ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Tuesday, November 1, 2005

Learning from Martha & The Donald

Miriam_cherry_1 Can America's most fashionable felon and its most revolting real estate tycoon teach us anything about the law of the workplace?

Miriam Cherry (Hofstra) thinks so.  In an op-ed for Legal Times, Reality at Work, she takes a look at the Martha Stewart and Donald Trump versions of the television show The Apprentice, in which various would-be rich and famous people sell their souls to the devil -- excuse me, I meant compete for a job with the two tycoons.  Her conclusion:  This reality is a little more real than a lot of workers suspect.

[Frank Snyder]

November 1, 2005 in In the News | Permalink | TrackBack (0)

Barnes on Spyware

Wayne_barnes Spyware is running rampant on the Internet.  Should we countenance these bargains under a contract paradigm, even when there is knowing consent?  Wayne Barnes (Texas Wesleyan) addresses this issue in Rethinking Spyware: Questioning the Propriety of Contractual Consent to Online Surveillance, forthcoming in the U.C. Davis Law Review.  Here's the abstract:

The spyware epidemic has reached new heights on the Internet. Computer users are increasingly burdened with programs they did not knowingly or consciously install, which place strains on their computers' performance, and which also trigger annoying "pop-up" advertisements of products or services which have been determined to match the users' preferences. The users' purported preferences are determined, in turn, by the software continuously monitoring every move the consumer makes as she "surfs the Internet." The public overwhelmingly disapproves of spyware which is surreptitiously placed on computers in this manner, and also largely disapproves of the pop-up advertising paradigm. As a result, there have been many legislative proposals, on a state and federal level, to address the spyware problem. All of the proposals assume that, if knowing and effective consent to spyware installation is granted by the consumer, then the software is lawful. Existing case law would seem to provide a means for corroboration of this conclusion. However, the implications of allowing such profound and invasive surveillance appear to be largely ignored in all of the proposals and discussion concerning spyware. This may be because of the "problem of perspective" concerning online activities, as first highlighted by Professor Orin Kerr. This article seeks to illuminate the true nature of the spyware bargain, and questions the propriety of sanctioning such "surveillance bargains" under principles of contract law. Such bargains may often be unenforceable because a term allowing continual surveillance may be beyond the range of reasonable expectations of most consumers. Even if not, however, the privacy implications are such that we as a society may wish to condemn such "bargains to be spied upon," and conclude that such contracts should simply be unenforceable as a matter of public policy, and therefore banned.

November 1, 2005 in Recent Scholarship | Permalink | TrackBack (0)

Alito on Contracts

Samuel_alito Supreme_court_22 Let’s talk about the really important question with regard to Judge Samuel A. Alito’s nomination to the U.S. Supreme Court: Does he know anything about contract and commercial law?  (Photos: Duncan Lock, GNU License; U.S. Court of Appeals Official Photo.)

There’s reason to be dubious -- he’s a career government employee, with stints as a deputy solicitor general, deputy attorney general, and U.S. Attorney.  That’s all fine, perhaps, if you need to figure out whether, say, lap dancing is “speech” for purposes of the first amendment, but it’s not going to be of much use in interpreting the Carriage of Goods by Sea Act or the CISG.

He also seems to have authored remarkably few contract opinions in his fifteen years on the bench - only half a dozen or so where the predominant issue is contractual.  Here they are:

MBIA Ins. Corp. v. Royal Indem. Co., 2005 U.S. App. LEXIS 21392  (3d Cir. Oct. 3, 2005) (Held that an insurance policy that provided that the beneficiary's right to payment became "unconditional" and "irrevocable" was broad enough to encompas an insurer's claim of fraud, and that such clauses between sophisticated parties are enforceable.)  [Thanks to Jeff Lipshaw (Wake Forest) for bringing this one to our attention; we missed it the first time.]

Masda Corp. v. Empire Comfort Sys., 69 Fed. Appx. 85 (3d Cir. 2003)  (Applied Illinois’s rules for contract definiteness pretty strictly in affirming dismissal of a complaint, and holding that no independent action for breach of the covenant of good faith was available.)

Trippe Manufacturing Co. v. Niles Audio Corp.,  (Holding that the assignee of a contract is bound by the arbitration clause in it, and that the forum selection clause is valid, but only claims arising out of the obligations expressly assumed by the assignee are arbitrable.)  [Larry Ribstein on Ideablog found this one, which we had originally missed.]

Lawson v. Fortis Ins. Co., 301 F.3d 159 (3d Cir. 2003) (Interesting discussion interpreting the word “for” in an insurance clause that required treatment “for” a pre-existing condition.)

National Data Payment Sys. v. Meridian Bank, 212 F.3d 849 (3d Cir. 2000)  (Held that an explicit duty to use “best efforts” to close a deal does not require that the defendant remind the plaintiff that the closing date is imminent or exert any pressure to get the deal one, and that a voluntary one-day extension of the closing date does not waive the closing date when there is a no-oral-modification clause.)

