Thursday, August 31, 2006
A dispute between timeshare owners and a Bahamian resort may raise some interesting issues of impracticability.
Timeshare owners at the Crowne Plaza Golf Resort and Casino in Freeport are complaining that their timeshare points have been frozen and that they have been unable to vacation under the program since the Resort was closed in 2004. The Resort owners closed the Resort—shutting down both golf courses and the casino and throwing 1,300 people out of work—shortly after the place was hit by Hurricane Frances in September 2004. It has not reopened. The suit was filed in July 2006.
This is the time of year when we find ourselves drumming into students' heads the idea that "contract" doesn't mean "signed piece of paper" -- that there are such things as oral contracts, even involving vast sums of money. A new dispute out of Las Vegas gives us a great example. As Nova Southeastern's Ronald Brown notes in the linked article, "It is really easier to create an enforceable contract than most people think."
The dispute involves the alleged promise made by the winner of the largest poker jackpot in history to split his $12 million take 50/50 with another man. Sometime Hollywood talent agent Jamie Gold, who beat out some 8,000 contestants, allegedly promised Crispin Leyser before the tournament that Leyser would be entitled to half his potential winnings in exchange for Leyser's services in lining up celebrities to wear clothes advertising one of Gold's clients. Gold denies the deal, claiming a "misunderstanding," but Leyser says he's got a taped message on his answering machine referring to the deal.
An interesting aspect is that such oral deals are apparently not unknown in poker circles -- top players often have deals with backers to split winnings, and they apparently are not always in writing.
[Frank Snyder -- hat tip, Gerry Caplan]
A thousand years ago, when King Sweyn I Forkbeard (left) and his son Canute the Great founded a little fishing village on a fine harbor in Jutland, they might have thought that one day it would become one of Europe's great cities. But they probably had absolutely no idea that the place, later known as Copenhagen would one day host the International Conference on Business, Law, and Technology, which is scheduled this December 5-7, 2006.
Papers are still being accepted for the conference; the submission deadline is October 20. The organizers have a long list of topics they're interested in, which include Sales of Goods, Electronic Signatures, Contract Law, Consumer Protection, and E-business. Selected papers will be published in a book, Business Law: Present and Emerging Trends.
Wednesday, August 30, 2006
We have a new Number One on this week’s Top 10 -- Andrea Matwyshyn’s new paper on the contract/technology divide, which is getting a lot of notice around the Internet. Following are the top ten most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending August 27, 2006.
1 (6) Technoconsen(t)sus, Andrea M. Matwyshyn (Florida).
2 (3) The Law and Economics of Contracts, Avery W. Katz (Columbia), Benjamin E. Hermalin (Cal Berkeley-Economics) & Richard Craswell (Stanford).
4 (2) Rise of the Financial Advisers: An Empirical Study of the Division of Professional Fees in Large Bankruptcies, Lynn M. LoPucki & Joseph W. Doherty (UCLA).
5 (4) A Coasean Analysis of Marketing, Eric Goldman (Santa Clara).
6 (7) Between Rights and Contract: Arbitration Agreements and Non-Compete Covenants as a Hybrid Form of Employment Law, Cynthia L. Estlund (NYU).
7 (-) The Strange Death of Academic Commercial Law, Larry T. Garvin (Ohio State).
8 (5) Bankruptcy, Creditor Protection and Debt Contracts, Stefano Rossi & Nicola Gennaioli (Stockholm-Economics).
9 (7) Finding Nemo: Rediscovering the Virtues of Negotiability in the Wake of Enron, Adam Levitin (3rd Circuit).
10 (9) Juries, Judges, and Punitive Damages: Empirical Analyses Using the Civil Justice Survey of State Courts 1992, 1996, and 2001 Data, Michael Heise (Cornell), et al.
I grew up in Salt Lake City, Utah thinking that lawyers were boring. As an undergraduate I studied political science, philosophy, and economics mainly because I couldn't decide which field I was more interested in. Gradually it became clear to me that the most interesting place where the concerns of these disciplines intersected was in the law. I tested the waters by working as a research assistant for a duo of law professors and got hooked on jurisprudence. Some come to the law for money, power, and prestige. Some come to the law out of a burning sense of outrage at the injustices of the world and a desire to work for their redress. Some come to the law because they have humanities degrees and don't know what else to do with their lives. Oddly enough, I came to the law because I thought that reading law review articles was fun.
