ContractsProf Blog

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

A Member of the Law Professor Blogs Network

Thursday, December 31, 2009

New Year's Greetings from the ContractsProfs

Martini  On behalf of my fellow bloggers, I wish our readers a happy and healthy 2010.  

May all your dealings be mutually beneficial.

May all your terms be clear and unambiguous, and 

May all your odious contractual obligations be avoidable.

[Jeremy Telman]

December 31, 2009 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Contract Dispute in My Local Paper

Post_logo
 I knew my subscription to the local paper would pay off at some point.  Today's edition of the Post Tribune includes an account of what looks like an interesting contracts dispute.  There are some ambiguities in the report, but making a few reasonable inferences, I think the facts are as follows:

Lake County contracted with Amereco Engineering, Inc. in 1998.  The contract was renewed in 2001 and 2004.  In 2006, Lake County cancelled the contract on the ground that the projects to which the contract related had not been funded.  In the report, Lake County's attorney claims that a contract for which there are no appropriations is void.  I suspect that what is really intended is that the contract was subject to a condition precedent which did not occur, excusing Lake County from performing any further contractual obligations.

Fair enough, but Amereco contends that Lake County is making use of some of Amereco's designs on projects that have been funded.  Amereco claims that it is entitled to $68,425 for that design work.  Amereco further contends that the projects to which its contract related were funded but that after a change in the composition of the County Council, the County simply hired a different engineering firm to proceed with the work.  Amereco thus contends that it is also entitled to the full value of the contract, which it puts at $1 million.  

Factual development in this case should be interesting.

[Jeremy Telman]

December 31, 2009 in In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 30, 2009

SSRN Weekly Top Ten

SSRN

Some new titles hit the big time this week.  Columbia's Robert Scott must be delighted to have two top-ten hits in the same week.

 RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law 

October 31, 2009 to December 30, 2009

RankDownloadsPaper Title
1165ProCD v. Zeidenberg and Cognitive Overload in Contractual Bargaining 
Eric A. Posner
University of Chicago - Law School
2159Conflict of Laws and Choice of Law 
Erin A. O'HaraLarry E. Ribstein
Vanderbilt University School of Law, University of Illinois College of Law
3140A Critique of Evans and Wright’s Study of the Consumer Financial Protection Agency Act 
Adam J. Levitin
Georgetown University - Law Center
4128Contract Interpretation Redux 
Alan SchwartzRobert E. Scott
Yale Law School, Columbia University - Law School
5114Duress in Contracts: An Economic Analysis 
Péter Cserne
Tilburg Law and Economics Center (TILEC)
696Repeal the Safe Harbors 
Stephen J. Lubben
Seton Hall University - School of Law
781Hoffman v. Red Owl Stores and the Limits of the Legal Method 
Robert E. Scott
Columbia University - Law School
878Contract Enforcement and the Harm Principle 
Brian Bix
University of Minnesota Law School
978Easterbrook on Copyright 
Randal C. Picker
University of Chicago - Law School
1075How to Critique & Grade Contract Drafting Assignments 
Robin Boyle
St. John's University School of Law

[Jeremy Telman]

December 30, 2009 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 29, 2009

Farewell Post from Alan White

Despite all my best intentions, I was not able to post weekly or on any other regular basis about what is still one of my favorite aspects of this job--teaching contracts.  My hat is off to colleague Jeremy Telman, who manages to teach, write and blog with one hand while writing limericks and even real poetry with the other.  Thanks to Jeremy and the other blogmeisters for inviting me, and I promise to do better next year!


Likewise, although I had grandiose plans for teaching skills, and teaching across the curriculum, my collaboration with our legal writing faculty trailed off as the semester progressed.  I did manage to assign two drafting (and one redrafting) exercises and to conduct a class session on the basic components of a written contract, which was perhaps of more value than three or four sessions on nineteenth century consideration cases.  The exercises that seem to work best are drafting problems suggested by cases the students have read.  In order to incorporate contract drafting into the class on a more regular basis, I am thinking that it will be essential to spend some time prior to the semester preparing the assignments and thinking carefully about how I will provide feedback.   One colleague suggested using a research/teaching assistant for this purpose.  


I also want to thank the community of contracts teachers, and particularly friends in the bankruptcy and financial services corners of the field, who have been so forthcoming with their own class exercises and problems, lecture notes, and other vital teaching resources.  Curiously, our teaching profession, unlike the profession and practice of law, does not come with continuing professional education requirements, or even much infrastructure for the purpose, apart from the excellent AALS workshops for new law teachers (http://www.aals.org/events_nlt.php. ).  It has been a pleasant surprise to find that senior scholars, and even casebook authors, will almost invariably help out a new teacher and take the improvement of our teaching quite seriously.  To new and aspiring contracts profs out there, my advice is:  don’t be shy, just ask, even if he or she is famous.  


