ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, November 1, 2010

No right to jury on unconscionability claim

A A Kentucky man was not entitled to get to a jury on the question whether his credit card contract with Discover was unconscionable, according to an unpublished ruling on Friday from the Kentucky Court of Appeals.  In Dungan v. Discover Bank, No. 2009-CA-000380-MR (Ky. App. Oct. 29, 2010), the pro se defendant/appellant raised a variety of reasonably creative issues, but one of his key claims was that the Discover Card agreement was unconscionable.

Citing the facts that the defendant had a graduate degree and the language of the agreement was understandable (even though printed in small type), Judge Kelly Thompson also rejected the claim that the defendant should be able to get to a jury on that issue, holding that the question was one of law for the judge.


November 1, 2010 in Recent Cases | Permalink | Comments (1) | TrackBack (0)

News Briefs -- November 1, 2010

RICHMOND HEIGHTS (Mo.):  "Municipal officials said Friday they were preparing a breach-of-contract resolution against the developer who proposed a $394 million project for the Hadley Township neighborhood."

HONOLULU:  "A controversial ruling in Hawaii that damage resulting from construction defects does not constitute an occurrence triggering coverage under a commercial general liability policy has prompted some insurers to alter policy language to make it clear that they intend to pay such losses."

A MACAU (P.R.C.):  "New Cotai, LLC initiated proceedings in the Hog Kong SAR last Friday against East Asia Satellite Television 'for engaging in unfair and prejudicial conduct in relation to the Macao Studio City project,' the integrated leisure resort (left) set to be built close to The Venetian Macau in Cotai."

NEW YORK:  "Two former Marsh Inc. executives whose bid-rigging convictions have been overturned have accused their former employer of violating federal law and breach of contract."

DENVER:  "A Texas attorney and his top_tier law firm, who face fraud claims from Colorado regulators, have been hit with a $103 million jury verdict [for breach of contract and conspiracy] in a related case in Mississippi."

HANOVER (Pa.):  "A lawsuit recently filed in Adams County [Pennsylvania] court attempts to [pierce the corporate veil and] link the Borough of Gettysburg and the Adams County Transit Authority to a failed redevelopment project that's cost two property owners part of their retirement savings."

BLACKPOOL (U.K.):  "In a worrying development for Ian Holloway and Blackpool [F.C.], club captain Charlie Adam will take his club to a Premier League arbitration court next week over unpaid bonuses."


November 1, 2010 in In the News | Permalink | Comments (0) | TrackBack (0)

Symeonides on comparative choice of law in contracts

Aa Much of American commercial law is based on a paradox:  commercial transactions are so complex that it is impossible to develop detailed rules in advance, yet after the fact the correct resolution of a dispute is so plainly obvious that any reasonable judge will inevitably come to the correct decision as to what the parties "really" intended.  European commercial law has tended to be less deferential to the wisdom of judges and more sanguine about a prior rules.

These different approaches play out in differeing approaches to choice-of-law problems, as Symeon Symeonides (Willamette) discusses in a new paper, Party Autonomy in Rome I and IΙ from a Comparative Perspective, forthcoming in the book Convergence and Divergence in Private International Law -- Liber Amicorum (K. Boele-Woelki, T. Einhorn, D. Girsberger, & S. Symeonides, eds., 2010).  In it, he takes a comparative look at U.S. law and the Rome Convention on the Law Applicable to Contractual Obligations.  The paper is available on SSRN (link above).  Here's the abstract:

This essay discusses the modalities and limitations of party autonomy under the Rome I Regulation on the Law Applicable to Contractual Obligations (and secondarily Rome II) on the one hand, and the Second Conflicts Restatement, on the other hand. The comparison reveals the differences between the legal cultures from which these documents originate and which they are designed to serve.

The Restatement opts for under-regulation, reflecting a typically American skepticism toward a priori rules and a high degree of confidence in the courts’ ability to develop appropriate solutions on a case-by-case basis. That confidence finds its justification in the fact that American state and federal judges share the same legal training and tradition and have long experience in working with malleable "approaches". The drafters had hoped - but could not mandate - that, over time, judges would develop similar solutions and thus eventually provide a modicum of consistency and predictability. Four decades later, the extent to which that hope has materialized remains debatable.

