ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, March 14, 2008

South Dakota Makes 30

By affixing his signature to SB 93 on March 13, 2008, Governor Mike Rounds made South Dakota the thirtieth state to enact Revised Article 1.  South Dakota's enactment, along with Kansas's (enacted last year), will take effect on July 1, 2008.

SB 93, like the versions of Revised Article 1 enacted in Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Texas, Utah, Virginia, and West Virginia, rejects uniform R1-301.  (To date, only the U.S. Virgin Islands has adopted uniform R1-301.)

SB 93, like the versions of Revised Article 1 enacted in Arkansas, California, Colorado, Connecticut, Delaware, Florida, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Texas, and West Virginia, adopts uniform R1-201(b)(20)'s definition of "good faith."  By contrast, Alabama, Arizona, Hawaii, Idaho, Indiana, Nebraska, Rhode Island, Utah, and Virginia retained the pre-R1 “honesty in fact in the conduct or transaction concerned” definition in Article 1 and left 2-103(1)(b) & 2A-103(3) unchanged.

The bills currently pending in Massachusetts, Pennsylvania, Tennessee, and Vermont do not appear to be making much progress.  But, you can count on your faithful correspondent to alert you if that changes.

[Keith A. Rowley]

March 14, 2008 in Legislation | Permalink | TrackBack (0)

Thursday, March 13, 2008

Best Efforts in Base Ball (Circa 1919)

Speaking of best efforts, consider the following standard-form language from the 1919 contract between "Shoeless" Joe Jackson and the Chicago White Sox (more precisely, Charles Comiskey, who owned the White Sox):

The player agrees to render for the club owner, at such times and places during the term of this contract as the club shall designate, his best services as a ball player; and he agrees to keep himself in the best possible physical condition from the date hereof until the termination of the contract; and a violation of either of the foregoing provisions of this paragraph shall be such a breach of contract as shall entitle the club owner either to terminate this contract forthwith, by written notice, or to suspend the player, by written notice, without pay until the club owner is satisfied that the player is ready, able and willing to resume his services in the manner in this paragraph provided.  The player further agrees that, during the term of this contract, he will not, except with the consent of the American League, engage, either during the American League season or at any other time, in any game or exhibition of base ball, foot ball, basket ball, or other athletic sport, except as herein provided.

Form 1919, American League Player's Contract ¶ 3 (emphasis added).  As baseball-savvy readers and those who heard my presentation at February's Fourth International Conference on Contracts at McGeorge School of Law know, several members of the 1919 Chicago White Sox arguably did not render their best services as ballplayers during the World Series against the Cincinnati Reds.

The final sentence of Paragraph 3, which served to make the player-team contract exclusive on the player's part, also reinforced the effect of Paragraph 9 -- the 1919 version of the so-called "reserve clause," a later version of which former St. Louis Cardinals great Curt Flood unsuccessfully challenged when he was traded to the Philadelphia Phillies after the 1969 season.

Whenever, in the sole judgment of the club owner, it is to the advantage of the club that such action be taken, the club owner may transfer the player to another base ball club and assign the rights and obligations of the club owner hereunder to the owner of such other base ball club ....

Form 1919, American League Player's Contract ¶ 9.

In Flood v. Kuhn, 407 U.S. 258 (1972), the U.S. Supreme Court upheld the reserve clause -- which institutionalized, to paraphrase Flood, well-paid slavery.  But major league baseball's hard-fought victory was fleeting, as the reserve clause met its demise following the 1975 season at the hands of arbitrator Peter Seitz, who ruled in favor of all-star pitchers Andy Messersmith and Dave McNally, declaring them to be "free agents" who could play or refuse to play for any major league baseball team that wanted their services.

[Keith A. Rowley]

March 13, 2008 in True Contracts | Permalink | TrackBack (0)

Mike Leigh on Best Efforts (Dedicated to Larry Garvin)

Helen Lenoir: Now, gentlemen, we all know why we’re here.  We seem to have come to something of a stand-still.

Arthur Sullivan: Indeed, we have.

Lenoir: Which, Arthur, is because?

Sullivan: Because, Helen, I am unable to set the piece that Gilbert persists in presenting.

W.S. Gilbert: The piece I persist in presenting, Sullivan, is substantially altered each time; otherwise, there would be little point in presenting it to you.

Sullivan: With all due respect, old chap, it is not substantially altered at all.  You seem merely to have grafted onto the first act the tantalizing suggestion that we are to be in the realms of human emotion and probability, only to disappoint us by reverting to your familiar world of topsy-turvydom.

