ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, May 29, 2008

Pondering Unconscionability

Diligently avoiding grading the last of my exams, I ran across a couple of interesting-looking papers recently distributed by the Social Science Research Network -- each of which grapples with the ever-slippery concept of unconscionability.

OmriOmri Ben-Shahar, immediate past president of the AALS Contracts Section, late of the University of Michigan Law School and bound for a new post at the University of Chicago Law School, prescibes How to Repair Unconscionable Contracts.  Here's the abstract:

Several doctrines of contract law allow courts to strike down excessively one-sided terms. A large literature explored which terms should be viewed as excessive, but a related question is often ignored - what provision should replace the vacated excessive term? This paper begins by suggesting that there are three competing criteria for a replacement provision: (1) the most reasonable term; (2) a punitive term, strongly unfavorable to the overreaching party; and (3) the maximally tolerable term. The paper explores in depth the third criterion -- the maximally tolerable term -- under which the excessive term is reduced merely to the highest level that the law considers tolerable. This solution preserves the original bargain to maximal permissible extent, but brings it within the tolerable range. The paper demonstrates that this criterion, which received no prior scholarly notice, is quite prevalent in legal doctrine, and that its adoption is based on powerful conceptual and normative underpinnings.

Lima_3Meanwhile, from the home of the 2009 ABA Business Law Section's Spring Meeting and the 2010 Winter Olympics (Hmm, I wonder which will be a bigger financial boon for BC), University of British Columbia Faculty of Law doctoral student Augusto C. Lima (center) offers When Harry Met Kreutziger: A Look into Unconscionability Through the Lenses of Culture.  Here's the abstract:

When addressing unconscionability, the legal academy focuses almost exclusively on the transaction between the parties, analyzing the parties themselves only in passing, if at all. More importantly, the current writing on unconscionability does not analyze the parties in the context of their culture. In cases like the famed Harry v. Kreutziger[, 9 B.C.L.R. 166 (C.A. 1978)], now marking its 30th anniversary, the appropriate resolution to the unconscionability argument should rest not only on the transaction itself, but also on the culture of the parties and the effect that culture may have had on their dealings. By failing to conduct such a cultural analysis, the academy and courts have not only continuously provided little guidance to future litigants, but also failed to treat culturally like cases alike. The cultural approach shares outcomes with two more established approaches to unconscionability: the paternalistic and the economic approaches. The cultural view of unconscionability may result in contracts being rescinded in many (but not all and not for the same reasons) of the situations in which paternalism would have them rescinded. On the other hand, the cultural view also shares outcomes with the economic approach: unconscionability, applied through a cultural analysis, will also be a narrow doctrine of exceptional application (but for practical reasons, not purposely, as intended by the economic approach).

Happy reading!

[Keith A. Rowley]

May 29, 2008 in Recent Scholarship | Permalink | TrackBack (0)

Wednesday, May 28, 2008

Ding, Dong, the Which* is Dead

At its annual meeting last week, the American Law Institute approved an amendment, which NCCUSL (a.k.a. the Uniform Law Commission) had previously approved, replacing the oft-jilted text of Revised UCC § 1-301 with language consistent with pre-Revised UCC § 1-105:

§ 1-301. Territorial Applicability; Parties’ Power to Choose Applicable Law.

  (a) Except as otherwise provided in this section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties.

  (b) In the absence of an agreement effective under subsection (a), and except as provided in subsection (c), [the Uniform Commercial Code] applies to transactions bearing an appropriate relation to this state.

  (c) If one of the following provisions of [the Uniform Commercial Code] specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law so specified:

    (1) Section 2-402;

    (2) Sections 2A-105 and 2A-106;

    (3) Section 4-102;

    (4) Section 4A-507;

    (5) Section 5-116;

    [(6) Section 6-103;]

    (7) Section 8-110;

    (8) Sections 9-301 through 9-307.

In so doing, the bodies responsible for the Uniform Commercial Code followed the lead of thirty-two of the thirty-three states that have enacted Revised Article 1 to date. Only Louisiana — deferring to its Civil Code to ascertain the applicable law where the transaction does not fall within the scope of a more specific choice-of-law provision elsewhere in the UCC — has enacted a version of Revised § 1-301 that differs non-trivially from the new official version.

* - As in, "Which state's law do you want to govern our contract?"

[Keith A. Rowley]

May 28, 2008 in Legislation | Permalink | TrackBack (0)

Tuesday, May 27, 2008

Idiosyncratic Terms a la Monty Python

Groom: We want to buy a bed, please.