Pacitti v. Macy's, 193 F.3d 766 (3d Cir. 1999)  (Held that whether a child actress had been promised a role in a Broadway play if she won a contest was one that required factual development and could not be decided on the pleadings.)

Lerman v. Joyce Int'l, 10 F.3d 106 (3d Cir. 1993) (Construed a employee’s severance agreement against the employer, holding that implied duties undertaken by employee were not material and did not justify cutting off severance pay.)

Tigg Corp. v. Dow Corning Corp., 962 F.2d 1119 (3d Cir. 1992)  (Reversed an award of lost profits to a seller, because the proper measure of damages was contract price minus market price.  Lost profits are available only if the standard remedy is inadequate, and the jury did not make any finding on that issue.)

Nicholas v. Pennsylvania State Univ., 227 F.3d 133 (3d Cir. 2000)  (While not really a contract case, the case is of some interest to contracts profs because the court held that tenure at a public university is a contractual right, not a property right for purposes of the U.S. Constitution.)

[Frank Snyder]

November 1, 2005 in In the News | Permalink | TrackBack (0)

Today in History

1508: After four years of work, Michelangelo finishes work on the 5,000 square-foot ceiling of the Sistine Chapel, commissioned by Pope Julius II.  The job is the sculptor's first attempt at painting frescoes.

1530: The dikes in Holland give way, flooding the country and killing an estimate 400,000.

1603: An audience at Whitehall Palace in London watches the debut of the latest new thing from William Shakespeare, a member of King James I’s theater company: The Tragedy of Othello: The Moor of Venice.

1683: The government of the new Royal Colony of New-York is reorganized, with the territory divided into twelve counties, and each county into towns, a system that has basically endured to the present day.

1762: Spencer Perceval is born, the seventh son of the Earl of Egmont.  His skill as a barrister will ensure that hardly anyone hires him, but his connections will eventually make him Prime Minister.

1765: The British Parliament, trying to raise money, passes the Stamp Act for the American colonies.  It will end up costing the government more than it raises.

1861: President Lincoln appoints Ohio & Mississippi Railroad executive George Brinton McClellan as commander of the United States Army.

1993: The European Union is created as the Maastricht Treaty goes into force.

November 1, 2005 in Today in History | Permalink | TrackBack (0)

N.Y.U Graduate Students Threaten Strike

About 1,000 N.Y.U. graduate student teaching assistants lost their union representation back in August when their contract with the university expired.  At that time, following a policy reversal by the Bush-controlled NLRB, the university decided it would no longer recognize a graduate student union. 

The N.Y. Times reports:

In the end, N.Y.U. offered the union the right to continue to represent the graduate assistants on economic matters if it would forgo the right to present grievances to an outside arbitrator. The university said that some of the grievances the union had filed interfered with academic decision-making. The union denied that it had encroached on N.Y.U.'s academic rights and rejected the offer.

At the time, the university said it would continue to increase the $18,000 minimum stipend by $1,000 a year for the next several years, and would continue to pay for health insurance.

The graduate students have threatened a strike next week.  In August, protests at the university resulted in 76 arrests.

[Meredith R. Miller]

November 1, 2005 in Labor Contracts | Permalink | TrackBack (0)

Monday, October 31, 2005

Weekly Top 10

Ssrn_logo_30 There are quite a few treats but no tricks on this week's Top Ten.  The list is little changed from last week, with the top three papers holding their own.  Following are the top ten most-downloaded papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending October 30, 2005.  (Last week's rank in parentheses.)

1 (1) Risk Management in Long-Term Contracts, Victor P. Goldberg (Columbia).

2 (2) Katrina's Continuing Impact on Procurement - Emergency Procurement Powers in H.R. 3766, Christopher R. Yukins & Joshua I. Schwartz (Geo. Washington).

3 (3) Bargaining Power in Contract Theory, Daniel D. Barnhizer (Michigan State).

4 (6) Competition and the Quality of Standard Form Contracts: An Empirical Analysis of Software License Agreements, Florencia Marotta-Wurgler (NYU).

5 (7) Are 'Pay Now, Terms Later' Contracts Worse for Buyers? Evidence from Software License Agreements, Florencia Marotta-Wurgler (NYU).

6 (5) Resolving the Paradox of the Consideration Doctrine: The Implications of Inefficient Signaling and of Anti-Commodification Norms, David Scott Gamage (Texas) & Allon Kedem (Independent).

7 (4) Are Heuristics a Problem or a Solution?, Douglas A. Kysar (Cornell).

8 (8) Credit Card Accountability, Samuel Issacharoff & Erin F. Delaney (NYU).