Gilbert: That which I have grafted on to Act One, Sullivan, has been specifically at your request.  And, if you take exception to topsy-turvydom, you take exception to a great deal of my work of the past twenty-five years, not to mention much of what you and I have written together since Eighteen Hundred and Seventy-One.

Sullivan: That is patent balderdash.

Gilbert: Is it?

Lenoir: Gentlemen.  If we might keep things cordial, we may make some progress.  Arthur, can you really not see your way to setting this new piece?

Sullivan: Alas, Helen, I cannot.

Lenoir: Cannot or will not?

Sullivan: I am truly unable to set any piece that is so profoundly uncongenial to me.

Lenoir: Uncongenial though it may be to you, I must remind you that we here are conducting a business.

Sullivan: And may I remind you, Helen, that I am not a machine.

Lenoir: I would not suggest for one moment that you were.

Sullivan: You all seem to be treating me as a barrel-organ.  You have but to turn my handle, and "Hey Presto!," out pops a tune.

Lenoir: Oh come now, that’s not fair.  You are both contractually obliged to supply a new work on request.

Gilbert: The very act of signing the joint contract dictates that we must be businesslike.

Lenoir: Yes, Mr. Gilbert, and I was wondering whether you might not be able to solve our wee difficulty.

Gilbert: How, pray?

Lenoir: By simply writing another libretto.

Gilbert: That’s out of the question.  I have worked for many long months at this play, which I have every confidence will be the best we have yet produced at the Savoy.  To abandon it would be not only criminal, but wasteful.

Lenoir: I see....  What I don't understand, Arthur, is why you cannot set this piece.   You're our greatest composer.  Surely, you can do anything.

Sullivan: How very kind you are, Helen.  But, I say again to you all: I am at the end of my tether.  I have been repeating myself in this class of work for too long and I will not continue so to do.

. . .

Gilbert: If you wish to write a grand opera about a prostitute dying of consumption in a garret, I suggest you contact Mr. Ibsen in Oslo.  I’m sure he will be able to furnish you with something suitably dull.

. . .

Sullivan: The opportunity to treat a situation of tender, human, and dramatic interest is one I long for more than anything else in the world.

Gilbert: If that is your sincere desire, I would be willing, with Carte's permission to withdraw my services for one term, to allow you to write a grand opera with a collaborator with whom you have a closer affinity than myself.

Sullivan: No, Gilbert.

Gilbert: I'm in earnest, Sullivan.

Richard D’Oyly Carte: No doubt that is something we shall be pursuing in the future.

Gilbert: Indeed.  Well, that is your prerogative, Carte.

Lenoir: However, we are concerned with the present.  Arthur, will you or will you not set Mr. Gilbert's new and original work?

Sullivan: Ma belle Héléne, ce n'est pas possible.

Lenoir: Truly?

Sullivan: I'm afraid so.

Lenoir: That being the case, Mr. Gilbert, would I be right in supposing that you remain unable to accommodate us?

Gilbert: Indeed, Miss Lenoir.  I have had what I deem to be a good idea and such ideas are not three a penny.

Lenoir: What a pity.  This will be a very sad day for many thousands of people.

from Topsy-Turvy (October Films 1999)

[Keith A. Rowley]

March 13, 2008 in Film Clips | Permalink | TrackBack (0)

Wednesday, March 12, 2008

It's a Mystery: Author's Settlement Agreement is Ambiguous

Walter Mosley and Joy Kellman were married for over 13 years.  During that time, Mosley commenced his writing career and became famous for, among other works, a series of stories starring a detective named Easy Rawlins, and his sidekick, Mouse.  Mosely and Kellman entered into a settlement agreement in tandem with their divorce.  At the time, Mosley had written seven Easy Rawlins books and three others, all of which were defined by the parties' agreement as "Marital Books."  Further, Paragraph 4.1(d) of the parties' 27-page agreement settling their divorce provided that:

the Wife shall receive 25 percent. . . of any funds. . . paid to the Husband on account of Marital Books/Literary Works. . . in written, verbal and visual communications, whenever produced after the date of execution of this Agreement, including but not limited to future publishing of Marital Books/Literary Works, screenplays. . ., motion picture rights, fiction and non-fiction, magazines, records, tapes (audio and video), disks (audio, video, CD, DVD, computer), theatrical productions of any kind, movies, television, television movies and radio productions, and any spin-off from any of the foregoing, including but not limited to any television series based on Easy Rawlins and Mouse.