Finally, I want to mention that my legal research and writing colleagues have been among my most valuable consultants on questions of pedagogy, and I thank them as well for the excellent and sometimes unrecognized work that they do in what is, or ought to be, our central mission, training lawyers.  Happy New Year! and now back to those exams…


[Posted, on Alan's behalf, by Jeremy Telman]

December 29, 2009 in Teaching | Permalink | Comments (0) | TrackBack (0)

Monday, December 28, 2009

Salahis: Famous for Breach of Contract

GateTareq and Michaele Salahi have become famous for making a surprise appearance at a White House dinner, known as the "gatecrashing incident," but a recent Washington Post report suggests that they really should be famous for breach of contract.  According to the report, the stylish couple has been named, individually, collectively or through a business that they own, in 30 law suits since 2004.  The suits range from the petty (a collection action for $4000 worth of hair extensions) to the slightly less petty (a claim that the couple owes a promoter $25,000 for flying a band to a charity event).  Three couples who held their weddings at the Salahis’ Oasis vineyard have sued, claiming that the wedding bill included large, unexplained charges.

According to the Post report, some of the suits were settled out of court, in some the Salahis were ordered to pay, and in a few cases, they won.  The report recounts a number of incidents in which, despite settlement agreements or court orders to do so, the Salahis or their company have not paid their creditors.

[Jeremy Telman]

December 28, 2009 in Celebrity Contracts, In the News | Permalink | Comments (0) | TrackBack (0)

Thursday, December 24, 2009

Madoff Mutual Mistake Case Decided in Favor of Ex-Wife

Grinch We had previously mentioned (here and here) a lawsuit (by a Paul Weiss partner) to unravel a divorce settlement that included a payout to his wife for the right to keep the $5.4 million (or so they thought) Madoff account.  As part of the settlement husband paid wife $2.7 million in cash, and he sued wife to modify the settlement agreement based on mutual mistake as to the value of the "account." 

Earlier this week, Supreme Court, New York County (Evans, J), dismissed the complaint in its entirety.  The court explained

According to the Amended Complaint and despite the absence of any such statement in the written contract, the parties intended to divide the value of the parties' assets equally as of September 1, 2004.  The Amended Complaint further states that this intention was thwarted by the parties' mistaken belief that on the September 1, 2004 valuation date, plaintiff's investment with the Madoff firm was worth $5.4 million.  The amended Complaint alleges that the Madoff firm in fact never engaged in any stock trades and as of the parties' valuation date, held no assets.  The Amended Complaint concludes from this that plaintiff's account was "a fiction."

The complaint does not contend, however, that the account had no value, only that, under the circumstances it was "non-existent".  In urging that the Amended Complaint fails to state a viable cause of action, defendnat contends without contradiction that on September 1, 2004, and later, on June 27, 2006 when the parties entered into their agreement, and in fact, for the several years thereafter that plaintiff maintained this investment, it could have been redeemed for cash, presumably significantly in excess of its 2004 value.

A claim of mistake must be set forth with particularity, and the circumstances must be stated in detail. CPLR §3016{b}.  Here, the claim of mistake is opaque, stating simply that the account at issue did not exist.  There is no assertion, however, that at the time of the agreement the account could not be redeemed for value.  In fact, plaintiff allegedly liquidated an undisclosed portion of his investment at the time of the agreement in June of 2006 to fund the payment of defendant's equitable entitlement. [Amended Complaint, para. 55].  An investor's ability to redeem an account for value, was the assumption on which the parties relied in dividing their property and in doing so they made no mistake.

* * * Viewed in their most favorable light, the Amended Complaint fails to articulate facts which if true would establish a viable cause of action that the settlement agreement pursuant to which the parties divided all of their assets and were divorced, was the product of a mutual mistake.

Simkin v. Blank (Sup. Ct., NY County Dec. 22, 2009).

[Meredith R. Miller]

December 24, 2009 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 23, 2009

Now in Print

Pileofbooks

R. Bruce Allensworth et al., That's Unconscionable: An Update Regarding the Enforceability of Arbitration Provisions in Form Contracts, 42 UCC L.J. 73 (2009).

Hilary Delany, Is There a Future for Proprietary Estoppel as We Know It?, 31 Dublin U. L.J. 440 (2009).

D. Andrew Gaona, Comment, Privity No More: Implied Warranty Rights of Subsequent Purchasers of Commercial Property in Arizona, 41 Ariz. St. L.J. 877 (2009).

Kevin F. Hallock, Job Loss and the Fraying of the Implicit Employment Contract, 23 J. Econ. Persp. 69 (2009).

Edward J. Imwinkelried, The Implied Obligation of Good Faith in Contract Law: Is it Time to Write its Obituary?, 42 Tex. Tech L. Rev. 1 (2009).

Hugh V. McLachlan & J. Kim Swales, Commercial Surrogate Motherhood and the Alleged Commodification of Children: A Defense of Legally Enforceable Contracts, 72 Law & Contemp. Probs. 91 (2009).