9 (9) The Myth of the Rational Borrower: Rationality, Behaviorism, and the Misguided 'Reform' of Bankruptcy Law, Susan Block-Lieb (Fordham) & Edward J. Janger (Brooklyn).

10 (10) The Hidden Roles of Boilerplate in Standard Form Contacts, David Gilo & Ariel Porat (Tel Aviv).

October 31, 2005 in Recent Scholarship | Permalink | TrackBack (0)

The Great Pumpkin and Demands for Restitution

Those who remember It's a Great Pumpkin, Charlie Brown, might remember Sally's outrage after sitting all night in the pumpkin patch with Linus, waiting for the arrival of the "Great Pumpkin."  The "Great Pumpkin" turned out to be a silhouette of Snoopy in his fighter pilot outfit.  Sitting in the pumpkin patch with Linus, Sally missed the night of trick or treating.  She threatened to sue; she demanded restitution.  Sally to Linus:

I was robbed! I spent the whole night waiting for the Great Pumpkin when I could have been out for tricks or treats! Halloween is over and I missed it! You blockhead! You kept me up all night waiting for the Great Pumpkin and all that came was a beagle!

I didn't get a chance to go out for tricks or treats! And it was all your fault! I'll sue! What a fool I was.  And could have had candy apples and gum! And cookies and money and all sorts of things! But no, I had to listen to you! You blockhead. What a fool I was. Trick or treats come only once a year. And I miss it by sitting in a pumpkin patch with a blockhead. You owe me restitution!

[Meredith R. Miller]

October 31, 2005 in Miscellaneous | Permalink | TrackBack (0)

Happy Halloween!


[Frank Snyder]

October 31, 2005 in Miscellaneous | Permalink | TrackBack (0)

The Fright Business

In honor of Halloween, check out this story about the economics of haunted houses.  Apparently consumers are willing to pay up to $20 - $30 a head to be scared out of their minds.  Estimates of the number of haunted houses this year range from 600 all the way to 3,000.  But some are claiming that the haunted house industry has peaked, given the high price of good quality special effects (such as animatronic zombies) and the increasing difficulty of finding a house big enough so that the werewolves have room to roam.

[Miriam Cherry]

October 31, 2005 in Miscellaneous | Permalink | TrackBack (0)

The Halloween Social Contract

On the Episode entitled “Trick or Treat,” on the show Curb Your Enthusiasm by Larry David, Larry indignantly denies candy on Halloween to some girls who are in their late teens, and are in no costume.  The girls, obviously angry, later toilet paper Larry’s house and write derogatory graffiti on his front door.  When Larry calls the police to his house, the following exchange occurs:

Officer: So they had no costumes?

Cheryl: Right, no costumes, and for some reason that really upset him [Larry].

Larry: Yeah.

Officer: Now, you’re sure there were no costumes, I mean, because sometimes they can be very subtle costumes.

Larry: No, they weren’t subtle at all, there were no costumes.  They were just going around from house to house trying to get candy, okay? . . . .

Officer: But they knocked on the door, they said “Trick or Treat?”

Larry: Yeah, they said “Trick or Treat.”

Officer: And you had treats?

Larry: I was giving out candy all night.  But, I don’t have to give them candy.  They don’t deserve candy.  And I don’t deserve this (gestures to house and door, which had been toilet-papered and laced with derogatory graffiti). . . .

Officer: Did they threaten you in any way?  Did you see weapons of any kind?

Larry: No, there was no threat, except for the “trick” threat.

Officer: What’s the “trick” threat?

Larry: The trick or treat.  No treat?  Trick.  It’s a threat!  How far can you take these threats?

Officer: If it was any other night, sir. . . .

Larry: Trick or treat – bang bang! (gesturing as if pointing a gun).

Officer: But, it’s trick or treat, we cut the kids a little slack on Halloween.  There’s a kind of a social contract that you enter when you open up that door.  They say “trick or treat,” I would advise you to give the treat.

Cheryl: (Shaking head) Why don’t you just give them the candy, next time, Larry?

Larry:  I will not be intimidated.  Even on Halloween.

[Wayne Barnes]

October 31, 2005 in Film Clips | Permalink | TrackBack (0)

Journal Honors Cibinic

John_cibinic_1 The late John Cibinic (Geo. Washington) was one of the titans of government contract law.  The Public Contract Law Journal has a tribute to him in a forthcoming issue, In Memoriam: John R. Cibinic, Jr., which features appreciations by a range of leaders in the field:

For three decades, he taught at the George Washington University Law School. Throughout that period, and until his passing, John made a huge and lasting contribution to the literature and practice of government contracting. These short pieces, authored by colleagues, students, and friends, offer a glimpse into the impact of John's full and productive life.