In New York County Supreme Court, Kellman has sued Mosley for breach of contract, alleging, among other things, that he breached Paragraph 4.1(d).  Kellman claims that Mosley published three new Easy Rawlins novels since the execution of the Agreement, and that, in addition to other projects, a motion picture of one post-divorce title, Little Scarlet, is set to be released.  She argues that she has not received her share of the proceeds from these projects.  And, she argues that she is entitled to her percentage of the proceeds because she reads Paragraph 4.1(d) as entitling her to 25% of any future books or projects which are based on Easy Rawlins and Mouse, regardless of whether the the new projects are listed as "Marital Books."  She basically claims the right to a percentage of net proceeds from any new works or projects which involve the character Easy Rawlins in any way.

Mosley responds that Kellman is not entitled to a percentage of the earnings on the new books in the Easy Rawlins series that were written post-divorce.

In a recent decision, Supreme Court, New York County (Silbermann, J.) denied Kellman's motion for partial summary judgment.  It held that this provision was "ambiguous as to the extent to which Kellman's interest follows Mosley's exploitation of Easy Rawlins in the future works." The court paid particular attention to the words "fiction and non-fiction" and the meaning of the word "spin off."  Further, the extrinsic evidence offered by Mosley of the drafting process merely offered a different view of the meaning of the contested terms "fiction and non-fiction" and did not clarify the meaning of the contract language. coverage.

Kellman v. Mosley (2/22/08, Justice Silbermann).

[Meredith R. Miller]

March 12, 2008 in Recent Cases | Permalink | TrackBack (0)

Government Contracts and the Revolving Door

John_ashcroftYou may know John Ashcroft (left) as the author of "Let the Eagle Soar" or you may know him as a former U.S. Attorney General.  In any case, he testified before Congress yesterday, defending a contract that could pay him as much as $52 million (over an 18-month period) to monitor Zimmer Holdings Inc. of Warsaw, Ind., a company that manufacturers replacement hips and knees.  According to (the Internet home of the St. Louis Post-Dispatch), Zimmer Holdings was one of four companies that agreed to pay $300 million to settle cases arising from a federal investigation.

Ashcroft's Washington, D.C. based company (presumably The Ashcroft Group, LLC) was selected on a no-bid basis by New Jersey's U.S. Attorney Christopher Christie, who used to work for Mr. Ashcroft at the Department of Justice,  In his defense, Mr. Ashcroft pointed out that no taxpayer dollars were spent on the contract as the money paid to him is provided by the company being monitored.  So, it's supposed to make us more comfortable with the quality of the monitoring that the monitor is paid millions of dollars by the party he's supposed to monitor?  But then again, Mr. Ashcroft is a man of integrity, just like this guy.

[Jeremy Telman]

March 12, 2008 in Government Contracting, In the News | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 11, 2008

Real Estate Developer's Detrimental Reliance Entitles Him to $6.5 million

A trial judge in Suffolk County, New York has awarded a real estate developer roughly $6.5 million in damages based on the developer's "detrimental reliance."

The plaintiff Ron Parr, a local real estate developer, had entered into business dealings with another developer, defendant Pitcairn Properties, Inc. The parties' stated intention was to develop and manage real property in Suffolk County, Long Island. In connection with a real estate transaction to obtain undeveloped lots in Ronkonkoma, defendant promised to "issue shares of voting common stock [of a single purpose entity that was to hold title to the properties] to [plaintiff] Ron Parr or his designee for 50 percent of the agreed upon residual value. . . of the property at closing . . ., less the amount paid for the property together with all related costs." When a 50% interest was not transferred to plaintiff, he sued. Plaintiff asserted that "he relied, in good faith, upon all of the representations made to him, most especially that he was entitled to a fifty percent share in the properties."

The court primarily justified its decision to award damages to plaintiff based on plaintiff's detrimental reliance on defendant's promise to transfer the half interest in the properties.* Yet, the court based its damages award on the full expectation measure -- that is, the court awarded plaintiff the value of the performance he was entitled to under the contract, roughly $6.5 million. Perhaps reliance and expectation were one in the same here, because plaintiff originally obtained the right to title to the properties as part of the settlement of a previous action, and transferred that title to the single purpose entity, presumably in reliance on the promise of receiving a half interest.

*A sentence in the opinion that baffles me: "Since a portion of the Plaintiff's action sounds in contract, it is necessary to address only the issues of detrimental reliance and foreseeability inasmuch as the existence of an agreement is not in dispute." Did the judge mean to say "inasmuch as the existence of a promise is not in dispute"? Because, technically, all plaintiff needs is a definite promise to seek damages for detrimental reliance, not the existence of a contract. Perhaps I am missing something here.

Parr v. Ronkonkoma Realty Venture I LLC (2/26/08, Justice Jeffrey Arlen Spinner).