In contrast, Rome I reflects the rich continental experience in crafting a priori rules and a reluctance to entrust courts with too much discretion. This reluctance finds additional justification in the fact that Rome I is designed to serve a plurilegal and multiethnic Union, one that brings together uneven legal traditions. As a result, Rome I consists of many detailed black-letter rules, subject to few narrow escapes according little judicial flexibility, and aims at greater consistency and predictability.

At the same time, the drafters of Rome I deserve praise for having the political courage and legal acumen to devise a series of specific rules explicitly designed to protect consumers, employees, passengers, and insureds. As the discussion in this essay illustrates, however, these rules work quite well in the case of consumers and employees, but not so well in the case of passengers, insureds, and other presumptively weak parties, such as franchisees. Even so, one might well conclude that it is preferable to have rules protecting weak parties in most cases (even if those rules do not work well in some cases), rather than not having any such rules, as is the case with the Restatement and American conflicts law in general.


November 1, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, October 31, 2010

Today in History -- November 1

1604 – William Shakespeare's The Tragedy of Othello, the Moor of Venice has its first performance, at Whitehall Palace in London.

1A765 – The British Parliament enacts the Stamp Act (right) on the 13 colonies in order to help pay for British military operations in North America.  Among other things, it puts a  £10 tax on attorney licenses.  That's about $20,000 in current U.S. dollars.

1802 – Thirty-five delegates gather at a raw hamlet on the Scioto River called Chillicothe to draft a constitution for what wll become the State of Ohio.

1848 – Dr. Samuel Gregory, who believes it inappropriate for men to be attending women at childbirth, opens the first medical school for women, Boston Female Medical College.

1946 – The new Basketball Association of America, forerunning of the NBA, opens its inaugural season at Maple Leaf Gardens in Toronto, where the visiting New York Knickerbockers down the Toronto Grizzlies 68-66. The Knicks will be one of 6 BAA teams to survive to the present day.

1950 – Pope Pius XI formally defines the dogma of the Assumption of Mary in his Apostolic constitution, Munificentissimus Deus.

1959 – Jacques Plante of the Montreal Canadiens becomes the first goaltender to wear a protective mask in regulation play.

1968 – Looking for ways to add more more nudity, profanity, and violence to American films, the Motion Picture Association of America's scraps its old Hays Code and replaces it with a film rating system that categorizes films as G, M, R, and X.

1982 – Honda opens a factory in Marysville, Ohio, making it the first Japanese auto maker to build cars in the United States.

1993 – The Maastricht Treaty establishing the European Union goes into effect.  This turns out to be the easy part.  Getting everyone actually united will prove to be more difficult.


October 31, 2010 in Today in History | Permalink | Comments (0) | TrackBack (0)

Frightening: A Halloween Costume Contract

Halloween-pumpkin-carving The Washington Post gets in the Halloween spirit with reporting on this costume contract that a Michigan junior high school required parents and students to sign before the students could wear costumes to school.

 Here's the deal (no emphasis added or punctuation changes made):



Parent Agreement Form 2010

1. All students wearing costumes to school MUST read and understand the costume guidelines. In addition, they MUST sign the registration form provided by their FIRST HOUR teacher. They must also have this form signed by their parent and submitted to their first hour teacher by the Wednesday, October 27th deadline. If form is not submitted in a timely manner, then student is NOT allowed to dress up.

2. All costume preparations are to be completed at home. (No dressing or applying of make-up or colored hairspray once students arrive at school).

3. No masks are to be worn during the school day.


5. Costumes that promote the use of illegal substances or activities or are derogatory or disrespectful are NOT allowed.

6. Teachers may take away any accessory that is used improperly or is considered inappropriate for school.

7. School rules regarding the dress code must be followed.

8. Students who have questions about the acceptability of their costume should check with their FIRST HOUR teacher by Wednesday, October 27th.

9. Students wearing inappropriate costumes will be sent to the office to call home for a change of clothes, and/or may result in one or both of the following disciplinary consequences: Saturday school, Suspension.

10. Students who do not submit parent agreement form by the Wednesday, Oct. 27th deadline and still choose to wear a costume will also face disciplinary action as deemed appropriate by administration.