After college I worked on the DC staff of Senator Mitch McConnell (R-Ky) while my wife attended graduate school. When she finished her degree, we moved to
After graduating from law school (which included a stint on the Articles Committee of the Harvard Law Review, where even my appetite for reading law review articles flagged at times), we moved to Little Rock, Arkansas, where I clerked for Judge Morris "Buzz" Arnold on the Eighth Circuit Court of Appeals. (Best clerkship ever!) After clerking, I survived two years of litigation and appellate practice with the Washington, DC office of Sidley Austin LLP before running the gauntlet of the "meat market." I now teach contracts and commercial law at William & Mary
For the present, my primary research interest in contract law is the relationship between economic and moral theories of contract. My own conclusion is that neither approach adequately captures the law of contracts, which contains some rules and structures that are best explained by one approach and some rules and structures that are best explained by the other approach. My ambition is to show that despite this heterogeneity, contract law should be understood as more than the largely random result of historical and political accidents but actually has a relatively coherent normative structure. Hopefully, the products of this ambition will be coming soon to a law review near you. (You can download my work thus far here).
When not working on contracts, I have a scholarly interest in law and religion. My focus here is less on traditional questions of church and state than on understanding how people have used religion as a lens through which to understand and experience the law. I am currently researching an article comparing the early legal codes of commonwealth America's two indigenous theocracies -- the early Puritan of Massachusetts Bay and the mid-19th century Mormon "State of Deseret" in the American West -- in an attempt to understand the very different ways in which competing theologies are
manifested in the law.
In addition to the law, I enjoy spending time with my wife and 4-year-old son. I also like to garden, run and play chess (badly). I have long felt that I had an inner banjo player, but I feared to let him out because I was convinced that he basically sucked. I recently began learning the banjo and my fears have proven to be fully justified.
[Ed. note: Nathan also manages to contribute rather admirably to the blog over at Concurring Opinions].
The N.Y. Times reports that MetLife has engaged a real estate broker to start the bidding process for a sale of Stuyvesant Town and Peter Cooper Village. The 110-Building site rests on 80 acres of property along First Avenue between 14th and 23rd Streets in Manhattan. You don’t usually hear about acres when you hear about Manhattan real estate sales – the normal measurement being the square foot. But, with a target price of nearly $5 billion, the sale would be “the biggest deal for a single American property in modern times.”
Apparently there is interest in making the purchase:
Behind the scenes, the sale has already drawn interest from dozens of prospective buyers, including New York’s top real estate families, pension funds, international investment banks and investors from Dubai, according to real estate executives, even though the marketing book will not be released to bidders until next week.
But, the sale raises concerns about the availability of affordable housing in Manhattan:
The sale would only add to the seismic cultural shifts already under way in New York City and especially in Manhattan, where soaring housing costs have made the borough increasingly inhospitable to working-class and middle-class residents. It would be another challenge to Mayor Michael Bloomberg’s effort to stabilize and expand the number of affordable apartments in the city.
MetLife has reserved the right not to sell if the offers come in too low, but MetLife is confident that “the current market conditions are very favorable.” Indeed, the article reports:
As one executive involved in the sale put it, “This is the ego dream of the world: 80 acres, 110 buildings, 11,000 apartments, covering 10 city blocks in Manhattan.”
[Meredith R. Miller]
Sunday, August 27, 2006
Civil marriage is often described as a contract, though the description seems more metaphoric than legal. However, some religious traditions do actually include the signing of a marriage contract that is intended to bind the parties. For example, it is Jewish tradition that the marrying couple signs a Ketubah, which is a contract that sets forth their responsibilities to one another. There are varying texts, ranging from very traditional to, for example, versions rewritten to express more egalitarian beliefs.
Today, the AP reports (via the Grand Forks Herald) on American Muslim women who negotiate the traditional Muslim marriage contract to “help them assert rights under religious law that long have been played down by men.” An excerpt from the article:
…. Advocates contend their approach is well within Islamic law, even though skeptics say the interpretation is too influenced by Western thinking.
The contract is especially useful in the
United States, where Muslims come from a variety of ethnic backgrounds and follow different customs and levels of observance. The document can accommodate views ranging from liberal to conservative.
