ContractsProf Blog

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

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Monday, May 23, 2005

Call for papers: Social Science Research

The Section Annual International Conference on Social Science Research will be held December 4-6, 2005, at the Hilton Hotel Orlando in Florida.   The Call for Papers is out; deadline is September 15.  Click on the “continue reading” link for the announcement.

Continue reading

May 23, 2005 in Conferences | Permalink | TrackBack (0)

Bankruptcy Act limits executive benefits

One aspect of the new Bankruptcy Act that didn’t get much air time is a provision that restricts the ability of trustees to make big payments to company execs to keep them aboard during a reorganization.  Under the new act, say Joseph Adams, Jennifer Miani and Karen Simonsen of McDermott Will & Emery in a new client advisory,  there are new guidelines that, among other things, prohibit such payments unless the individual already has a bona fide job offer at the same or higher salary.

May 23, 2005 in Commentary | Permalink | TrackBack (0)

Today in history—May 23

1568: The long struggle for independence of the Netherlands begins with the Battle of Heiligerlee, as rebels under Louis of Nassau defeat a small Imperial army.

1609: The Virginia Company of London, a joint-stock enterprise founded to colonize America, receives its second royal charter.

1783: Former Massachusetts Attorney General James Otis, who gave up his job rather than execute illegal writs and who said, "Taxation without representation is tyranny," dies after being struck by lightning.

1788: South Carolina becomes the eighth state to ratify the new U.S. Constitution.

1875: Alfred Pritchard Sloan, Jr., is born at Mew Haven, Connecticut.  At age 24 he will become president of a small ball-bearing company, which through various mergers will ultimately become General Motors.

1910: Arthur Jacob Arshawsky (a/k/a Artie Shaw), the clarinetist and bandleader who will earn $30,000 a week during the Depression, is born in New York City.

1923: Belgian air carrier Société Anonyme Belge d'Exploitation de la Navigation Aerienne, better nown as SABENA, is founded.  It will go bankrupt in 2001.

1934: Bank robbers Clyde Barrow and Bonnie Barker are ambushed and killed by police at Black Lake, Louisiana.

1937: James Davison Rockefeller dies at Ormond Beach, Florida.  On a scale of the richest Americans by share of Gross National Product, he's number one.

1949: The Grundgesetz für die Bundesrepublik Deutschland, the constitution of modern Germany, comes into effect.

1999: Wrestler Owen "The Blue Blazer" Hart falls 90 feet to his death during a live pay-per-view wrestling program in Kansas City.  The audience believes it's part of the show and give him a big round of applause as paramedics carry him out.

May 23, 2005 in Today in History | Permalink | TrackBack (0)

Sunday, May 22, 2005

Cases: Liquidated damages subsumed in fraud

California_flag_4 An unpublished California decision shows some offbeat damages calculations in a case involving a liquidated damages clause in a fraud situation.

Two men, Tumanjan and Capazzola, owned Dante's Inferno, a sports bar, and Dante's Italian Cuisine, a family-style restaurant.  These two businesses shared the same address and the same liquor license.  When Dante's Italian Cuisine went under, Tumanjan and Capazzola leased the property to RiLoRo, Inc.  Under the deal, RiLoRo would open a new restaurant, Cucina Paradiso.  The contract contained the following clause:

Lessor shall be responsible for providing Lessee with use of Lessor's liquor/wine/beer license. If Lessee does not have full use of a type 47 bona fide liquor license, Lessee shall have the right to terminate the lease and all funds paid by Lessee ($ 103,750.00) shall be returned within thirty (30) days upon return of all personal property.

Turns out that there were, however, problems with the liquor license.  First, Dante’s had no right to let someone else use the liquor license, and second, the license was already under investigation because Capazzola was a convicted felon and ineligible for a license.  Three years after Cucina Paradiso started operating, the ever-vigilant state ABC authorities finally got around to noticing the problems and suspending the license.  RiLoRo sued, claiming fraud.

The trial court, no piker when it comes to damages, managed to award liquidated damages ($103,750), reliance damages ($450,000) and “benefit of the bargain” damages ($300,000).   This was too much for the court of appeals, which tossed the liquidated damages award as duplicative, found the evidence insufficient for the expectation measure, and stuck with the $450,000 as damages for the fraud.

