ContractsProf Blog

News in brief

Baseball's Texas Rangers are saying they won't be re-negotiating the contract of staff ace Kenny Rogers, on the unusual ground that "on all of their contracts -- good or bad -- the Rangers stick to the deal they made."

Wal-Mart stores says it will close the Canadian store that is about to become the chain's first union shop.

Russia's Gorbunov Aviation signs a ten-plane deal with a Moscow finance lessor, a positive move for the government-owned industry.

Not surprisingly, a Seattle shipyard wins the $223 million contract to build four new automobile ferries for the state of Washington; it is the only one of five competitors found capable of performing.

Under pressure, the Alabama welfare department says that when its current contract runs out in 2007 it will stop using a call center in India to handle calls from food stamp recipients, but warns that taxpayers will have to pay more.

An energy services company wins a $175 million jury verdict for breach of a license agreement.

Professor Spotlight: Omri ben Shahar

Omri Ben-Shahar joined the University of Michigan Law School in 1998, after teaching for three years at Tel-Aviv University.  He had also served as a research fellow at the Israel Democracy Institute and a panel member of Israel's Antitrust Court, and clerked at the Supreme Court of Israel.

He spent five years in the early 90’s at Harvard University, where he earned a SJD and a Ph.D in economics.  At Michigan, he teaches Contracts and Law-and-Economics, and he founded the Olin Center for Law and Economics.  He is a regular participant in the annual meetings of the American Law and Economics Association.  This year he has joined the AALS Contract Section Executive Committee as an at-large member.

The unexpected contracts scholar

“When I was in graduate school, I didn’t expect to end up a contracts scholar,” he says.  “My dissertation work focused on economic analysis of liability rules in tort law, a field in which I am still actively writing. But it was during the transition to Michigan, when I started teaching contract law, that I realized how much I like the substance matter of this field, and that this is where I enjoy using my background in economics.”

Omri has published several articles applying the economic approach to contracts.  “My writings in contract law have been influenced greatly by the work of three people, with whom I also had the privilege of collaborating in research. Lucian Bebchuk was my mentor in law school, and, among other things, started me thinking about the topic of pre-contractual liability, which has featured prominently in my recent work.  Lisa Bernstein, in our joint work and in numerous conversations over the years, helped me identify interesting questions to ask, and to look beyond strict economic logic for responses.  And Avery Katz’s work, applying game theory to the analysis of contract doctrine, inspired me to do my own research in the intersection of game theory and the law.”

One of his recent activities was organizing the successful recent symposium on Freedom from Contract, which was published last year in the Wisconsin Law Review.  His own article in this symposium, “Agreeing to Disagree,” provides a novel solution to the problem of agreements-to-agree.  Some of his other recent work includes a series of articles on duress, including a forthcoming law review article titled, “Credible Coercion.”  He is now working on a more comprehensive treatment based off the ideas from his controversial article, “Contracts without Consent,” 152 U. Pa. L. Rev. 1829 (2004), which will be published as a book with the same name by Harvard University Press.

Favorite cases to teach?  Raffles v. Wichelhaus and ProCD v. Zeidenberg.  To keep fresh, he uses a different casebook every couple of years for his contracts course.  Most recently, he uses Fuller-Eisenberg and Murphy-Speidel-Ayres but will soon switch to Summers-Hillman.  He's currently preparing to teach an e-commerce course for the first time.

Omri, 42, lives in Ann Arbor but often returns to Israel.  He is married to Sarah Clarke (left), whom he met at law school, and they have three young children.  He says that his interactions with his kids inspired many of his ideas for scholarly research; particularly, observing their nuanced understanding of what promises mean and when they expect promises to be kept.

Omri has a personal website http://www-personal.umich.edu/~omri/ that contains links to his working papers, photos, and other materials from courses that he teaches.

Today in history--February 12

1719: One of the world's oldest insurance companies, the Onderlinge van 1719, is founded at Haarlem, Netherlands.

1733: The first settlers from the H.M.S. Anne go ashore to found the 13th of the original American colonies, which they name for King George II.

1809: Abraham Lincoln and Charles Darwin are born on opposite sides of the Atlantic and at opposite ends of the social spectrum.

1825: The Creek Indians cede the last of their ancestral lands in Georgia to the U.S. government and begin their trek west.

