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Editor: D. A. Jeremy Telman
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Saturday, December 4, 2010

Strategic Default on Second Homes

I have been closely following the discussion of strategic default in the popular press (and on comedy shows too).  For anyone else who may be interested, the New York Times recently printed a column with a new variation on a common theme - strategic default on a second home.  Though, much of the article was about strategic default generally (i.e., the information in the article was not specific to second homes).  Generally, the numbers:

In July, a study by researchers from the European University Institute, Northwestern University and the University of Chicago concluded that the strategic default trend was “large and rising” among homeowners with an equity shortfall of $100,000. As of last March, it said, strategic defaults accounted for 35.6 percent of all foreclosures, compared with 23.6 percent a year earlier.

The challenge here is the definition of "strategic" and identifying which situations are in fact "strategic."   Is the default strategic if the borrower is unwilling to take on a second job to pay the mortgage?  If the borrower is unwilling to work overtime?  Decides to stay at home longer after having a baby?

[Meredith R. Miller]

December 4, 2010 in In the News | Permalink | Comments (0) | TrackBack (0)

Contracts and climate change

Elizabeth Peden (Sydney) as a new paper in the new book, In the Wilds of Climate Law, (Rosemary Lyster, ed. 2010). It’s called Contractual Perspective of Climate Change Issues and it's also available online at the previous link. Here’s the abstract:

Bbb This paper first seeks to provide a perspective of how contract law has fared when given the role of protecting rights relating to environmental issues through the case example of Tito v. Waddell (No. 2) [1977] 1 Ch. 106. This case highlights that often contract law cannot provide a remedy that is ideal in situations that do not concern purely commercial issues, because contract law is designed to allocate risks in markets, rather than ensure important concerns such as slowing climate change or protecting forests or flora are achieved.

With this background, the paper then considers the operation contract law may have when the Australian government introduces carbon trading. Some observations are also offered relating to the standard term contract that has been introduced earlier this year in Europe, the home of the largest carbon credit trading market. This analysis focuses on remedies, and provides some insights into issues that might be considered in Australia, should a similar standard form contract be adopted.

FGS

December 4, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, December 3, 2010

Reminder: AALS Contracts Section Call for Proposals

The Executive Committee of the AALS Contracts Section solicits proposals for the Section’s Annual Meeting program Navigating Lombard Street in a Fog: Seeking (or Ignoring) Landmarks of Intent and Context, scheduled for Thursday, January 6, 2011 from 2:00 to 5:00 p.m.

The Topic: Consent supposedly distinguishes contracts from other private or public rights and duties by requiring that each contracting party manifest its intent, at the time it enters into the contract, to be bound to the contract.  This program will explore:

♥   whether intent – objectively manifested or otherwise – is or should be an integral part of contemporary contract law, practice, and theory;

♥   the extent to which context affects or should affect a party’s ability to consent, the significance of its manifested consent, or both; and

♥   assuming that intent and context matter, how best to determine and give effect to the parties’ intent in the context of their transaction.

We are particularly interested in fostering discussion of (1) intent to be bound, (2) intent to be bound to specific terms, (3) the intended meaning of agreed terms, (4) intended circumstances under which a party may avoid or delay performing their duties, and (5) intended remedies available or foreclosed if a party does not perform as agreed under circumstances that neither invite nor allow avoidance or delay.

The Program: Inspired by last year’s lively roundtable discussion of pedagogical approaches and by a fairly robust body of recent scholarship relevant to our topic, and paying homage to the increasingly rare, but fondly remembered, two-semester Contracts course, we seek speakers for two (or more) discussion panels, which the planning subcommittee will organize topically.  We have secured a 180-minute time slot, which should facilitate a broader, more diverse, and more participatory discussion than the typical 100-minute AALS program permits.

Publication: While we hope that this program will ignite or further fuel already-burning scholarly interest across its broad scope, we do not require an original paper proposal and have not pre-arranged publication of any papers discussed at or arising from the program (although we may explore publishing a program transcript if we can find a suitable venue and all of the speakers consent).