RiLoRo, Inc. v. Tumanjan, 2005 Cal. App. Unpub. LEXIS 4221 (Cal. Ct. App. May 12, 2005).

May 22, 2005 in Recent Cases | Permalink | TrackBack (0)

Contracts and strategic alliances

Wisconsin's Gordon Smith has a new paper out that will be of particular interest to those who are interested in business associations as well as contracts.  It's called The Exit Structure of Strategic Alliances, and it's forthcoming in the Illinois Law Review.  Here's the abstract:

Today, many biotechnology firms use strategic alliances to contract with other companies.  This article contends that the governance structure of these alliances—specifically, the “contractual board”—provides an integrated restraint on opportunism.   While an alliance agreement’s exit structure could provide a check on opportunism by allowing the parties to exit at will, such exit provisions also can be used opportunistically.  Most alliance agreements, therefore, provide for contractual “lock in” of the alliance partners, with only limited means of exit.  Lock in, of course, raises its own concerns, and the contractual board—which typically is composed of representatives from each alliance partner, each wielding equal power—addresses these concerns about opportunism via the potential for deadlock.

May 22, 2005 in Recent Scholarship | Permalink | TrackBack (0)

California mandates supervisor training

California has a new law requiring all firms with 50 or more employees to give mandatory sexual harassment training to all “supervisory employees.”  Training is to be done by January 1, 2006, and must be repeated every two years thereafter.

There are minimal penalties for violation but, as Richard J. Frey of McDermott Will & Emery reports in a client advisory, plaintiffs’ lawyers will almost certainly zero in on compliance as part of their cases, so it will be a good idea for employers to comply.    One difficulty with the new law is that it neither defines who counts as a “supervisory employee” nor specifies what kind of training is sufficient.

May 22, 2005 in Commentary | Permalink | TrackBack (0)

Today in history—May 22

337: A few weeks after he is baptized by Bishop Eusebius, Flavius Valerius Constantinus, who will be known to history as Constantine I, dies at Nicomedia (now Izmit, Turkey).

1807: Former U.S. Vice President Aaron Burr is arraigned before a grand jury in Richmond, Virginia, on a charge of treason.  It's the fourth time the government has tried, and this time the jurors issue a true bill.

1819: The Savannah Steamship Co.'s first vessel, the S.S. Savannah, leaves the harbor to become the first steamship to cross the Atlantic.  Even after a successful round-trip voyage her owners can't convince passengers or shippers to trust the "Steam Coffin," so her engines are removed and she's turned into a sailing ship.

1826: Christopher Columbus Langdell is born in New Boston, New Hampshire.

1856: South Carolina Congressman Preston Brooks savagely beats the seated, unarmed Senator Charles Sumner with a cane on the floor of the U.S. Capitol.  Admiring students at the University of Virginia vote to present Brooks with a fine new cane.

1859: Sir Arthur Ignatius Conan Doyle is born at Edinburgh, Scotland.  He will become a physician, but won't get patients.  He will become a politician, but won't get elected.  He'll write serious stuff, but will only be remembered for detective stories.

1872: President Grant signs the Amnesty Act, restoring civil rights to all but about 500 persons who took part in the recent unpleasantness.

1893: Karl Nickerson Llewellyn is born in Seattle, Washington, on C.C. Langdell’s 77th birthday.

1908: Orville and Wilbur Wright receive a patent for the airplane.

1922: Television Producer Quinn Martin (The Untouchables, The Fugitive, 12 O'Clock High, The FBI, Cannon, Streets of San Francisco, Barnaby Jones) is born Martin Cohn, in New York City.

1967: The first episode of a new children's TV series airs on WQED in Pittsburgh, Pennsylvania.  It stars an ordained Presbyterian minister and is called Mister Rogers' Neighborhood.

1992: Johnny Carson ends a 30-year run as host of the Tonight Show on NBC.  A lot of your students think that the host has always been Jay Leno.

May 22, 2005 in Today in History | Permalink | TrackBack (0)