[Frank Snyder]

October 31, 2005 in Contract Profs | Permalink | TrackBack (0)

Today in HIstory: October 31

1517: Martin Luther posts his Disputation . . . on the Power and Efficacy of Indulgences (known familiarly as the “95 theses”) on the door of the Castle Church in Wittenberg, Germany.

1864: Nevada joins the Union as the 36th state.  Motto?  "Battle-Born."

1875: Eugene Isaac Meyer is born at Los Angeles, California.  A successful stock speculator who kept his wealth during the Depression, he’ll buy the Washington Post at a bankruptcy auction, which will later bring fame to his daughter, Katherine Graham.

1912: The Biograph Co. releases the first Hollywood gangster film, the 17-minute silent Musketeers of Pig Alley, written and directed by Anita Loos and D.W. Griffith.

1941: Sculptor Gutzon Borglum and 400 workmen finish the portraits of the four U.S. Presidents on Mount Rushmore, South Dakota.

1988: Actor John Houseman, whose portrayal of Charles Kingsfield, Jr. remains the gold standard for contracts professors, dies at Malibu, California.

1998: President Clinton signs the Iraq Liberation Act, which makes it U.S. policy “to support efforts to remove the regime headed by Saddam Hussein from power in Iraq and to promote the emergence of a democratic government to replace that regime.”

2003: A federal approves MCI’s reorganization plan, letting the telecommunications firm exit bankruptcy.

October 31, 2005 in Today in History | Permalink | TrackBack (0)

Sunday, October 30, 2005

John Glenn on Contract Bids

This story from

John Glenn, the first American astronaut in space, was once asked to describe his (presumably profound) thoughts just before taking off into space. "I looked around me and suddenly realized," Glenn replied, "that everything had been built by the lowest bidder!"

[Meredith R. Miller]

October 30, 2005 in Quotes | Permalink | TrackBack (0)

A Matter for Consideration

Why do we enforce contractual promises only if they are supported by consideration?  That question has troubled contract theory from the very beginning.  David Scott Gamage (Texas) and judicial clerk Allon Kedem have come up with a new take on the question, in Resolving the Paradox of the Consideration Doctrine: The Implications of Inefficient Signaling and of Anti-Commodification Norms, now available on SSRN.  Here's the abstract:

This paper addresses one of the central problems of contract law, a puzzle that has troubled generations of contracts scholars: Why do we only enforce promises backed by consideration?  Or, how can we justify insisting on the bargain context, but not requiring that the bargains be adequate? The lack of a theoretical solution to this puzzle has plagued the application of the consideration doctrine in courts of law.

We resolve this paradox through two innovations. First, using a game theory model based on asymmetric information, we dispute the common wisdom that the law should honor parties' intentions as articulated at the time of contract formation. We show how parties' expressed intentions may not conform to their underlying desires. Crucially, the mere fact that parties take advantage of a legally binding option does not imply that they desire the existence of that option.  When courts create an option for the legal enforcement of promises, parties can essentially be forced into exercising that option.

How then can the law determine which promises to enforce? Our second innovation shows how social norms against commodification limit the availability of the consideration form. Where previous scholarship has assumed that anyone so wishing can invoke nominal consideration, we argue that anti-commodification norms make even nominal consideration unavailable within certain social contexts. Moreover, the contexts in which norms block the use of consideration are precisely the circumstances where creating a legally binding option would be most likely to harm both promisors and promisees.

Ultimately, what matters is not whether the parties actually do offer consideration, but rather whether they can voice consideration. Only when norms allow the use of consideration should we conclude that parties truly desire the option to have their promises legally enforced.

October 30, 2005 in Recent Scholarship | Permalink | TrackBack (0)

Today in History: October 30

1340: The last Islamic invasion of Spain from Africa is defeated by Kings Alfonso IV of Portugal and Alfonso XI of Castile at the Battle of Rio Salado.

1735: Boston lawyer, rebel, and future President John Adams is born at Braintree, Massachusetts.

1831: The leader of a failed slave rebellion, Nat Turner, is captured at Southampton County, Virginia.  He will later be hanged and skinned, with body parts kept by spectators as souvenirs.

1864: Four miners who struck it rich at Last Chance Gulch, Montana, found a new town on the site, called Crabtown.  For P.R. reasons, the name will later be changed to Helena.

1892: The father of the modern fitness industry, Angelo “Charles Atlas” Siciliano, is born at Arci, in southern Italy.  Thirty million people have bought his mail-order course.

1947: At Geneva, Switzerland, twenty-three countries sign a new General Agreement on Tariffs and Trade.

1961: Soviet authorities remove Josef Stalin’s body from Lenin’s tomb for his “violation of Lenin’s precepts.”  Yep, that shows him.

1988: Tobacco giant Philip Morris buys Kraft Foods for $13.1 billion.

October 30, 2005 in Today in History | Permalink | TrackBack (0)