Karamah, an organization of Muslim women lawyers based in
Washington, is developing a "model" marriage contract that can be adjusted to meet the requirements of family law in different parts of the country, said Azizah al-Hibri, a founder of the group, whose name means "dignity" in Arabic. In the United States, civil law governs divorce, but judges have taken Muslim marriage contracts into consideration, sometimes viewing them as prenuptial agreements.
Al-Hibri, a law professor at the University of Richmond, Va., said the contracts also help couples prepare for the challenges of married life.
"Couples need to define their relationship as they enter the marriage, so that they do not get disillusioned later," al-Hibri said. "They need a meeting of the minds on what their family life will look like. The contract helps them do that by discussing the issues up front."
[Meredith R. Miller]
Thursday, August 24, 2006
The most practically important part of contract law is the law on damages. How much damage the plaintiff has actually suffered, and how much of that damage the defendant will have to make good, is an issue in virtually ever litigated dispute. Yet the rules vary from jurisdiction to jurisdiction. Sometimes they vary a little, sometimes a lot.
So those who teach or litigate damages should welcome a new primer from John Gotanda (Villanova), Damages in Lieu of Performance Because of Breach of Contract, which is included in a forthcoming book from the Hague Academy of International Law, Damages in Private International Law. Here's the abstract:
In contract disputes between transnational contracting parties, damages are often awarded to compensate a claimant for loss, injury or detriment resulting from a respondent’s failure to perform the agreement. In fact, damages may be the principal means of substituting for performance or they may complement other remedies, such as rescission or specific performance.
Damages for breach of contract typically serve to protect one of three interests of a claimant: (1) performance interest (also known as expectation interest); (2) reliance interest; or (3) restitution interest. The primary goal of damages in most jurisdictions is to fulfill a claimant’s performance interest by giving the claimant the substitute remedy of the benefit of the bargain monetarily. This typically includes compensation for actual loss incurred as a result of the breach and for net gains, including lost profits, that the claimant was precluded from because of the respondent’s actions.
All legal systems place limitations on damage awards. The most common limitations are causation, foreseeability, certainty, fault, and avoidability. In order to obtain damages, there must be a causal connection between the respondent’s breach and the claimant’s loss. In addition, the claimant must show that the loss was foreseeable or not too remote. Further, the claimant is required to show with reasonable certainty the amount of the damage. Many civil law countries also require, as a prerequisite to an award of damages for breach of contract, that the respondent be at fault in breaching the agreement. Damages may also be limited by the doctrine of avoidability, which provides that damages which could have been avoided without undue risk, burden, or humiliation are not recoverable.
The rules concerning damages for breach of contract are complex and vary greatly from country to country. Furthermore, in some federal countries, such as the United States and Canada, the applicable rules differ among states and provinces. This chapter, which is part of a comprehensive study of the awarding of damages in private international law, focuses on the general rules concerning damages awarded in lieu of performance because of a breach of contract (performance damages). It begins with an overview of the purposes served by awarding damages. It then examines performance damages for breach of contract in common law and civil law countries. The study subsequently analyzes the awarding of damages under the Convention on the International Sale of Goods (CISG), general principles of law, and principles of equity and fairness.
B.A., Yale College
J.D., Harvard University
LL.M, Temple University
From 2002-2004, Professor Duhl was an Abraham L. Freedman Fellow and Lecturer-in-Law at Temple University's James E. Beasley School of Law where he co-taught Contracts with his two mentors, Bill Woodward and Amy Boss. He then visited for two years at the Southern Illinois University School of Law.
Professor Duhl graduated from Yale College (B.A. 1991) and Harvard Law School (J.D. 1995), practiced law at Mayer, Brown in Chicago, Brown & Bain, P.A. in Phoenix, and Schiff, Hardin & Waite in Chicago, and then gave up big firm practice to represent tenants in Chicago Eviction Court before entering law teaching.
Professor Duhl writes in the areas of Agency & Partnership, Contracts, and Property, and is beginning an investigation of the payday lending industry as well as an empirical study of how courts have developed a substantive body of law for limited liability companies. He also edits the Unincorporated Business Law Prof blog.