[Meredith R. Miller]

March 11, 2008 in Recent Cases | Permalink | TrackBack (0)

Contracts, Politics, and National Security

Usaf_f15_f16_kc135_750pix  On February 29th, the U.S. Air Force announced that it was awarding a $35-40 billion contract to build aerial refueling planes to a team formally led by Northrop Grumman.  I challenge anyone to click on the image at left and resist the temptation to stand up and shout U.S.A!!  U.S.A.!!  Aerial refueling is cool!!

Anyhow, the contract award to Northrop Grumman and its partner, the European Aeronautic Defense and Space Co. (EADS),was widely reported as a "stunning setback" for Boeing, since EADS is the parent corporation of Boeing's rival, Airbus.  What was the Air Force thinking?  This is about refueling, not about supplying pilots with beaujolais nouveau.  In any case, like an earlier proposal to place a Dubai-controlled company in charge of managing six U.S. port terminals, this government contract raises issues of patriotism, national security and economic outsourcing.

Today, the Associated Press reports that Boeing will file a challenge to the Air Force's decision with the Government Accountability Office.  According to the AP, pressure to review the decision is coming from politicians representing states that would have benefitted had the contract been awarded to Boeing. Meanwhile, Alabma Senator, Richard Shelby, defended the Air Force's decision.  Northrup Grumman reports that the contract will lead to the creation of 2000 new jobs in Mobile.

UPDATE: For those interested in learning more about the Government Accountability Office bid-protest mechanism, there is a new article out:  Robert S. Metzger & Daniel A. Lyons, A Critical Reassessment of the GAO Bid-Protest Mechanism, 2007 Wisc. L. Rev. 1225.

[Jeremy Telman]

March 11, 2008 in Government Contracting, In the News, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Monday, March 10, 2008

Really Hot Cayanne: Porsche Up in Flames

This story concerning allegations of breach of contract, breach of warranty and negligence, courtesy of The BLT:

A D.C. law firm specializing in national security cases moved a little away from its niche this week by filing a civil action against a company that allegedly sold it a new Porsche SUV that spontaneously caught fire.

Paleos & Krieger’s March 3 lawsuit accuses the Georgia-based Porsche Cars North America of breach of contract, breach of warranty, and negligence. The suit also accuses Wisconsin-based Ameriprise Home and Auto Insurance of breach of an insurance contract.

The complaint, filed by partner Roy Krieger, says the firm bought the SUV — a Porsche Cayanne S — from Porsche Cars North America in December 2003 and insured it with Ameriprise.

Krieger says on March 5, 2005, he parked the car outside a local bookstore. After reading for about two hours, he came out to find a fire truck sitting in the lot.

“I just hoped it wasn’t blocking me in,” he said.

When Krieger turned the corner, he found his car to be a wet “smoking hulk” with the interior blackened and all the windows smashed.

“I was quite startled and dismayed because, up to that point, the car had been running fine,” Krieger says. “At the end, it couldn’t even be towed. It had to be placed on a flatbed truck and driven away.”

According to the complaint, a forensic examination to determine the cause of the fire was apparently inconclusive.

It was bad enough the $60,000 car was totalled, Krieger says, but he also lost two custom suits and several dress shirts fresh from the drycleaners.

He is seeking monetary damages of more than $75,000 because the vehicle was under warranty and insurance coverage. He said he hasn’t received any payments.

“I’m over the shock of it now, it was a few years ago,” Krieger says. “But I haven’t gotten any money, and someone’s got to pay.”

Porsche Cars North America’s legal department had not received the complaint and was unable to comment. Ameriprise said it couldn't comment either because the case was pending.

[Meredith R. Miller]

March 10, 2008 in In the News | Permalink | TrackBack (0)

Foreclosure Conference at Valparaiso

ForeclosureMy colleague, Alan White, has organized a one-day conference, "Defending Foreclsosures, Saving Homes," to be held Friday, March 29, 2008 at the Valparaiso University School of Law.  Conference participants will learn about the latest developments in foreclosure and bankruptcy, loss mitigation and mortgage servicer practices. Attorneys interested in representing homeowners will learn the nuts and bolts of the Indiana foreclosure process, explore effective claims and defenses available to homeowners,  and learn how to present workout and loan modification proposals to mortgage servicers. Housing counselors will learn more about judicial foreclosure in Indiana and options available to homeowners at each stage of the process. Architects of the Indiana Foreclosure Prevention Network will be on hand to explain the IFPN initiatives—including the recently established hotline and referral network. 

