ContractsProf Blog

Tigers use creative contracting

Few areas of contract practice are more difficult than that of employment contracts for high-profile athletes.  Added to the normal difficulties of reaching agreement are problems added by salary caps and the necessity for all unusual clauses to be blessed by the appropriate labor unions.

The Detroit Tigers are getting good reviews for their work in developing innovative contracts that manage to protect the team while giving enormous amounts of money to the players. The contract for new Tiger Magglio Ordonez, for example, will pay him an amount somewhere between $6 and $105 million—depending on how things work out.  A story in the Detroit News has an interesting discussion from the point of view of the player, the agent, and the team.

Help wanted

The University of Oklahoma College of Law is looking for a visitor for the 2005-2006 academic year to teach Contracts and/or Commercial Law.   Contact Kathleen Guzman at the school for information.

Today in history—February 9

1409: Constantine XI, the Byzantine emperor whose head will adorn a pike on the gate after the Muslims conquer Constantinople and extinguish the last remnant of the Roman empire, is born.

1748: Luther Martin is born. He will serve as attorney general of Maryland for 28 years, and as a delegate to the Constitutional Convention will refuse to sign the final document.

1825: The U.S. House of Representatives elects John Quincy Adams president of the United States after no candidate gets a majority of the popular vote.

1875: After 20 years of work and the loss of 200 lives, the Boston & Maine Railroad’s Hoosic Tunnel opens in the Berkshires. It is the first in which the compressed-air drill and nitroglycerine are used for excavation.

1883: Mining engineer and industrialist William E. Dodge (Phelps, Dodge & Co.) dies at New York City.

1883: Real estate developer Garnet Carter, the inventor of miniature golf, is born. He opens his first course at the Fairyland Club at Lookout Mountain, Georgia, in 1926. By 1930 there will be 25,000 in the U.S.

1893: Congress creates the U.S. Court of Appeals for the D.C. Circuit, the second least important court in the country for contracts professors.

1902: Dr. Eugène-Louis Doyen of Paris performs the first successful operation separating Siamese twins, but one dies.

1909: David Dean Rusk, whose career will prove that being a law professor is easier than being Secretary of State, is born at Lickskillet, Georgia.

1994: President Clinton appoints Guido Calabresi to the U.S. Court of Appeals for the Second Circuit.

1996: Scientists at the Gesellschaft für schwerionenforschung facility at Darmstadt, Germany, create element 112, which they name "ununbium." It has little practical use, since it always disintegrates within one-thousandth of a second.

News in brief

A British publishing company lands an $800 million U.S. government contract to provide information to low-income students on accessing federal programs.

Super Bowl-winning defensive coordinator Romeo Crennel is hammering out contract terms with his next employer, the Cleveland Browns, who hired him as their new head coach.

A pulp mill that pays 45 percent of the tab for a Humboldt Bay water district wants a new contract with lower costs—or says it may have to close.

Pilots for Mesa Air’s commuter airlines are "locked in a nasty battle" with the carrier over alleged contract violations.

ABC Television and the Academy of Motion Picture Arts & Sciences have agreed to a six-year extension of the contract to broadcast the Academy Awards.

If you can’t think of what Sunkist’s marketing slogan is, well, that’s probably why the Young & Rubicam ad agency has won the contract to take over ad duties for the brand.

Ballots are in the mail for union movie and television actors who are voting for a controversial new contract that calls for 3 percent raises (averaging about $1,000 per union member) and no share of studio DVD sales.

A breach of contract action by a jilted developer is throwing a wrench into plans for a $145 million redevelopment of a Kalamazoo River paper mill property.

Public enterprise

Prisoners from Sierra County, New Mexico (pop. 13,270) will no longer be held at the neighboring McKinley County jail in Gallup, after the Gallup facility lost a contract under which Sierra County had been paying $30,000 to $40,000 a month to house its prisoners. The prisoners will now be sent to a jail in Cibola County, instead.

Loss of the Sierra County prisoners will leave a hole in the jail budget. Since it has about 100 vacant beds, Warden Donna Goodrich says she’s now "soliciting prisoners from jails on the Navajo reservation and neighboring counties."