Professor Duhl grew up north of Chicago and never thought that he would find himself living in Oklahoma. He lives there with his wife Michelle and their two dogs, Midnight and Kinsey (named after Kinsey Millhone - the protagonist in Sue Grafton's mysteries). His favorite job was teaching at a stodgy, private boys secondary school in Sydney, Australia, after graduating from college, where he relived the role of Robin Williams in Dead Poet's Society. He still encourages students to stand on the desk at the front of the room and yell if they are afraid to speak in class.
[To have your profile featured in the weekly ContractsProf Spotlight or recommend someone to be featured, please email Meredith Miller]
Wednesday, August 23, 2006
With the 2006 legislative season drawing to a close (indeed, it's been over for months in some states), and the 2006-07 academic year about to being (or having just begun at many law schools), here's a wrap-up of legislative action on Revised Article 1 this year:
Seven states -- Arizona, Colorado, Kentucky, Louisiana, New Hampshire, North Carolina, and West Virginia -- have enacted Revised Article 1 thus far this year. This is the same number of states that enacted Revised Article 1 in 2005 and the aggregate number of states that enacted Revised Article 1 before 2005. Bringing the total number of enacting states to 21.
Kentucky's, Louisiana's, and West Virginia's revisions are already in effect. Colorado's take effect on Sept. 1, 2006. Arizona's take effect on or about Sept. 21, 2006. North Carolina's takes effect on Oct. 1, 2006. New Hampshire's takes effect on Jan. 1, 2007.
California appears poised to become the 22nd enacting state. Just yesterday, the California Senate approved SB 1481 as amended by the Assembly. That bill is now set for enrollment and should be sent to Governor Schwarzenegger in relatively short order. Barring a veto, California will become the 22nd state (out of 22) to reject uniform R1-301 and the 16th state to adopt the uniform R1-201(b)(20) good faith definition. If enacted California's amendments will take effect Jan. 1, 2007. One interesting aspect about the California bill is the addition, by amendment, of a new non-UCC statutory provision that will have the essential effect of recodifying pre-revised 1-206 to preserve a statute of frauds for sales of personal property that is not subject one of the UCC's Articles.
The Massachusetts legislature continues to largely ignore HB 3731, which was first introduced in early 2005. Most recently, the Massachusetts House voted to further extend to January 2, 2007 the relevant committee's deadline to report back to the full legislature the committee's recommendation following public hearings held on October 26, 2005. While the Senate has yet to concur in this most recent extension, it seems clear that Massachusetts will not enact Revised Article 1 this year.
The Florida legislature considered Revised Article 1 in 2006, but allowed both House and Senate bills to die in committee. Bills that were introduced in 2005 in Illinois and Kansas and then languished went without further action in 2006.
For those who are interested, California SB 1481 will, if enacted, bring the number of Revised Article 7 enactments to 24. Meanwhile, five states -- Arkansas, Kentucky, Minnesota, Nevada, and Texas -- have enacted the latest Article 3 and 4 amendments, and Massachusetts appears to be progressing toward becoming the sixth.
The 2003 amendments to Article 2 and 2A continue to go nowhere. They have only been introduced in three states -- Kansas, Nevada, and Oklahoma -- and have died unceremonious deaths in all three. Unless NCCUSL and the ALI return to the drawing board and initiate a legislative full court press (neither of which seems likely in the near future), the only amendments to Articles 2 and 2A likely to be of any relevance in the foreseeable future are conforming amendments required by a state's adoption of Revised Article 1 or 7 or amended Articles 3 and 4.
[Keith A. Rowley]
Whatever the merits of "terms in the box" contracts like that involved in Hill v. Gateway 2000, they don't apply to warranty limitations that are not, in fact, ever delivered to the customer. That's the ruling from a recent Massachusetts case, Schacter v. Circuit City Stores Inc., Civ. No. 05-12456, (D. Mass. May 3, 2006), reported in BNA's Electronic Commerce and Law Reporter.
In the case, the plaintiffs bought a phone from Circuit City and bought an extended warranty. The store gave them a glossy brochure describing the warranty, which explicitly noted that the details of the warranty were contained in another document. That other document was never delivered. The logic of the Gateway case -- that buyers are bound to the after-delivered terms if they do not return the goods -- doesn't apply, said the court, when the terms are never actually delivered.
