March 1, 2008
The Best is the Enemy of the Reasonable
What’s the difference between a clause requiring "best endeavours" and one requiring "reasonable endeavours"? And, for that matter, one requiring "all reasonable endeavours"? In a decision last year, Rhodia International Holdings v. Huntsman International LLC,  EWHC 292 (Comm), the U.K. High Court took a whack at sorting them out. A duty to use "reasonable endeavours," said the court, can be met by exhausting only one of a number of possible solutions, while a duty to use "best endeavours" requires the party to exhause all possible courses of action.
In a recent memo, Use Of Best And Reasonable Endeavours In Contracts, solicitor Sian Forbes of Bristol’s Bevan Brittan LLP offers an analysis of the decision.
Three Cheers for Merchants!
If merchants "were [ever] considered" no better than thieves, I say, consider who's doing the considering. The possibility of gains from trade in the hands of "merchants" was and is the key driver for social and economic mobility and the political instability that comes with it. Feudal lords had much to fear and loathe at the possibility that by trading among themselves serfs might drag themselves out of hunger and ignorance. And so too the Church. Trade is possible only when people assert property rights. Assertion and exploitation of property rights by political subordinates is the beginning of the end of a social order based on birthright and violence.
Stirring stuff. But why does it seem so familiar? Ah, yes, here's what it reminds me of:
The bourgeoisie, historically, has played a most revolutionary part.
The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his "natural superiors", and has left no other nexus between people than naked self-interest, than callous "cash payment". It has drowned out the most heavenly ecstacies of religious fervor, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom -- Free Trade. . . .
The bourgeoisie has disclosed how it came to pass that the brutal display of vigor in the Middle Ages, which reactionaries so much admire, found its fitting complement in the most slothful indolence. It has been the first to show what man's activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former exoduses of nations and crusades.
What great 19th-century thinker is Mary T. Reilly channeling (find out below the break)?
Now I'm not saying that we here at the Contracts Profs Blog don't enjoy a little competition from our friends and colleagues over at the Commercial Law Blog. I'm just saying they're a bunch of godless commies.
February 29, 2008
Why Is a Burrito Sandwich So Hard to Swallow?
As Professor Marjorie Florestal (University of the Pacific McGeorge School of Law) notes in the abstract to her new article, Is a Burrito a Sandwich? Exploring Race, Class and Culture in Contracts, a recent case involving the question of whether or not a burrito is a sandwich sparked a "firestorm of media attention." She might have cited to this blog as evidence. Some readers may be disappointed to learn that the article does not in fact answer the question in its title. Well, one thing we know for sure, since it's not a goose, a duck or a turkey, a burrito must be a chicken.
In any case, for those hungry for Professor Florestal's insights on the case, here's the rest of the abstract:
A superior court in Worcester, Massachusetts, recently determined that a burrito is not a sandwich. Surprisingly, the decision sparked a firestorm of media attention. Worcester, Massachusetts, is hardly the pinnacle of the culinary arts - so why all the interest in the musings of one lone judge on the nature of burritos and sandwiches? Closer inspection revealed the allure of this otherwise peculiar case: Potentially thousands of dollars turned on the interpretation of a single word in a single clause of a commercial contract. Judge Locke based his decision on common sense and a single definition of sandwich - two thin pieces of bread, usually buttered, with a thin layer (as of meat, cheese, or savory mixture) spread between them. The only barrier to the burrito's entry into the sacred realm of sandwiches is an additional piece of bread? What about the one-slice, open-face sandwich? Or the club sandwich, typically served as a double-decker with three pieces of bread? What about wraps? The court's definition lacked subtlety, complexity or nuance; it was rigid, not allowing for the possibility of change and evolution. It was a decision couched in the primitive formalism Judge Cardozo derided nearly ninety years ago when he said [t]he law has outgrown its primitive stage of formalism when the precise word was a sovereign talisman, and every slip was fatal. It takes a border view today. Does it? Despite the title of this piece, my goal is not to determine with any legal, scientific or culinary specificity whether a burrito is a sandwich. Rather, I explore what lies beneath the primitive formalism or somewhat smug determination of the court that common sense answers the question for us. I suggest Judge Locke's gut-level understanding that burritos are not sandwiches actually masks an unconscious bias. I explore this bias by examining the impact of race, class and culture on contract principles and on the determination of this case.
Oman's Random Thoughts on Consideration
Nate Oman (William & Mary) asks: why bother with consideration to determine which promises are enforceable? He argues: why not enforce all promises, no matter how trivial, and let litigation costs serve as the gatekeeper for which promises get enforced - it simply isn't worth the expense of seeking to enforce trivial claims (like the broken promise to have lunch). Interesting thoughts. But, what about the justification of consideration as a recognition of the solemnity of making the promise? I realize that consideration often does not serve this stated purpose (especially not a mere peppercorn); however, to the extent non-trivial (high value) promises would be binding in court regardless of consideration, shouldn't the law have some mechanism to give the promisor pause? Bring back the seal!?!