David McLauchlan, Commonsense Principles of [Contract] Interpretation and Rectification, 126 Law Q. Rev. 8 (2010).

Susanne Ohlendorf, Expectation Damages, Divisible Contracts, and Bilateral Investment, 99 Am. Econ. Rev. 1608 (2009).

Kate Tokeley, Introducing a Prohibition on Unfair Contractual Terms into New Zealand Law: Justifications and Suggestions for Reform, 23 N.Z. U.L. Rev. 419 (2009).

[Keith A. Rowley]

December 23, 2009 in Recent Scholarship | Permalink | TrackBack (0)

Monday, December 21, 2009

Always Depend on the Kindness of Colleagues

When I first started teaching contracts, I relied heavily on the advice of my more-experience colleague, who is now our Associate Dean, Mark Adams.  I adopted the same casebook as Mark was using, adapted his syllabus to suit my purposes, and vamped on his exam questions to create my own exam.  

When Alan White came on board, I thought I would serve the same role for Alan as Mark provided for me, but I think I have benefitted from his arrival at least as much as I have benefitted him.  I was thinking of changing casebooks in any case, just to force myself to get a new perspective on the material, and Alan and I adopted the same one.  We struggled together through the material, taught ourselves the new cases and worked to accommodate the perspectives of the casebook authors to our own teaching styles.  As readers of the blog familiar with Alan's stint as a guest blogger know, Alan has pushed to introduce more problems and drafting exercises into first-year teaching as part of a Carnegie-inspired recognition of the need for an integrated approach to law school teaching, including writing across the curriculum.  Alan and I have worked together on this project, but he has clearly taken the lead, while I have borrowed some of his exercises and reaped the rewards of his experimentation.  My students are the real beneficiaries of Alan's innovations.

All of this is my way of saying, "Alan, thanks for the memories."  As Alan will not be teaching contracts next semester, his first stint as a guest blogger in this space has come to an end.  We hope to bring him back next year.  In the meantime, those of you addicted to exposure to Alan's mind should visit the Consumer Law & Policy Blog, to which Alan is a regular contributor.

Ave atque vale, Alan!

[Jeremy Telman]

December 21, 2009 in About this Blog, Teaching | Permalink | Comments (0) | TrackBack (0)

Friday, December 18, 2009

Strategery or Immorality? Underwater Home Borrower’s Quandry: Should I Stay or Should I Go?

Home_under_water Over 5 million U.S. homes are under deep water – that is, the borrowers have outstanding mortgage debt that exceeds the home’s current value by more than 20%.  A homeowner in this situation that can afford to make mortgage payments faces a tough choice: stay and continue to pay *or* stop making loan payments and walk away.  A default is bad for the borrower’s credit score; but why stay when you could rent a much better crib for a lot less dough?

The Wall Street Journal explains:

A growing number of people in Arizona, California, Florida and Nevada, where home prices have plunged, are considering what is known as a "strategic default," walking away from their mortgages not out of necessity but because they believe it is in their best financial interests.

As the article reminds, the “standard mortgage-loan document reads, ‘I promise to pay’ the amount borrowed plus interest.”  Does this promise have a moral element? Lenders and others say there is an obligation to continue to pay, even if it has become inconvenient to do so:

George Brenkert, a professor of business ethics at Georgetown University, says borrowers who can pay -- and weren't deceived by the lender about the nature of the loan -- have a moral responsibility to keep paying. It would be disastrous for the economy if Americans concluded they were free to walk away from such commitments, he says.

But others would say it is quite ironic for the mortgage lenders to cry “morality”: 

Brent White, an associate law professor at the University of Arizona who has written about this issue, says homeowners should make the decision on whether to keep paying based on their own interests, "unclouded by unnecessary guilt or shame." He says borrowers can take a cue from lenders that "ruthlessly seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility."

What do you think, is walking away from your mortgage immoral or just (to borrow a word) common sense strategery?  Now who’s the sucker?

[Meredith R. Miller]

December 18, 2009 in In the News | Permalink | Comments (0) | TrackBack (0)

Thursday, December 17, 2009

What Happens When the Buyer of an Apartment Dies Between the Contract of Sale and Closing?

Screen shot 2009-12-17 at 10.33.35 AM Here’s a worst-case-scenario story to take into account when contracting to purchase real estate.  Buyer of a $2,300,000 Manhattan co-op apartment dies after contract of sale and approval by the co-op’s board of directors, but before closing.  The buyer's estate does not want to consummate the deal.  Do the sellers get to keep the $230,000 deposit?  New  York's Appellate Division (First Department) recently held: yes, the sellers are entitled to keep the $230,000.

