ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Tuesday, December 26, 2006

Limerick of the Week

I skipped a week so that I could focus on grading.  Then, I got behind due to weather delays that kept me stranded in Boise, Idaho for three days.  Actually, it's quite a pleasant place to be stranded.

In any case, to make up for the unintended hiatus, I offer a Limerick two-fer, representing the majority and dissenting opinions respectively in Borelli v. Brusseau:

Is only the one in the blouse
Expected to care for her spouse?
No, the same law applies
To the gals and the guys
Who must care for their partners in-house.

Is only the one in the blouse
Expected to care for her spouse?
Love, Honor, Cherish
And clean bed-pans -- that's marriage!
A housewife's still wed to a house.

[Jeremy Telman]

Happy Holidays!

December 26, 2006 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

Friday, December 22, 2006

Cool Gadgets: Don't Bother Shopping Around

In this time of frenzied holiday shopping, this Slate.com article by Sean Cooper explains why there is no price variation among retailers selling Ipods. First, Cooper explains that price variation is the norm of online retailers, and an intentional marketing strategy:

Hal Varian, an economist at U.C. Berkeley and co-author of Information Rules: A Strategic Guide to the Network Economy, argues that sellers offer the same products at vastly different prices as an intentional marketing strategy. (This phenomenon is what economists call price dispersion.) Imagine that everybody sold 42-inch Philips plasma-screen TVs for the same price. There would be no reason to comparison shop, consumers would always buy from the same places, and e-tailers' profits would stagnate. According to Varian, retailers who vary their prices over time—increasing them one week, then discounting the next—create the kind of price instability that encourages consumers to shop around. The end result is that shoppers visit several sites before making a purchase, which is exactly what retailers want us to do.

Research supports Varian's view. In 2003, a group of economists led by Michael Baye of Indiana University compared prices for 36 consumer electronics products purchased online. Another study by the same team analyzed millions of price points for hundreds of products over an eight-month period. Both studies found significant price variation, regardless of how many retailers sold the product in question. What's more, they found that the site offering the lowest price for any given product was in constant flux, meaning that e-tailers were raising and lowering their prices at will. As a result, Baye's team came to the conclusion that price dispersion on the Internet is an "equilibrium phenomenon"—the natural state of a competitive market.

Then, why is it that, wherever you look, the 8 gig Ipod has the same price tag? It is all about MAP, Cooper explains:

No, the answer isn't that Apple illegally manages prices. In reality, Steve Jobs and Co. use an accepted, if controversial, tactic, a retail strategy called minimum advertised price, to discourage resellers from discounting. The minimum advertised price, or MAP, is the absolute lowest price retailers are allowed to advertise a product for. (If you've ever shopped at a site that won't reveal a product's price until you add it to your shopping cart, MAP is the reason.) MAP is usually enforced through marketing subsidies offered by a manufacturer to its resellers. If a retailer keeps prices at or above the minimum advertised price, then a manufacturer like Apple will give them money to help advertise. If a store's price dips too low, on the other hand, the manufacturer can withdraw these advertising subsidies.

MAP helps smaller retailers compete, since it aids in reducing the kind of cutthroat price competition from big-box stores that can put them out of business. But what's in it for a company like Apple? Stable prices are important to the company, because it's a manufacturer and a retailer (both online and through its chain of Apple Stores). If Apple resellers dropped prices on iPods and iMacs—selling at or below cost to get customers in the door, or as a way to cross-sell stuff like software or iPod skins—they could squeeze the Apple Stores out of their own markets.

There is a downside to all that stability, however. By limiting how low sellers can go, MAP keeps prices artificially high (or at least higher than they might otherwise be with unfettered price competition). In 2000, the Federal Trade Commission forced the five major record labels to suspend MAP policies that it deemed excessively restrictive. MAP benefits manufacturers and, to a lesser extent, retailers, but not necessarily consumers.

