April 15, 2006
We all know the fascination that contracts profs have with poetry (it dates back at least as far as Karl Llewelyn). For the past couple semesters at the two institutions where I have taught, I’ve run a poetry contest for my contracts class. I’m sure that many of us have our particular favorites (written either by ourselves, from our law school days, or from our students). Over at the VC, Todd Zywicki recently posted the following contracts limerick, written by a student in his contracts class: An ode to Cricket Alley Corp. v. Data Terminal Systems Facts: DTS sold registers to Cricket’s To automate bookkeeping wickets. The shop owner said, “Dang! These won’t talk to my Wang. We’re stuck with hand entered sales tickets.” Holding: Cricket’s needs were expressed or implied. On salesmen’s claims Cricket had relied. Damage was foreseeable And so we’re agreeable Consequence relief can’t be denied. Enjoy. If anyone has any funny contracts poetry that they’d like to send me, feel free…. [Miriam Cherry]
We all know the fascination that contracts profs have with poetry (it dates back at least as far as Karl Llewelyn). For the past couple semesters at the two institutions where I have taught, I’ve run a poetry contest for my contracts class. I’m sure that many of us have our particular favorites (written either by ourselves, from our law school days, or from our students).
Over at the VC, Todd Zywicki recently posted the following contracts limerick, written by a student in his contracts class:
An ode to Cricket Alley Corp. v. Data Terminal Systems
DTS sold registers to Cricket’s
To automate bookkeeping wickets.
The shop owner said, “Dang!
These won’t talk to my Wang.
We’re stuck with hand entered sales tickets.”
Cricket’s needs were expressed or implied.
On salesmen’s claims Cricket had relied.
Damage was foreseeable
And so we’re agreeable
Consequence relief can’t be denied.
Enjoy. If anyone has any funny contracts poetry that they’d like to send me, feel free….
April 14, 2006
Today in History: Nephew Gets the Money
On this date, April 14, 1891, the New York Court of Appeals decides the famous consideration case of Hamer v. Sidway, a staple of contracts casebooks. It's the one where the uncle promises his namesake nephew $5,000 if the young man will "refrain from drinking, using tobacco, swearing, and playing cards or billiards for money until he became 21 years of age." It doesn't sound like much of a deal today, but using the unskilled wage as a measuring stick that $5,000 in 1869 would be worth about $500,000 today.
The opinion in the case was written by Judge Alton Brooks Parker (left), who would become even more famous in 1904 when he was the Democratic candidate for President of the United States against Theodore Roosevelt.
April 13, 2006
Have a Nice Weekend
Three Sheets to the Wind, or Less
Bed sheets are normally sold by "thread count" -- how many strands of fiber run horizontally or vertically through a given inch of the fabric. Two large retailers, Bed Bath & Beyond and Wal-Mart, have been sued for selling sheets with lower thread counts than those marked on the packages.
It should be an interesting case, with a potential trade usage issue, given that the meaning of "thread count" used by manufacturers and that used by the Federal Trade Commission appear to be different -- a study reportedly showed that 8 out of 9 sheets had fewer actual threads than advertised. Manufacturers appear to count a double-ply thread as 2 threads, while the FTC says it's only 1. Stay tuned.
I think we've mentioned this site before, but those who like to keep up on what lawyers who advise businesses (both in-house and out-house) are thinking should regularly check out the Company Counselor blog. A lot naturally focuses on things other than commercial law, but editors Denise Diaz and Linda Chan make it an interesting and eclectic mix.
Today In History: Minneapolis Surplus Rides Again
Exactly fifty years ago today, on Friday, April 13, 1956, the Great Minneapolis Surplus Store shoots itself in the foot a second time, running the following ad:
2 Brand New Pastel Mink 3-Skin Scarfs
Selling for $89.50
Out they go Saturday ... Each $1.00
1 Black Lapin Stole, Beautiful, worth $139.50 ... $1.00
First Come First Served
When the store refuses to sell the items to Morris Lefkowitz, the result will be Lefkowitz v. Great Minneapolis Surplus Store, Inc., the classic case on whether an advertisement is an "offer" in contract law.