The court reasoned: 

The crux of this matter lies in contract paragraph 15.2, which expressly makes the contract binding on the parties' "heirs, personal and legal representatives and successors in interest." The inclusion of this provision indicates that the parties explicitly contemplated, and provided for, the possibility of either party's death before closing, by specifying that the death would not terminate the contract, but that the contract would survive, to be performed by the successors or heirs of the deceased party. This provision makes the contract binding on [the buyer's] estate.

While a contract for personal services is terminated by the death of the servant (see Minevitch v. Puleo, 9 AD2d 285, 287 [1959]), a contract of sale is not terminated by the death of the purchaser. On the contrary, as a general rule,

"[w]here the proposed purchaser dies before the closing of title, his executor or administrator may pay the balance of the purchase price and take the deed in his own name holding it in trust for the heirs at law or devisees. It is the duty of the fiduciary for a deceased vendee to complete payments under a contract entered into by such vendee for the purchase of real property" (4-35 Warren's Weed New York Real Property §35.24 [2009] [footnote omitted]; see Di Scipio v. Sullivan, 30 AD3d 660 [2006]).

What about frustration of purpose?  No dice:

We also reject [the estate's] contention that [buyer's] death before closing justifies nonperformance under the defense of either impossibility or frustration of contract.

"Impossibility excuses a party's performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible. Moreover, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract" (Kel Kim Corp. v. Central Mkts., 70 NY2d 900, 902 [1987]). Paragraph 15.2 of the contract conclusively disproves the theory's applicability here. [The estate relies] on a case in which the very subject matter of the contract was destroyed, making performance impossible (see Stewart v. Stone, 127 NY 500 [1891]). However, where performance is possible, albeit unprofitable, the legal excuse of impossibility is not available (see 407 E. 61st Garage v. Savoy Fifth Ave. Corp., 23 NY2d 275, 282 [1968]). The other cases [the estate relies] on for application of the impossibility defense are also not on point.

Similarly, although at first blush the general definition of "frustration of contract purpose" would seem to suit these circumstances, closer examination reveals that the defense cannot be applied here. "In order to invoke the doctrine of frustration of purpose, the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense" (22A NY Jur 2d, Contracts §375). Since it is agreed that [the buyer] was purchasing the apartment solely for her own residence, her death would, by this definition, frustrate the purpose of the contract. However, "the doctrine of frustration of purpose…is not available where the event which prevented performance was foreseeable and provision could have been made for its occurrence" (Matter of Rebell v. Trask, 220 AD2d 594, 598 [1995], citing 407 E. 61st Garage, 23 NY2d at 282). Since the contract actually made explicit provision for the event of either party's death, the doctrine is not available here.

Looks like the sellers ended up getting $2,125,000 from another buyer.  

Warner v. Kaplan (N.Y. App. Div. 1st Dep't Dec. 10, 2009).

[Meredith R. Miller]

December 17, 2009 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 16, 2009

Weekly Top Ten

SSRN
Lots of movement this week as last weeks top three fall from the list!  Eric Posner is enjoying another #1 smash hit, Adam Levitin leapfrogs from fifth to second, and James Ely debuts at #6, but the others are hot on his heals, with only 11 downloads separating sixth from tenth place..  Oh, it's been an exciting week!!

 TOP 10 Papers for Journal of Contracts & Commercial Law 
October 17, 2009 to December 16, 2009

RankDownloadsPaper Title
1155ProCD v. Zeidenberg and Cognitive Overload in Contractual Bargaining 
Eric A. Posner
University of Chicago - Law School, 
2139A Critique of Evans and Wright’s Study of the Consumer Financial Protection Agency Act 
Adam J. Levitin
Georgetown University - Law Center, 
3132Conflict of Laws and Choice of Law 
Erin A. O'HaraLarry E. Ribstein
Vanderbilt University School of Law, University of Illinois College of Law, 
4111Fannie Mae, Freddie Mac, and the Home Mortgage Foreclosure Crisis 
Christopher Lewis Peterson
University of Utah - S.J. Quinney College of Law,
5110Duress in Contracts: An Economic Analysis 
Péter Cserne
Tilburg Law and Economics Center (TILEC) 
692Whatever Happened to the Contract Clause? 
James W. Ely
Vanderbilt University - School of Law, 
790Repeal the Safe Harbors 
Stephen J. Lubben
Seton Hall University - School of Law, 
887The Role of International Law Firms and Multijural Human Capital in the Harmonization of Legal Regimes 
Gillian Hadfield
USC Law School and Department of Economics, 
984Contract Interpretation Redux 
Alan SchwartzRobert E. Scott
Yale Law School, Columbia University - Law School, 
1081Law and Morality in the Regulation of Contracts: Lessons from Ancient Rome 
Péter CserneGergely Deli
Tilburg Law and Economics Center (TILEC) , New York University - School of Law, 


[Jeremy Telman]

December 16, 2009 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 15, 2009

The New Nexus of Contracts: Assisted Reproduction

Newborn  In light of the Baby M case, we have posted before on the subject of advanced assisted reproduction.  Sunday’s New York Times had a lengthy report on page A1 about the tragically confused state of the law in this area.  The report begins with the story of  Amy Kehoe, who has clearly adopted the nexus of contracts approach to reproduction:

“We paid for the egg, the sperm, the in vitro fertilization,” Ms. Kehoe said as she showed off baby pictures at her home near Grand Rapids, Mich. “They wouldn’t be here if it weren’t for us.”