Pretty much everyone agrees that one of the least successful bits of UCC Article 2 -- not that there's not a lot of spirited competition -- is section 2-209, which deals with modifications and waivers. At one swoop it removes the consideration requirement for modifications, but then quickly backtracks by adding some writing requirements, which it then suggests don't really need to be followed, and then adds that the gratuitous modification can be retracted unless retraction would be unjust. Follow?
In a new paper, How to Create a Commercial Calamity, forthcoming in the Ohio State Law Journal, Robert A. Hillman (Cornell) uses 2-209 as a springboard to take a critical look at what happens when reform-minded lawmakers don't really understand either what they're trying to do or what the consequences of their actions will be. Here's the abstract:
There are many ways to define a legal calamity. For example, a grossly unfair or inefficient law constitutes a legal calamity. A law that produces serious and deleterious unintended effects, such as effects opposite from those intended, is another kind of legal calamity. A law that is so imprecise and confusing that judges do not know how to apply it and lawyers do not know how to advise their clients is still another example of a legal calamity, which I focus on in this paper. Because this paper is a contribution to a symposium on commercial legal calamities, my example is Uniform Commercial Code (UCC) section 2-209, dealing with contract modification and waiver. But my goal is not to explain why 2-209 is a calamity of the third kind - everybody already knows that it is. I use the section to illustrate the kind of strategy of lawmaking that cannot fail to create a calamity of obfuscation. Section 2-209 illustrates what happens when lawmakers who boldly seek to reform the law cannot bring themselves to carry out their plan or never fully understand the ramifications of what they are doing. Instead, they waiver. The result is chaos - a commercial calamity.
This clip of the final minutes of the (original!) Charlie and the Chocolate Factory movie begins with a great contract moment when Charlie's grandfather asks about the promised lifetime supply of chocolate. Of course, despite Wonka's citation to section 37(b) of the contract, the movie has a happy ending. Enjoy!
[Meredith R. Miller]
Tuesday, August 22, 2006
Few issues in contract law create more problems than the status of "letters of intent." Frequently, prospective parties to some undertaking sign a document that indicates their present intent to enter into a deal, but that also indicates that neither party is bound to anything. When the deal falls through, one or the other of the parties may sue.
In a recent client advisory, Letters of Intent: Principles and Pitfalls, Matthew Needham-Laing of London's Fenwick Elliott LLP, offers some thoughts from a U.K. perspective.
Plaintiff Louis Thyroff was associated with Nationwide Mutual Insurance Company (“Nationwide”) as an insurance agent for 21 years. When the relationship began in 1988, Thyroff and Nationwide entered into an Agent’s Agreement, which provided a non-compete clause that allowed competition only if certain enumerated requirements were met. Thryoff was also required to lease an agency-automation system, which consisted of hardware and software from Nationwide. Thyroff relied on this system to keep track of customer data.
In September of 2000, Nationwide sent Thyroff a letter canceling the Agent’s Agreement. The following day, without notice, Nationwide denied Thryoff access to the agency-automation system, and all his client files contained therein.
Thryoff sued Nationwide for (1) conversion of the personal
and business data contained on the computer and (2) breach of contract for
depriving him of access to business information necessary to compete once the
Agency’s Agreement expired. In an
unpublished opinion, the District Court dismissed the conversion claim and
granted Nationwide summary judgment on the breach of contract claim. Thyroff appealed to the Second Circuit.
In what is perhaps the most interesting aspect of the case (and has much less to do with contract law), the Second Circuit has certified the following question to the New York Court of Appeals: Is a claim of conversion cognizable for electronic data?
In addition, the Second Circuit affirmed the grant of summary judgment to
Nationwide on Thyroff’s breach of contract claim. Thryoff asserted that Nationwide owed a
contractual obligation not to seize policyholder information from the leased
computer without first providing Thyroff with an opportunity to duplicate
it. Thryoff attempted to cobble together
this duty by pointing to (1) a section of his Agent’s Agreement that allowed
him to compete if certain requirements were met and (2) the implied covenant of
good faith and fair dealing. The Second
Circuit interpreted the non-compete provision to allow Thryoff to compete in
certain situations, but did not interpret it as requiring Nationwide to provide
Thryoff with a means to compete. The
court determined that “despite Thyroff’s evidence that Nationwide may have acted in
bad faith in the manner in which it removed the policyholder information from
Thryoff’s possession, no rational trier of fact could conclude that in so doing
Nationwide violated any provision of the contract." The court held that the Agent’s Agreement,
coupled with the implied covenant of good faith, could not be read to impose any
affirmative obligation on Nationwide.