April 12, 2006
A Host Without Peer…
A school thought they had a deal with Jon Stewart (host of the Daily Show and this year’s Oscars) to host their annual fundraiser.
The school sent out invitations and sold tickets, but then, according to Yahoo News, they discovered that they had actually booked a motivational speaker and former professional wrestler also named “Jon Stewart.”
After discovering the mistake, several area theater groups offered to help out by performing. The school also agreed to notify ticket-holders of the problem and to offer refunds.
[Miriam A. Cherry]
Building With Boilerplate Blocks
The terrific new Michigan Law Review symposium on "Boilerplate" is out. One of the most interesting interesting contributions is by Henry Smith (Yale), called Modularity in Contracts: Boilerplate and Information Flow. Here's the abstract:
Like property, contractual boilerplate is less tailored to its contractual and business environment than one might expect considering only the costs of producing it. Boilerplate, like all legal communication, requires actors to trade off the benefits of information-richness with the need for adaptability to a wide variety of contexts. One device for managing the complexity of contexts is modularity, under which a system is divided into information-hiding components which allow internal interaction but only limited interaction across component boundaries. Modularity helps boundedly rational agents to understand systems and to specialize in working on a subset of modules. Modularity also facilitates adaptability of systems in response to changes in the environment. Boilerplate utilizes modularity to allow for its addition, subtraction, and porting from one contract to another, without the need to worry about unforeseen interactions with other parts of the contract and the business context. Governing law and severability provisions provide particularly dramatic examples. Boilerplate is also intermediate between contract and property in terms of contexts not taken into account by the creators of boilerplate, and thus boilerplate requires less judicial intervention to maintain standardization than does property, but more so than in the case of contracts. The need for modularity also helps explain the role of "reading costs" in parties' choice of simpler contractual provisions over other more complex provisions that are not necessarily more costly to write. Modularity and formalism more generally are matters of degree, and underappreciated benefits of modularity help explain the incompleteness of the Realist revolution in contracts and the relationship of contracts to off-the-rack doctrines in civil and common law.
Construction Warranties and Liability to Tenants
An interesting recent British case involving a contractual warranty in a construction case presented a knotty question of interpretation. In the case, Contractor had a contract with Developer, who in turn had a contract with Tenant. The Contractor-Developer contract provided:
The Contractor shall owe no duties or have any liability under this deed which are greater or of longer duration in that which it owes to the Developer under the Building Contract.
The Contractor’s work was apparently not very good, and Tenant had to do some remedial work. Developer went bust and owed Contractor more than the amount of the remedial work. Could Tenant recover from Contractor?
No, said the court. The point of the clause was to limit Contractor’s liability to the amount of its obligations to the amount it was to get from Developer. Since it had a set-off against Developer for all claims, it couldn’t be liable to Tenant.
Jeremy Glover of London’s Fenwick Elliott LLP runs down the facts in Will a Warranty Always Enable an Employer to Pursue a Claim Against the Contractor if the Developer Becomes Insolvent?
Alleged Fraud Cover-Ups and Employment at Will
New York has long been one of the great bastions of the employment-at-will doctrine. One of the few groups of employees who get an exception to that are, interestingly enough, lawyers. A state judge has ruled that the doctrine does not protect a law firm against a claim that it fired an associate who "refus[ed] to allow himself to be drawn into the cover-up of defendants' wrongful acts."
April 11, 2006
Cubs Hurler Testifies in Contract Dispute
We've previously mentioned the breach of contract action being brought by a Chicago-area sports memorabilia store against Chicago Cubs pitcher Mark Prior. The case is now at trial, and Prior was on the stand yesterday. The 25-year-old right-hander, who was 11-7 for the Northsiders last year, was paid $67,500 for the appearance, but allegedly left early and failed to meet his contractual obligations.