Are independent judges good for business?

It seems intuitive that businesses would value an an independent judiciary that can limit the power of the state.  And a new study by Daniel Klerman (Southern Cal) and Paul Mahoney (Virginia) suggest that this is, in fact, the case.  Studying the returns in the equity market that follow moves toward increasing judicial independence and prestige in 18th century England (e.g., increasing pay and granting tenure on good behavior), the pair conclude that there is in fact a positive correlation.  The abstract:

This paper assesses the impact of changes in judicial independence on equity markets. North and Weingast (1989) argue that judicial independence and other institutional changes inaugurated by the Glorious Revolution of 1688-89 improved public and private finance in England by putting restraints on the government. We calculate abnormal equity returns at critical points in the passage of statutes giving judges greater security of tenure and higher salaries. Early eighteenth-century legislation granting tenure during good behavior is associated with large and statistically significant positive abnormal returns. Other statutes had positive but generally insignificant effects.

Today in history—February 8

1693: Virginia charters the College of William and Mary in Williamsburg to train clergymen.  It will get its first chair of law in 1779.

1820: William Tecumseh Sherman is born at Lancaster, Ohio. After managing a bank in California and practicing law in Kansas, he will discover his real vocation at age 41.

1837: Democrat Richard Mentor Johnson, a Kentucky lawyer and Congressman, is elected Vice President by the U.S. Senate, after no candidate receives a majority in the Electoral College.

1861: The Confederate States of America is formed at Montgomery, Alabama.

1896: Representatives of several Midwestern universities meet to form the Western Conference, which later changes its name to "Big 10." There are 11 members.

1905: Louis-Philippe Pigeon, who will serve on Canada’s Supreme Court from 1967 to 1980, is born at Henryville, Quebec.

1910: William D. Boyce incorporates the Boy Scouts of America as a U.S. counterpart to the earlier British scouting organization.

1936: The first National Football League draft is held. Jay Berwanger of the University of Chicago is the first player picked. Yes, they used to have a football team.

1955: Lawyer/writer John Grisham is born in Jonesboro, Arkansas.

1969: After 157 years, the Saturday Evening Post ceases publication. The magazine cost twice as much to produce as its cover price.

1996: Cleveland Browns owner Art Modell reaches agreement with the city of Cleveland to betray them and move the team to Baltimore so that he can make a great deal more money.

Super Bowl ad cut during game

Daniel Drezner notes that Fox Television may have breached a contract with a sponsor by refusing to run an ad during the second half of the game.  The ad, for GoDaddy.com, featured a woman whose top bursts while she is testifying in front of a Congressional committee.

GoDaddy had purchased two spots; Fox apparently approved the ad in advance, but later pulled the second when the NFL complained after the first one was run.  Thanks to Instapundit for the link.  In an unusual burst of good taste, Fox also apparently refused to run spots featuring Mickey Rooney's ancient nude backside.

What is a contract?

Thanks to our colleagues over at CrimProf Blog, a reference to an article about law and The Simpsons.  A sample, involving the show where Homer sells his soul for a donut and "law taking guy" Lionel Hutz defends him:

Devil Flanders: I simply ask for what is mine.

Hutz: That was a right-pretty speech, sir.  But I ask you, what is a contract? Webster's defines it as "an agreement under the law which is unbreakable." What is unbreakable?  Excuse me, I must use the restroom.

News in brief

Maui, facing a glut of abandoned cars and junked refrigerators on its roads, lets an $825,000 contract to clean them up.

The Mexican Navy orders a new batch of Ural trucks from Russia.

A homeless man who does all his work in a public library gets his second book contract for his The Power of Choice.

A Sacramento real estate broker is asking home buyers to sign a new contract guaranteeing exclusivity and a commission on purchases.

John Cusack and Morgan Freeman will star in The Contract, a thriller set to begin shooting (so to speak) this spring.

Farnsworth obituary

For those who missed the New York Times obituary of contracts great Allan Farnsworth, here it is, and also here, for those not registered with the Times.  There's also a fine write-up at NorthJersey.com.

