October 11, 2005
Today in History: October 11
1614: A group of Dutch merchants, led by fur trade Adriaen Block, petition the States General for a trade monopoly in the area between Delaware Bay and the Canadian border. Their United New Netherland Co. will get an exclusive three-year deal.
1811: The first regularly scheduled steam ferry service in the U.S. opens between New York City and Hoboken, New Jersey. The steamer Juliana is designed and owned by lawyer John Stevens.
1844: Henry John Heinz is born at Pittsburgh, Pennsylvania. He’ll start in business at age 8 carrying vegetables door to door and will make his first “Heinz” brand product -- ground horseradish -- at age 9.
1929: J.C. Penney opens a store at Milford, Delaware, making it the first U.S. retailer with stores in all 48 states.
1872: U.S. Chief Justice Harlan Fiske Stone (Columbia Law 1898) is born at Chesterfield, New Hampshire. He's one of the few justices to have three last names.
1961: Leonard “Chico” Marx, who as manager of the Marx Bros. negotiated the first Hollywood contract guaranteeing a share of gross receipts, dies at Los Angeles, California.
1975: Saturday Night Live debuts on NBC. It was really funny back then.
2001: Polaroid Co., one of the famed "Nifty Fifty" stocks of the late 1960s, files for bankruptcy.
October 10, 2005
Weekly Top 10
Victor Goldberg debuts at number 1 with a bullet on the Weekly Top 10, while another effort from the government contract powerhouse at George Washington's also debuts in the top three. Following are the top 10 most-downloaded papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending October 10, 2005. (Last week's rank in parentheses; • indicates fastest-rising papers.)
•1 (-) Risk Management in Long-Term Contracts, Victor P. Goldberg (Columbia).
2 (2) Bargaining Power in Contract Theory, Daniel D. Barnhizer (Michigan State).
•3 (-) Katrina's Continuing Impact on Procurement -- Emergency Procurement Powers in H.R. 3766, Christopher R. Yukins & Joshua I. Schwartz (Geo. Washington).
4 (4) Is Forum-Shopping Corrupting America's Bankruptcy Courts?, Todd J. Zywicki (Geo. Mason).
5 (6) Are Heuristics a Problem or a Solution?, Douglas A. Kysar (Cornell).
6 (7) Are 'Pay Now, Terms Later' Contracts Worse for Buyers? Evidence from Software License Agreements, Florencia Marotta-Wurgler (NYU).
7 (8) Resolving the Paradox of the Consideration Doctrine: The Implications of Inefficient Signaling and of Anti-Commodification Norms, David Scott Gamage (Texas) & Allon Kedem.
8 (9) Competition and the Quality of Standard Form Contracts: An Empirical Analysis of Software License Agreements, Florencia Marotta-Wurgler (NYU).
9 (-) Credit Card Accountability, Samuel Issacharoff & Erin F. Delaney (NYU).
10 (10) New Basics: 12 Principles for Fair Commerce in Mass-Market Software and Other Digital Products, Jean Braucher (Arizona).
Lesson: Don’t "Pretend" to Contract (or You Might Get Socked With Punitive Damages and Lost Profits)
Microsoft authorizes Wetmore to sell Microsoft software kits to approved Microsoft distributors and licensees. Under the arrangement, Wetmore sells the software kits to a distributor, then it notifies Microsoft. Microsoft charges the distributor a separate licensing fee.
HGI is a reseller of computer software and hardware; HGI "purchases software in the secondary market because the costs of obtaining software through authorized distribution channels are prohibitive." HGI contacted Wetmore about purchasing Microsoft software. Wetmore notified Microsoft of HGI’s interest. Wetmore agreed to help Microsoft investigate HGI’s activities – to determine whether HGI was illegally selling unlicensed software. Wetmore and Microsoft both knew that HGI was not an authorized Microsoft dealer. With this knowledge, Wetmore pretended to do business with HGI in order to assist Microsoft’s investigation.
Even though Wetmore was "just pretending," HGI completed purchase orders and paid Wetmore for the software. Wetmore confirmed these orders, accepted payment and shipped some of the products. At some point, however, Wetmore told HGI that it could no longer supply HGI with Microsoft software. Wetmore told HGI that there had been "a mistake" and stated that, if HGI returned the prior shipments, Wetmore would give HGI a full refund. HGI sued Wetmore for breach of contract.
Despite Wetmore’s public policy argument, the 11th Circuit agreed with the District Court that Wetmore and HGI had entered into valid, enforceable contracts. The court affirmed the punitive damages award for Wetmore’s fraudulent inducement.
Additionally, reversing the District Court, the 11th Circuit held that HGI could recover lost profits from the resale of the software. The court held that "the uncertainty and speculative nature of lost profits that generally defeats their recovery in contract cases refers to the cause of the damage and not the amount of the damage." Here, the cause of the damage was certain enough to allow HGI to recover lost profits. The 11th Circuit remanded to the District Court to decide whether HGI had met its burden to establish a right to lost profits:
The evidence must show the amount of lost profits from HGI’s breached contracts with Wetmore to a reasonable certainty. To do so, the parties should focus on record evidence of other similar software resellers, if any, including their ability to sell a similar amount of Microsoft software, the price at which such software can be resold, and expenses they would incur from selling such software.