Ms. Kehoe’s story highlights the difficult issues raised by assisted reproduction.  After her surrogate, Laschell Baker, whose medical bills related to the pregnancy Ms. Kehoe covered, learned that Ms. Kehoe had a history of paranoid schizophrenia, Baker demanded the return of the twins she had carried but to whom she had no genetic link. 

A Michigan court has granted temporary custody of the twins to Ms. Baker and her husband, who already have four children (Ms. Baker has also served as a surrogate mother to two other couples).  Under Michigan law, surrogacy agreements are unenforceable on public policy grounds.  The Kehoes have abandoned their attempts to get custody of the babies, citing the difficulty of the task under Michigan law.

Expecting_mother  Applicable law in other states ranges from the permissive to the non-existent.  Surrogacy contracts have been upheld in California courts.  In other states, the law is silent on the subject, leaving courts without guidance when faced with a parentage and custody dispute.  Sometimes, the transactions might involve a sperm donor in one state, an egg donor in another, a surrogate in a third and an adopting couple in a fourth.  The IVF clinic might bring in a fifth state.  The jurisdictional issues alone raise significant challenges. 

The New York Times article illustrates the complexities with two law stories.  The first involves a single, New Jersey man in his 60s who attempted to pick up his twins in Indiana.  While he appears to have settled matters with the New Jersey courts, Indiana courts are still adjudicating the status of the twins.  Frances Watson from the Indiana University School of Law served briefly as the children’s appointed legal representative.  The Times quotes her as follows: “You should not be able to come from out of state on some contract and order up some babies and then go about your business.”

The other story involves Donald Robinson and Sean Hollingsworth, a gay couple residing in New Jersey and married in California in 2008.  Mr. Hollingsworth served as a sperm donor and the couple used a donated egg.  The fertilized egg was then implanted in Mr. Robinson’s sister, who was to act as surrogate and as a doting aunt.  But Ms. Robinson’s relationship with her brother unraveled during the pregnancy, which was a difficult one, which produced twins.  The court in Baby M’s state has temporarily awarded shared custody of the children, with a trial slated for April.

Help is on the way, it is to be hoped, as the ABA has developed a model surrogacy act that could provide needed guidance to courts.   One helpful provision would be a requirement that all parties undergo psychological screening before entering into a surrogacy agreement.  Still, one would hope that people with a history of mental illness would not be legally precluded from entering into surrogacy agreements, assuming full disclosure and a willing partner.  We do not want the law to be in the position of determining ex ante who has a right to be a parent 

There  are already 152 comments on the New York Times website, so I will refrain from piling on.

[Jeremy Telman]

December 15, 2009 in In the News, True Contracts | Permalink | Comments (0) | TrackBack (0)

Monday, December 14, 2009

Now in Print (Low-Calorie Alternatives to Grading Exams)

Pileofbooks

Benjamin Alarie, Mutual Misunderstanding in Contract, 46 Am. Bus. L.J. 531 (2009).

Justin L. Browder, Note, The 2007 Private Equity Bust: Re-contextualizing Material Adverse Change Clauses in a Credit-Stricken Market, 63 U. Miami L. Rev. 1151 (2009).

J. Robert Brown, Jr. & Sandeep Gopalan, Opting Only In: Contractarians, Waiver of Liability Provisions, and the Race to the Bottom, 42 Ind. L. Rev. 285 (2009).

Mark Cantora, Note, The CISG after Medellin v. Texas: Do U.S. Businesses Have It? Do They Want It?, 8 J. Int'l Bus. & L. 111 (2009).

W. Ashley Hess & Alexander L. Ewing, Thou Shalt Not Lie: Enforcement of Non-reliance Clauses under Kentucky Law, 35 N. Ky. L. Rev. 157 (2008).

V. Niranjan, A Software Transfer Agreement and its Implications for Contract, Sale of Goods and Taxation, [2009] J. Bus. L. 799.

Nathan B. OmanA Pragmatic Defense of Contract Law, 98 Geo. L.J. 77 (2009).

Nick Piška, Hopes, Expectations and Revocable Promises in Proprietary Estoppel, 72 Modern L. Rev. 998 (2009).

Gregory C. Shaffer, How Business Shapes Law: A Socio-Legal Framework, 42 Conn. L. Rev. 147 (2009).

