ContractsProf Blog

Sanctity of contract . . . .

AIG Talk

Deborah Post (Touro) and I were guests on a Legal Talk Network segment discussing (what else?) the AIG bonuses.  For those who can't get enough of hearing law professors talk to each other, you can access the podcast here.

One of the most interesting moments came, I thought, with Deborah's suggestion that the current meltdown is something far bigger in scope and effect than previous recessions, and that it has (I'm trying to say it as clearly as she did) essentially changed the lives of all of us in ways that were entirely unexpected a year or two ago.  She suggests that not even AIG insiders, who were ostensibly thinking about future risks, could have really understood the calamity that was about to come about, and thus the doctrine of changed circumstances might justify a court in modifying the contracts

Her point was broader than simply AIG, though; she argued that nearly everyone in America has been touched by this unexpected event.  If that's so, and if this is potentially a valid theory, it might apply to a lot more situations than the employment contracts of bailed-out financial institutions, potentially affecting all kinds of contracts where the meltdown has caused the economics of deals to change.  It's an ineresting idea.

[Frank Snyder] 

For Those Who Did Not See Today's NY Times: More on AIG

The Times today posted this letter of resignation from an AIG executive.  He makes the case in defense of at least some of those executives.  I have yet to see how this letter is received in the blogosphere.  I do not expect a backlash against AIG bashing.

I just want to highlight what is for me the money shot:

I know that because of hard work I have benefited more than most during the economic boom and have saved enough that my family is unlikely to suffer devastating losses during the current bust. Some might argue that members of my profession have been overpaid, and I wouldn’t disagree.
That is why I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget. Our earnings have caused such a distraction for so many from the more pressing issues our country faces, and I would like to see my share of it benefit those truly in need.
On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes.

To me, there is a tremendous tension, even cognitive dissonance, between the first sentence and the second.  On the whole, the main point of the letter is that its author has done nothing wrong, and yet his willingness to donate his bonus (in the face of government threats to take it from him) is presented as a recognition that not all of his earnings are earned.  

This is certainly a very rich text.

[Jeremy Telman]

Business Associations Limerick of the Week: Stuparich v. Harbor Furniture

This is a case about a family-owned close corporation.   The father, Malcolm, Sr. gave a controlling share to his son, Malcolm, Jr., leaving two sisters, Candi and Ann, as minority shareholders.  The siblings disagreed about the direction of the business.  The main business, which involved furniture was stagnating, so the sisters wanted to expand the family's side business in trailer parks. 

But Malcolm had a controlling interest, and while the sisters had the ability to voice their opinions, Malcolm never paid them any heed, and he ran the business according to his own lights.  One of the disputes allegedly involved Malcolm hitting one of the sisters, but the court did not give any weight to that fact. 

The sisters claimed that they were being improperly frozen out and deprived of the benefits of ownership, so they sought a court-ordered dissolution of the company.  The court sided with Malcolm.  The sisters still got their dividends, so their ownership interest in the company was not frustrated.

Stuparich v. Harbor Furniture

Two sisters, Candi and Ann,
Preferred trailers to chairs of rattan.
Dividends they receive
And so they must leave
It to Malcolm the business to plan.

[Jeremy Telman]

Now in Print

Paula D. Baron, The Doctrine of Penalties and the Test of Commercial Justification, 34 U.W. Austl. L. Rev. 42 (2008).

Ashleigh L. Boggs, Note, Interpretation of Oil and Gas Lease Habendum Clauses in Texas and Why Oklahoma Should Maintain its Divergent Approach to Keep Leases Alive (Anadarko Petroleum Co. v. Thompson, 94 S.W.3d 550 (Okla. 2002)), 61 Okla. L. Rev. 341 (2008).

J.W. Carter, Commercial Construction and Contract Doctrine, 25 J. Contract L. 83 (2009).

Adri du Plessis, Pre-contractual Misrepresentation, Contractual Terms, and the Measure of Damages When the Contract is Upheld, 125 S. African L.J. 413 (2008).

Howard Hunter, Good Faith and the Construction of Terms in Commercial Contracts: The American Perspective, 25 J. Contract L. 39 (2009).

Glenda Labadie-Jackson, The Reproductive Rights of Latinas and Commercial Surrogacy Contracts (English Translation), 14 Tex. Hispanic J.L. & Pol'y 49 (2008).

Eric Michael Liddick, Give Me Freedom of Contract or Give Me Death: The Obscurity of Article 44(A) of the Louisiana Code of Civil Procedure, 54 Loy. L. Rev. 602 (2008).

David McLauchlan, Plain Meaning and Commercial Construction: Has Australia Adopted the ICS Principles?, 25 J. Contract L. 7 (2009).

Elisabeth Peden, "Implicit Good Faith" -- or Do We Still Need as Implied Term of Good Faith?, 25 J. Contract L. 50 (2009).

Michael Risch, Virtual Third Parties, 25 Santa Clara Computer & High Tech. L.J. 415 (2009).

Donald Roberston, Force Majeure Clauses, 25 J. Contract L. 62 (2009).

John Tarrant, Partial Failure of Consideration, 34 U.W. Austl. L. Rev. 59 (2008).

Cory S. Winter, Comment, The Rap on Clickwrap: How Procedural Unconscionability is Threatening the E-Commerce Marketplace, 18 Widener L.J. 249 (2008).

R. George Wright, Your Mileage May Vary: A General Theory of Legal Disclaimers, 7 Pierce L. Rev. 85 (2008).

[Keith A. Rowley]

Is the iPhone Actionably Slow?

A New Jersey man is suing Apple, claiming that its network speed is not all it was advertised to be, according to this article in PC World. Plaintiff alleges breach of contract, among other things, because he claims that the service is unreliable, as he is unable to stay connected to the 3G network from his iPhone. In addition, he alleges that Apple misrepresented its network's "speed, strength, and performance."  This is just the latest in a string of lawsuits that the company has faced over the network issues related to the otherwise stupendous iPhone.  

I don't see the need for lawsuits when parody is such an obvious alternative.  For example, a collection of the allegedly misleading real iPhone ads can be found here.*  A parody illustrating real speed can be found here.  Parodies illustrating the bizarre apps proliferation can be found here

and here.

[Jeremy Telman]

*Typepad has rolled out a new editing platform, which is very nice. Unfortunately, I have yet to be 

able to figure our how to embed videos on the new system.