1870: The Utah Territory grants women the right to vote.

1879: The first artificial ice rink in the U.S. opens at Madison Square Garden in New York.

1946: The United Kingdom scuttles the last of 121 captured German U-boats.  When it later discovers that the U-boats contain a great deal of valuable stuff, it has to pay someone to bring them back up again.

1973: The vanguard of a revolution that never arrives, Ohio becomes the first state to put road signs in kilometers on its highways.

2004: Mattel Toys announces that after 43 years of dating, Barbie and Ken have decided to split, saying that they need to "spend some quality time apart."

Cases--Limitations--UCC 2-725 trumps sovereign immunity

The statute of limitations in U.C.C. § 2-725 trumps state common law and statutory sovereign immunity, according to the Texas Court of Appeals.

In the case, a local hospital district, conceded to be a government entity, used GE equipment in a new electrical system it had installed.  It claimed that the equipment was defective, but it waited five years after the goods were delivered to bring the action.  GE moved to dismiss for failure to comply with the statute of limitations.

A government instrumentality is a “person,” said the court, and a “person” who engages in a transaction is a “party” under  § 1-201(b).  Under § 2-725, a “party” must bring the action within four years.  That means the hospital is covered.  Texas has a general statute that provides that state entities are not bound by various statutes of limitations, but the one in § 2-725 isn’t specifically listed.  The action was therefore barred.

Tarrant County Hospital District v. GE Automation Services, 2005 Tex. App. LEXIS 699 (Jan. 27, 2005)

News in brief

A New York Times story says that baseball's Yankees knew about slugger Jason Giambi's steroid use, and carefully eliminated all references to the performance enhancing substances in his $120 million contract.

Some actors are campaigning against the proposed new SAG/AFTRA contract with film and television producers, arguing that they ought to get a better deal.

Basketball's Toronto Raptors apparently will buy out the contract of "fading star" Alonzo Mourning, for somewhere around $10 million.

North Carolina's Goodrich Corp. wins a 20-year, $6 billion contract to supply parts to France's Airbus Industries.

Labor troubles at San Francisco hotels continue.

Scandal-plagued Chicago mayor Richard Daley issues an executive order saying that city contractors who contribute to his campaign war chest will forfeit their contracts, although he'll keep their contributions.

The Boston subway system signs a 15-year contract to provide wireless services at four of its busiest stations.

Cases—Damages—No consequentials on first film venture

A film producer whose first film saw its opening spoiled by his Internet service provider's erroneous blocking of his e-mail notices,  couldn't muster enough evidence to allow the grant of consequential damages, according to the U.S. Court of Appeals for the Second Circuit.

Independent producer Peter Hall had scheduled the premiere of his Delinquent ("Raw, restless, contemplative and haunting"—The Village Voice)  in New York City on September 12, 1997.  He had a personal account with an ISP, EarthLink.  He used that account to send out notices of the premiere, hoping to drum up business. EarthLink, thinking it was a spam e-mail, blocked his account.  It later determined, however, that he was in compliance with its rules and unblocked the account. Hall sued.

Applying California law, the court held that while damages for a new venture could be recovered if "their nature and occurrence can be shown by evidence of reasonable reliability," the producer, who had never made film before, could not show how much money it would have made if the ads for the new film had actually been delivered.

Hall v. EarthLink Network, Inc., 2005 U.S. App. LEXIS 1230 (2d Cir. Jan. 25, 2005).

Soccer and incomplete contracts

The problem of incomplete contracts is a hot one in the contracts field. A new paper from the National Bureau of Economic Research takes a look at the issues by examining the contracts of Spanish soccer players.  We haven't read it yet, and we're not exactly sure what it's about, but here's the abstract:

The theory of incomplete contracting is rival to that of complete contracting as a frame of reference to understand contractual relationships. Both approaches rest upon diametrically opposed postulates and lead to very different policy conclusions. From a theoretical viewpoint, scrutiny of the postulates has revealed that both frameworks are reasonable. This paper designs and implements an empirical test to discern whether contracts are complete or incomplete. We analyze a problem where the parties' inability to commit not to renegotiate inefficiencies is sufficient for contractual incompleteness. We study optimal contracts with and without commitment and derive an exclusion restriction that is useful to identify the relevant commitment scenario. The empirical analysis takes advantage of a data set from Spanish soccer player contracts. Our test rejects the commitment hypothesis, which entails the acceptance of the existence of contractual incompleteness in the data. We argue that our conclusions should hold a fortiori in many other economic environments.