The full brochure can be found here.  Registration is free and can be accomplished with a call to Faye Jackson at 1-877-VALPOLAW or an e-mail to

[Jeremy Telman]

March 10, 2008 in Conferences | Permalink | TrackBack (0)

Syllabi as Contracts

I have often considered beginning my Contracts course by insisting that students sign and return a copy of a mock syllabus containing unreasonable terms on the first day of class.  My favorite unreasonable term:

If a student's cell phone goes off during class, the instructor may confiscate it for the remainder of the semester.  If the student takes the call, the instructor may confiscate the cell phone and smash it with a hammer, unless it's one of those iphones, in which case the instructor will simply confiscate it.

There would be other standard form contract stuff of course -- an arbitration clause, choice of law, merger, integration, etc.  I expect that if I did this, most of the students would immediately sign and a few would hold out, and I would make a big show of putting pressure on them to sign or leave.  I've never done it because I don't want to start the semester off on an adversarial note. 

Still, I do think of my syllabus as an implied contract.  I am mostly concerned that the syllabus sets forth my expectations regarding attendance and participation.  Some students regard the syllabus as a binding contract that I will cover all of the assigned materials (despite express language to the contrary), and thus there are a few, isolated howls of protest if I suggest that, becasue we are behind, we will skip a case or two. It appears that my students and I are not alone in considering a syllabus as akin to a contract, according to this article in the March 14, 2008 issue of The Chronicle of Higher Education

HT: Penny Andrews

[Jeremy Telman]

March 10, 2008 in In the News, Teaching | Permalink | Comments (0) | TrackBack (0)

Sunday, March 9, 2008

Spring Break

A My postings may be a little thin this week.  As some of you know, my second job is as owner of the Texarkana Gunslingers, an independent minor league baseball team.  Spring training starts May 1, and I'm off to the Border Cities (that's what we call Texarkana, which is half in Texas and half in Arkansas) for a week of getting ready for the season.

So I'll be in and out of touch.  Anyone who wants to order a Gunslingers hat or T-shirt (they make great gifts!) can send me an e-mail.

[Frank Snyder]

March 9, 2008 in About this Blog | Permalink | TrackBack (0)

Vicous Unprovoked Assault on Brian Leiter Refuted!

There are three things most everyone knows about our blogmate Brian Leiter (Texas), the author of Brian Leiter's Law School Reports (the People magazine of America's elite law schools), and more recently Brian Leiter's Legal Philosophy Blog. The first is that he likes to put the name "Brian Leiter" on things. The second is that he'll never put out a ranking in which Texas ranks lower than it does in U.S. News. The third is that he sometimes acts like he needs a personality transplant. Or maybe some lithium.

I note this apropos of this recent attack on our colleague Jeremy Telman, who allegedly misread something Leiter had written.

Department of Scholarly Howlers . . . I would have thought (vanity of vanities, I know, but I would think someone making claims about my views might have read my work) that I had a modest reputation as a major critic of Hart's misinterpretation of legal realism. Indeed, someone who had read only Rethinking Legal Realism, and nothing else, would have learned as much about my views. . . . But putting the scholarly carelessness of Professor Telman's essay to one side . . . .

[Emphasis added.] The nastiness of that irritated me, so I'm sorry to say I actually posted a comment on Leiter's blog in response. I usually try to wait 24 hours before responding when someone bothers me. But I violated my rule. Mea culpa. I said:

Actually, it looks like he read your book. He may have misinterpreted your argument. This might be because (a) he misread it, or (b) he's simply incapable of understanding the nuances of your thought, or (c) you didn't write it clearly. Obviously the third is, as all readers of this blog know, impossible. Unthinkable, even.

But even assuming Prof. Telman is dead wrong, the nastiness of this response is pretty impressive. I find it hard to imagine that Hart (for example) would ever have written this kind of insulting garbage in public about someone who misinterpreted his work. Great scholars seem to be above this kind of petty strutting. It's the lesser ones who get bent out of shape and lash out. "Vanity of vanities," indeed.

It took about five minutes to get a response from Leiter:

You really are a nasty piece of work, aren't you? I knew from our prior exchanges that you had some chips on your shoulder, but really, this is something else. I think you must not spend any time with philosophers. When people get things wrong, philosophers say so. It's nothing to do with strutting or pettiness, but with truth. You've heard of that, right?

What a sick man you must be.

Wow, it takes a real philosopher engaged in the never-ending pursuit of truth to draw so accurate a picture of a subject he's never actually met. I'm devastated. Now I'll go crawl under my rock and die.

[Frank Snyder]

March 9, 2008 in About this Blog | Permalink | TrackBack (0)