ContractsProf Blog

Contract Rider: No Shaking The Hips

Here's a story that (1) has Elvis rolling over in his grave and (2) restores the inspiration in the movie Footloose.  Harding University hosted a performance by Robert Randolph & The Family Band.  During the band's set they played their song Shake Your Hips and encouraged audience participation -- dancing on the stage.  Zach Neal, the University's Director of Campus Life, "was concerned about the 'spirit of rebellion'" and the band's breach of contract:

"We have a specific rider that spells out expectations," [David Burks, the President of the University] said. "They expressly violated it when [Randolph] repeatedly invited people on stage."

Though the contract says nothing regarding inviting students on stage, the contract does state that "The school permits no dances."

Neal said the school will not pursue legal action, but will make the contract clearer for future bands, including a "no students allowed on the stage" clause.

It wasn't only about the no dancing rule; Neal did also express concern for the equipment on the stage.  And this concern appears warranted in light of this video of the event.

[Meredith R. Miller]

UCC Article 2 & 2A Legislative Update

As of January 31, 2007, only three state legislatures (Kansas, Nevada, and Oklahoma) have considered bills proposing to enact the 2003 amendments to UCC Articles 2 and 2A.  None of the bills were enacted.

During the 2005 legislative session, the Kansas bill was tabled for further study and the Nevada bill died in committee.

During the 2006 legislative session, each house of Oklahoma's legislature passed a version of a bill to enact the Article 2A amendments.  However, the conference committee was unable to reconcile the two versions and the bill died in conference.  Meanwhile, a separate bill proposing to enact the Article 2 amendments died in committee.

Oklahoma 2172, proposing adoption of the 2003 amendments to UCC Articles 2 & 2A (along with certain conforming amendments to other articles), is scheduled to be introduced on February 5, 2007.

This is not to say that none of the content of the 2003 amendments has found its way into any state's law.  In 2005, Oklahoma amended Sections 2-105 and 2A-103 of its Commercial Code to add that the definition of "goods" for purposes of Articles 2 and 2A, respectively, "does not include information," see 12A Okla. Stat. Ann. §§ 2-105(1) & 2A-103(1)(h) (West Supp. 2007), and amended its Section 2-106 to add that "contract for sale" for purposes of Article 2 "does not include a license of information," see id. § 2-106(1).  The net effect is similar to having enacted Amended §§ 2-103(k) & 2A-103(1)(n), both of which exclude information from the meaning of "goods" for purposes of Article 2 and 2A, respectively.

[Keith A. Rowley]

Revised Article 1 Legislative Update (2/1)

Three quick updates to my 1/29 posting about Revised Article 1:

1. Utah SB 91 has been replaced with a substitute bill that abandons uniform R1-301 in favor of language tracking pre-Revised 1-105.  Substitute SB 91 also eschews the unitary good faith standard of uniform R1-201(b)(20) in favor of the bifurcated good faith standard in pre-Revised 1-201(19) & 2-103(1)(b).

2. Informed sources report that South Dakota SB 85 will soon be amended to replace uniform R1-301 with language tracking pre-Revised 1-105.

3. Florida has joined the fray with parallel bills -- SB 252 and HB 151.  The texts of the two bills are identical.  Both reject uniform R1-301 and embrace uniform R1-201(b)(20).

[Keith A. Rowley]

Semper ubi sub ubi

Okay, stop what you are doing and make sure you are sitting down.  Get this:

Dame Kiri Te Kanawa (at left) is being sued for breaching a $1.55 million contract after she withdrew from a tour with Australian rock star, John Farnham.  The duo was to appear in three "Two Great Voices" concerts, but Te Kanawa backed out after watching a DVD of a Farnham concert and learning that his fans like to celebrate Farnham's great voice by throwing their underwear onto the stage.

I'm not making this up. It's even reported in the New York Times.

Te Kanawa stated that she might feel differently if the underwear were tasteful, or promoted positive views of women (see left, e.g.).  She added that she was devastated that she and her fellow "star-crossed crooner" were splitting up.  As you may recall, Te Kanawa sang at the wedding of Prince Charles and Lady Diana.  "I felt the same connection to John that I sensed Charles felt for his Di," the Diva disclosed in an exclusive interview with the Contracts Profs Blog.  She added that she is not giving up on the idea of a crossover concert.  "I am currently talking with one of your charming American pop stars, Mr. Snoop Doggy Dogg.  Have you heard of him?"