When a house is not a home

A Florida mother and daughter who violated their land sale contract by building a$100,000 house on their 10-acre plot will be able to use it as a barn or a pig sty, but not as a home, according to a Manatee County circuit judge.

Mosaic Phosphate had sold 7,000 acres of agricultural land 11 years ago, retaining mining rights and providing specifically that buyers could not build homes on the property.  Four years ago Alice and Yvonne Cislo bought the property, with notice of the restriction.  She went ahead and built her home in 2003.  Mosaic sued.

Judge Marc Gilner ruled for the phosphate company, issuing a permanent injunction prohibiting the Cislos from getting a certificate of occupancy for the home.  He refused to rule that the building be torn down, holding that it could be turned into an "agricultural structure."

Cases--Third Party Beneficiaries--Employees

A public school teacher is not a third party beneficiary of a state-mandated job preservation agreement entered into by her former and present employers, according to the Tennessee Court of Appeals.

In the case, the city of Chattanooga decided to stop running its school system, and turned operations over to Hamilton County.  The County school board and the city entered into a "Personnel Plan" which stated that the rights of existing Chattanooga teachers would not be "impaired, interrupted, or diminished."  Nevertheless, when plaintiff began work for the County she found herself in a lower paid job and sued.

Tennessee has recognized that employees may sometimes be third-party beneficiaries of their employers' agreements, said the court, but not here.  The agreement itself stated that the employee would be covered by the County contract, so the plaintiff had no remedy.

Barker v. Hamilton County Board of Education, No. E2003-02645-COA-R3-CV (Tenn. Ct. App. Feb. 2, 2005).

Spam is not just for dinner any more

A University of Maryland study finds that junk e-mail costs U.S. businesses almost $22 billion a year.  The average employee gets 18 spam messages a day and spends an average of 2.8 minutes reading and deleting them.  At average U.S. wage rates, that adds up to $21.6 billion of real work employees would otherwise be doing, says the study.  [Update: The assumptions in the study, though, seem to have some serious flaws.]

A striking finding of the study, however, is that four percent of recipients have actually bought something advertised through a spam message within the past year-- which suggests that the inundation will continue.

Today in history--February 7

1478: Lord Chancellor, fantasy writer, and martyr Sir Thomas More is born, the son of a King's Bench judge, at London.

1795: The 11th amendment to the U.S. Constitution is ratified.

1811: A massive earthquake at New Madrid, Missouri, rings church bells in Boston, Massachusetts.

1812: Charles Dickens, who will give up a career as an aspiring lawyer for journalism and fiction, is born at Portsmouth.

1914: Jaime Ramón Mercader del Río Hernández is born at Barcelona.  After assassinating Leon Trotsky in his study with an ice pick, he will be welcomed in Cuba and made Hero of the Soviet Union in 1961.

1920: One of the pioneers of the personal computer revolution, An Wang, is born in Shanghai, China.  Emigrating to the U.S. his Wang Laboratories will eventually have 30,000 employees.

1922: DeWitt and Lila Acheson Wallace begin distributing 5,000 copies of their new magazine, Reader’s Digest.  Today its circulation is over 12 million.

1938: Harvey Samuel Firestone, a Detroit buggy salesman who saw some merit in the new "horseless carriage" and started his own little tire company in Akron, dies at Miami Beach, Florida.

1943: The U.S. government announces that it will begin rationing shoes.

1969: Singer Tom Jones's new show appears on ABC television, after the network pays $20 million to a British production company for the rights.

1985: Sports Illustrated magazine discovers that sex sells better than football, as its "Swimsuit Edition" becomes the biggest issue in its history.

News in brief

The Detroit Tigers sign free agent outfielder Magglio Ordonez to what would be a five-year, $75 million contract if his bad knee holds up.

Meanwhile Newcastle United striker Craig Bellamy turns down a "mega" £11 million deal with Birmingham City.

National Hockey League owners and players have stopped talking again over a new contract to end the season-long lockout.

Kerr-McGee signs a contract with the China National Offshore Oil Corporation to explore for oil in the Pearl River Mouth Basin of the South China Sea.

