ContractsProf Blog

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

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Friday, March 2, 2007

Ships, the Repo Man, and Piracy

Over at Concurring Opinions, Nate Oman (William & Mary) has this fascinating post about the difference between repossession and piracy, specifically when we're talking about the repossession of a ship.  The tale he recounts even involves the actions of a witch doctor - check it out!

[Miriam A. Cherry]

March 2, 2007 in Commentary | Permalink | TrackBack (0)

UNLV Looking for a Podium Visitor

UNLV's William S. Boyd School of Law is looking for a visitor to teach some combination of Contracts, Sales & Leases, Payment Systems, and Secured Transactions during the 2007-08 academic year.  If you are interested, please contact Associate Dean Joan Howarth.

[Keith A. Rowley]

March 2, 2007 in Help Wanted | Permalink | TrackBack (0)

UCC Legislative Update (3/2/07)

What looked to be a prolific year for Revised Article 1 -- based on the number of January introductions -- now looks like it might produce fewer adoptions than either 2005 or 2006.

Utah SB 91 has passed both houses, but has not yet made its way to Governor Jon Hunstman, Jr.'s desk.  Indiana SB 419, Kansas SB 183, and North Dakota HB 1035 have each passed one house and are in the other.  Parallel bills Florida HB 151 and SB 252 are slowly progressing through their respective originating houses.  Rhode Island SB 105 has been idling since its mid-January introduction.  South Dakota SB 85 was been tabled until after the legislative session adjourns.

Utah SB 91, Indiana SB 419, and Kansas SB 183 have each been amended to replace uniform R1-301 with choice-of-law language tracking pre-Revised 1-105 -- keeping uniform R1-301's 0-for-22 streak alive.  Kansas SB 183 and North Dakota HB 1035 adopt the uniform R1-201(b)(20) good faith standard.  Indiana SB 419, Rhode Island SB 105, and Utah SB 91 retain the bifurcated good faith standard of pre-Revised 1-201(19), 2-103(1)(b) & 2A-103(3).

Elsewhere on the UCC front ...

Oklahoma HB 2172, proposing adoption of the 2003 amendments to UCC Articles 2 & 2A (along with certain conforming amendments to other articles), was introduced on February 5 and referred to the Oklahoma House Rules Committee on February 6.  No further action has been reported.

Oklahoma HB 2171, proposing adoption of the 2002 amendments to UCC Articles 3 & 4 (along with certain conforming amendments to other articles), was also introduced on February 5 and referred to the Oklahoma House Rules Committee on February 6.  No further action has been reported.

[Keith A. Rowley]

March 2, 2007 in Legislation | Permalink | TrackBack (0)

Contracts Section Call for Papers - AALS Annual Meeting 2008

Call for Papers

AALS Section on Contracts

Panel on

“How Bad Are Mandatory Arbitration Terms?”

Papers will be published in the Michigan Journal of Law Reform (2008).

The Section on Contracts of the Association of American Law Schools is seeking two presenters for its annual meeting program on the topic, “How Bad are Mandatory Arbitration Terms?”  The conference will be held on January 2-6, 2007, in New York City (the precise date and time of the panel is not yet determined.)

One of the most hotly contested issues in contract law these days is the unconscionability of mandatory arbitration terms in employment and consumer contracts. Some aspects of this phenomenon are well understood: how widespread these terms are, and what are the doctrinal aspects of the unconscionability test. But a basic issue in this debate is not yet well-informed: how bad is mandatory arbitration in reality? How much worse, if at all, are breached-against parties when they have to arbitrate? When does mandatory arbitration bar recovery and prevent vindication of legitimate claims? Are there unintended implications to the use, or the elimination of, mandatory arbitration terms?

The presentations in the panel are intended to move beyond myth, conjecture, and assumption, and to shed a more concrete and empirical light on these questions. Speakers will present and debate insights and findings regarding the reality of mandatory contract arbitration.

Four presentations will be made: two by invited speakers and two by scholars selected through this call for papers.  The Michigan Journal of Law Reform has agreed to publish their papers and is potentially interested in publishing several additional papers in the same 2008 issue on this topic. The two invited speakers are Theodore St. Antoine, the Degan Professor of Law Emeritus at the University of Michigan and former President of the National Academy of Arbitrators, and Theodore Eisenberg, the Henry Allen Mark Professor of Law at Cornell.

A selection committee, in consultation with the editors of the Michigan Journal of Law Reform, will choose the two additional papers for presentation.  The committee members are Omri Ben-Shahar (Michigan), Lisa Bernstein (Chicago), and Martha Ertman (Utah), members of the section’s Executive Committee. The deadline for submissions is July 31, 2007, but the committee encourages earlier submissions and will read papers as they are submitted.  Please send an abstract and a draft paper as electronic attachments to Omri Ben-Shahar, omri@umich.edu. Selections will be made before Sept. 1, 2007, in time for inclusion of the names of those selected in the AALS annual meeting program.  Panelists will be expected to circulate manuscripts among the panel, and submit an initial draft to the law journal, by December 1.  The deadline for revised manuscripts for publication will be in February 2008, with publication in the summer 2008 issue. The length of pieces should be no more than 30 printed pages (40 double-spaced manuscript pages).