Prediction: this will all blow over when Farnham explains that the underwear was found on stage after his warm-up act, Britney Spears, finished her set.

Okay, I am making some of this up.

[Jeremy Telman]

CISG's Critical Mass Continues to Grow

El Salvador and Montenegro have recently become the 68th and 69th countries to have acceded to, accepted, approved, ratified, or succeeded to the CISG.

Montenegro became a Contracting State effective retroactively to June 3, 2006, when the former Serbia and Montenegro notified the United Nations that it would thenceforth be two countries, with the Republic of Serbia succeeding to, inter alia, Serbia and Montenegro's status as a CISG Contracting State.

El Salvador, which acceded to the CISG on November 26, 2006, will become a Contracting State effective December 1, 2007.

In the interim, Paraguay, which acceded to the CISG on January 13, 2006, will become a Contracting State effective February 1, 2007.

Ghana and Venezuela, which signed the CISG in 1980 and 1981, respectively, have yet to accede to, accept, approve, ratify, or succeed to the CISG.  Therefore, they do not qualify as Contracting States for purposes of Article 1(1)(a).

[Keith A. Rowley]

Revised Article 1 Feeding Frenzy

With the legislative session's opening gavel yet to fall in several states, six state legislatures are already about the business of considering recently-introduced bills to enact Revised UCC Article 1.

Indiana SB 419, Kansas SB 183, Rhode Island SB 105, South Dakota SB 85, and Utah SB 91 are all before their initial committees.  North Dakota HB 1035, by contrast, has already unanimously passed the North Dakota House and is now in the Senate. The Kansas and North Dakota bills represent second chances for Revised Article 1 in those states.  Each state's legislature had a Revised Article 1 bill before it during the prior legislative session.  In addition to these six new bills, long-suffering Massachusetts HB 3731 appears to still be alive but going nowhere.

To date, all twenty-two states that have enacted Revised Article 1 -- Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Kentucky, Louisiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Oklahoma, Texas, Virginia, and West Virginia -- have rejected uniform R1-301 in favor of language similar to pre-Revised 1-105.  Six enacting states -- Alabama, Arizona, Hawaii, Idaho, Nebraska, and Virginia -- have rejected uniform R1-201(b)(20) in favor or retaining a bifurcated good faith standard that requires only "honesty in fact" from non-Article 2 or 2A merchants.

Of the seven pending bills, Indiana SB 419, Kansas SB 183, South Dakota SB 85, and Utah SB 91 include uniform R1-301, while Massachusetts HB 3731, North Dakota HB 1035, and Rhode Island SB 105 eschew it in favor of pre-Revised 1-105.  Kansas SB 183, Massachusetts HB 3731, North Dakota HB 1035, South Dakota SB 85, and Utah SB 91 include uniform R1-201(b)(20).  Rhode Island SB 105 retains the bifurcated good faith standard.  Indiana SB 419 eliminates the bifurcated good faith standard in a more unique way: it retains the pre-Revised 1-201(19) “honesty in fact in the conduct or transaction concerned” definition and deletes the “honesty in fact and the observance of reasonable commercial standards of fair dealing” standard for merchants from current Article 2.

I will continue to monitor and comment on these and other legislative efforts on my website and will try to keep this blog current, as well.  If you are or become aware of unreported developments in any of the foregoing states or legislation in other states, please e-mail me at keith.rowley@unlv.edu.

[Keith A. Rowley]

Limerick of the Week

There was a lot of talk about tobacco barns and Buffaloe v. Hart last week on the Contracts Profs Listserve.  I think we established to our satisfaction that students should come away from their first year in law school secure in the knowledge that tobacoo barns (pictured) are moveable. 

And while we are on the topic of useful knowledge, here is a Limerick memorializing the case:

Acceptance of "goods" was the start
Of Buffaloe's barn deal with Hart.
A torn check was the end,
Evincing a trend
To bind through Llewellyn's black art.