Wetmore, on the other hand, was directed to "focus on evidence of HGI’s ability to cover and mitigate damages, if any."
HGI Assocs., Inc. v. Westmore Printing Co., No. 04-11931 (11th Cir. Oct. 4, 2005).
[Meredith R. Miller]
Blackouts from Internet Contract Disputes
Most of us, I suspect, are fairly limited in our knowledge of exactly how the Internet works. We understand vaguely that there are a bunch of computers connected together, but that's about it. When we hear talk about "backbones" to the Internet, our eyes glaze over. Well, at least mine sometimes do. But, it turns out that there are contracts called "peering agreements" between large Internet companies, that give us the degree of connectivity we have. A peering agreement is where two or more companies agree to connect directly, thereby creating "short-cuts" for lots of online traffic. This story from news.com details the fragility of the Internet which is exposed when disputes arise in these peering agreements. Money has not traditionally exchanged hands in these peering agreements, but some backbone companies are now demanding compensation, when the relative traffic between the two companies becomes disproportionate. Future disputes could greatly affect the quality of the Internet experience for many.
Happy Anniversary, Mr. Kirksey
One hundred and sixty-five years ago today, October 10, 1840, a man named Isaac Kirksey wrote a letter to his sister-in-law, Angelico (a/k/a Antillico) Kirksey:
Dear sister Antillico -- Much to my mortification, I heard, that brother Henry was dead, and one of his children. I know that your situation is one of grief, and difficulty. You had a bad chance before, but a great deal worse now. I should like to come and see you, but cannot with convenience at present. * * * I do not know whether you have a preference on the place you live on, or not. If you had, I would advise you to obtain your preference, and sell the land and quit the country, as I understand it is very unhealthy, and I know society is very bad. If you will come down and see me, I will let you have a place to raise your family, and I have more open land than I can tend; and on the account of your situation, and that of your family, I feel like I want you and the children to do well.
The results of that letter are still familiar to every American law student today. Click on "continue reading" for the opinion.
Kirksey v. Kirksey
Supreme Court of Alabama
8 Ala. 131
January, 1845, Decided
Error to the Circuit Court of Talladega.
ASSUMPSIT by the defendant, against the plaintiff in error. The question is presented in this Court, upon a case agreed, which shows the following facts:
The plaintiff was the wife of defendant's brother, but had for some time been a widow, and had several children. In 1840, the plaintiff resided on public land, under a contract of lease, she had held over, and was comfortably settled, and would have attempted to secure the land she lived on. The defendant resided in Talladega county, some sixty, or seventy miles off. On the 10th October, 1840, he wrote to her the following letter:
"Dear sister Antillico--Much to my mortification, I heard, that brother Henry was dead, and one of his children. I know that your situation is one of grief, and difficulty. You had a bad chance before, but a great deal worse now. I should like to come and see you, but cannot with convenience at present. * * * I donor know whether you have a preference on the place you live on, or not. If you had, I would advise you to obtain your preference, and sell the land and quit the country, as I understand it is very unhealthy, and I know society is very bad. If you will come down and see me, I will let you have a place to raise your family, and I have more open land than I can tend; and on the account of your situation, and that of your family, I feel like I want you and the children to do well."
Within a month or two after the receipt of this letter, the plaintiff abandoned her possession, without disposing of it, and removed with her family, to the residence of the defendant, who put her in comfortable houses, and gave her land to cultivate for two years, at the end of which time he notified her to remove, and put her in a house, not comfortable, in the woods, which he afterwards required her to leave.
A verdict being found for the plaintiff, for two hundred dollars, the above facts were agreed, and if they will sustain the action, the judgment is to be affirmed, otherwise it is to be reversed.
RICE, for plaintiff in error, cited 4 Johns. 235; 10 id. 246; 6 Litt. 101; 2 Cowen, 139; 1 Caine's, 47.
W. P. CHILTON and PORTER, for defendant in error, cited 1 Kinne's Law Com. 216, 218; Story on Con. 115; Chitty on Con. 29; 18 Johns. 337; 2 Peters, 182; 1 Mar. 535; 5 Cranch, 142; 8 Mass. 200; 6 id. 58; 4 Maun. 63; 1 Conn. 519.
ORMOND, J. -- The inclination of my mind, is, that the loss and inconvenience, which the plaintiff sustained in breaking up, and moving to the defendant's, a distance of sixty miles, is a sufficient consideration to support the promise, to furnish her with a house, and land to cultivate, until she could raise her family. My brothers, however think, that the promise on the part of the defendant, was a mere gratuity, and that an action will not lie for its breach. The judgment of the Court below must therefore be reversed, pursuant to the agreement of the parties.
