ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, June 20, 2008

A Mind-Bending Ruling on the Status of eBay Sales

Uri_geller1Uri Geller (pictured) was once famous for bending spoons and other objects with his mind.  Does the fact that I have to tell you what he was famous for mean that he is no longer famous?  In any case, Geller has grabbed the spotlight again, this time with a breach of contract claim that has resulted in an interesting legal opinion about the status of e-Bay auctions.  I have not yet been able to locate the opinion, so I am relying on the AP report

According to that report, Geller and his partners bid just over $900,000 in a 2006 eBay auction for a Memphis home where Elvis Presley once resided .  The owners of the home ended up selling it for over $1 million to a Nashville record producer.  According to the BBC, always an authority on Elvis-related matters, Geller described himself as "mind-blown angry" over the sale.  The BBC might have added that since learning the news, the mind-blown Geller has been unable to bend a single spoon!  But I digress.

Chief Judge Jon McCalla of the Western District of Tennessee ruled that there was no actionable breach of contract by the sellers because Geller and his partners had already breached by altering the closing terms.  In addition, and this is what I find interesting, if the AP report is accurate, Judge McCalla ruled that the eBay auction in which Geller participated was more a means of advertising the home than a vehicle of binding sale.

If anyone can contribute a link to the actual opinion, I would appreciate it.

HT:Hazel Glenn Beh

[Jeremy Telman]

June 20, 2008 in Celebrity Contracts, In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

A Fault-Line Drawn in Contracts Theory

CohenThe University of Virginia Law School of Law's George M. Cohen has a new article out challenging conventional wisdom regarding contract law as a system of strict liability.  The piece, The Fault that Lies within Our Contract Law, was written for a University of Michigan Law School symposium on contract and fault and is forthcoming in the Michigan Law Review.  But those who can't wait can download the article here.

I have been toying with the idea of doing some legal scholarship on a pet theory of mine that damages in promissory estoppel cases are sometimes a form of punitive damages because courts award full expectation damages when the theory of harm is based on reliance but reliance damages would be paltry.  Professor Cohen's scholarship suggests that my theory (which may not be original, or in any other sense "mine" for all I know) might be just one small piece of a broader picture, so I am happy to learn of it.  The abstract of the article is presented below:

Scholars and courts typically describe and defend American contract law as a system of strict liability, or liability without fault. Strict liability generally means that the reason for nonperformance does not matter in determining whether a contracting party breached. Strict liability also permeates the doctrines of contract damages, under which the reason for the breach does not matter in determining the measure of damages, and the doctrines of contract formation, under which the reason for failing to contract does not matter.

In this essay, prepared for a symposium on Fault and Contract Law sponsored by the University of Michigan School of Law and to be published in the University of Michigan Law Review, I take issue with the strict liability paradigm, as I have in my prior work on contract law. In my view, the theoretical justifications for strict liability as a general paradigm for contract law oversimplify contractual intent, the relationship between intent and fault, and the nature of contractual fault. Moreover, the strict liability label is descriptively misleading, once one dips even slightly below the surface of contract doctrine. Fault shows up throughout contract law. Efforts to make contract law conform more to the strict liability paradigm and exorcise fault are wrongheaded. In any case, such efforts are doomed to fail. Fault may not be the dominant feature of contract law, but it plays an inherent, invaluable, and ineluctable supporting part. The strict liability impulse occurs when contract intent, contract terms, and contract doctrine coincide with a persuasive story of promisor fault, and when the consequences of strict liability are blunted because the promisor can easily mitigate them. But strict liability, like other contract rules, is merely a fault-based presumption. Determining the limits of that presumption means considering why parties make contract and why they do not perform them, in other words, fault. Courts and scholars should would do better to acknowledge the role of fault and think about how to use fault more effectively within the framework of contract doctrine.

[Jeremy Telman]

June 20, 2008 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 18, 2008

And Speaking of FOX Television . . .