Submitting a Proposal: If you would like to participate as a panelist, please contact program chair Keith Rowley (keith.rowley@unlv.edu), no later than 12:00 p.m. PST, Monday, December 6th, indicating the aspect(s) of the topic that most interest(s) you; from what perspective(s) you propose to discuss it/them; if applicable, the scholarly work – yours or someone else’s, published or in progress – you plan to draw upon; and how best to contact you between now and December 10.  While the program planning subcommittee will reserve some spots for submissions received by the foregoing deadline (and may consider late proposals), we will begin to review proposals as we receive them and may begin extending offers as early as Monday, November 29th.

We apologize for the short notice, but hope to capitalize on it by attracting participants who might have been unwilling or unable to commit themselves in September or early October or who, like some of us, were stymied by the ongoing labor strife at the AALS headquarters hotel.  We are meeting; we are meeting elsewhere; and we ask that you help make this a well-attended, informative, and interactive program.

Thank you for your consideration.

[Keith A. Rowley]

December 3, 2010 in Conferences, Law Schools, Meetings | Permalink | Comments (0) | TrackBack (0)

Wilkes v. Springside Nursing Home: Defendant Dr. Leon Riche

Riche 

It was Riche whose disputes with Stanley Wilkes triggered the freeze-out in the case.  Image courtesy Eric Gouvin (Western New England).

FGS

December 3, 2010 in Famous Cases, Teaching | Permalink | Comments (0) | TrackBack (0)

News in Brief . . . . December 3, 2010

A NEW YORK (N.Y.):  Actress Ellen Barkin reportedly has won a bitter court battle to get $4.3 million from her billionaire ex-husband Ron Perelman, who had agreed to invest the money in her film production company.  (Left: The couple in happier times.)

DAR ES SALAAM (Tanzania):  Just a day after an arbitration panel of the International Chamber of Commerce ordered the financially-troubled Tanzania Electric Supply Company (Tanesco) to pay a $123.6 million in breach of contract damages, the Tanzanian government is being asked to bail out the state utility company or face serious economic harm to the country.

MINNEAPOLIS (Minn.):  "Digital Angel Corp. said Thursday that a federal jury in Florida has ruled against Michael Krawitz, the former CEO of a predecessor company who sued Digital Angel over breach of contract."

EUGENE (Ore.): "Six years after the death of spiritual leader Yogi Bhajan, three legal battles are under way in Oregon and California over the use of the name ‘yogi’ in food products and ingredients."

LONDON (U.K.):  "Former Wilson Phillips singer Carnie Wilson has been fired from her job as the face of The Fresh Diet because she didn’t lose enough weight while she was on the program."

AUSTIN (Tex.): "A dispute over a multibillion-dollar water-sharing contract that fell apart last year led the San Antonio Water System and the Lower Colorado River Authority back to court Wednesday."

SANTA CLARA (Calif.):  "Latham & Watkins Litigator Overcomes 'Slam Dunk' Evidence to Win Defense Verdict in Marvell Trade Secrets Case."

SYDNEY (N.S.W.): "Qantas Airways is claiming damages from engine maker Rolls-Royce over faulty Airbus A380 engines and loss of business, as investigators concluded a design fault was the likely cause of a mid-air engine failure on an Airbus A380 last month."

NEW YORK (N.Y.):  The New York Yankees have apparently agreed on a new 2-year, $30 million contract with 41-year-old reliever Mariano Rivera, and have increased their 3-year, $45 million offer to 36-year-iold shortstop Derek Jeter.

FGS

 

 

 

 

December 3, 2010 in In the News | Permalink | Comments (0) | TrackBack (0)

Spurlock helps bring rule of law to Mongolia

1908RandallCountyCourthouseCanyonTexas907TJnsn My contracts colleague at Texas Wesleyan, Joe Spurlock, has been working for a decade helping the judiciary of Mongolia make its transition from Soviet authoritarianism to a free and independent group that helps further the rule of law in the country.

Joe is a former Texas state legislator, gubernatorial advisor, and judge at both the trial and appellate levels, and he runs TW's Asian Judicial Institute.  Over the years he's brought scores of Mongolian legal officials to Texas in the summer to learn about the American system.