Faculty at some Illinois community colleges are charging the system's board of trustees engaged in unfair labor practices by questioning teachers and trying to sway their votes on a proposed contract.

A $140 million breach of contract action in Provo, Utah, against the nation's fourth largest insurance broker enters its fourth week of trial.

Piper Rudnick Gray Cary announces that it has made 35 new partners.

Biker wins suit over endorsements

Cyclist Greg LeMond won a $3.46 million verdict Friday against a company that stopped using his name on its bike gear.

The three-time Tour de France winner, had a 10-year deal with PTI Holdings of New York for a "Greg LeMond" line of bike accessories.  But PTI decided it wanted to end the deal in 2002 after rival Lance Armstrong became the biggest name in cycling.  It unilaterally stopped using the name, offering to buy out the contract for $1.1 million.

The jury verdict was based on an estimate of royalties LeMond would have made over the life of the contract if PTI had continued to perform. 

Makin' Bacon

The dominant pedagogical approach taken in U.S. law schools has not changed much since Christopher C. Langdell convened his first Contracts class at Harvard back in -- well, a long time ago.  The casebook and the "Socratic" method have become as prevalent and as popular as kudzu.

Langdell's approach to contracts was sometimes called "scientific," but what would the founder of the scientific method, himself a lawyer (albeit a crooked one), have thought about it?  In a new essay, The Purer Fountains: Bacon and Legal Education, in Francis Bacon and the Refiguring of Modern Thought, Daniel Coquillette (Boston College) reaches back into Bacon's views on the legal education of his day (not good) to see what we might learn today.  Click on the link for the abstract.

ABSTRACT:

Today, the classical underpinnings of American legal education are under intense critical review. The dominant pedagogy, the  case book and the Socratic method, were established by Christopher Columbus Langdell (1806-1906) at Harvard Law School more than a century ago. Together with Langdell's first year curriculum, which was exclusively focused on Anglo-American common law doctrine, and his emphasis on a competitive, anonymous graded meritocracy, this system still exercises an incredible grip on elite American law schools. But Langdell's 19th Century model has now been challenged by many rivals, including critical legal studies, law and economics empiricism, global curriculums, and clinical instruction.

As is so often the case, Bacon anticipated these major forces of change. In his great De Augmentis Scientiarum (hereafter,  De  Augmentis), Bacon attacks the narrow parochialism of the common law pedagogy of his day.  "For at present there are nothing but schools and institutions for multiplying altercations and controversies on points of law, as if for the display of wit. And this evil is also an old one"  (Spedding ed., V, 108 De Augmentis Aphorism 93).  Attacking reliance on decided judicial cases and on the parochial, prevailing common law treatises and pedagogy, Bacon evolved a new system of legal instruction based on empirical observation, distilled into maxims or aphorisms, one that sought true global significance and universal scientific legitimacy.  "[T]here are certain fountains of natural equity from which spring and flow out the infinite variety of laws which individual legal systems have chosen for themselves.  And as veins of water acquire diverse flavors according to the nature of the soil through which they flow, just so in these legal systems natural equity is tinged and stained according to the site of territories, the disposition of peoples, and the nature of commonwealth. It is worthwhile to open and draw out the purer fountains of equity, for from them all amendment of laws in any commonwealth must be sought."  The Aphorismi (Neustadt, ed., 273).

This paper will set out Bacon's philosophy of legal education, analyze its fundamental pedagogical and doctrinal elements, and examine its lessons for American legal education today.  In so doing, it will be necessary to traverse a minefield of controversy. As E.O. Wilson has so powerfully described in his book Consilience:  The Unity of Knowledge (1998), "Bacon was the grand architect of an enlightenment dream that called for the illumination of the moral and political sciences by the 'torch of analysis.'" (Edward O. Wilson, Consilience: The Unity of Knowledge (New York, 1998), p.23. (Hereafter, Consilience.))   Bacon was also devoted to a belief in a unity of knowledge, relying on the common means of inductive inquiry that might optimally serve all branches of learning. (Consilience, p. 27).   In E.O. Wilson's words, "Bacon envisioned a disciplined and unified learning as the key to improvement of the human  condition."  (Consilience, p. 27).