Note: The AALS will not provide funds for speakers’ travel expenses or meeting registration; annual meeting speakers typically obtain funding from their home institutions. 

March 2, 2007 in Conferences | Permalink | TrackBack (0)

Corbin v. Fuller

Aaa_83 One of the big pedagogical divides among contracts teachers is whether to start the first-year Contracts course in the traditional way -- beginning with contract formation -- or to start with remedies.  The first approach traces its origins to the creator of the first contracts casebook, Harvard's C.C Langdell.  The latter was championed by another Harvard teacher, Lon Fuller.

The modern debate, says Scott Gerber (Ohio Northern) (top left) in a piece published on the AALS Contracts Section web site, began in discussions between Fuller and one of the titans of modern contract law, Yale's Arthur Corbin.  Gerber details the interesting correspondence between them over The Casebook That Never Was.

[Frank Snyder]

March 2, 2007 in Recent Scholarship | Permalink | TrackBack (0)

Thursday, March 1, 2007

Billion Dollar Rock Quarry

How's this for interesting...  A $50,000 purchase of a rock quarry is really worth millions (billions?).  Here's an excerpt from the whole story, which can be found here:

Matt White, a journeyman pitcher trying to make the Los Angeles Dodgers, could become baseball's first billionaire player.

It has nothing to do with his arm. He owns a rock quarry in western Massachusetts.  White, who has appeared in seven big league games in nine professional seasons, paid $50,000 three years ago to buy 50 acres of land from an elderly aunt who needed the money to pay for a nursing home.

While clearing out a couple acres to build a home, he discovered stone ledges in the ground, prompting him to have the property surveyed.  A geologist estimated there were 24 million tons of the stone on his land. The stone is being sold for upward of $100 per ton, meaning there's well over $2 billion worth of material used for sidewalks, patios and the like.

No word on what happened to the aunt (who one assumes is either still in a nursing home or who has passed away).  Apparently White may turn his tale into a movie.

[Miriam A. Cherry]

March 1, 2007 in In the News | Permalink | TrackBack (0)

Abbott Laboratories v. Takeda Pharmaceutical Co., Ltd.

Posner_2On February 2, 2007, the Seventh Circuit (Posner, J.) enforced a forum-selection clause favoring Takeda, a Japanese pharmaceutial company, and thus affirmed the District Court's dismissal of Abbott Labs' suit brought in the Northern District of Illinois.  The full opinion can be found here.

The parties to the suit formed a 50/50 joint venture, which became the Delaware Corporation, TAP Pharmaceuticals.  In 1995, Takeda contracted to supply TAP for ten years with a heartburn and acid reflux drug, Prevacid.  In 2004, just before the contract was due to expire, TAP's board voted to renew it.  Abbott brought suit alleging breach of fiduciary duty by Takeda.  Abbott alleged (and Judge Posner expressed some perplexity at the allegation) that Takeda had coerced Abbott to instruct its TAP directors to approve the contract renewal, even though TAP thereby agreed to an excessive price.

The Agreement that created TAP provided that it should be governed by Illinois law but that disputes "arising from, concerning or in any way relating to" the Agreement should be brought in Japan if Abbott is plaintiff. 

Continue reading

March 1, 2007 in Recent Cases | Permalink | TrackBack (0)

Wednesday, February 28, 2007

Just How Much is Becks Worth, Anyway?

Apparently there is some confusion about how much exactly David Beckham is getting paid now that he's taken up with the Los Angeles Galaxy team.  According to this story:

David Beckham's playing contract with the Loas Angeles Galaxy is worth about $27.5 million in base salary over five seasons, according to a person familiar with Major League Soccer agreements.  It's a fraction of the $250 million income figure floated for the English star when he agreed to the deal last month. . . . Beckham's contract, according to several people familiar with the details, is a complex and probably unique arrangement that gives the 31-year-old midfielder a percentage of club sponsorship, merchandizing and uniform sales contracts. Promotional arrangements also are included.

Perhaps it's just hard to pin down exactly how much Becks will being paid with these various factors, but according to the article, it's far and above what other soccer players will receive.  Sports is still one of those "winner take all" compensation arenas in many aspects (although this has come under criticism, along with CEO pay, in recent years).