I mention this now because if you happen to be flying American Airlines this month, you'll see a piece about Joe's work in the American Way magazine.  If you're staying home, you can read it online here.

FGS

December 3, 2010 in Contract Profs | Permalink | Comments (0) | TrackBack (0)

Robertson on offshore legal outsourcing

Cassandra Burke Robertson (Case Western) has posted a new paper, A Collaborative Model of Offshore Legal Outsourcing. It’s forthcoming in the Arizona State Law Journal. Here’s the abstract:

1908RandallCountyCourthouseCanyonTexas907TJnsn International outsourcing has come to the legal profession. The ABA and other bar associations have given it their stamp of approval, and an ailing economy has pushed both clients and firms to consider sending more legal work abroad. This article integrates research from the fields of organizational behavior, social psychology, and economic theory to analyze the effectiveness of the legal outsourcing relationship. It identifies organizational pressures in the practice of law that affect how legal work is performed in a transnational context, and it examines how individuals on both sides of the outsourcing process influence the success or failure of a globalized practice. Ultimately, the article recommends that parties involved in legal offshoring should move away from a model of disaggregation and toward a model of collaboration. Unlike a disaggregation model that assumes outsourcing vendors will autonomously complete discrete legal tasks, a collaborative model would explicitly focus on cooperation, communication, and renegotiation of status and resources.

FGS

December 3, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, December 2, 2010

Today in History: December 3

1552 – St. Francis Xavier, Jesuit missionary to India and the Far East, dies of a fever on Shangchuan Island, China.

1818 – Illinois becomes the 21st U.S. state. The state will be home to four future U.S. Presidents, but only one will grow up there: Who is it?  (Answer below.)

1842 – Future flour tycoon Charles Alfred Pillsbury is born at Warner, New Hampshire.

1854 – At Ballarat, Victoria, more than 20 rebellious gold miners are killed by mixed force of Australian soldiers and police at what comes to be known as the Battle of Eureka Stockade. The miners are outraged by the high price of government mining licenses and the taxes imposed on them.

A 1857 – Future merchant seaman and writer Joseph Conrad is born at Berdyczów in the Russian Empire. His service as captain of the Congo River steamer Roi des Belges (right) will be the basis for his novella Heart of Darkness.

1894 – Robert Louis Stevenson, who gave up a career at the Scottish bar to write adventure novels, dies of a brain hemorrhage at his estate in Samoa. Last words to his wife: "Does my face look strange?"

1910 – At the Salon de l'Auto in Paris, Georges Claude makes the first public demonstration of his new invention, the neon light.

1984 – At Bhopal, India, an accidental chemical release from a Union Carbide pesticide plant kills nearly 4,000 people and injures tens of thousands of others. The company will ultimately settle the resulting claims for $470 million.

1990 – Two passenger aircraft run into each other on the runway at Detroit Metropolitan Airport, killing 7 passengers and 1 crew member. The Transportation Safety Administration immediately decides that passengers on all future flights must wear fluorescent protective headgear.

2007 – Thousands of delegates from 180 countries and dozens of other entities arrive at the luxurious oceanfront Bali International Convention Center on carbon-spewing jet aircraft for the United Nations Climate Change Conference.

FGS

[Answer to the trivia question:  Ronald Reagan.  The other presidents with ties to Illinois are Abraham Lincoln, Ulysses S. Grant, and Barack Obama.]

December 2, 2010 in Today in History | Permalink | Comments (0) | TrackBack (0)

Wilkes v. Springside Nursing Home: Plaintiff Stanley Wilkes

Wilkes-Wilkes 

A high school grad with a talent for real estate, Wilkes had the vision in the early 1950s that private nursing homes would become a major industry.  Image courtesty Eric Gouvin (Western New England).

