Tuesday, October 17, 2006
Following are the top ten most-downloaded recent papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending October 15, 2006.
1 The Promise and Perils of Credit Derivatives, David A. Skeel (Penn) & Frank Partnoy (San Diego).
2 Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences, Barak D. Richman (Duke) & Jeffrey Macher (Georgetown-Business).
3 Payment Wars: The Merchant-Bank Struggle for Control of Payment Systems, Adam Levitin (Independent).
4 The Flight from Arbitration: An Empirical Study of Ex Ante Arbitration Clauses in Publicly-Held Companies' Contracts, Theodore Eisenberg (Cornell) & Geoffrey P. Miller (NYU).
5 Expectation Damages and Contract Theory Revisited, Richard Craswell (Stanford).
6 The Law and Economics of Preliminary Agreements, Alan Schwartz (Yale) & Robert E. Scott (Columbia).
7 Restitution for Wrongs and the Restatement (Third) of the Law of Restitution, James Steven Rogers (Boston College).
8 What Do Corporate Default Rules and Menus Do? An Empirical Examination, Yair Jason Listokin (Yale).
9 Legal Origins: Reconciling Law & Finance and Comparative Law, Mathias M. Siems (Edinburgh).
10 Hoffman v. Red Owl Stores and the Myth of Precontractual Reliance, Robert E. Scott (Columbia).
We're never sure whether we ought to say "congratulations" or "condolences" (after all, you now get to hear grade complaints from everyone's students) but Brooklyn Law School contracts prof Lawrence M. Solan has been named Associate Dean for Academic Affairs there.
Solan, who is an expert in language and law, has been at Brooklyn since 1996, and is the Don Forchelli Professor of Law.
The New York Law Journal reports on this hairy breach of contract case from the S.D.N.Y.:
Pony Pal entered into a contract with Claire's Boutiques in September 2004 to sell "an inventive, removable hair piece comprising an elastic loop suitable to surround and bind a ponytail of a user and a connection end securing a first end of a length of hair strands to the elastic loop."
In exchange for an upfront payment of $10,000 and future royalties of 5 percent, Pony Pal agreed to let Claire's manufacture and sell its product. Claire's paid the $10,000. But the business relationship between Claire's, an international retailer with over 2,000 stores nationwide, and the Iowa-based licensor grew brittle. Claire's refused to pay royalties, and the adversaries soon were splitting hairs over patent specifics.
Claire's argued that, because it had made enough changes to Pony Pal's hair piece, it had fallen outside the scope of the patent.
The case distilled to an interpretation of the language in Pony Pal’s patent which described the removable hair piece as comprising “a length of hair strands having a first end and a second end.”
Claire's argued that the wording of the patent called for strands of hair to be attached at one end to an elastic loop.
The two parties disagreed over the meaning of the term "end." The patent language at issue reads "a connection securing the first end of the length of hair strands to a portion of the elastic loop."
Claire's argued that "the 'first end' and 'second end' of the 'length of hair strands' must be the same as the collective ends of the hair strands themselves." Based on this reading, Claire's created a hair piece that consisted of a braid and placed the loop at a different end.
Pony Pal, in its memo of law, contended that the "first end" language should be properly construed as "the proximal end of a collection or bundle of hair strands and is not limited to end extremities of linear or unidirectional strands of hair."
After combing through the legal papers, Judge Haight concluded that the plain meaning of the words was that "one end of the length of hair is opposite to the other."
"The first end is attached to the elastic loop, the other hangs opposite to it (that is, distally from the elastic loop)," Judge Haight said. "The language of the claim, and indeed, the invention, are no more complicated than this."
Based on this interpretation, the court held that Claire's product was similar enough to Pony Pal's to fall within the patent and, therefore, Claire had breached the parties' contract by failing to pay royalties.
NYLJ article. Full text of the opinion.
[Meredith R. Miller]
Monday, October 16, 2006
In my Cyberlaw course, I argue to my students that the best way to form a valid online agreement is through a "mandatory non-leaky clickthrough" agreement. By this, I mean that, to reach their destination, every user must go through a mandatory process that requires the user to affirmatively click that they are agreeing to the contract terms. These contracts generally have fared well when considered by courts--at least, from a formation standpoint. (See my list of online contract formation cases here).