Nathan Somogie, Note, Failure of a "Basic Assumption": The Emerging Standard for Excuse under MAE Provisions, 108 Mich. L. Rev. 81 (2009).

Debra Pogrund Stark & Jessica M. Choplin, A License to Deceive: Enforcing Contractual Myths Despite Consumer Psychological Realities, 5 N.Y.U. J.L. & Bus. 617 (2009).

Eric L. Talley, On Uncertainty, Ambiguity, and Contractual Conditions, 34 Del. J. Corp. L. 755 (2009).

[Keith A. Rowley]

December 14, 2009 in Recent Scholarship | Permalink | TrackBack (0)

Can Tiger Renegotiate His Pre-Nup?!?

Tiger Woods  I would have thought that the answer would be clearly no, but I admit that I am not sufficiently on top of developments in family law and marital agreements to feel at all confident of my gut instinct.  In any case, rumors are flying (for example at TheHollywoodGossip.com (HG), and at AssociatedContent.com (AC) and at ABC News (ABC)) that a renegotiation is in process, which suggests that some people think it is possible.  Please note, that what follows is simply based on my reading of the above-mentioned reports.  I make no more claims to special insight into the relationship between Tiger Woods and Elin Nordegren than I do to expertise in family law.

Accounts of the couple's agreement vary widely.  While AC reports that the two entered into a pre-nuptial agreement before their 2004 marriage that provides for a $300 million payment to Elin Nordegren in case of a divorce, HG reports that the prenup provides that Elin would be entitled only to $20 million after ten years of marriage and to an up-front payment of $5 million. ABC concurs on the $20 million figure.

Elin_Nordegren These reports suggest that Elin is seeking an additional $55-60 million on top of the $20 million already negotiated and that she would be entitled to the full amount -- now in the $75-80 million range -- so long as the marriage lasts a total of seven, rather than the original ten years.  This strikes me as a deal in which Elin would get more for doing less.

It seems that the parties are trying to provide for some sort of consideration going from Elin to Tiger to justify the modification of an existing agreement.  That would consist, according to HG of "a behavioral component": Elin must play the role of "dutiful wife," by showing up for social events and by signing a confidentiality agreement (which may or may not be related to the role of dutiful wife).  I have a hard time seeing this promise (if that is indeed the deal) as constituting some new consideration in the marital context.  In any case, it seems hopelessly vague.  Are they going to negotiate how often Elin must be seen in public with Tiger and how fawningly affectionate or nordically respectful of him she must appear?  Is Tiger in effect promising to pay his wife an extra $55-60 million to act like his wife for two years?

I don't know what jurisdiction governs the pre-nup or would govern the amended pre-nup, but the Restatement's provisions on modification of an executory contract could be relevant here:

89. MODIFICATION OF EXECUTORY CONTRACT

A promise modifying a duty under a contract not fully performed on either side is binding 
 (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or
 (b) to the extent provided by statute; or
 (c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.

Subsection (a) could not be applicable as marital infidelity could not have been unanticipated by the parties.  I suppose the nature or extent of the infidelity might be unanticipated, but isn't the purpose of a pre-nup to provide for liquidated damages in the case of a broad range of unexpected events that the parties could have anticipated but did not want to contemplate or name at the time they tied the knot?

Subsection (b) may apply, but it seems unlikely.

That leaves us with subsection (c), but there the public policies that have long led courts to refuse to enforce marital promises would cut against enforcement. 

So, I welcome any input from readers more learned than the author in this area of the law. . . .

[Jeremy Telman]

December 14, 2009 in Celebrity Contracts, In the News | Permalink | Comments (0) | TrackBack (0)

Thursday, December 10, 2009

Going First

Bluebooks Whew!  My contracts students are taking their exam right now.  This year, our registrar scheduled the contracts exam first, which meant that my students' first-year angst was concentrated on my course.  The result was probably better exam preparation overall but a much higher ratio of procedural to substantive questions than I am used to.  What I am calling procedural questions came in three categories:

1. I think more students than usual availed themselves of our electronic exam archive, which includes model answers to my past exams.  There were follow-up questions on whether I prefer IRAC or CREAC, whether they should spot one big issue and state the general rule or spot mini-issues and mini-rules etc., and whether the issues should be highlighted and underlined or set apart with bullets, on the one hand, or simply worked into a paragraph on the other.

2. I allow my students to bring their statutory supplements with them to the exam.  I don't mind if their supplements include some highlighting.  Every year, the students ask me if they can tab their supplements.  In the past, I have said no, because the supplement already has printed tabs and each section also has a table of contents, which is all they really need.  This year, since students really seem to want to be allowed to tab and since I regard it as neither a help nor a hindrance, I permitted them to do it.  The result was a flood of questions about what kind of tabbing was permissible and what kind of tabbing was optimal.  Ugh.  I think I will revert to my no-tabs rule.