[Meredith R. Miller]
Commercial Law Blog
Welcome to the world ... Commercial Law blog. Check it out; add it to your Google Reader subscriptions.
[Meredith R. Miller]
February 28, 2008
Call for Papers: Security and Privacy Issues in IT
Those whose work touches on electronic commerce and related issues may be interested in the upcoming Third International Conference on Legal, Security and Privacy Issues in IT, which will be held at the University of Economics, Prague, Czech Republic, on September 3-5, 2008. The conference topics run the gamut of security and privacy issues that arise in the electronic world.
Deadline for submitting papers is August 1, 2008. The Call for Papers is here.
India, International Cricket Battle Over Contracts
Backers of the new India Premier Cricket League are bracing for a battle with the International Cricket Council over the ICC's decision to schedule matches so as to prohibit players from competing in the upstart league.
The Premier League has already signed player contracts worth A$45 million, with a recent player auction that has turned some cricket stars -- hitherto poorly paid by international sporting standards -- into instant millionaires, like Australia's Andrew Symonds (left). The sport's international authorities have fought back with an annual international schedule that would prevent players from appearing both in the Premier League and on their national squads.
ContractsProf Isn't Chicken
One of the seller's witnesses in Frigaliment Importing Co. v. BNS Int'l Sales Corp., 190 F. Supp 116 (1960), testified that "'Chicken is everything except a goose, a duck, and a turkey. Everything is a chicken. . .'" Professor Ethan Lieb (Hastings) further underscores that testimony with this account. Congrats! Certainly, this story is the reason that contracts, chicken costumes and the internet were invented.
[Meredith R. Miller]
February 27, 2008
Writers Ratify Strike Settlement
The Associated Press reports that 93.6% of the members of the Writers Guild of America voted to ratify a three-year contract with Hollywood movie and television companies, thus ending the tragic writers' strike. Only 4.060 of the 10,500 Guild members affected by the strike actually voted on the contract ratification, but as Jon Vitti, author of the incomparable "Lisa's Substitute" episode for The Simpsons, knows, voting's for geeks.*
Prediction: stylish writers will be sporting strike beards again in Hollywood and New York City in 2011.
*In the episode in question, Bart challenges Martin for the office of class president. Martin offers a school library featuring the ABC of science fiction; Bart promises more asbestos in the classroom. Martin argues that a vote for Bart is a vote for anarchy; Bart counters that a vote for Bart is a vote for anarchy. As the election approaches just before recess, Mrs. K. offers Martin the opportunity for one final campaign speech. Martin, sweating, shaking and looking pale, can't think of anything more to say. Bart announces a victory party under the slide. As Bart is passing out celebratory cupcakes during recess, he asks Nelson if he voted. "Nahh, voting's for geeks," says Nelson. "You got that right," says Bart. Martin wins the election by a vote of 2-0.
White House Stands Up For Contracts
According to CNN, the White House has issued a warning to Democrats that President Bush will veto a pending bill that would create a $4 billion fund to help state and local government buy homes abandoned in the mortgage crisis. According to a White House statement, passing the bill "would constitute a bailout for lenders and speculators, while doing little to help struggling homeowners."
Actually, the bill proposes to help struggling homeowners by giving bankruptcy judges the power to modify loan terms. According to the Washington Post, the White House finds this proposal unacceptable because it "would undermine existing contracts." So there you have it -- the Bush administration stands up for contracts, even in bankruptcy proceedings.
But the Bush administration also has an alternative proposal, a private-sector alliance called HOPE NOW (see logo at left). According to this White House press release, this alliance "is implementing a plan that could help up to 1.2 million subprime homeowners avoid foreclosure over the next two years." However, as the New York Times points out, HOPE NOW is a voluntary program and thus may only affect a tiny fraction of the 1.8 million borrowers facing steep increases in their sub-prime loan rates. So, the key word in the sentence quoted above is "could," and HOPE NOW may actually mean that all borrowers can do right NOW is HOPE. Meanwhile, as reported on the Consumer Law & Policy Blog, Fitch Ratings projects that 50% of the subprime mortgages from the fourth quarter of 2006 will end in foreclosure.
Courts Should Not Imply Employment Contracts in U.K.
When is someone who works for an employer an "employee"? The question can be significant in the U.K., where "employees" have certain rights that "agency employees" do not. Agency employees are those who work for employment agencies, who in turn provide the workers to the ultimate employer. Under the law, employees get protection from unfair dismissal when they are "employed under a contract of service, express or implied." The question thus becomes when should a court imply a contract with the end user of the services if they are performed under an express contract with an employment agency?