Paula_abdul_1Fox's megahit American Idol has a problem, and for once, it's not Paula's fault.  No, this time the Associated Press is reporting that the problem is with management.  The American Federation of Musicians, a musicians' union, is suing the producers of the program, claiming that they were underpaid because the shows music was re-recorded for reruns.

Here is the AP's summary of the nature of the suit:

That contract says the show's musicians should be paid royalties for rebroadcasts of the show, the lawsuit said.

The producers are required to pay 75 percent of scale to musicians who appear in the original show and rehearsals, plus 10 percent of that pay to a union pension fund, with decreasing percentages for each rebroadcast, according to court papers.

In 2007, the producers started cutting out the show's soundtrack and using different musicians to re-record new music for the past-season highlights show "American Idol Rewind," the lawsuit said.

I am genuinely curious about the backstory here.  Why would the producers go to the trouble of hiring new musicians and re-recording the music?  After all, the musicians' salaries and benefits must be de minimis in the grand scheme of things.

[Jeremy Telman]


June 18, 2008 in In the News | Permalink | Comments (0) | TrackBack (0)

Writers Walk at Fox

FoxBack when The Simpsons was fresh and funny, they had an episode in which Bart and Lisa write an episode of Itchy and Scratchy for the Krusty the Clown show.  Realizing that nobody at the networks will take them seriously as a couple of kids, they decide to use Grandpa Simpson's name.  Unfortunately they don't know his name.  They ask him, and he can't remember, but whenever he can't remember his name, he just checks his underwear.  Then comes the following priceless dialogue:

Grandpa; Call me (pulling his underwear out of his pants). . . Abraham Simpson.
Lisa: Grandpa, how did you take off your underwear without taking off your pants?
Grandpa: I don't know.

I love that exchange, but it's not really relevant.  What is relevant is that when Lisa proposes that she and Bart write a script for a cartoon, he responds, "Cartoons have writers?!?"  "Sort of," she replies.  Now you might remember that joke (or a variation of it) from any number of subsequent Simpsons episodes, but that's just because they've been recycling old material for at least ten years.  Believe me, it was genuinely funny in 1993.  Today, not so much.

But oddly enough, it turns out that cartoons really do have writers and now some of those writers are on strike.  The New York Times reports that writers for a new Fox animated series about a high school, Sit Down, Shut Up walked off the job last Wednesday.  They had been working without a contract, and Sony Pictures Television, which is producing the series, just notified them that the show is not covered under the agreement recently negotiated by the Writers Guild of America. 

Now just what has become of writers?  If they're so talented, why don't they just write themselves a contract.  These guys don't even seem to have the creativity of the fictional cartoon writer characters on The Simpsons.  Those guys would have dropped an anvil on the heads of the Sony Pictures executives.  Or perhaps they would draw what looks like a tunnel on a brick wall so that the Sony executives would repeatedly walk into it.  And then when the Sony boys finally realize that it's still a brick wall, a train would come through the tunnel and run them down.  Now that's good writing!!

[Jeremy Telman]

June 18, 2008 in In the News, Labor Contracts | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 17, 2008

Held: No Contractual Right to Single-Sex Education

Logo Back in April, my able co-blogger noted the AP's reporting on the oral argument in Dodge v. Trustees of Randolph-Macon Woman's College.  In Dodge, a group of female students sued the college for breach of contract after its trustees decided to "transition from a predmoninantly female educational insitution to a coeducational college."  The Supreme Court of Virginia recently held that the plaintiffs failed to state a claim for breach of contract based on male enrollment in the college

The plaintiffs alleged that

when they “accepted [the College's] offers of admission, paid tuition and other fees, and registered for classes, a contract was formed between them and the [College], which ... included the promise, both express and implied, that if [the plaintiffs] paid the tuition and fees and enrolled at [the College], they would receive a four-year liberal arts education at a woman's college.” The plaintiffs allege that they reasonably expected that the College would continue to offer “the curriculum plan as advertised in the college catalog and other promotional materials upon which Plaintiffs relied when choosing” to attend the College. Continuing, the plaintiffs state that “[a]dditional terms of the contracts are within the various official [College] publications, including promotional materials, the [H]onor [C]ode, the student handbook, the academic catalog, correspondence between [the College] and the students, and the [C]ollege's policies and regulations.”