3. I recommend to my students that they do not consult supplementary materials, because such supplements are apt to create confusion, as contracts doctrine can be organized with infinite variation, some doctrines go by multiple names and most importantly, first-year students have a hard time distinguishing between doctrines that I have covered and those that I have not.  As a result, consultation of outside materials can induce panic.  I recommend Farnsworth's one-volume treatise as a reference if they want clarification on a given topic, and I recommend Blum's Examples and Explanations book if they want to work through problems.  Many students do not take my recommendation to heart and thus want me to comment on the value of various supplements that I have never read or to tell them whether or not the exam will cover topic X, which they do not remember talking about in class but have certainly heard of somewhere.

So, I can now provide answers to the multiple choice section of the exam as envisioned by my students:

1. The correct answer is E: this material was not covered in the course.

2. The correct answer is B: there was no meeting of the minds.

3. The correct answer D: yellow is the best color for a UCC tab.

4. The correct answer is A: for the purposes of this course, the rule stated in the casebook trumps the rule stated in Blum's book to the extent of any contradition, and the rule stated in the Blum book trumps what you learned in the BarBri review, to the extent of any contradition.

5. The correct answer is E: any reasonably well-organized presentation of the material is acceptable. . . and

The answer to all other questions is: the mailbox rule.

[Jeremy Telman]

December 10, 2009 in Teaching | Permalink | Comments (0) | TrackBack (0)

Recording Review Sessions

As I've mentioned before, I hold review sessions at the end of the semester for my contracts courses.  I take about four hours (two, two-hour review sessions) to orally outline the course.  I also record the sessions so that students who cannot attend can watch later. 

But this is where the trouble starts.  In most situations, I am not a vain person.  In these videos, however, my butt looks like it has its own zip code, I seem to be in need of a manzier, and my neanderthal brow overhangs my eyes so as to render them invisible.  Well, one picture is worth a thousand words; here's a still from my most recent review session (I was having a bit of difficulty with my PowerPoint presentation):

Meatball Father
Shouldn't my law school pay to provide the sort of technical support that would permit the review session recordings to show me as I really am?

Body Builder
[Jeremy Telman] 

December 10, 2009 in Teaching | Permalink | TrackBack (0)

Wednesday, December 9, 2009

Social Science Research Network's Weekly Top Ten


SSRN
 
TOP 10 Papers for Journal of Contracts & Commercial Law
 

October 10, 2009 to December 9, 2009


Rank Downloads Paper Title
1 211 The Effect of the Consumer Financial Protection Agency Act of 2009 on Consumer Credit 
David S. EvansDavid S. EvansJoshua D. Wright 
University College London, University of Chicago Law School, George Mason University School of Law 
2 195 Gods at War: Shotgun Takeovers, Government by Deal and the Private Equity Implosion 
Steven M. Davidoff 
University of Connecticut School of Law 
3 176 The 2005 Rules of the Australian Centre for International Commercial Arbitration - Revisited 
Simon GreenbergLuke R. NottageRomesh Weeramantry 
International Chamber of Commerce (ICC), University of Sydney - Faculty of Law, City University of Hong Kong (CityUHK) 
4 146 ProCD v. Zeidenberg and Cognitive Overload in Contractual Bargaining 
Eric A. Posner 
University of Chicago Law School
5 132 Conflict of Laws and Choice of Law 
Erin A. O'HaraLarry E. Ribstein 
Vanderbilt University School of Law, University of Illinois College of Law 
6 123 A Critique of Evans and Wright’s Study of the Consumer Financial Protection Agency Act 
Adam J. Levitin 
Georgetown University Law Center
7 107 Duress in Contracts: An Economic Analysis 
Péter Cserne 
Tilburg Law and Economics Center (TILEC) 
8 106 Fannie Mae, Freddie Mac, and the Home Mortgage Foreclosure Crisis 
Christopher Lewis Peterson 
University of Utah, S.J. Quinney College of Law 
9 88 Repeal the Safe Harbors 
Stephen J. Lubben 
Seton Hall University School of Law
10 87 The Role of International Law Firms and Multijural Human Capital in the Harmonization of Legal Regimes 
Gillian Hadfield 
USC Law School and Department of Economics

[Jeremy Telman]

December 9, 2009 in Recent Scholarship | Permalink | TrackBack (0)

Jennifer Lopez Suing Ex-Husband for Breach of Confidentiality

JLO  According to Wikipedia's entry on Jennifer Lopez, she had a brief marriage with the Cuban-born Ojani Noa, whom she met when he was a waiter in a Miami restaurant.  They divorced in 1998, and Lopez filed her first lawsuit against Noa in 2006.  The result was an order enjoining Noa from publishing a tell-all book about their relationship and that Noa pay Lopez $545,000 for breach of a confidentiality agreement In 2009, according to Wikipedia, it was reported that Noa is going to do a film about Lopez titled, "How I Married Jennifer Lopez: The JLo and Ojani Noa Story", which will include "11+ hours of previously unseen home video footage". In November 2009, it was announced that Lopez is suing to enjoin Noa from releasing the footage and for $10 million for invading her privacy and for breach of contract, citing the parties' confidentiality agreement.