[Jeremy Telman]

Contract and Same-Sex Marriage: Yoshino Op-Ed on Gonzalez v. Green

Just before the new year, in Gonzalez v. Green, a New York trial court "declared valid and in full force and effect" a separation agreement between a gay couple. Kenji Yoshino (Yale) published an op-ed in today's NY Times. Here's his synopsis of the facts:

The case sounds like a contracts question on the New York Bar Exam. Steven Green and David Gonzalez moved in together in 2001. Over the course of their relationship, Mr. Green, whom the court describes as “a person of considerable assets and income,” showered Mr. Gonzalez with gifts, including cars and a ski house.

In 2005, the couple, whose primary residence was in Westchester County, traveled to Massachusetts, which permits resident same-sex couples to marry, and took part in a marriage ceremony on Valentine’s Day. But months later, they decided to end their relationship.

In September 2005, the two men signed a written separation agreement under which Mr. Green paid Mr. Gonzalez $780,000 and Mr. Gonzalez transferred the title of the ski house to Mr. Green. More than a year later, when Mr. Gonzalez filed for divorce, Mr. Green sought to rescind the contract. He argued that because there was no marriage, the contract was invalid. Question: Can Mr. Green get his money back?

[The answer is after the jump.]

The court declared the Massachusetts marriage null and void (Massachusetts law provides: "No marriage shall be contracted in this commonwealth by a party residing and intending to continue to reside in another jurisdiction if such marriage would be void if contracted in such other jurisdiction, and every marriage contracted in this commonwealth in violation hereof shall be null and void.").

The issues remained, however, whether Green could have the parties' "Separation Agreement" unraveled based on lack of consideration or mutual mistake (the parties believed mistakenly that they were married). The court held that consideration supported the agreement:

Defendant's claim of lack of consideration similarly fails. "The valid consideration which will support a contract need not be equal on both sides, and if a minimal yielding of a position by one side promotes an agreement, then it will be deemed enforceable. There is no need to measure the relative weight of the consideration provided by each party." Silver v. Starrett, 176 Misc 2d 511, 519 (S. Ct. NY Co. 1998).Here, as in Silver v. Starrett, supra, the Agreement provides at the outset that it is made "in consideration of the premises and of the mutual promises hereinafter contained...." (Agreement at 1).The Agreement, which was drafted with deliberation by defendant's own attorney, purports the settlement of all claims between the parties indeed, it contains a mutual release of all claims, causes of action or demands that might arise in law or in equity which either party has, ever had or will have against the other which further supports this court's finding of valid consideration in support of enforcement of the Agreement.

Apparently, however, the defendant, who on each counterclaim seeks the return of the $780,000.00 he paid to plaintiff upon his execution, and thus his ratification, of the Agreement, mistakenly believes such things as promises to act or to forbear from acting that constitute detriment to the promisor are not sufficient consideration to support the Agreement in light of the tangible sums he paid to plaintiff upon its execution (which he selectively characterizes as support or maintenance, but which is also defined in the deliberately drafted Agreement as an "other form of payment by either party hereto to the other" [Agreement at 3]). As set forth above, the law is otherwise (e.g., Silver v. Starrett, supra, Anonymous v. Anonymous, supra) and defendant's assertions in this regard are intrinsically mistaken. Never the less, to further alleviate defendant's curious logic in this regard, I find that the plaintiff delivered tangible property of more than sufficient value to defendant in consideration of his entering into the Agreement.

Further, the court held that the Separation Agreement was not voidable on the ground of mutual mistake:

Nor do I find that the Agreement is voidable under the doctrine of mutual mistake. Defendant claims that since both sides mistakenly thought they were married at the time they entered into the Agreement, with all of the rights and obligations that attend such status, the fact that they were not actually married when they believed they were should vitiate the Agreement. However, defendant defeats his own argument by his own statement in his moving papers in support of his motion; he asserts: "[t]he Court should note that the Plaintiff and I never filed Joint-tax Returns and always filing such returns as single' and we never purchased property as married people and only had the marriage, because it seemed like a nice thing' to have, since couples in the gay community' are seeking such status" (Defendant's moving affidavit sworn to June 26, 2006, p. 3, n. 1). It could not be more obvious that defendant never took the idea that he was married to plaintiff seriously. Moreover, the law of New York at the time the parties returned from Massachusetts was not yet settled on the issue of same sex marriages, and the law of Massachusetts was that it had to be recognized in both Massachusetts and the jurisdiction in which the parties resided in order to be valid in Massachusetts. Whether or not the parties considered themselves married in nature, defendant, a sophisticated businessman, must have considered the strong possibility of illegality while the law was in such a developing state. Accordingly, defendant's position that there was a mutual mistake of fact which impairs the validity of the Agreement is disingenuous. Nor is the Agreement invalid under the doctrine of mutual mistake of law. CPLR 3005 provides:

When relief against a mistake is sought in an action or by way of defense or counterclaim, relief shall not be denied merely because the mistake is one of law rather [*5]than one of fact.