[Frank Snyder -- hat tip to Bill Sjostrom]
Contracts and Hierarchy
And speaking of hierarchy, a new paper from Martin Boyer (HEC Montreal-Finance) explores the ways that firms use hierarchies to get around the problems inherent in organizing production through contracting.
It's On the Use of Hierarchies to Complete Contracts When Players Have Limited Abilities. Here's the abstract:
Why do larger corporations have more layers in their hierarchy? My contention in this paper is that hierarchies arise because economic agents have limited ability to anticipate and ascertain every possible contingency they are faced with. As a result, the complete contract may become too complex (or too costly) to devise and manage directly. My contention in this paper is that hierarchies may help a limited-ability principal (the organization's president) collect all pertinent information about the productive elements in the organization so that the complete is again possible. The contributions of the paper are six-fold: 1) it suggests a reason why hierarchies exist; 2) it develops a measure of the quantity of information that needs to be processed at each level of the organization; 3) it measures endogenously the optimal number of layers in a hierarchy given the players' ability to process information; 4) it provides a rationale for having the most talented individuals at the top of the hierarchy; 5) it offers an explanation for the existence of an unique president in an organization; and 6) it explains how the number of layers and of managers may vary over time as the company grows and/or the players' ability changes.
Hooters and "Trade Dress"
As long as we're not talking about contracts anyway, we'll mention the recent decision about whether it's it a violation of Hooters Restaurants' “trade dress” (no pun intended) to hire only young, attractive female wait staff and make them wear short-shorts and tank tops?
No, according to a federal district court decision out of Florida, which Hooters is appealing. Winghouse of Florida, a competitor, put its female wait staff in black short-shorts and tank tops (Hooters uses orange and white, respectively) with the Winghouse logo (not the Hooters owl) on the front. Hooters cried foul, claiming that it had exclusive rights to this particular form of sexploitation.
Apparently, though, Hooters ran afoul of the rule that trade dress which is merely ornamental or functional is not protected. The “ornamental” part seems to be a given, but Hooters also lost on the “functional” part, since the point of the dress, as it conceded, was to “provide vicarious sexual recreation, to titillate, entice, and arouse male customers' fantasies.”
Randy Broberg of L.A.’s Allen Matkins Leck Gamble & Mallory offers a rundown of the decision in Hot Wings and Hot Pants.
Blogging, Duncan Kennedy, and Me
It has nothing to do with contracts, but it's getting mentioned on some other blogs and I wrote it, so I'll plug it here. It's Late Night Thoughts on Blogging While Reading Duncan Kennedy's Legal Education and the Reproduction of Hierarchy in an Arkansas Motel Room. The title is self-explanatory.
What Do Editors Want?
Our colleagues over at TaxProf have a survey of what law review editors are looking for. Few surprises for those who've been one.
April 10, 2006
Writing v. Interpretation
A perennial battle in the contracts field is whether courts should enforce contracts "as written," or "interpret" them to get to the "real" deal the parties intended. In a new article, On the Writing and the Interpretation of Contracts, forthcoming in the Journal of Law, Economics, and Organization, Steven Shavell (Harvard) takes the latter position. Here's the abstract:
The major theme of this article is that the interpretation of contracts is in the interests of contracting parties. The general reasons are (a) that interpretation may improve on otherwise imperfect contracts; and (b) that the prospect of interpretation allows parties to write simpler contracts and thus to conserve on contracting effort. A method of interpretation is defined as a function whose argument is the written contract and whose value is another contract, the interpreted contract, which is what actually governs the parties' joint enterprise. It is shown that interpretation is superior to enforcement of contracts as written, and the optimal method of interpretation is analyzed.