They further alleged that, when the Trustees voted to allow male students to enroll in the college, that contract was breached.  The college filed a demurrer, asserting that the plaintiffs failed to identify or plead the existence of a contract between plaintiffs and the college.  The Virginia court agreed with the defendant College, holding that "plaintiffs failed to plead the existence of a clear, definite, and explicit contract between the plaintiffs and the College that required the College to provide a four-year education for the plaintiffs in an academic environment predominantly for women."  The court reasoned:

A contract must be sufficiently definite to enable a court to give the contract an exact meaning, and the contract must obligate the contracting parties to matters that are definitely ascertained or ascertainable. * * * A contract is not valid and it is unenforceable if the terms of the contract are not established with reasonable certainty. * * *

Applying the aforementioned principles, we hold that the plaintiffs failed to plead facts, which if established at trial, would demonstrate the existence of a contract that required the College to operate an academic institution predominantly for women during the four years that the plaintiffs expected to attend the College. Even though the plaintiffs referenced numerous documents, this Court, just as the circuit court, has reviewed the documents and can find no such promise. There is no language in any of these documents in which the College made a clear, definite, and specific promise to operate a college predominantly for women during the duration of the plaintiffs' academic studies at the College. Thus, we hold that the plaintiffs failed to plead the existence of a contract between the parties.

Contrary to the plaintiffs' contentions, the College's articles of incorporation do not form the basis of a contract between the students and the College. By its very nature, the articles of incorporation do not contain a clear, definite, and explicit agreement among the parties to the alleged contract.

The two-judge dissent did not dipsute the legal principles stated by the majority, but disagreed with the majority's application of the those principles to the facts.  In light of evidence of numerous communications espousing a single-sex educational environment (such as promotional materials and acceptance letters), the dissent would have held that the plaintiffs presented sufficient evidence to survive demurrer.

Dodge v. Trustees of Randolph-Macon Woman's College, ___ S.E.2d ___, 2008 WL 2312509 (Va. Jun. 6, 2008).

[Meredith R. Miller]

June 17, 2008 in Recent Cases | Permalink | TrackBack (0)

Oregon Politician Liable For Breach of Contract, Inter Alia

Oregon According to The Oregonian, Craig Berkman "cut quite a figure" for years in Oregon politics.  Jeff Mapes reports that Berkman was a big donor in national Republican circles, the chair of the Oregon Republican party, and the great hope for the future among moderate Oregon Republicans until a string of electoral defeats in the 1990s. 

Alas, even in Oregon (an underrated state, in my view), politics can have its seedy side.  Last month, Berkman took the stand and tearfully admitted that he lied to investors about the assets of his venture capital fund in order to attract new funds.  He told investors that he personally had $25 million in assets when he was in fact in debt to the tune of $5 million.  Today, he claims to be nearly $12 million in the red, according to The Oregonian, but that claim might be to Berkman's benefit now, since he faces a $28 million judgment, including punitive damages, for theft, negligence and breach of contract.

Plaintiffs were trying to recover $75 million invested in Berkman's ventures.  They probably won't be recovering much from Berkman himself.  Fortunately, there was also a judgment against the non-defunct accounting firm, Arthur Andersen, that may be a source of some recovery.

[Jeremy Telman]

June 17, 2008 in In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Secret Contracts for 50 U.S. Military Bases in Iraq?

Bush_goofyAs reported in the Asian Times Online, various representatives of the Bush administration have been saying for some time that the United States has no interest in "permanent" military bases in Iraq.  Whew.  That's a relief.  However, according to an editorial in Saturday's New York Times, Still President Bush is "insisting on keeping more than 50 long-term [military] bases in Iraq." 

