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Wednesday, March 15, 2006

Connery Part III

Just yesterday, I wrote a post asking why the golf club would have signed a contract with Sean Connery that allowed him to collect money after he quit.  I couldn’t find a copy of the contract on line, so I was really just guessing about it. After reading my post, Professor Jeff Lipshaw had this excellent comment to offer:

“I wonder what the precise wording of the contract was.  This is pure speculation because I haven't seen the contract.  But it seems to me this is either going to be an easy case of the kind of opportunism that simple and unambiguous contracts are supposed to avoid, or a very difficult case of ambiguous language leaving it unclear what the parties intended.

If the words "going rate" clearly and unambiguously apply to the going rate at the time the member resigns, then the following are possible:  (a) Connery is right, and he had an incentive to create value to the club proprietors - if he attracted members at that rate, he clearly earned the money, or (b) Connery got lucky because nobody thought about a huge inflation in the price, or (c) or somebody really blew it, and created a "four corners" document that allocated the risk of future inflation in a way the parties did not intend, invoking the application of mistake doctrine.

This is pure speculation, but I would bet something less than the whole farm that the lawsuit is based on an ambiguity around the words "going rate."  It is not uncommon for clubs to be obliged to pay as much as 80% of the equity or initiation fee back. I wonder if the contract failed to specify the precise time (upon entry or exit) at which the "going rate" was to be calculated.  In which case, we don't even have the contract language as an indicator of what the parties really intended.  Which I have contended in the past is the way most contract disputes in the real world arise:  both parties argue ambiguous language in their favor as applied to present opportunity, and there really never was a mutual intention!”

That makes a lot of sense.  Thanks for your input, Jeff!

[Miriam Cherry]

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