Use of MAP in some form is fairly common in the gadget world, though few companies seem to pursue it with the rigor of Apple or Sony (both of whom operate retail stores). Shawn DuBravac of the Consumer Electronics Association believes most gadget manufacturers prefer to let the market determine price, and the dispersion described by Varian and Baye suggests he's probably right. (None of the companies I contacted for this story would discuss their pricing strategies with me.) That means good deals for shoppers willing to search them out.

[Meredith R. Miller]

December 22, 2006 in E-commerce, In the News | Permalink | TrackBack (0)

Wednesday, December 13, 2006

From Socratic Dialogue to Power Point Slide

Here is a link to an interesting article in the NY Times concerning the shift from socratic dialogue to "didactic lecture" in medical education. According to the article, the patient-focused method is being replaced with lectures concerning biomedical research.

[Meredith R. Miller]

December 13, 2006 in Teaching | Permalink | TrackBack (0)

Tuesday, December 12, 2006

The New Melvin Eisenberg Article Is Here!!

Mlr The latest issue of the Michigan Law Review  (the picture at left is not the latest issue) sports Melvin Eisenberg's "The Disgorgement Interest in Contract Law."  Do you remember the scene from Steve Martin's The Jerk when the new phonebooks arrive and Steve Martin gets terribly excited?  That scene approximates my joy at discovering a new article by Eisenberg.  For some reason, this one did not first circulate on SSRN, so it is a happy surprise.  An edited version of the abstract appears below:

Restatement Second of Contracts provided that contract law serves to protect one or more of three interests: the expectation interest, the reliance interest, and the restitution interest.  There is, however, a fourth interest that contract law should and does protect: the disgorgement interest, which is the promisee's interest in requiring the promisor to disgorge a gain that was made possible by the promisor's breach, but did not consist of a benefit conferred on the promisor by the promisee.  It is not clear why the Restatement Second excluded the disgorgement interest.  Perhaps the drafters believed that this position was compelled by positive law.  That proposition, however, would have been doubtful even when Restatement Second was published ,and it is clearly wrong today: . . . Alternatively, the drafters of Restatement Second may have believed that the disgorgement interest should not be protected as a normative matter.  That proposition also cannot be supproted.  On the contrary, there are strong efficiency reasons, as well as moral reasons, for protecting the disgorgement interest, because in certain categories of cases, protection of that interest in contract law is necessary to provide efficient incentives ot the promisor, to effectuate contracts., or to prevent unjust enrichment. . . .

The citation for the article is 105 Mich. L. Rev. 559 (2006)

[Jeremy Telman]

December 12, 2006 in Recent Scholarship | Permalink | TrackBack (0)

Monday, December 11, 2006

Limerick of the Week

Once again, I thank Knapp, Crystal and Prince for including Syester v. Banta in their casebook, as I would otherwise never have come across it.  For those unfamiliar, I recommend looking it up, as the facts are terrific.

In the shallow end of the gene pool
Met a widow and a young dancing fool
Who had to teach her for squat
How to waltz and foxtrot
Becasue misleading widows is cruel.

[Jeremy Telman]

December 11, 2006 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

Thursday, December 7, 2006

"Lawsuit is the Word"

This important contract-related news flash from the AP (via NYLawyer.com):

Lawsuit is the word: Olivia Newton-John is suing Universal Music Group Inc. for allegedly failing to pay more than $1 million in royalties on sales of the "Grease" soundtrack album.

Newton-John starred with John Travolta in the 1978 movie version of the Broadway hit.

The breach-of-contract suit was filed Friday in Los Angeles County Superior court. It contends that while Universal did pay some royalties on the album, it failed to make a range of other contractual payments, said John Mason, an attorney for Newton-John.

According to the suit, a recent audit showed Universal owes more than $1 million to Newton-John's company, ON-J Productions, Ltd.

"The lawsuit is without merit and, at the appropriate time, we expect that the court will dismiss it," Universal said in a statement Tuesday.