Mr. Lambert: Oh, certainly. I'll get someone to attend to you.  Mr. Verity!

Mr. Verity: Can I help you, sir?

Groom: Ah, yes. We'd like to buy a bed ... a double bed ... about fifty pounds?

Verity: Oh, no, I'm afraid not, sir. Our cheapest bed is eight hundred pounds, sir.

Groom: Eight hundred pounds!

Lambert: Perhaps I should have explained: Mr. Verity does tend to exaggerate; so, every figure he gives you will be ten times too high. Otherwise he's perfectly all right.

Groom: Oh, I see. So your cheapest bed then is eighty pounds?

Verity: Eight hundred pounds, yes, sir.

Groom: And how wide is it?

Verity: The width is sixty feet wide.

Groom: (Politely whispering to his wife) Six foot wide. And the length?

Verity: The length is ... Lambert, what is the length of the Comfydown Majorette?

Lambert: Two foot long.

Groom: Two foot long?

Verity: Ah, yes, you have to remember, of course, to multiply everything Mr. Lambert says by three.  It's nothing he can help, you understand.  Apart from that he's perfectly all right.

Groom: I see....

Verity: But, it does mean that when he says a bed is two foot wide, it is in fact sixty foot wide.

Groom: Oh, yes, I see.

Verity: And that's not counting the mattress.

Groom: Oh, how much is that?

Verity: Mr. Lambert will be able to help you there. Lambert, will you show these twenty good people the dog kennels, please?

Lambert: Certainly.

Groom: Dog kennels? No, no, no, mattresses, mattresses!

Verity: Oh, no, no. You have to say dog kennel to Mr. Lambert because, if you say mattress, he puts a bag over his head. I should have explained. Apart from that he's really all right....

from Monty Python's Flying Circus, Season 1, Episode 8 ("Full Frontal Nudity"), air date: Dec. 7, 1969.

[Keith A. Rowley]

May 27, 2008 in Film Clips | Permalink | TrackBack (0)

Limerick of the Week: Botticello v. Stafanovicz

CtThis is the case I use to teach the doctrine of ratification, even though in this case the court found no ratification.  It's a fun case to teach, and students are usually relieved to learn that the case is easier to understand than the parties' names are to pronounce.

It's fun to teach because it raises issues relating to a type of contract that we have had occasion to mention recently on this blog, namely marriage.  Mary and Walter Stefanovicz owned a parcel of land in Connecticut as tenants-in-common.  Botticello wanted to buy the land and he offered $75,000 for it.  Mary said "no way" but she also said that she would not sell the land for less than $85,000, which Walter construed as meaning "way" when Boticello offered to lease the land with an option to purchase for $85,000.  Several years and substantial improvements later, Botticello sought to exercise his option and Mary balked.

The court boldly found that, despite the fact that Walter handled much of the family's business affairs, Mary did not thereby make her husband her agent.  You go girl!  In addition, the court found that Mary had not ratified Walter's agreement with Botticello by accepting payments, as she was entitled to assume that such payments were nothing more than evidence of a lease.  A wonderfully just result, except that it leaves Walter and Botticello as tenants-in-common, an arrangement that the parties likely would not have agreed to.  I therefore take poetic license in the following Limerick in which I imagine where the story goes post-judgment.

Botticello v. Stefanovicz

Connecticut is one location
Where fam deals need ratification.
Walt sold out to Tony;
He now pays alimony
And owes Tony remuneration.

As reported earlier, I will be away for the rest of the week.  However, I will not be fishing.  I will be attending the Law & Society Association Meeting in Montreal. If time permits, I will report on any blogworthy events that arise.

[Jeremy Telman]

May 27, 2008 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

Monday, May 26, 2008

Speaking of International Law ...

Moved by the spirit of Jeremy's recent shout out to the new International Law Prof Blog, I realized it has been more than a year since I last updated this blog's readers on the status of the U.N. Convention on Contracts for the International Sale of Goods (CISG) and the U.N. Convention on the Use of Electronic Communications in International Contracts (CUECIC).

Since last May, the number of CISG Contracting States stands fast at 70.  During that same span, the number of signatories to the CUECIC has increased from 10 to 18 with the additions of Colombia, Honduras, Iran, Montenegro, Panama, Philippines, Republic of Korea, and Saudi Arabia.  However, because none of the signatories have yet ratified or acceded to the CUECIC, it is not yet in effect in any country; whereas, depending on one's opinion on the effect of the U.S. Supreme Court's recent Medellin decision on the viability of the CISG in the United States, the CISG is in effect in either all of its Contracting States (except in transactions in which the parties have expressly contracted out of the CISG) or all of them except the U.S. (except in transactions in which the parties have expressly contracted into the CISG).