For a textbook example of how the courts evaluate mandatory non-leaky clickthrough agreements, consider ESL Worldwide.com, Inc. v. Interland, Inc., 06-CV-2503 (S.D.N.Y. June 21, 2006). In that case, a disgruntled customer sued a web host because the hosted website was allegedly offline for 7 months. The web host moved to dismiss based on the forum selection clause in its contract. The court says:
First, Shin may not remember click the icon, but Defendants' records reveal that he did, in fact, so click...Furthermore, because of the manner in which the website is organized, without having clicked "Accept," Shin would not have been allowed to access certain other sections of the site, and it is uncontested that Shin did enter those sections...Finally, the text above the "Accept" icon clearly states that by clicking "Accept," a user is bound to the new Terms of Services, and such terms, which include the forum selection clause, are easily accessed by clicking on the accompanying link.
As you can see, an airtight formation process makes it easy for the court. Case dismissed.
Google recently won a similar outcome in Person v. Google, where Google successfully moved to change venues based on the venue selection clause in its mandatory clickthrough AdWords contract. Person v. Google Inc., 2006 WL 2884444 (S.D.N.Y. Oct. 11, 2006).
I taught both Frigaliment and Peerless last week. What a great week to be a contracts professor!
Helen of Troy's face may have launched a thousand ships, but Peerless is the ship that launched a hundred Limericks. Hmmm, perhaps a lesser boast. In any event, this was my first Limerick, and since I was assisted in writing it by my wife, the poet Catherine Tufariello, I think it is one of my best.
There are pedagogical principles underlying my Limericks for Lawyers project. The Limericks are supposed to summarize facts and law in a way that helps students remember both the cases and the principles that they stand for. But sometimes the cases themselves are so memorable, pedagogy takes a back seat to frivolity.
Friday, October 13, 2006
According to news reports, Bruce Crispin Leyser has filed a complaint claiming entitlement to half of Gold's winnings. Leyser claims that he and Gold had an agreement whereby they would cooperate to find celebrities to wear Bodog merchandise at the World Series of Poker. In return, Bodog would pay the $10,000 entry fee for one of them in the World Series. Since only one of the two could pay, according to Leyser, the two men agreed to split the winnings.
Leyser claims to have a recording of a telephone conversation with Gold in which Gold promises to pay Leyser half of his winnings. According to Leyser, Gold is a gambler. Flush with cash, he might go straight to a casino. Hence the need for a TRO.
Thanks to my student, Jeff Lehrman, for alerting me to the story.
Those who teach Bazak Int'l v. Mast Indus., on the UCC's merchant exception to the Statute of Frauds, might be interested in a more recent case also involving Bazak and the Statute of Frauds, Bazak Int'l v. Tarrant Apparel Group.*
In Bazak v. Tarrant, the S.D.N.Y. held that an e-mail sent between merchants could serve as a confirmation of an earlier agreement pursuant to the UCC's "merchant exception to the Statute of Frauds (Section 2-201(2)).
The case is significant in two respects. First, Bazak is two-for-two on this issue. Second, it addresses the tricky question of whether e-mails can serve as confirmations. The difficulties with the UCC's "merchant exception" are manifest in the New York Court of Appeals' 4-3 decision in Bazak v. Mast Indus. Those difficulties are compounded in Bazak v. Tarrant, because the recipient of the allegedly confirmatory e-mail claims never to have opened the e-mail or its attachment. The District Court nonetheless denied Tarrant's motion to dismiss based on the Statute of Frauds, as material issues of fact regarding the existence of an agreement remained for resolution.
*Thanks to my student who, in violation of my policy on laptop use, found this case for me using Google during class earlier this week
Thursday, October 12, 2006
As usual, eBay never stops providing amusing contracts fodder. In addition to the “Virgin Mary Toast,” discussed infra, the occasional kidney, and people who auction themselves off, here’s a story about a most unusual item (a mummy!) for sale:
Porrett said she told police she obtained the remains from a friend, who works in demolition and who said he found them in a Detroit school he helped demolish nearly 30 years ago.