But the Bush administration has reached an impasse with the Iraqi government, according to a report in The Telegraph.  Iraqi Prime Minister Nouri al-Maliki said that negotiations over future U.S. operations in Iraq were at a stalemate because the United States was making demands that he regarded as an intrusion on Iraqi sovereignty.  The matter needs to be settled before a U.N. resolution authorizing the presence of the U.S. military in Iraq expires at the end of the year.  The administration has not shared details of the negotiations with Congress because, as innumerable news organizations have reported, it's a secret.  Shhhhhh!

[Jeremy Telman]

June 17, 2008 in Government Contracting, In the News | Permalink | Comments (0) | TrackBack (0)

Monday, June 16, 2008

Relationship Negotiation: Why Wait for the Pre-Nup?

WSJ Law Blog reports that Valleywag (self-described as "Silicon Valley's Tech Gossip Rag") reports on a supposed agreement between Facebook founder Mark Zuckerberg and his girlfriend. Apparently, when Zuckerberg's girlfriend moved to Silicon Valley, the couple penned a contract to govern their dating. The "final contract" purportedly contained the following clause:

One date per week, a minimum of a hundred minutes of alone time, not in his apartment and definitely not at Facebook.

Specifically enforceable? What are the damages for breach? Perhaps early negotiations are meant to take the sting out of the billionaire's eventual request for a pre-nuptial agreement if and when the relationship approaches marriage (i.e., it is never too early to negotiate). At the same time, if you need a written, formalized agreement concerning entitlement to a minimum number of "alone time" minutes, what does that say about your relationship? Perhaps, again, this is simply contract as metaphor or perhaps as a tool to initiate communication.

[Meredith R. Miller]

June 16, 2008 in In the News | Permalink | TrackBack (0)

Limerick of the Week: Ira S. Bushey & Sons v. U.S.

We already know what to do with a drunken sailor.  That question has been answered in the famous sea shanty and illustrated in this video (with thanks to Meredith Miller for her technical assistance!):

But Judge Friendly had to address the vicarious liability of the U.S. government for the conduct of one of its sailors who returned from shore leave "in the condition for which seamen are famed."  Upon his return to the scenic Gowanus Canal in Brooklyn, where his ship was docked, the sailor turned some valves which caused both vessel and dock to list.  The sailor made some attempt to confess his actions but, according to Judge Friendly, his "condition was not such as to encourage proximity."  Eventually the ship fell off the blocks and against the drydock wall, causing damages which the drydock owner sought to recover from the master. 

Judge Friendly rejected the then-operative "motive" or "purpose" test for vicarious liability in favor or a general foreseeability test. 

Ira S. Bushey & Sons, Inc. v. United States

Knowing sailors can drink with the best,
Judge Friendly proposed that the test
For vicarious liailbity
Be foreseeability
Not: "Was it done at the master's behest?"

[Jeremy Telman]

June 16, 2008 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

ATA Sues FedEx for Breach of Contract

Ata_airlines_logo_2001Ahh, ATA.  I have such pleasant memories of flying on your planes out of Midway to LaGuardia.  Where are you now, old friend?  Alas, like most air carriers, you are in the throes of bankruptcy.  Supporters of deregulation, be careful what you wish for.

But even while in bankruptcy, airlines still retain their legal personhood and they also retain attorneys, and so according to The New York Times, ATA is suing FedEx, alleging that the latter breached an agreement with ATA in January when it dropped ATA from its military charter team. 

The Associated Press quotes ATA's attorney as claiming that notice of FedEx's decision to drop ATA came "out of the blue."  That's rich!  Get it?  Airplane contracts? out of the blue?!?  It's clever, no?  Unfortunately, the loss of the contract with FedEx was no laughing matter for ATA, which relied on the military personnel charters to generate over $400 million in revenue annually.  ATA had been a member of the FedEx team for over 20 years and had just spent $50 million buying aircraft from Northwest Airlines in reliance on its continued membership in the team.  Damages sought are not yet specified but are expected to be in the tens of millions.

ATA alleges that FedEx's breach drove the airline into bankruptcy.  I wonder what drove all the other airlines into bankruptcy?

Also, why do we use a freight company to transport military personnel?

[Jeremy Telman]

June 16, 2008 in In the News | Permalink | Comments (0) | TrackBack (0)