Thryoff v. Nationwide Mutual Ins. Co., __ F.3d __ (2d Cir. Aug. 21, 2006).
[Meredith R. Miller]
Why does the law enforce promises it calls "contracts" but not those it calls "gifts"? It's a good question. Such a good question that nobody has ever really been able to explain it so clearly that everyone agrees -- including me, this morning, on opening day of Contracts I.
In a new paper, Law & Gratuitous Promises, Robert A. Prentice (Texas-Business) takes a look at the various rationales and offers his take on the issues. Here's the abstract:
A foundational question in contract law is why certain promises are enforced and others are not. For many years scholars have attempted to justify the common law’s use of the consideration doctrine to draw this line. Recently, law & economics scholars have turned their attention to this issue, with less than fully satisfying results. This article critically examines the rationales provided by both traditional scholars and law & economics scholars and then contributes an analysis regarding whether gratuitous promises should be enforced that applies the principles of behavioral law & economics.
A macabre breach of contract action is unfolding in Pennsylvania, where families of six decesased babies and fetuses are suing the University of Pittsburgh's Magee-Women's Hospital for breach of contract and negligence, after the remains of 19 infants were found stored in a McKeesport funeral director's garage. The hospital had contracted with the funeral director to cremate the remains.
Monday, August 21, 2006
There's a lot of interest in comparative contract law these days. For those who've thought they'd like to teach in that area, but who've been intimidated by the prospect of putting together materials, relax. Carolina Academic Press has launched a new casebook, Comparative Contract Law, by Tadas Klimas, dean of the law school at Vytautas Magnus University in Lithuania.
Klimas is unusually well-suited for the task, since he trained as an American lawyer, practiced law in both New York and Lithuania, worked as a legal adviser to the Lithuanian Parliament, and is a founder and editor of the Journal of Baltic Law. The book is due out later this year.
From the Department of Judicial Decisions You Don't Want to Show Your Clients if They Still Owe You Money, this snippet from a recent California Court of Appeals decision, via The Legal Reader:
In sum, the artists lack standing to contest most of the matters they cite, their appeal is untimely as to anything of which they have standing to complain, their briefs are defective, their arguments lack merit and their attorney misrepresented the complexity of the issues, apparently as a means of delaying our consideration of the merits of the Artists’ arguments.
[Frank Snyder -- hat tip, QuizLaw]
With the beginning of the semester come a stream of new papers on contract and commercial law, three of which crack out Top Ten for the first time this week. Following are the top ten most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending August 20, 2006. (Last week's ranking in parentheses).
2 (3) Rise of the Financial Advisers: An Empirical Study of the Division of Professional Fees in Large Bankruptcies, Lynn M. LoPucki & Joseph W. Doherty (UCLA).
3 (-) The Law and Economics of Contracts, Avery W. Katz (Columbia), Benjamin E. Hermalin (Cal Berkeley-Economics) & Richard Craswell (Stanford).
4 (5) A Coasean Analysis of Marketing, Eric Goldman (Marquette).
5 (7) Bankruptcy, Creditor Protection and Debt Contracts, Stefano Rossi & Nicola Gennaioli (Stockholm).
6 (-) Technoconsen(t)sus, Andrea M. Matwyshyn (Florida).
7-tie (8) Finding Nemo: Rediscovering the Virtues of Negotiability in the Wake of Enron, Adam Levitin (3rd Circuit).
7-tie (10) Between Rights and Contract: Arbitration Agreements and Non-Compete Covenants as a Hybrid Form of Employment Law, Cynthia L. Estlund (NYU).
9 (9) Juries, Judges, and Punitive Damages: Empirical Analyses Using the Civil Justice Survey of State Courts 1992, 1996, and 2001 Data, Michael Heise (Cornell), et al.
10 (-) The Common Law as an Iterative Process: A Preliminary Inquiry, Lawrence A. Cunningham (Boston College).