Sterling told the Times Herald that she was selling the item for a friend, had done research and contacted an attorney before posting the remains on eBay.
"It's an anatomical, medical-use skeleton," she said. "I would never have put it on (eBay) if I thought it was anything other than an anatomical, medical thing."
Company spokeswoman Catherine England said the posting was removed from eBay Wednesday morning because it violated a policy against selling human remains. The Web site allows the sale of skeletons for medical use, but not mummified remains.
Perhaps this story is in keeping with the fact that this is October, and Halloween is fast approaching. Boo![Miriam Cherry]
The case involved Fredolin Egger, who bought bought some land at a tax sale, and sold it to a man named Larkin. The land was apparently sold under the wrong name, and Scott Nesbit, who had bought up the patent title to the property and that of various heirs, brought suit to quiet title in him. Subsequently Nesbit offered to dismiss the suit and give a quitclaim deed to Egger in exchange for $400. Egger responded, "I will accept your proposition, with the understanding that you will deliver to me all the papers you have made in reference to the land -- U.S. patent and other deeds." The court's decision is notable because it holds that this "understanding" that Egger will get the papers was a new term that turned his purported acceptance into a counter-offer.
Viewed one way, the case is a particularly rigid application of the mirror image rule, under which the court treated a very minor request -- what else would Nesbit do besides transfer all the deeds to the man who was buying his interest? -- as a condition and defeated the contract. On another viewing, however, the decision may be that of a populist court ruling against the banker in a foreclosure case.
Plaintiff Fredolin Egger was born in Switzerland in 1827, attended the University of Lausanne, and emigrated to the U.S. in 1850, where he worked for a time as agent for the promoters of a Swiss colony at New Glaurus, Wisconsin. He subsequently was engaged in the mercantile and banking businesses there, serving as justice of the peace. In his early 40s he moved to Appleton City, Mo. (picture above left), for his health, and opened the first bank there in 1873. It was originally known as F. Egger & Sons, but the name was later changed to First National Bank of Appleton City. The case therefore may be the classic tale of the rich banker buying the tax deed to the property of some unfortunate, and then getting the heirs to relinquish their claims. This view of things may have influenced the court's decision that adding a request that the grantor deliver the deeds and other papers to an acceptance turned it into a counter-offer.
At the top left is a view of Appleton City, Mo., probably dating from the time of the case.
Bravo's show, Project Runway, is down to the very last episode. This evening, I watched an episode that aired last week - the reunion special, where all the designers get together to discuss the outcomes of the challenges, personality clashes on the show, etc. One of the designers, Keith, had been dismissed from the show because he had pattern books, against the rules. He insisted that he hadn't known about the ban, and the other designers all chimed in "it's in the contract!" His responded that he hadn't read it.
Wednesday, October 11, 2006
B.A., McGill University
M.A., McGill University
J.D., New York University School of Law
LL.M, Columbia University
Professor Boon has an LLM from Columbia University and a JD from NYU School
of Law. She is currently finishing her JSD at Columbia. Despite her American training, Professor Boon is Canadian, and clerked in the Canadian Supreme Court and worked as a legal officer for Foreign Affairs Canada.
She says she is well known for her "Canadianisms," although she noted that
her use of the letter "u" in words such as colour and neighbourhood is starting to drop off. She has learned that it is important to speak to her audience. That said, Kristen has made a priority of exploring different parts of Canada on her vacations, and just ran a half marathon in the Canadian Rockies in September.
A recipient of several fellowships, including a SSHRC doctoral fellowship and an international fellowship from the American Association of University Women, Professor Boon's research focus is on the intersection of public and private international law. She is currently working on an article concerning the new generation of Security Council sanctions regimes.
Tuesday, October 10, 2006
Just reading this news about a gadget that lets you burn different images on your piece of toast. Cool! Silly! Coolsilly! Of course, my thoughts went back to the news story a couple of years ago, about the piece of toast with an image of the Virgin Mary that sold for close to $30,000 on ebay (a transaction that formed the centerpiece of a contracts exam I gave that year). Does this new technological development render the Virgin Mary toast valueless? Or does the original Virgin Mary toast retain a special cache due to the religious iconography and the fact that the image appeared spontaneously? Of course, one could say that even the original sale on ebay really did serve to show the subjectivity of value (a point that very few students made on the exam, but which I had hoped more would address).