Law & econ call for papers

The Supreme Court Economic Review, an "interdisciplinary journal that seeks to provide a forum for scholarship in law and economics, public choice and constitutional political economy" is looking for papers.  If you’re the sort of person who actually knows what "constitutional political economy" is, this may be something you’re interested in. Click the link for the call for papers.

                        CALL FOR PAPERS
      SUPREME COURT ECONOMIC REVIEW

The Supreme Court Economic Review is an interdisciplinary journal that seeks to provide a forum for scholarship in law and economics, public choice and constitutional political economy. Its approach is broad ranging and contributions will employ explicit or implicit economic reasoning for the analysis of legal issues, with special attention to Supreme Court decisions, judicial process, and institutional design. The use of theoretical and empirical economic models is permitted, but papers are expected to be accessible to a general audience of judges, academic lawyers, and economists.

PAPER SUBMISSIONS:

Peer review is an important feature of this publication. Accordingly, submissions should be accompanied by a cover letter indicating that the submission is being made on an exclusive basis. Electronic submission of manuscripts can be directed to the Editors, Supreme Court Economic Review.

FURTHER INFORMATION:

Other correspondence can be directed to:

Editor, Supreme Court Economic Review
George Mason University School of Law
3301 North Fairfax Drive
Arlington, Virginia 22201-4498

For more information, see Supreme Court Economic Review at the University of Chicago Press's website.

Coaching deals taking longer

Contract negotiations for successful university athletic coaches are getting more complicated every year. Auburn University, for example, has four of its top coaches unsigned, and negotiations are continuing.  The most prominent of them is football coach Tommy ("13-0") Tuberville, who has agreed "in principle" to seven years at $2 million a year, but the devils are in the details.

"It's a litigious society that we live in," says the school’s athletic director. "It's always this, that and the other. If you're going to have something for three, four, five years, you want to be able to live with it."

Today in history—February 11

1650: The father of modern philosophy, René Descartes, dies at age 53.

1808: A Pennsylvania judge named Jesse Fell experiments with burning coal in his fireplace.  Turns out, it works, and the Pennsylvania coal industry is born.

1809: Robert Fulton receives a patent for the steamboat.

1812: Massachusetts Governor Elbridge Gerry announces a new redistricting plan for the state, which seems suspiciously designed to enhance the electoral chances of Jeffersonian candidates.  One district looks like a salamander, or "gerrymander."

1826: University College London, the third or fourth university in the U.K. (Durham argues about the sequence) is founded.

1847: Industrialist Thomas Alva Edison, founder of several companies including General Electric, is born in Milan, Ohio.

1928: Cousins Ed Shoemaker and Edward Knabusch invent the La-Z-Boy recliner chair.

1941: Bandleader Glenn Miller receives the first "gold record" ever awarded, for his Chattanooga Choo-Choo.

1966: Willie Mays of the San Francisco Giants becomes baseball’s highest-paid player, at $130,000 a year.

1994: The Monsanto Co. begins sales of the first genetically engineered growth hormone for cattle, called "Posilac."

1999: Pluto passes Neptune to become the farthest planet from the sun; Neptune had been farther since 1979.

Getting what you pay for

Are Super Bowl commercials worth $2.8 million for 30 seconds?  A new look by the good folks at the Wharton School says "maybe."

Houston is not a bad place to spend the winter

Houston's South Texas College of Law is looking for candidates for its new Fred Parks Distinguished Visiting Chair in Law.  There's no subject matter restriction, but the school wants a "distinguished scholar with a sincere interest in teaching and mentoring younger faculty."

Interested parties, or those who have folks to suggest, should contact the search committee chair, Cherie Taylor, or Dean James Alfini. 

Stanley Cup trust question aired

Via our colleagues over at Wills, Trusts & Estates Prof Blog, here’s a link to an opinion letter raising a neat little interpretation question.  It's one involving trusts, not contracts, but among the questions is whether the NHL is the "world’s leading hockey league" this year if it isn’t playing because of a lockout.  If it's not, then other Canadian hockey teams may have a right to challenge for the prestigious cup.