11. Costumes MUST be worn all day.


I have read and discussed with my child the Jeannette Jr. High School Halloween costume rules/guidelines. I understand that if my child violates any of the above rules, he/she will have earned Saturday school and/or suspension as a consequence. I also understand that this form must be signed and returned to my child’s 1st hour teacher, on or before Wednesday, October 27th. 
(print student first and last name) 
(student signature) 
(print parent first and last name) 
(parent signature) 

Wow, frightening indeed!  It sure leaves a lot open to interpretation, including whether a costume depicts a "violent character" and whether certain costumes are "inappropriate."  Some traditional Halloween staples come to mind as arguably violent: the devil? grim reaper? vampire?  This year's most popular costumes are apparently Lady Gaga and Jersey Shore characters: appropriate?  And, what is the remedy if a student doesn't comply with paragraph 11?

[Meredith R. Miller]

October 31, 2010 in In the News, True Contracts | Permalink | Comments (2) | TrackBack (0)

Pesky Typo Dooms Luxury Condo Developer

RUSHMORE In New York, a protracted court battle rages between a luxury real estate developer and 41 condo owners seeking the return of their deposits.  Many of their sales contracts for units at The Rushmore were executed at the height of the real estate market.  Now the buyers want out, and they argue that the contracts entitle them to the return of their deposits if at least one sale did not close by Sept. 1, 2008.  The first closing did not occur until February 2009.  The developer argues, however, that there was a typo in the contract and the date was intended to be September 1, 2009.  In response, the buyers argue that the contract should be enforced as written. 

The case has worked its way through the federal court and now is finding its way back to state court.  The WSJ reports:

The Second U.S. Circuit Court of Appeals in Manhattan this month affirmed a May district court ruling that said the developers couldn't block the release of the deposits now held in an escrow account.

The developers appealed to federal court—rather than taking the more traditional route to state court—arguing that the attorney general's ruling violated the U.S. Constitution because they were denied due process of law because they weren't permitted to contest and evaluate the charges against them.

Richard N. Cohen, an attorney for a group of the condo buyers, said the buyers "question the developers' motivation in continuing to drag out this case in a different forum, having been unsuccessful in the federal courts and with the attorney general."

Presumably, if the developer has to find new buyers, it will never get close to the prices of these contracts and it will likely turn the development into losing proposition.

[Meredith R. Miller]


October 31, 2010 in In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Happy Halloween!

There's one one horror film I know of where the heroes include a business lawyer and a university professor, but that one is one of the best.  It was the scariest of my childhood, hands down.



October 31, 2010 in Film Clips | Permalink | Comments (0) | TrackBack (0)

Weekly Top Ten

SSRN Not much change at the top, but three new papers crack our weekly Top 10.  Following are the top ten most_downloaded papers from the SSRN Journal of Contract and Commercial Law for the sixty days ending October 24, 2010. (Last week's rank in parentheses.)

1 (1)  Two Faces: Demystifying the Mortgage Electronic Registration System's Land Title Theory, Christopher Lewis Peterson (Utah).

2 (2)  Good Faith and Contract Interpretation: A Law and Economics Perspective, Simone M. Sepe (Arizona).

3 (3)  The Need for Insurance Policy Transparency, Daniel Schwarcz (Minnesota).

4 (4)  Regulating Systemic Risk, Steven L. Schwarcz (Duke) & Iman Anabtawi (UCLA).

5 (5)  Misbehavioral Economics: The Case Against Behavioral Antitrust, Joshua D. Wright (Geo. Mason) & Judd E. Stone (Int’l Ctr. for Law & Econ.).

6 (6)  Taking Punitive Damages Seriously: Why a French Court Did Not Recognize An American Decision Awarding Punitive Damages and Why it Should Have, François-Xavier Licari (Metz).

7 (–)  Choice of Forum Provisions in Intra_Corporate Litigation: Mandatory and Elective Approaches, Joseph Grundfest (Stanford).

8 (7)  A Moral Rights Theory of the Private Law, Andrew S. Gold (DePaul).

9 (–)  Contractors and the Ultimate Sacrifice, Steven L. Schooner & Collin D. Swan (Geo. Washington).

10 (–)  Vertical Restraints, Dealers with Power, and Antitrust Policy, Herbert J. Hovenkamp (Iowa).


October 31, 2010 | Permalink | Comments (0) | TrackBack (0)