Is Incompetence Grounds for Dismissal?
If an employee is subject to termination only for “just cause,” is mere incompetence enough to justify firing? You might think that question is easy, but it’s not. Abdul-Basit Khan and Robin Reinertson of Toronto’s Blake, Cassels & Graydon LLP offer a Canadian perspective on the question in Incompetence or Poor Performance — Just Cause for Dismissal?
Today in History: October 10
732: Franks under Charles Martel defeat a larger invading Moorish force at the Battle of Tours. Though it will take two generations to finally drive them across the Pyrenees, this marks the end of Muslim expansion into Western Europe.
1659: Abel Janszoon Tasman, the Dutch East India Co. captain who was the first European to see Van Dieman’s Land (Tasmania) and New Zealand, and who did much to map New Holland (Australia) dies in comfort back in the Netherlands. (Left, the Company logo; Wikipedia Commons.)
1872: New York lawyer William Seward, who as U.S. Secretary of State negotiated the controversial purchase of Alaska from Russia, dies at his home at Auburn, New York.
1924: The man usually regarded as the worst motion-picture director of all time, Ed (Plan 9 from Outer Space) Wood is born at Poughkeepsie, New York.
1971: The reassembled London Bridge opens at Lake Havasu City, Arizona, as the anchor of a mock-Tudor shopping mall that has become the state’s second-biggest tourist attraction.
1979: Japan’s Namco releases a new video game called Puck-Man. It won’t become a success until it’s licensed by Midway Games for the U.S. market and the name is changed to Pac-Man, to avoid the chance that U.S. teenagers would vandalize the "P" in "Puck."
1985: Ed Wood’s idol, Orson Welles, dies at Hollywood, California, days after performing as the planet-eating Unicron in Transformers: The Movie.
October 9, 2005
Deadline Looms for MPSA Proposals
A reminder that tomorrow, Monday, October 10, is the deadline for submitting paper proposals for the Annual National Conference of the Midwest Political Science Association, which will be held April 20-23 at the Palmer House in Chicago. The MPSA, which usually has well over 3,000 presenters, traditionally welcomes a wide range of papers. You can also volunteer to be a panel moderator or discussant. Information on the conference is here.
The Crime of Unpublishment
One of the great threats to contract law in the 21st century (at least in the opinion of one of your editors) is the extensive practice of issuing non-precedential decisions in cases. Anecdotal evidence from California suggests that at least eight out of ten contract cases are disposed of in unpublished (and un-cite-able) opinions.
Villanova's David S. Caudill (left) explores the ethical issues involved in courts disposing of cases without feeling obliged to conform future decisions to them, in Parades of Horribles, Circles of Hell: Ethical Dimensions of the Publication Controversy. Here’s the abstract:
This article examines the ethical dimensions of the controversy over no-citation rules and current publication practices. In the literature concerning that controversy, ethical concerns are often mentioned, but usually in tandem with other concerns. Professor Caudill isolates and categorizes the different types of ethical dilemmas, and demonstrates that at different levels of the controversy, the ethical concerns are different. He identifies three levels--the controversy over no-citation rules, the broader controversy over publication practices, and the even broader controversy over privatization of law (the so-called disappearing trial, ADR, and the end of law as we know it).
Meanwhile, an examination of what would happen if courts did allow citation of these unmentionable cases is The Dog that did not Bark: No-Citation Rules, Judicial Conference Rulemaking, and Federal Public Defenders, by Stephen Barnett (UC-Berkeley), forthcoming in the Washington and Lee Law Review.
Today in History: October 9
1000: Leif Ericson’s ships reach Vinland, making them the first known Europeans to set foot on North America. A Greenland merchant, Bjarni Herjólfsson, had reported seeing land there fifteen years earlier, but hadn’t landed.
1201: Future teacher and theologian Robert de Sorbon is born in the Ardennes region of France. In 1257, under the patronage of St. Louis IX, he will found the college that will come to be known as the Sorbonne.
1635: Troublemaker Roger Williams, a former protégé of Sir Edward Coke, is banished from the Massachusetts Bay Colony.
1701: The General Court of the Colony of Connecticut passes an act authorizing creation of a Collegiate School. When an East India merchant named Elihu Yale gives the new school £560, 417 books, and a portrait of King George I, the school is renamed in his honor.
1873: Charles Rudolph Walgreen is born near Galesburg, Illinois. After he’s injured working in a shoe factory, he’ll have to take lighter work, and so will become a druggist’s apprentice, eventually buying his own store at age 29.
1986: Harry Claiborne, the first federal judge to be convicted of crime (tax evasion) while in office, is convicted on impeachment charges by the U.S. Senate and removed from office.
1992: A 27-pound meteorite plunges to earth and smashes the trunk of a red 1980 Chevy Malibu owned by Michelle Knapp of Peekskill, New York.
2002: The air is out of the bubble as the Dow Jones Industrial Average hits its lowest point in five years and the NASDAQ Index reaches a six-year low.