Just reading this news about a gadget that lets you burn different images on your piece of toast. Cool! Silly! Coolsilly!
Of course, my thoughts went back to the news story a couple of years ago, about the piece of toast with an image of the Virgin Mary that sold for close to $30,000 on ebay (a transaction that formed the centerpiece of a contracts exam I gave that year).
Does this new technological development render the Virgin Mary toast valueless? Or does the original Virgin Mary toast retain a special cache due to the religious iconography and the fact that the image appeared spontaneously? Of course, one could say that even the original sale on ebay really did serve to show the subjectivity of value (a point that very few students made on the exam, but which I had hoped more would address).
This, used by permission from the good folks at Movies in Fifteen Minutes.
Ruskin Co. is a manufacturer of dampers and louvers for buildings. My brother David Snyder (no, not the contracts prof) is manager of their plant in Thailand. He dropped me an e-mail about a recent transaction of theirs, which sounds like a bad contracts exam problem.
Ruskin-Thailand gets an order to fabricate three hundred special high-temperature switches for an order being built by Ruskin’s plant in Monterey, Mexico. The heat sensors used in the switches are manufactured by Honeywell. Ruskin-Thailand places an order for the sensors from Honeywell’s South East Asia Distributor in Singapore. Honeywell-Singapore transmits the order to Honeywell-U.S. Honeywell-U.S. imports the sensors from its facility in China. Honeywell-U.S. then ships the sensors to the distributor, Honeywell-Singapore, which then ships the sensors to Ruskin-Thailand.
Ruskin-Thailand builds the switches and installs the sensors. It then ships the assembled switches to the Ruskin test facility in Kansas City, Missouri. Ruskin-Kansas City performs the tests, then ships the tested switches to Ruskin-Monterey. Ruskin-Monterey builds the order and installs the switches, and then ships the completed units to the customer . . . in Beijing.
Well, sort of. Here's an ad (click to enlarge) for John W. Corlies & Co., the entity actually involved in the case. Corlies was involved in a number of mercantile businesses over the years. He later went into partnership with Jonathan Neville Tifft. After the French occupation of Mexico and the proclamation of the Empire, Corlies & Tifft were apparently employed as American agents running guns to the rebels under Benito Juárez.
When the American Civil War ended and the U.S. Government recognized the Juárez government, Corlies & Tifft became agents for the rebel government, negotiating loans on its behalf. Prior to this, the firm had its offices at 32 Dey Street in New York, well north of the heart of the financial district. The new business with Mexico led the firm to open new banking offices at 57 Broadway, near Exchange Place, only a block from the Stock Exchange. It was these offices that Samuel P. White was to be hired to fit out in September 1865. After the fall of Maximilian, became the regular financial representatives in New York for the Mexican government until Tifft's death in 1885.
Monday, October 9, 2006
According to the New York Times, licensing experts estimate the value of selling Rosa Parks' image at over six figures annually -- meaning that the holder of such licensing rates could potentially earn millions. The Rosa and Raymond Parks Institute for Self Development, charged with the responsibility for safeguarding Ms. Parks' image, lacks the resources to prevent unauthorized uses, and so it has hired CMG Worldwide, which handles licensing rights for many deceased celebrities, to handle the rights for the use of Ms. Parks' image as well. CMG should help prevent unauthorized uses of Ms. Parks image, while steering the proceeds from the authorized u e of her image to the appropriate institution. (Image: National Archives)
But 12 of Ms. Parks' 13 surviving nieces and nephews don't see things that way, and they are challenging in probate court Ms. Parks' will that leaves them out of decision-making processes relating to, among other things, the licensing of her image.
For those who teach the King v. Boston University case, the Times article also includes some information about the disposition of MLK's papers.
In the seventh season of The Simpsons, Bart expresses some skepticism about the notion of a soul, then proceeds to sell his soul (in writing) to Millhouse for $5.00. Of course, Lisa advised Bart that he would regret it, but Bart didn’t listen:
Lisa: For five dollars, Milhouse could own you for a zillion years.