In a recent decision, James v. London Borough of Greenwich,  EWCA Civ 35, the Court of Appeal held that courts should not routinely imply a contractual relationships for such workers. In the case, Merana James signed a "temporary work agreement" with an employment agency, which then found her a job working for the Borough Council. Her contract plainly stated that she was not an employee of the Council, but rather was an employee of the agency. She worked for the Council for several years, before being replaced by another agency worker. She claimed unfair dismissal, and argued that she should be considered an employee of the Council.
Not so, said the court. Under some circumstances it might be necessary to imply a contract with the end user if that were the only way to make sense of a particular transaction. If the conduct of the parties could only be explained by the existence of a contract with the end user, there would be an implied contract. But here, said the court, the conduct of the parties was fully explained by the agency contract signed by James and the contract between the agency and the Council. It was thus irrelevant that James thought herself an employee of the Council and that others thought of her as an employee. Lord Justice Mummery noted that the question of whether protection should be given to agency workers was an important one, but not one for the court to decide:
The courts and tribunals are fully aware of the current controversy about the absence of job protection for agency workers, who do not have an express or implied contract of employment. While this appeal and this judgment were pending articles appeared in the newspapers under such headlines as "The slow death of the Real Job is pulling society apart", "Agency Workers could get full-time rights" and "Temps may get full work rights under EU Law." A Private Members' Bill was introduced to reform the law. It was doomed to failure for lack of support from the Government and failed to get a reading. There is no current government proposal to introduce legislation giving agency workers similar rights to those enjoyed by employees. There are negotiations about the possible regulation of agency workers through the medium of an EC Directive to member states on agency/temporary workers.
The courts and tribunals are also well aware of the nature of the arguments for and against a change in the law, but it is not for them to express views about a change or to initiate change. This is a matter of controversial social and economic policy for debate in and decision by Parliament informed by discussions between the interested parties- the Department for Business and Enterprise, the TUC, the CBI and other employers' organisations and the European institutions and governments of member states. The questions for discussion, negotiation and decision are not legal questions susceptible to adjudication or appropriate for comment by a court or tribunal. The questions are outside their province and competence.
Gooooooooooal! Real Madrid!
It's good that somebody keeps track of these things. Most soccer (football) fans are probably focused on such mundane things as how many games their teams win. But the accountants at Deloitte Touche are always focused on the most important thing: how much money they take in. According to Deloitte's 2008 Football Money League report, the top five clubs in the world all play in England or Spain. They are:
Real Madrid (€351.8 million)
Manchester United (€315.4 million)
Barcelona (€291.1 million)
Chelsea (€284.4 million)
Arsenal (€264.2 million)
All this is a bitter pill, presumably, for Italy's AC Milan, which happend to win the European championship but only grossed €228 million. (By comparison, at current exchange rates the average U.S. National Football League team grosses about €140 million a year in football revenue; only 14 soccer clubs around the world take in more than this a year.)
February 26, 2008
Blogger in Contract with Warner Brothers
Would you pay this man $100,000 to pick music for you? If you answered "Yes!" you must be corporate America. According to the New York Times, Warner Brothers is negotiating a deal with Mario Armando Lavandeira Jr., better known as celebrity gossip blogger, Perez Hilton, whereby "Mr. Lavandeira could receive $100,000 a year as an advance against 50 percent of any profits generated by artists he discovers and releases through Warner Brothers."
On his blog, Mr. Lavandeira/Hilton stresses that the deal is still being negotiated. It must be downright irksome for a gossip columnist to be gossiped about!
Regulating Service Contracts in the EC
The European Community has been working toward a system for encouraging and regulating an internal market in services. How it's going about that task is the subject of Regulatory Strategies on Services Contracts in EC Law, a new paper by Hans-W. Micklitz (European University Institute) (left). Here's the abstract:
The idea is to show how and by what means the European Community is attempting to realise its overall policy to establish and accomplish the Internal Market for services, and more particularly how this policy which is meant to open up markets affects the contractual relations between the supplier and the customer, whether the latter be a professional or a consumer. The European Community relies, as usual, on a piecemeal approach. Regulation of services is very much following different patterns in different areas of the economic sector. I have chosen a particularly European perspective, as the European Community has become by far the most important regulator. The paper is first and foremost meant to systemize the existing regulatory strategies applied in the field of services. As such, this paper is just a first step to provide the groundwork for ongoing research.
Students Mull Breach of Contract Action
Students at Cambrian College in Sudbury, Ontario, are considering breach of contract actions against the institution's Board of Governors, which voted this week to terminate a geology program for alleged lack of student interest. Critical students point out that Sudbury is a major mining center and that the students who graduate from the two-year program are in high demand.