Cases—Interpetation—Wrestler sues over change in script

A professional wrestler who claims that a wrestling promoter improperly changed the scripted outcome of a match can go forward on his breach of contract claims, says the Georgia Court of Appeals.

Wrestler Terry Bollea, a/k/a "Hulk Hogan" and "Hollywood Hogan," had a deal with Universal Wrestling Corp. (formerly World Championship Wrestling), for a pay-per-view program called "Bash at the Beach."  Under the contract, the script called for Hogan to wrestle "champion" Jeff Jarrett.  Hogan says that UWC changed the script by having Jarrett lie down and forfeit the match.  This and other things, said Hogan, violated a clause in his contract that provided that Hogan "shall have approval over the outcome of all wrestling matches in which he appears, wrestles and performs, such approval not to be unreasonably withheld."

UWC argued that "outcome" meant whether Hogan won or lost; Hogan argued that it meant the "outcome" of the "story line"—the total result that would affect his character. The court found that summary judgment was properly denied since a jury trial would be required to sort out such questions.

Bollea v. World Championship Wrestling, Inc., 2005 Ga. App. LEXIS 33 (Jan. 21, 2005).

Trailer residents sue for power outage

The city of Hampton, Georgia, is locked in a dispute a local trailer park, many of whom have been without city-provided electricity since August.  The city cut the power to the Clover Ranch Manufactured Home Community, claiming that the community’s wiring was inadequate.  Residents are claiming breach of contract.  The park’s owners have sued, claiming that vacant units can’t be leased because there’s no power.  The park has been open since 1970.

Man bites dog

In case you missed it, some of the nation's elite law reviews (Columbia, Cornell, Duke, Georgetown, Harvard, Michigan, Stanford, Texas, Penn, Virginia, Yale), are taking a stand for shorter articles.  Under the joint agreement, each review is going to develop its own standards.

The Harvard Law Review is out of the gate with its new rules, under which it will give preference to articles of less than 25,000 words and will not print articles over 50,000 words without good reason.  Click on the link for the Review's letter outlining the new policy.

                              Harvard Law Review
                       1511 Massachusetts Avenue
                          Cambridge, MA 02138

                                                             February 9, 2005

Re: Articles Length Limitations

Dear Professor,

I wish to report an important development in the Harvard Law Review's policy regarding the length of law review articles. As many of you know, last December, the Harvard Law Review conducted a nationwide survey of law faculty regarding the state of legal scholarship. Nearly 800 professors completed the survey and submitted their feedback. As promised, we will soon post complete tabulations of the survey on the web.

Importantly, the survey documented one particularly unambiguous view shared by faculty and law review editors alike: the length of articles has become excessive. In fact, nearly 90% of faculty agreed that articles are too long. In addition, dozens of respondents submitted specific comments, identifying the dangers of this trend and calling for action. Survey respondents suggested that shorter articles would enhance the quality of legal scholarship, shorten and improve the editing process, and render articles more effective and easier to read.

We are very grateful for your feedback and have shared your concerns with a number of law reviews across the country. Recently, these law reviews issued a statement that reflects a commitment to play an active role in moderating the length of law review articles; we have posted this statement on our website at the following address:

Joint Statement: www.harvardlawreview.org/articles_length_policy.pdf  [Ed. note, the link provided in the actual letter does not work; this one does.]

Ultimately, however, individual law reviews will have to decide for themselves how best to resolve these concerns. At the Harvard Law Review, we agree with your diagnosis and apologize for whatever role we have played in encouraging the submission and publication of lengthier articles. In an effort to respond to these concerns, we are committed to doing our part to counter this troubling trend and to break what we perceive as a vicious cycle. To that end, we now adopt the following articles submission and publication policy:

The Harvard Law Review will give preference to articles under 25,000 words in length-the equivalent of 50 law review pages-including text and footnotes. The Review will not publish articles exceeding 35,000 words-the equivalent of 70-75 law review pages-except in extraordinary circumstances.