FGS

December 2, 2010 in Famous Cases | Permalink | TrackBack (0)

New York court ignores Colorado choice of law provision

A New York courts will enforce contractual choice of law provisions, but only if the provision bears "a reasonable relationship to the parties or the transaction."  In Sheppard Mullin Richter & Hampton LLP's recent New York Commercial Division Roundup, lawyer Sean R. Kirby notes a recent decision where the plaintiff was a delaware corporation with its principal place of business in Nebraska; the defendant was a New York corporation with its principal place of business in New York; but the contracts at issue specified Colorado law.

Justice Eileen Bransten held that Colorado had no connection to the case, and applied New York law.  The case is Transfirst EPayment Services, Inc. v. Advanced Marketing Research, Ltd.,Index No. 602536/2008 (N.Y. Sup. Ct. N.Y. Cty. Sept. 29, 2010).

FGS

December 2, 2010 in Recent Cases | Permalink | Comments (1) | TrackBack (0)

News in Brief . . . .

. . . WEDNESDAY, DEC. 2, 2010

A NEW YORK (N.Y.):  "Rocker Courtney Love (left) is having serious issues when it comes to paying and accounting for various goods and services."

BONN (Germany):  "A major row has broken out between German broadcast group Mediengruppe RTL Deutschland and Deutsche Telekom regarding the distribution of RTL’s channels on the telco’s IPTV platform Entertain.  RTL apparently accuses Telekom of breach of contract and threatens to take legal action."

DAR ES SALAAM (Tanzania):  "The International Chamber of Commerce (ICC) has ordered Tanzania Elecdtricity Supply Company (Tanesco) to pay Dowans Holdings SA and Dowans Tanzania Limited a sum of 106 billion shillings for breach of contract."

SAN FRANCISCO (Calif.):  "The former chief executive of Planned Parenthood Golden Gate has filed suit against the organization for more than $180,000 in severance. The lawsuit comes as the struggling nonprofit organization is making a major fund-raising push to stay afloat."

LAS VEGAS (Nev.):  "A 2008 injury that left Green Valley High School football player LaQuan Phillips temporarily unable to walk has led to a lawsuit questioning the insurance provided by the Clark County School District for students involved in sports and extracurricular activities."

WASHINGTON (D.C.):  "Just a day after a Microsoft executive accused Google of failing in the enterprise, the U.S. General Services Administration announced that Google and several other companies have been awarded a five-year, $6.7 million email contract."

SEATTLE (Wash.):  "When you think of solar powerhouses, Seattle and Oslo do not exactly come to mind.  But now two solar companies from those cities have created a joint venture to build photovoltaic power plants in the western United States."

NEW YORK (N.Y.):  "Kraft Foods has started arbitration proceedings against Starbucks to force the Seattle-based coffee company to pay a fee in order to exit its 12-year partnership."

 FGS

December 2, 2010 in In the News | Permalink | Comments (0) | TrackBack (0)

Attorneys' fees clauses in contracts: America v. England

Theodore Eisenberg (Cornell) and Geoffrey Miler (NYU) have a new paper, The English vs. The American Rule on Attorneys Fees: An Empirical Study of Attorney Fee Clauses in Publicly-Held Companies' Contracts. Here’s the abstract:

Aa We study attorney fee clauses in a data set of 2,350 contracts contained as exhibits in Form 8-K filings by reporting corporations. Because 8-K filings are required only for material events, these contracts likely are negotiated by sophisticated parties and, therefore, provide evidence of efficient ex ante solutions to contracting problems. The American Rule for compensating attorneys requires each party to pay its own attorney, win or lose; the English Rule (applicable rule in most of the world) requires the losing party to pay the winner's reasonable fees. Adoption of the English Rule or other loser-pays arrangements has frequently been proposed as a solution to perceived U.S. litigation problems. But the vast theoretical modeling literature on fees has reached no consensus. Empirical reality should help assess the models and provide new insights. Because contracting parties can opt out of the American Rule and into a loser-pays rule at low cost, we expect such opt-outs to occur frequently if the English Rule more efficiently compensates counsel.