Radaronline.com reports that Noa counter-sued last week and will be seeking $100 million because JLo and others are interfering with the production of Noa's "mockumentary."  As reported in the New York Daily News, the planned movie was rumored to include over eleven hours of footage from the couple's honeymoon, some of which was said to be of the naked kind.  According to the Daily News:

 Lopez's side says the movie-making crew wants to sell 11-plus hours of footage that depicts Lopez "in a revealing lack of clothing, and in sexual situations, especially in the hotel room from (her and Noa's) honeymoon."

 But on CNN.com, we get a slightly different version of plaintiff's allegations:

"There wasn't anything close to sex in it," Lopez's attorney John Lavely told PEOPLE. "We never alleged that. But it's still private and personal to my client."

It's all good.  The "mockumentary" that reports (mockingly perhaps?) on Noa's life as a Cuban immigrant has now been retitled "Escape."

[Jeremy Telman]

December 9, 2009 in Celebrity Contracts, In the News, Recent Cases | Permalink | Comments (1) | TrackBack (0)

Tuesday, December 8, 2009

Jury Finds Sempra Energy Not in Breach of Contract

Hydroelectric dam  Bloomberg.com reports on what appears to have been a very interesting contracts dispute between Sempra Energy, owner largest U.S. natural gas distributor and the the California Department of Water Resources, which alleged that Sempra had breached an $6.6 billion agreement that it entered into with the state in 2001 because Sempra failed to build a power plant on time.  

Sempra initiated the suit in 2002 to prevent the state from canceling the 2001 agreement after the state learned that Sempra was planning to purchase electricity on the open market and resell it to the state rather than use a new power plant as provided in the contract.  Although the new power plant was supposed to be up and running in 2002, it was not completed and operational until 2003.  The jury agreed with Sempra that the company was permitted to provide the state with energy from an alternative source when forcing compliance with the agreement would have been commercially unreasonable.   

According to one of Sempra's attorneys, the jury found that California was not harmed by the delay and got the full benefit of its bargain.  One attorney for California saw things differently, telling the jury: “Sempra has made hundreds of millions of dollars of profits from this contract and never provided the state with one dime’s worth of power from [the new plant]."  Apparently, compliance with the contract became a less attractive option for Sempra when energy prices dropped and it became cheaper to buy electricity than to boost capacity in California.  Sempra argued that the contract provided the option for Sempra to behave precisely as it did if cheaper sources of electricity were available.

[Jeremy Telman]

December 8, 2009 in In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Monday, December 7, 2009

Hurley v. Eddingfield: It's the Law and It's Ethical

Physician  I always start my contracts course with Hurley v. Eddingfield, in which the court held that a doctor has no contractual obligation to treat his own patient and need give no reason or excuse for his refusal to do so.  The case illustrates the strength of our notions of freedom of contract and also permits us to discuss the interaction of common law doctrines with other legal or regulatory regimes.  

Now I have in the past crossed swords with The New York Times Magazine's ethicist, Randy Cohen.  I have chided him for too readily conflating the lawful with the ethical.  Mr. Cohen has always responded to my criticisms, which is all one can ask for, but he gives no ground.  Still, I was cheered by a recent column addressing the etiquette of car phones.  The writer boasted of her hands-free car phone and of her habit of informing people when other people are in the car.  Cohen responded, in part, as follows:

This should be handled by never using the phone while driving. To do so increases your chance of an accident fourfold, akin to driving drunk. And there is no significant difference between speaking on a hand-held or hands-free device. (As your local legislators knew or should have known when they legalized the latter. Ignorant or cynical? Let’s not rush to judgment. They might merely have been possessed by demons.)
My point exactly.  But the comment applies to much of what emerges from our legislature.  

In any case, having criticized Mr. Cohen in the past. I must now give him his props for his nuanced response to a Hurley-like question that arose in yesterday's column. The writer is a doctor who did not want to take on a notorious med-mal attorney who had in the past sued the doctor's wife.  Cohen answered as follows:

As to this particular would-be patient, you acted reasonably. Because you and your wife have a history that causes you to resent him and his cohort, your ability to view him dispassionately and thus act in his best medical interest may be compromised. Therefore, not only may you decline to take him on; you should decline. I might feel different if you practiced medicine in a provincial town on the Russian steppes, like some brooding doctor out of Chekhov, with no other physician within a thousand miles. But in your actual situation, go forth guiltlessly.
And the good doctor can do so all the more easily, as the attorney found some other sucker -- oops, typo -- doctor to treat him.

[Jeremy Telman]

December 7, 2009 in Commentary, Famous Cases | Permalink | Comments (0) | TrackBack (0)