ContractsProf Blog

Survivor Contract Renewed

Jeff Probst, the host of the CBS hit reality TV show "Survivor" has signed a new contract and will be returning to the show to preside over more cut-throat competition, physical challenges, and mind-games.  Luckily (for those who like the show!) CBS has ordered two more seasons.  The finale for this season will air on CBS tomorrow, and yes, I will be watching.

Speaking of cut-throat competition, physical challenges, and mind-games, good luck to all the law students cramming for exams! 

[Miriam Cherry] 

Good Faith Down Under

Does Australian contract law include an implied duty of good faith in performance?  The law seems to be in flux, and Tyrone M. Carlin of the Graduate School of Management at Macquarie University zeroes in on the cases, not the rhetoric, in Assertion Versus Evidence -- Taking a Closer Look at Implied Good Faith Performance Obligations in Australia.  Here's the abstract:

The question of the status of implied good faith performance obligations as an element of the Australian law of contract continues to lurk as a vital yet unresolved jurisprudential puzzle. Given the vital importance of contract as a foundation for commercial exchange and the potential for a good faith performance doctrine to materially impact the operation of contracts, this is an undesirable state of affairs. The evidence presented in this paper suggests that the approach taken to good faith performance has fragmented along jurisdictional lines. Further, far from representing a well developed and established doctrine, it has been the project of a very limited number of judges primarily drawn from just one state. These observations raise significant questions as to the legitimacy of the alleged doctrine.

[Frank Snyder]

Cowboy Merchants in England

Christmas apparently brings with it more than snow and good cheer in the United Kingdom -- it brings squatter "cowboy" merchants who camp out in empty stores without paying rent to cash in on the Christmas bustle.  Turns out, it can be hard (and expensive) to get rid of these folks; the police won't help, the courts are slow, and private "bailiffs" may use too much force and saddle you with a lawsuit.

Caroline Delaney and Danielle Drummond-Brassington of London's CMB Cameron McKenna LLP outline the issues in Unwanted Christmas Traders.  One solution?  Really good locks.

[Frank Snyder]

AALS Section Program Set

"Empirical Scholarship in Contract Law" will be the topic of the Section's panel at the AALS Annual Meeting in January.  Section Chair David Snyder will lead the discussion, which will explore different approaches to empirical scholarship in contract law.  The panel is slated for Friday, January 6, 2006, from 10:30 a.m. to 12:15 p.m., at the Godawful Marriott Wardman Park.

Steven Choi (Cal-Berkeley) and Mitu Gulati (Georgetown) will present results from their studies on boilerplate terms, particularly geared to the factors leading to innovation and change.  George Geis (Alabama, left) will present an empirical study, based on marketing data, on the optimal precision of default rules.  Stewart Macaulay (Wisconsin) will address the empirical side of policy issues, especially contract interpretation, and will put empirical work in the context of a new legal realism related to the law in action movement.  Debora Threedy (Utah, right), one of the leading practitioners of qualitative empiricism in law -- through deep historical studies of important cases such as Alaska Packers -- will examine how the practice of legal archaeology illuminates contract law.  The published symposium, which will appear in the Tulane Law Review, will also include an empirical study from Kate Litvak (Texas), discussing recent trends in venture capital contracts.

The format will allow time for questions and answers, including questions about what constitutes “empirical” work in the law and what role empirical study can play in contract scholarship.  The annual Business Meeting will take place at the end of the panel.

[Frank Snyder]

Today in History: Sinking of the Peerless

On this date, December 9, 1870, the good ship Peerless (the "October" Peerless from Raffles v. Wichelhaus) is abandoned and sinks at night seventy miles north-north-west of Cape Horn.  The ship was en route from Newport in Wales to Callao.  Fortunately, all of the crew are brought away safely by the Norwegian barque Elise Mathilde.

[Frank Snyder]

Assent on Paper or Electronically

Once again a timely article on an issue near to the heart of consumers at this time of year.

Quoting from the abstract:

"This article takes a critical look at the developing body of cases that address the threshold issue in Internet contracting: the issue of assent."

What is assent in such cases?

"While the Internet is new, the challenges presented by Internet contracts are not. Traditional contract rules, based on the paradigm of two individuals meeting face-to-face to negotiate written terms, have been modified over the years to accommodate diverse methods of communicating contract terms. These modifications have been fashioned to account for the different signals sent to offerees by new methods of contracting.