[Meredith R. Miller]

December 7, 2006 in In the News | Permalink | TrackBack (0)

Wednesday, December 6, 2006

Interesting Exchanges in the Virginia Law Review

Uva The most recent issue of the Virginia Law Review is a Symposium issue on Contemporary Political Theory and Private Law.  It includes two fascinating exchanges on contract law theory.  Barbara Fried provides comments on Daniel Markovits' Article, "Making and Keeping Contracts." In resopnding to Michael Trebilcock and Jim Leng's "The Role of Formal Contract Law and Enforcement in Economic Development," Terrance O'Reilly's "Cotnract Theory on and off the Grid" assesses the applicability of dominant contracts law theories to non-Western societies.  His short essay discusses the approaches of Charles Fried, Thomas Scanlon, Melvin Eisenberg, Peter Benson, James Gordley, and Michael Trebilcock.  Fun stuff!

[Jeremy Telman]

December 6, 2006 in Recent Scholarship | Permalink | TrackBack (0)

A Heartbreaking Blog Post of Staggering Genius

I have noticed a trend towards puffery in recent legal scholarship.  I'm not talking about David Hoffman's briliiantly-titled The Best Puffery Article Ever (I haven't read the Article, but anything with that good a title has got to be good).  No, I'm talking about abstracts that sound a common theme. 

This Article provides the first comprehensive study demonstrating conclusively that . . .

or

This Article shows that everything you have previously read on this topic is wrong and I am right . . .

or

This Article demonstrates that the simple and obvious solution to this problem (or interpretation of this provision) is correct and nobody has recognized this brilliant and straightforward solution until I came along.

I have been sucked in by quite a few such abstracts.  Here's the thing.  The Articles never live up to their abstracts (creating the biggest false advertising claim since Lionel Hutz's suit against the movie The Never Ending Story).  They often add significantly to my understanding of the issues addressed and usually persuade me, but they never change my life, remove all mysteries and doubts, or unlock the secrets of happiness and success as the initial puffery suggests.

But perhaps the Articles have a different impact on the law review editors who are perhaps the abstracts' primary intended audience.

[Jeremy Telman]

December 6, 2006 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Greetings from... Coney Island Baby

Coney_island_postcardLast week, Carol Hill Albert sold Astroland Park in Coney Island, Brooklyn, USA, to real estate developer Thor Equities. Astroland will open for a final season next year; then Thor plans to build a $2 billion theme hotel and amusement park. What will happen to Coney Island’s iconic rides? The Astrotower, the Cyclone, the Parachute Jump?

Well, the New York Post reports that Albert has offered to donate the 275-foot-high Astrotower to the City of New York so that it can be moved to another area of the Coney Island Boardwalk. But, if the City doesn’t accept Albert’s offer, she said she has a buyer who wants to move the tower to “an undisclosed amusement park somewhere down South.”

Now, I know the-potential-amusement-park-buyer “down South” is “undisclosed,” but my first reaction is pleeease Mr. Mayor don’t let Disney buy the Astrotower. This is pure speculation, but I can just imagine a part of Disneyworld named “Coney Island, USA”; this is all too ironic. If this were to happen, a historic amusement park in Brooklyn will be replaced with something approximating Disneyworld and, in turn, a bit of that history would be moved to Disneyworld. Given that many have noted the “Disneyfication” of New York and, in particular, Time Square, it will soon be unclear where Disney ends and Main Street, USA begins.

My next thought, and my grandparents met at Coney Island in the 1930’s, so I may have a particular bias informed mostly by nostalgia: what will be next? The Cyclone? According to the New York Post, apparently not: “[t]he famed Cyclone roller coaster at Astroland was not part of the deal, and Albert will continue operating the landmark ride under a city lease.”

[Meredith R. Miller]

December 6, 2006 in In the News | Permalink | TrackBack (0)

Tuesday, December 5, 2006

Limerick of the Week

Many of my students, faced with the prospect of their first set of law school exams, find the system unconscionable.  They have no bargaining power, and the terms are unreasonably favorable to law professors, who give no feedback all semester and then administer exams in environments that could hardly be more stress-inducing for students.  I suggest they raise their claim in D.C.

When he learned of Ms. Williams' plight,
"Unconscionable!" said Skelly-Wright.
If you sell door-to-door,
The court might abhor
You, and void all your contracts for spite.

[Jeremy Telman]

December 5, 2006 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)