Timing is Everything
A great many contracts have provisions requiring things to be done within certain periods of time. But the problem of calculating time under such contracts isn’t as simple as it looks. Catriona Dodsworth of London’s Pinsent Masons offers a quick outline of the problems in As Time Goes By.
News from George Washington
Not sure how we missed this, but George Washington government contracts scholar William Kovacic (left) has been serving as a Commissioner of the Federal Trade Commission since January. It's actually Kovacic's third stint with the FTC; he served on the staff from 1979-1983 and as general counsel to the agency from 2001-04.
Meanwhile, his sometime collaborator Steven Schooner (right) has been named associate dean at GW. He'll take over that job this summer.
Weekly Top 10
The top papers remain much the same this week, but two new papers make the list. Following are the top ten most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending April 9, 2006. (Last week's ranking in parentheses.)
1 (1) Emerging Policy and Practice Issues (2005), Steven L. Schooner & Christopher R. Yukins (Geo. Washington).
2 (4) Contract Law Theory, Brian Bix (Minnesota).
3 (3) The Best Puffery Article Ever, David A. Hoffman (Temple).
4 (6) Reputations, Relationships and the Enforcement of Incomplete Contracts, W. Bentley MacLeod (Columbia-Economics).
5 (5) Reading Wood v. Lucy, Lady Duff-Gordon with Help from the Kewpie Dolls, Victor P. Goldberg (Columbia).
6 (7) The Moral Impossibility of Contract, Peter A. Alces (Wm. & Mary).
7 (8) Contract Formation Issues in Employment Arbitration, Richard A. Bales (Northern Kentucky).
8 (9) Modularity in Contracts: Boilerplate and Information Flow, Henry E. Smith (Yale).
9 (-) Creative Commons: A Skeptical View of a Worthy Pursuit, Niva Elkin-Koren (Haifa).
10 (-) Legal Default Rules: The Case of Wrongful Discharge Laws, W. Bentley MacLeod (Columbia-Economics) & Voraprapa Nakavachara (Southern Cal-Economics).
April 9, 2006
Will Anyone Use the CUECIC?
One of the chief difficulties with the United Nations Convention on Contracts for the International Sale of Goods has been getting people to use it. Even parties who would benefit by the law -- such as sellers who stand a much better chance of getting their standard terms incorporated under the CISG -- have been reluctant. Now there’s the new Convention on the Use of Electronic Communications in International Contracts. Will it get any more play?
Charles Martin (UDC) takes a look at that question in a recent piece, The UNCITRAL Electronic Contracts Convention: Will it be Used or Avoided?, 17 Pace Int'l L. Rev. 261 (Fall 2005). Here’s the abstract:
The Convention on the Use of Electronic Communications in International Contracts (CUECIC) was approved by the United Nations Commission on International Trade Law (UNCITRAL) in July 2005. It is now available for ratification by U.N. member states. CUECIC is based on the Model Law on Electronic Commerce adopted by UNCITRAL in 1996 The Model Law has served as the basis for electronic signature and electronic commerce legislation at the federal and state levels in the United States and other countries. The similarity of CUECIC to domestic electronic commerce laws should facilitate its use for international contracts. CUECIC requires, however, that its terms be interpreted by domestic courts according to its international character and the need to promote uniformity in its application. These same rules of interpretation also apply to the UNCITRAL Convention on Contracts for the International Sale of Goods (CISG), but no implementing legislation accompanied CISG ratification by the United States to locate the CISG and to annotate decisions interpreting it within the body of the code of federal statutes. Like the CISG, there will be no authoritative judicial body or expert commentary to resolve conflicts or ambiguities in judicial interpretations of CUECIC. Varying interpretations may also result from the different versions of CUECIC that could be created by national declarations varying its scope of applicability. Therefore, despite the common source of CUECIC and U.S. electronic commerce laws in the UNCITRAL Model Law on Electronic Commerce, the use of CUECIC for international commercial contracts might be restrained by the same procedural difficulties that have limited the use of the CISG.