tortuous writing style? Cardozo opinions? Easterbrook opinions? Pacific Gas? Trident Center? The fact that numbers are involved?
Whatever it is, our friends at the AALS Section on Commercial and Related Consumer Law have got a panel for you: Commercial Calamities, or What I Hate Most About Commercial Law. It’s scheduled for the AALS Annual meeting this coming January. So get out your knives, test the blade with your thumb, and get ready to participate. Click on the link for the call for papers.
A Call for Proposals
At January's AALS meeting, the topic for the Section on Commercial and Related Consumer Law will be "Commercial Calamities." This could be subtitled "What I Hate Most about Commercial Law." What we have in mind is a series of presentations about the aspect of commercial law most disliked by each of a range of scholars. I t could be as focused as one section or subsection of the Code, or one especially odious though prominent judicial decision. It could be the coverage of the Code -- should some groups or types of transactions be in? Be out? It could be the existence of the Code as state law. It could be the structure of the Code, or of some part of the Code. It could be the means of drafting or revising the Code. It could be the state of commercial law scholarship.
This topic has two aspects. One will of course be the session at AALS, which has been scheduled for Saturday, January 7 at 1:30. We will leave plenty of time for comment, as we're sure that those present will have their own horrors to relate -- and, for that matter, may take issue with the choices of the panelists. The other is a written symposium. We're in the midst of discussions with a number of law reviews. Here we plan to publish a series of essays, more lightly footnoted than the usual law review fare and, we hope, more readable as well, in which the authors relate their least favorite aspects of our most favorite topic. We'll have more people writing than speaking, with the presenters at AALS providing a cross-section of those participating in the written version. We anticipate that the essays would be due in March 2006, for publication that Fall.
We would like to get a range of contributors taking a range of perspectives on this engaging and perhaps controversial topic. We have already started soliciting contributions, and we've had favorable responses from such luminaries as Robert Hillman (Cornell), Robert Scott (Virginia), James White (Michigan), Amy Boss (Temple) and Neil Cohen (Brooklyn). Now how about you? We wish to reserve some spots for open submissions. Just send us an abstract of 300-800 words, indicating your desired target and choice of ammunition. Send it to Chair Larry Garvin by Friday, May 13. The members of the Executive Committee not putting forth proposals will winnow the proposals and let all know promptly thereafter. Many thanks, and don't hesitate to get in touch with me if you have any questions.
Battle isn't over for rocker
Ted Nugent says he's not satisfied with the $100,000 he won previously in breach of contract claim against a Muskegon (Mich.) festival. He's quoted in Rolling Stone as saying of the case:
When I get accused of such a horrible thing [as using racial slurs], I get really fucking angry. I went to court and sued them and won, but I'm not done yet. We killed the beast with the smallest gun they allowed us [i.e., expectancy damages]. We're gonna go back, get a bigger gun [consequential damages], and kill them all—figuratively speaking.
News in brief
Nike, which has often been criticized for conditions at its overseas plants, has published a list of the factories where its shoes are made: there are 700 of them around the world.
Contract talks between faculty and administrators at Florida International University have hit an impasse; faculty have been without a contract since 2003.
The National Hockey League and its players are going back to the table to mull over a "new concept" that tries to bridge the gap between them.
Ave Maria University has got the final permit from the Corps of Engineers to build its new 5,000 acre, $240 million campus on former farmland in Florida.
France's Arianespace and the Russian space ministry have signed a deal to allow Russian Soyuz launches from French Guiana.
Tasmanian pea farmers are angry at plans by Idaho's J.R. Simplot Co. of Idaho to slash prices it pays by 25 percent next year.
Forest giant slammed for breach
After a year of thought and 138 pages of opinion, a federal banktruptcy judge in Atlanta has ruled that Weyerhauster Co. breached its warranties against infringement when it spun off a division in an IPO whose disposable diapers infringed patents held by Kimberly-Clark and Proctor & Gamble. Judge Margaret Murphy assessed damages at $457.8 milion.
One of the interesting features about the case is that ordinarily a claim for failure to disclose in an IPO would be governed by securities laws (which Weyerhauser says were not violated) but the judge decided to proceed under a contract theory.
In a great many contractual situations, one party has a substantial amount of discretion over its own performance. A law school, for example, has a contract with its students, but the school will unilaterally decide what classes are offered, who will teach them, what time they'll be taught, what hours the library will be open, who'll be licensed to provide beverages in the building, and so on. MIT economist Birger Wernerfelt views these as incomplete contracts where subsequent term-making has been delegated to one party. In Incomplete Contracts and Renegotiation, he tries to model such situations:
The parties to a contract typically make a lot of decisions during the time it is in force, and the paper is based on the premise that it takes time to be involved in any one of these decisions. Attempts to economize on decision-making time then imply that the parties may write a contract in which each cedes some decision rights to the other. The cost of the arrangement is that the information and preferences of the uninvolved party are neglected. We find that decisions are more likely to be left out of contracts if only one player attaches significant weight to them and simultaneously is well informed. While the direct effect of this may be small, it is dramatically amplified if the decision-maker can be disciplined by the threat of renegotiation. We identify a set of conditions under which the possibility of renegotiation allows the parties to leave all non-price decisions out of the contract. By thus arguing that the threat of renegotiation allows contractual incompleteness, the paper reverses the direction of causality stressed by the literature.