Today’s courts, however, virtually ignore the fact that the common law of contracts has developed rules that account for the different signals sent by contract terms that are delivered in novel ways. This article argues that courts must consider the cautionary function that the paper contract form has traditionally served and account for the different signals sent by electronic contracts. To support this argument, the article reviews the electronic contracting case law and compares it to older cases addressing the issue of assent when contract terms are delivered by novel methods. The paper then discusses the factual differences between paper and electronic contracts, drawing on computer science and marketing scholarship examining the ways that individuals perceive electronic communications. The paper concludes by suggesting approaches to the assent issue that take these different perceptions into account."

Moringiello, Juliet, "Signals, Assent and Internet Contracting" . Rutgers Law Review, Vol. 57, No. 1307, 2005 http://ssrn.com/abstract=859485

[Stephen Safranek]

John Lennon on Executing Contracts

On the 25th anniversary of John Lennon's death, this story from anecdotage.com:

George Harrison once refused to allow John Lennon to join him onstage during a concert and later denied him a backstage pass. Why? "At the time he was doing the concert, we were also finalizing the Apple papers [concerning the Beatles' beleaguered production company]," Lennon recalled. "And, actually, what happened was, at the last minute, I wouldn't sign it." Why not? "As I put it at the time, my astrologist said it wasn't the right time to sign..."

[Meredith R. Miller]

Supreme Beings Hear Contract Case

The Supreme Court heard arguments Tuesday in one of the rare contract cases that come before it.  True, the issue in Domino's Pizza, Inc. v. McDonald is actually a civil rights question, but there is a contract involved.  A recap of the briefs in the case is here, and a summary of what happened at oral argument is here.

In the case, Domino's allegedly breached its contract with a corporate franchisee.  The corporation's claim against Domino's apparently was settled in bankruptcy.  But the owner of the franchisee claimed that reason Domino's breached the contract is because because he was black, and therefore violated his civil rights under section 1981.  He's therefore claiming a personal cause of action against the franchisor even though he was not individually a party to the contract.

As Ross Runkel of LawMemo notes, the contract issue is pretty plain: one who is not a party to or a third-party beneficiary of a contract can't claim a breach under it.  The question is whether section 1981 would give a right of action for breach of the contract even where contract law wouldn't.

[Frank Snyder -- Disclosure: My friend and former partner Maureen Mahoney argued the case for Domino's before the Supreme Court.]

Moral Hazard and Private Evaluation

There are many situations involving agency contracts where the principal has information about the agent's performance that the agent doesn't have -- such complaints about the agent from third parties, or observations of the agent's activities of which the agent is unaware.  Those are the sort of situations explored by William Fuchs of Chicago's Graduate School of Business in a new piece called Contracting with Repeated Moral Hazard and Private Evaluations.  Here's the abstract:

A repeated moral hazard setting in which the Principal privately observes the Agent's output is studied. It is shown that there is no loss from restricting the analysis to contracts in which the Agent is supposed to exert effort every period, receives a constant efficiency wage and no feedback until he is fired. The optimal contract for a finite horizon is characterized, and shown to require burning of resources. These are only burnt after the worst possible realization sequence and the amount is independent of both the length of the horizon and the discount factor (δ). For the infinite horizon case a family of fixed interval review contracts is characterized and shown to achieve first best as δ → 1. The optimal contract when δ << 1 is partially characterized. Incentives are optimally provided with a combination of efficiency wages and the threat of termination, which will exhibit memory over the whole history of realizations. Finally, Tournaments are shown to provide an alternative solution to the problem.

[Frank Snyder]

Today in History: Ricketts v. Scothorn

On this date, December 8, 1898, the Nebraska Supreme Court issued its opinion in Ricketts v. Scothorn, 57 Neb. 51 (1898).

In the case, as all first-year law students know, young Katie Scothorn is working as a bookkeeper in a store, when her grandfather shows up.  Distressed that any granddaughter of his should actually work for a living, he gives her a promissory note for $2,000 at 6 percent a year, telling her that, in effect, she no longer must soil her hands with sordid trade.  She quits her job.  But 6 percent interest on $2,000 ($60 a year) isn't really enough to live on even in 1891, so she goes back to work.  Granddad subsequently dies before paying the money, and she sues the executor.

The court might have held that when one makes a gift of a promissory note, the gift is complete and the giver must make it good.  But that would be too simple.  Instead, the court holds that the promise was enforceable under contract law because Katie relied on it -- leaving open the rather absurd result that if she'd continued being a productive citizen she wouldn't have got the money at all.  It does make for a good teaching case, though.

[Frank Snyder]