But the unity of the modern legal academy has been fragmented into academic specialties and increasingly divorced from the experience of law practice. Post-modern and post-structuralist ideologies have attacked any pretense neutral and objective rule of law that could be taught in a formal, external setting, like mathematics or physics. Increasingly, law, and legal education, are seen as devoid of external truths.  In E.O. Wilson's words: "In the most extravagant version of this constructionism, there is no 'real' reality, no objective truths external to mental activity, only prevailing versions disseminated by ruling social groups. Nor can ethics be firmly grounded, given that each society creates its own codes for the benefit of the same oppressive forces." (Consilience, p. 40).  Hence comes the post-modernist prohibition against universal truth . . . which can have particular force in modern legal pedagogy.

Equally important, law practice itself has changed. The three qualities of modern law, described prophetically by Max Weber (1864-1920) and articulated in his great Law and Economy and Society, seem to be coming true. First, the legal ignorance of
the layman has increased, as legal rules become more specialized, complex and technical. Most lawyers in modern firms are divided into such specialties, and usually have little or no idea of what their partners and associates actually do. Second,  the anti-formalistic tendencies of modern legal development have led courts and tribunals to increasingly depart from objective or universal rules, and to rely instead on economical utilitarian meaning. Finally, there is the lay justice and corporate tendencies in the modern legal profession. Weber adds, "The use of jurors and similar lay judges will not suffice to stop the continuous growth of the technical element in the law and hence its character as a specialist's domain."

Add to those changes the rapid shrinking of world cultures by improved communications and the welcome, and dramatic, increase  in cultural diversity throughout American law schools and American society generally, and it becomes clear that conventional legal pedagogies and curricula will come under great stress. The century old orthodoxy of American legal education could soon be shattered into a hundred unrelated pieces. Can Bacon help us?

eBay missile vendor runs afoul of use terms

Online auctioneer eBay pulled the ad of a British man who was trying to sell a deactivated Soviet-era missile and launcher on the web site.

It didn't do so because selling such stuff is improper -- demilitarized weapons are considered "museum pieces" and are legitimate for sale -- but because the seller violated eBay's "terms of use" by offering the missile and the launcher on the same page.

Today in history--February 6

1740: Lorenzo Corsini, who gave up a successful law practice to join the church and later became Pope Clement XII, dies at Rome.

1756: Aaron Burr, the prominent New York lawyer who would become the only sitting Vice President to be indicted for murder, is born at Newark, New Jersey.

1788: Massachusetts becomes the sixth state to ratify the U.S. Constitution.

1815: The State of New Jersey issues the first charter for a railroad enterprise to John Stevens.

1826: The first 86 African-American emigrants from the United States found the town of Christopolis (later "Monrovia") in the American Colonization Society's African colony at "Liberia."

1840: British officials and Maori chieftains agree to the Treaty of Waitangi, routinely regarded as the formal founding of New Zealand.

1843: The craze for "blackface" music begins when "Dan Emmet's Virginia Minstrels" play their first "minstrel show" in the Bowery Theater, New York.  By 1860, the city will have twenty full-time resident minstrel companies.

1911: Ronald Wilson Reagan, who will become the first labor union president to be elected President of the United States, is born in Tampico, Illinois.

1914: Actor Thurl Ravenscroft is born at Norfolk, Nebraska.  His greatest role will be the voice of Kellogg's "Tony the Tiger."

1959: Texas Instruments' Jack St. Clair Kilby filees the first patent application for the "integrated circuit."

1985: The Perrier Company of France introduces its first new product in 123 years: flavored mineral water.

1991: Actor/comedian Danny Thomas, who will create a production company that makes many of TV's most popular series (Andy Griffith Show, Mod Squad, Dick Van Dyke Show) dies in Los Angeles.

1994: Comic book artist Jack Kirby (born Jacob Kurtzburg), who played a major role in creating many of the stars of the lucrative Marvel Comics empire (Incredible Hulk, Fantastic Four, X-Men, Daredevil) dies at age 76.