1908RandallCountyCourthouseCanyonTexas907TJnsn Our data show, however, that the American Rule is preferred about as often as the English Rule (or similar loser-pays rules). Choosing the American Rule is associated with the following contractual features: specific kinds of contracts, the presence of a non-U.S. party, the absence of arbitration clauses and jury trial waivers, selection of New York law in contracts other than underwriting contracts, and a likely long-term relation between the parties. It is inversely associated with an increasing degree of contract standardization. Sophisticated parties thus often perceive the American Rule to be value-enhancing compared to loser-pays systems but contracting parties that opt out of U.S. courts through arbitration clauses, or eliminate jury trials through jury waiver clauses tend to reject the American Rule. The findings suggest that theoretical models should resist the assumption that a single attorney fee rule is most efficient in all contexts and that models should strive to account for real-world factors associated with fee clauses.

FGS

December 2, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Parts of her were found in a flower pot and a margarine dish . . . .

Apropos Meredith's post yesterday about the family who unknowingly bought the meth house, Andrew Tettenborn (Swansea) writes to mention a case that tops that one.  Which would you prefer -- meth fumes, or bits and pieces of a previous occupant?. . . .

1908RandallCountyCourthouseCanyonTexas907TJnsn "The story of the house that used to be used as a meth lab [writes Andrew] puts me in mind of a parallel in the Court of Appeal in England about six years ago. A seller sold a house in Yorkshire without disclosing to the buyer the fact that a few years previously a previous occupant had brought an adolescent girlfriend home, murdered her, dismembered the body and hidden the various bits around the house. Oh, and the seller also omitted to mention that the police had probably failed to find all the bits. The house was, not surprisingly, difficult to re-sell.

"Is Seller liable to Buyer? No. English contract law adheres to perhaps the strictest limitation in the world on the duty to disclose; and although the buyer had given a questionnaire to the seller, no question in it had been apt to refer to whether it was a charnel house rather than a family house."

The case is Sykes v Taylor-Rose [2004] EWCA Civ 299; [2004] 2 P. & C.R. 30.  The sellers answered "No" to the question asking for "Any other information which you think the buyer might have a right to know?"

The house (above left) is at 16 Stillwell Drive, Sandal, Wakefield, WF2 6RL.  And it's apparently for sale.

FGS

December 2, 2010 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 1, 2010

Today in History: December 2

1409 – Frederick, Elector of Saxony, opens the University of Leipzig. One of its first four faculties is a law school, today one of Europe's oldest.

1763 – At Newport, Rhode Island, the Touro Synagogue is dedicated. It is today the oldest synagogue in North America.

A 1775 – Lieutenant John Paul Jones hoists the Grand Union Flag—the first national flag of the United States—aboard the USS Alfred. As befits the first nation largely founded by business corporations, the flag is based on that of the British East India Company.

1804 – Corsican artillery officer Napoleon Buonaparte, the son of a small-town lawyer, crowns himself Emperor of the French at the Cathedral of Notre Dame in Paris.

1859 – Abolitionist John Brown is hanged for treason at Charles Town in what is now West Virginia. On the day of his death, he writes,"I, John Brown, am now quite certain that the crimes of this guilty land will never be purged away but with blood."

1927 – After 19 years of manufacturing the Model T, Ford Motor Co.—facing heavy competition from companies offering more modern vehicles—announces plans for a new car it will call the Model A.

1930 – Future Nobel Prize economist Gary Stanley Becker is born at Pottsville, Pennsylvania.

1961 – Cuban caudillo Fidel Castro declares that he is a Marxist-Leninist and that Cuba is going to adopt Communism. He will go on to turn the island into a workers’ paradise with a vibrant economy and great respect for human rights..

2001 – After being named "America’s Most Innovative Company" five times by Fortune magazine, Enron Corp. files for Chapter 11 bankruptcy.

FGS

December 1, 2010 in Today in History | Permalink | Comments (0) | TrackBack (0)

Handling disruptive students?

Over at TaxProf, Paul Caron links to an article raising the question, "Should faculty members walk out of the class if students are too busy texting to pay attention?"  Steve Banbridge at his Professor Bainbridge blog has an interesting discussion going on about that topic in the comments.