Meanwhile, the school is starting a new program in Animation.
February 25, 2008
Weekly Top Ten
It's been a pretty good week for Christopher Peterson (Florida), who sees two of his recent papers land in the top three this week. All in all, there are four new papers and six returnees. Following are the top ten most-downloaded recent papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending February 24, 2008. (Last week's rank in parentheses.)
1 (-) Usury Law and the Christian Right: Faith Based Political Power and the Geography of the American Payday Loan Regulation, Christopher Lewis Peterson (Florida) & Steven M. Graves (Cal State Northridge).
2 (1) Choice of Law in the American Courts in 2007: Twenty-First Annual Survey, Symeon C. Symeonides (Willamette).
3 (3) Over-Indebtedness, Predatory Lending, and the International Political Economy of Residential Home Mortgage Securitization: Comparing the United States' Subprime Home Mortgage Lending Crisis to Home Finance in the United Kingdom, Germany, and Japan, Christopher Lewis Peterson (Florida).
4 (5) The Case for Banning Subprime Mortgages, Alan M. White (Valparaiso).
5 (6) Homeownership Risk Beyond a Subprime Crisis: The Role of Delinquency Management, Melissa B. Jacoby (North Carolina).
6 (-) Party Autonomy and Beyond: An International Perspective of Contractual Choice of Law, Mo Zhang (Temple).
7 (8) All But Accurate: A Critique of the American Bankers Association's Study on Credit Card Regulation, Adam Levitin (Georgetown).
8 (9) Arbitration's Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Nonconsumer Contracts, Theodore Eisenberg (Cornell), Geoffrey P. Miller (NYU) & Emily L. Sherwin (Cornell).
9 (-) Neither Saints Nor Devils: A Behavioral Analysis of Attorneys' Contingent Fees, Eyal Zamir (Hebrew U.-Law) & Ilana Ritov (Hebrew U.-Education).
10 (-) The Making of Transnational Contract Law, Gralf-Peter Calliess (Bremen).
Bluebook Enters 20th Century
The second-best-selling law book in history (right behind Deuteronomy) is now on the web. Yep, the 18th edition of the Uniform System of Citation (better known as the Bluebook) is now available on line. You can thus now actually search the thing for such gems as the Five Footnote Rule:
If the case has been cited (not referred to textually) anywhere in the preceding five footnotes (including in a (citing) or (quoting) parenthetical or a citation of a brief or oral argument from that case), use a short form citation. An id. citation within the previous five footnotes does count if it’s referring to the case in question. When counting footnotes for the purposes of this rule, count all five of the preceding footnotes. For example, if the case in question is in note 49, references in notes 44–48 count for purposes of the rule.
The new online format, says a Yale Law Review editor, "responds to requests from customers for a Bluebook that is easier to search, use, and teach." The editors apparently chose not to respond to the requests of other customers, who wanted a Bluebook that was simpler, cheaper, and more comprehensible. But it's a start.
February 24, 2008
The Predictive Power of This Blog
Sports fans were probably surprised by the Chicago Bulls' 135-121 victory over the Denver Nuggets on Friday, since that was the most points the Bulls have scored in a game since 1991. But Contracts Profs Blogs readers knew it was going to happen. Why? Because they saw that this blog called on the Bulls to unload Ben Wallace (left). The Bulls did so, and without Wallace clogging up the lane and letting the shot clock wind down while he dribbled aimlessly in the post before putting up an airball, the Bulls' offense showed its capabilities.
No need to thanks us, John Paxson. Just part of the job. If you need some advice on how to get Luol Deng playing up to his potential, you know where to reach us.
CISG Conference at Touro Law Center
While Frank is on the topic of conferences at Touro, I should mention the CISG conference which my colleague Jack Graves has organized. It will be held on Friday, April 11, 2008. All the relevant details: here.
[Meredith R. Miller]
Call for Papers: Business Law and Technology
If you're working in the areas of law and technology, you'll be interested in the upcoming 2nd Annual Conference on Business, Law, & Technology, scheduled for June 17-19, 2008, at the Jacob Fuchsberg Law Center at Touro College in New York (left) The conference is "an opportunity for academics, practitioners and consultants from different backgrounds to come together and exchange ideas for discussing key developments in Business, Law and Technology."
The Call for Papers -- the deadline for which is May 5 -- covers a broad array of topics, including Sales of Goods, Electronic Signatures, Contract Law, Media & Entertainment, Consumer Protection, Arbitration, E-marketing, E-business, and Cyberlaw.
You can visit the conference web site here.
[Frank Snyder -- thanks to Juliet Moringiello]