[Keith A. Rowley]

May 26, 2008 in Legislation | Permalink | TrackBack (0)

Speaking of Fishin' and Baseball Players ...

Here's one in honor of our fearless leader, Frank Snyder, who now spends his spare time as a minor league baseball mogul.  The recent trade that sent pitcher John Odom (no, not that John Odom) from the Calgary Vipers to the Laredo Broncos for ten maple baseball bats brought to mind similarly unusual minor league baseball trades of yore.

In July 1998, the Pacific Suns of the Western League traded right-handed pitcher Ken Krahenbuhl to the Greenville Bluesmen of the Texas-Louisiana League for an undisclosed amount of cash, a player to be named later, and "10 pounds of expertly filleted Mississippi River catfish."  Hank Hersch & Kostya Kennedy, Deal of the Week: A Trade with a Catch, Sports Illustrated, Oct. 10, 1998, at 18.  Krahenbuhl reportedly commented "I didn't think I deserved to get traded for fish.”  Id.... The Bluesmen had previously traded second baseman Sean Murphy to the Sioux Falls Canaries for fifty pounds of pheasant, and had sent a mint copy of a classic Muddy Waters album to the Meridi[a]n Brakemen for first baseman Andre Keen.  See id.

Keith A. Rowley, You Asked For it, You Got It ... Toy Yoda: Practical Jokes, Prizes, and Contract Law, 3 Nev. L.J. 526, 543 n.74 (2003).

Ironically, the bats seem not to have helped the Vipers out much so far, as they dropped their first two games of the season due to -- wait for it -- cold bats.

[Keith A. Rowley]

May 26, 2008 in True Contracts | Permalink | TrackBack (0)

The Antioch College Contract

Antiochcollegelogo Antioch College held its last commencement ceremonies (for a while) this month.  The school's Board of Trustees announced in 2007 that it would close this year, with plans to re-open in 2012.  More than half of the Antioch College faculty responded with a lawsuit, seeking to prevent the Board from firing them.  The Board of Trustees temporarily lifted its threat to shut down the College, allowing a group of faculty and alumni the opportunity to raise necessary funds to keep the place running.  When those efforts came up short, the Board re-imposed its (temporary) death sentence. 

In May, a group of alumni offered the Board $15.5 million to keep Antioch running ($6.5 million of which would go to other campuses of the Antioch University system).  The alumni asked for 10 seats on the 19-seat board in exchange for their offer of cash.  The Board refused the offer.

Although the faculty lawsuit cites to various breaches of contractual obligations by the Board, the real Antioch College contract is one that Antioch students make with themselves when they choose to attend a College whose motto was supplied by its first president, Horace Mann: "Be ashamed to die before you win some victory for humanity."

[Jeremy Telman]

May 26, 2008 in In the News | Permalink | Comments (0) | TrackBack (0)

Sunday, May 25, 2008

Gone Fishin'

Posts are likely to be relatively light around here at ContractsProf Blog over the next week or so, while your humble contributing editors are traveling around the globe. No worries, we'll be back with BIGGER, BETTER and BOLDER content when we return. It's a money back guarantee.*

*Void where prohibited by law. Some restrictions may apply. See your local blogger for details. Must be over 18 to participate.

[Meredith R. Miller]

May 25, 2008 in Miscellaneous | Permalink | TrackBack (0)

Regulating Early Termination Fees

0507phone_x6001Terminating a cell phone service contract can be cost prohibitive because of the early termination fees charged by most carriers -- that is, the $175 or more the carriers charge if you cancel your service contract early. I have always wondered whether this fee is unconscionable or an unenforceable penalty. Well, the New York Times reports that the FCC chairman wants to regulate early termination fees, and take the matter out of the hands of state contract law (and a speckling of state class actions lawsuits). From the article:

Cellphone companies routinely charge customers $175 or more for quitting their service early. Under the wireless industry proposal, consumers would have the opportunity to cancel service without any penalty for up to 30 days after they sign a cellphone contract or 10 days after they receive their first bill.

The sticking point for consumer groups is that the proposal would take away states’ authority to regulate the charges. Consumers Union called the provision a “get-out-of-court-free card.”

Wireless companies say cancellation fees are necessary to recover the cost of cellphones, which they subsidize under long-term service contracts, and to defray their costs for signing up new customers. Consumer groups said the fees were unreasonable and intended to discourage customers from switching among providers.

[Meredith R. Miller]

May 25, 2008 in In the News | Permalink | TrackBack (0)