Although academic publications from a range of other disciplines regularly use length limitations, we are aware that we are abruptly introducing a constraint to which the legal academy is unaccustomed. Not surprisingly, then, we anticipate growing pains and acknowledge that our approach runs certain risks. Still, we hope the policy we announce today will play a modest role in reversing a trend that has cost legal scholarship dearly. To ease the transition, we have installed a fully functional electronic submission system and recommend the following practices:

- We encourage contributors who have submitted articles that exceed the new length limitations to resubmit abbreviated versions of their articles. We are sorry for the inconvenience this mid-year change will cause and the additional work it will surely require. Please understand that these policies, however burdensome, are intended to enhance legal scholarship in the long run. Indeed, the Review conceives of this new policy as a modest first step in a longer process toward substantially shorter articles.

- The electronic submission system allows contributors to submit articles and request expedited review through a web interface. Contributors who are resubmitting a piece to meet length requirements may feel that the material removed from the original submission would be helpful background for a reader unfamiliar with the subject matter. If so, please feel free to include the material as a supplementary document through the new electronic system, which can be reached at the following address: www.harvardlawreview.org/manuscript.shtml

We are well aware that our policy will draw some praise and some criticism. Rest assured that we plan to monitor this issue carefully, and we acknowledge that modifications may be needed in years to come. For now, though, we announce and adopt these policies to try to catalyze some change for the good. We hope you will support our efforts.  If you have any questions, feel free to contact me [by e-mail].

All the best,

Thiru Vignarajah
President, Volume 118
Harvard Law Review

News in brief

Two big law firms will get even bigger, as San Fran’s Pillsbury Winthrop and D.C.’s Shaw Pittman agree to a merger.

Singer Britney Spears sue her insurance carriers for nearly $10 million, after they refuse to pay on a policy covering a canceled tour.

The New York Transit Authority issues a $143 million contract to Unisys Corp. for "desktop support services."

The Peruvian government cancels a water-services privatization contract with the French firm Suez Lyonnaise des Eaux.

Roads will stay open in Ohio, as unionized turnpike toll collectors and maintenance workers agree to a new contract.

The Association of Trial Lawyers of America, hoping to "reach out" to GOP senators pushing tort reform, hires a new chief executive—from Howard Dean’s presidential campaign.

A grand jury decides not to indict a man prosecuted for telling really lame lawyer jokes at a Long Island courthouse.

An heir to the Morton Salt fortune and the Gibson Dunn law firm have been hit with a $23 million judgment for a baseless lawsuit against an art expert.

Save big bucks, register today

Today is the last day to get the Early Bird Registration Discount for the ABA Section of Business Law’s Spring Meeting in Nashville. The meeting is scheduled for March 31-April 3, and you get $50 off if you register by today. The meeting brochure is here and you can register online here.

Today in history—February 10

1258: The Mongols burn Baghdad to the ground.

1808: Civil engineer John Edgar Thomson is born in Springfield, Pennsylvania. As president of the Pennsylvania Railroad, will take it from 246 miles of track to 6,000 miles of track by 1874.

1897: The New York Times adopts the slogan, "All the news that’s fit to print."

1933: The Postal Telegraph Company of New York introduces the singing telegram.

1956: Elvis Presley records Heartbreak Hotel for RCA Records.

1957: The styrofoam cooler is invented.

1961: The Los Angeles franchise in the new American Football League moves to San Diego. The team is called "Chargers" in part because owner Barron Hilton had recently launched his new "Carte Blanche" credit card.

1967: The 25th amendment to the U.S. Constitution is ratified. It’s the one about what happens when the president becomes incompetent.

News in brief

The most powerful woman in American business, CEO Carly Fiorina of Hewlett-Packard, has stepped down, reportedly forced out by the board.

New Delhi's Multi Commodity Exchange has started trading in India's first-ever crude oil futures contract.  Meanwhile, the Chicago Board of Trade is getting ready to offer the first futures contract for ethanol.

Chicago aldermen are calling for an investigation after repeated scandals involving award city contracts have rocked city hall.

Sikorsky Aircraft Co. says that it will not protest the Navy's award of a $1.8 billion helicopter contract to a competitor.

Unions at the University of Maine say that the system's chancellor has "poisoned labor relations" by his comments to a newspaper.

Workers at Imperial Sugar have ratified a new three year contract; details aren't released but both sides say they're pleased.

The Los Angeles Philharmonic has reached agreement with conductor Esa-Pekka Salonen on a new contract through 2008, with additional option years thereafter; terms are not disclosed.

A U.S. company receives a $15 million contract from the Israeli government to help bring U.S.-style welfare reform to Israel.