[Miriam Cherry]

February 28, 2007 in In the News | Permalink | TrackBack (0)

Mizzou and Tulane Looking for Commercial Podium Visitors

Visitors wanted in Sales, Secured Transactions, Modern Payment Systems, Negotiable Instruments or some combination of the above.  If interested in the Missouri position, contact James R. Devine, Associate Dean, University of Missouri School of Law, David Ross Hardy Professor of Law & Trial Practice; if interested in the Tulane position, contact Steve Griffin, Vice Dean, Tulane Law School. 

[Miriam Cherry/Hat tip: Blog Emperor Caron]

February 28, 2007 in Help Wanted | Permalink | TrackBack (0)

Tuesday, February 27, 2007

Franchisees of the World Unite!

Quiznos In my Business Associations course, franchisor/franchisee relationships provide a wonderful opportunity to explore agency issues.  As recently reported in The New York Times (warning, registration required), discontent among Quiznos franchisees provides a great opportunity for people who teach in this area to educate themselves as to the parameters of the relationship.

According to suits filed by the franchisees, Quiznos has been accepting $25,000 franchise-fee payments but then not finding store locations for its franchisees.  In addition, as reported in the Times, plaintiffs contend that they are forced to buy everything they need to run their stores through designated suppliers and distributors owned or controlled by Quiznos, which permits the corporation to profit handsomely at the expense of its franchisees.  Plaintiffs also allege that 40% of franchises fail to break even and that this fact is not disclosed to potential franchisees.

The disaffected franchisees have set up their own organization, Toasted Subs, whose website you can visit here

The Times article reports on general discontent among franchisees.  As Susan P. Kezios, president of the American Franchisee Association, told the Times, franchisees sign franchise agreements with which they must comply but which franchisors may alter unilaterally.  "When they control how much you are going to pay them in royalties and advertising and then force you to buy all of your supplies from them, its not free enterprise anymore.  It's indentured servitude." 

Franchisees of the world unite!  You have nothing to lose but your (franchisor's) chains! 

[Jeremy Telman]

February 27, 2007 in In the News, Recent Cases | Permalink | TrackBack (0)

Monday, February 26, 2007

Law Prof Takes on Cell Phone Company

Here's a great David v. Goliath story about Osgoode Hall professor Susan Drummond taking on cellphone company Rogers Communication's Inc.  Drummond was angered when Rogers shut off her 11-year-old son's cellphone service without first notifying her that it planned to do so.

The net result: despite her lack of trial experience, Prof Drummond won $2,000 in punitive damages against Rogers and slightly more than $800 in compensatory damages for breach of contract.  Another result: "I'm sure that the Rogers' legal department is redrafting their agreement as we speak," Drummond says.  The article further reports:

Bruce Cran, president of the Consumers' Association of Canada, praised Drummond's work.

"The problem is these companies completely control these contracts," he said.

"It's a take-it-or-leave-it thing. You sign the contract or you don't get the service. I'm sure a lot of the stuff in these contracts would not pass legal tests, if someone would challenge it, but people very rarely do.

"I take my hat off to this woman."

Drummond kept her Rogers cellphone until recently, when she was able to give it up without incurring an early cancellation fee of $200.

"I am a Scot and by God I wasn't going to pay that early cancellation fee," she says.

"I was just sick at the thought of paying $200 to get out of the contract."

[Meredith R. Miller]

February 26, 2007 in In the News | Permalink | TrackBack (0)

Limerick of the Week

In order for my students to appreciate this week's Limerick, I first have to instruct them in the patois of New York pick-up basketball.  You see, those of us who frequent the hard-scrabble asphalt courts of the City have developed our own expressions.  For example, sometimes a call in a game can be simultaneously fair and charitable.  For example, a player may travel or double-dribble, but only because -- oh, I don't know -- perhaps the sun was in his eyes, or he got scared when a bigger player came up to guard him.  In such a case, the traveling player might call out that he was fouled and the other players might agree that allowing the foul would be both fair and charitable, or to use the vernacular "fairitable." 

I swear, the word is used all the time in pick-up basketball games.  If you don't believe me, just try using it.  When someone calls a foul on you, just look him in the eye and say, "Okay, that's fairitable."  You will get no argument.

It is for that reason, and not (heavens forfend) because I was desparate for a rhyme, that the word, "fairitable" appears in this Limerick.

Allegheny College v. National Chautauqua County Bank

Although her estate was inheritable,
Ms. Johnston chose to be chartible.
A bargain was struck;
Her heir's out of luck:
To the College Cardozo was fairitable.

[Jeremy Telman]

February 26, 2007 in Famous Cases, Limericks, Teaching | Permalink | Comments (2) | TrackBack (0)

Thanks!

Thanks are due to Frank Snyder, Val Ricks, Texas Wesleyan and South Texas College of Law for being great hosts for this year's annual International Contracts Conference. Thanks!

[Meredith R. Miller]

February 26, 2007 in Conferences | Permalink | TrackBack (0)