Bart: If you think he got such a great deal, I'll sell you my conscience for four-fifty. (Lisa walks away) I'll throw in my sense of decency too! It's the Bart Sales Event. Everything about me must go!
After the sale, the family dog (Santa’s Little Helper) will longer play with Bart, automatic doors no longer open for him, and Itchy and Scratchy cartoons cease to be funny. When Bart tries to buy his soul back from Millhouse, Millhouse has already “kinda traded” Bart’s soul at the comic book store for Alf pogs. Of course, in the end, Lisa buys back Bart’s soul for him:
Bart: You bought my soul back?
Lisa: With the spare change in my piggy bank.
Bart: You don't have any spare change in your piggy bank.
Lisa: Not in any of the ones you know of.
[Meredith R. Miller]
1 The Law and Economics of Contracts, Benjamin E. Hermalin (Cal Berkeley-Business), Avery W. Katz (Columbia) & Richard Craswell (Stanford).
2 Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences, Barak D. Richman (Duke) & Jeffrey Macher (Georgetown-Business).
3 The Promise and Perils of Credit Derivatives, David A. Skeel (Penn) & Frank Partnoy (San Diego).
4 Payment Wars: The Merchant-Bank Struggle for Control of Payment Systems, Adam Levitin (Independent).
5 The Strange Death of Academic Commercial Law, Larry T. Garvin (Ohio State).
6 The Flight from Arbitration: An Empirical Study of Ex Ante Arbitration Clauses in Publicly-Held Companies' Contracts, Theodore Eisenberg (Cornell) & Geoffrey P. Miller (NYU).
7 The Law and Economics of Preliminary Agreements, Alan Schwartz (Yale) & Robert E. Scott (Columbia).
8 Expectation Damages and Contract Theory Revisited, Richard Craswell (Stanford).
9 Business Outsourcing and the Agency Cost Problem, George S. Geis (Alabama).
10 Restitution for Wrongs and the Restatement (Third) of the Law of Restitution, James Steven Rogers (Boston College).
Two notes in the current issue of the Yale Law Journal may, believe it or not, be of interest to commercial law types. In one, BlackBerry Users Unite! Expanding the Consumer Class Action To Include a Class Defense, Nicole Johnson takes on a thorny but fascinating issue: how can dispersed consumers who want to defend something a company is doing play a meaningful role in the litigation. In the other, From Employment to Contract: Section 1981 and Antidiscrimination Law for the Independent Contractor Workforce, Danielle Tarantolo critiques the moves companies are making to move larger parts of their work forces to independent contractor status.
Should a court enforce a “domestic agreement” between a polygamist-husband and one of his spiritual (but not legal) wives?
A trial court held that Michael Combs, a Colorado businessman, and Brenda Tibbits were putative spouses when Tibbitts left their spiritual marriage in 1999. An appellate court recently vacated that decision. The Montrose Daily Press reports:
Under the couple’s “domestic agreement and writ of divorce,” Combs was to pay Tibbitts $4,000 per month until she turned 65, or until payments reached $868,000. The agreement also required Combs to pay a lump sum of $100,000 and medical expenses incurred by their children. The trial court enforced the agreement and awarded Tibbits more than $2 million in prejudgment interest.
* * *An appellate court reversed, holding that the trial court erred in determining that Combs and Tibbits were “putative spouses.” Under statute, a putative spouse is one who cohabits with another on the “good faith belief that he was married to that person until knowledge of the fact that he is not terminates his status and prevents acquisition of further rights.”
The appellate court held as a matter of law that both Combs and Tibbitts knew at all times they weren’t legally married. Thus, the appellate court concluded that the parties “domestic agreement” was not enforceable:
“No appellate court of this state has construed an agreement governing the termination of a relationship such as the one presented here,” the ruling read. “We conclude that, because the parties were not legally married, payments denominated for ‘alimony’ are unenforceable.”
On remand, the trial court must make findings as to whether "under general contract law principles, the parties’ contract is enforceable for any lawful purpose.” If the domestic agreement is an enforceable contract, the trial court must determine whether it had been materially breached.
[Meredith R. Miller]