As explained by Professor David D. Siegel in his practice commentary to this statute (Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3005:1, at 620): "The point is, that one cannot draw a total parallel between a mistake of law and a mistake of fact and permit undoing of the transaction for a mistake of law merely because a mistake of fact might have justified it. **** It really leaves the matter to the court to determine whether the particular law mistake is sufficiently analogous to a fact mistake to justify a judicial result to which the fact mistake would lead. It does not permit a mere misreading of the law by any party to cancel an agreement. If it did, the courts would be flooded with applications to get out from under because one party assumed its right to be of a kind and quality greater than it was. As long as the mistake has not been induced by the other party's misrepresentations...resort to CPLR 3005 may be misplaced." (Id. At 621).

Yoshino's commentary points us to the "real issue" here:

The real issue, the court said, was whether separation agreements between unmarried, cohabiting individuals are binding. Under New York law, such contracts are enforceable so long as “illicit sexual relations were not part of the consideration of the contract.” In other words, contracts will not be invalidated just because the parties are cohabiting, so long as they do not violate the prohibition on prostitution.

It may seem obvious that a separation agreement is not what used to be called a “meretricious contract.” But other courts in other times have deemed contracts between two people who have been sexually involved with each other with suspicion, particularly if the people are of the same sex. In dispensing with the “meretricious contract” exception in a footnote, the court properly refused to dignify arguments made under it. It concluded that the contract was enforceable.

According to Yoshino, this was the obvious and correct result. But, he reminds us that private contracts between same-sex couples should not be viewed as a substitute for marriage:

My only concern about such decisions is their potential to serve as substitutes for same-sex marriage, rather than as stations toward it. Too many people reacted to the New York decision by reaffirming that gays could get all the significant benefits of marriage through contract. This is false.

Gays cannot enter into a contract for benefits bestowed on married couples by third parties. Such benefits include those that the government provides, like immigration rights, custody rights, tax benefits and the various spousal privileges available in litigation. They also include benefits provided by private institutions, like access to a partner’s hospital room or coverage under his health plan. And a gay couple, of course, cannot enter a contract with each other for the simple dignity of having the state recognize a commitment between them as a marriage. This seems to be the only count on which Mr. Green was right: marriage is indeed “a nice thing to have.”

The fiction that gays can get the rights of marriage through contract is pernicious because it permits inertia on the part of those who have incentives to remain inert. As with any civil rights struggle, those in power will be tempted to rest on their laurels. Prior to election, Gov. Eliot Spitzer was an open and ardent supporter of same-sex marriage. His Jan. 3 State of the State address, however, made no reference to the issue, other than the oblique phrase that the civil rights movement in the state “still has chapters to be written.”

But the final chapter in this struggle must be marriage. And it must be written soon.

The op-ed in full. The decision in Gonzalez v. Green.

[Meredith R. Miller]

Roehm v. Wal-Mart

Ah, where would the blogosphere be if we didn't have Wal-Mart?

Julie Roehm, hired with great fanfare in January 2006 as Wal-Mart's Senior Vice-President for marketing communications, was fired with even greater fanfare in December 2006. 

Wal-Mart, having just settled one high-profile suit and won a significant victory in the Fourth Circuit, now has to deal with a new suit, Roehm v. Wal-Mart Stores, Inc. (the link is to Wal-Mart's removal motion, which attaches the original complaint filed in Michigan state court).  The complaint purports to state claims sounding in breach of contract, fraud and misrepresentation, and claim and delivery.  While press reports suggested that Roehm was fired in part because of an "inappropriate relationship" with her subordinate, Sean Womack, the complaint alleges that she was terminated because she was not "fulfilling the expectations of an officer of the company."  Discovery in this case could be juicy.  Stay tuned.

[Jeremy Telman]