I've never had problems even remotely similar to those in the article, but I find it hard to believe that walking out is a sensible solution.  Unless the weather's really good and the fish are biting.

FGS via Instapundit

December 1, 2010 in Teaching | Permalink | Comments (1) | TrackBack (0)

Reopening breach of K verdict for fraud

Over at the Volokh Conspiracy, an interesting breach of contract case involving bad faith on one side and fraud on the other.  The legal issues are more procedural than factual, but it's a pretty good story.

FGS

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

Is the euro dead?

Europe's economies seem to be doing one of those elaborate falling-dominoes thing, and the EU's currency is dropping against the dollar -- which given the dollar's recent doldrums is pretty amazing.

Over at The Atlantic, America's Tallest Female Econo-BloggerTM  takes a look at the question.  Her take?  Not quite yet.  But, says Megan McArdle, it's beginning to look a lot like it migiht be "pining for the fjords."  And we can't resist a Monty Python reference.  Viz:

FGS.

December 1, 2010 | Permalink | TrackBack (0)

Wilkes v. Springside Nursing Home: The images

Courtesy of Eric Gouvin (Western New England) we're delighted to publish some of the images of the case he collected as part of his recent (and highly enjoyable) conference on that staple of Business Associations casebooks, Wilkes v. Springside Nursing Home.  We'll be publishing one a day.  Enjoy!

Here's the Springside Nursing Home before renovations.

 Wilkes-Springside Future

FGS

December 1, 2010 in Famous Cases | Permalink | TrackBack (0)

Exxon-Mobil: How to do a deal right?

1908RandallCountyCourthouseCanyonTexas907TJnsn Yesterday in our "Today in History" feature we noted that November 30 was the anniversary of the 1999 merger between Exxon and Mobil, the largest in history.  Today is the anniversary of the deal's public announcement.

There were lots of naysayers (like me) at the time.  But over at the Wall Street Journal blog, Gregory Corcoran takes a look back at the very controversial merger, and rates it as one of the most successful ever -- the "archetype of a successful deal."  He makes a pretty good case.

FGS

December 1, 2010 in Commentary, Today in History | Permalink | Comments (0) | TrackBack (0)

New edition of Blum's Examples & Explanations

1908RandallCountyCourthouseCanyonTexas907TJnsn Our beloved Official Blog Sponsor, Aspen Publishing/Wolters Kluwer Law & Business -- may good fortune always shine on them --  is out with a new edition of (IMO) one of the best student study aids, Examples & Explanations: Contracts by Brian Blum (Lewis & Clark) (left).   Here's the book blurb:

A thorough overview of Contracts, the fifth edition of this popular E&E for Brian Blum’s extraordinarily lucid explanations of complex concepts. The Fifth Edition of Examples & Explanations: Contracts, builds on the framework established in earlier editions by providing an accessible, comprehensive treatment of the first-year contracts syllabus, written especially for students and designed to provide them with information, examples, and analysis of appropriate complexity and detail. In the fifth edition, the coverage of contracting through standard forms and electronic means is expanded, and new notes offer an international perspective on contract law.

Thoroughly updated in its Fifth Edition, Examples & Explanations: Contracts features:

  • the proven-effective Examples & Explanations format that combines explanatory text with hypothetical problems and answers
  • a well-organized arrangement of topics that links the themes in each chapter so that students can see the interaction between different topics studied in the course informal and lucid text that articulates basic assumptions, explains the transactional context, and defines terminology
  • sufficiently complex examples—many based on actual cases —that allow the reader to explore topics in depth
  • flow charts and diagrams that illustrate key points and reinforce memory
  • coverage of UCC Article 2 throughout the book
  • expanded coverage of standard form contracts and contemporary forms of contracting via electronic communications and on the Internet
  • new notes throughout the book that give student a perspective on how the rules of contract law may differ in other countries

A gifted teacher and author, Brian Blum clarifies the principles, goals, policies, and legal rules of Contracts. The Examples & Explanations pedagogy gives the reader practice interpreting the contracts and applying the rules and principles to factual situations.

If you haven't got a copy, check with your Aspen rep.  Tell 'em you heard about it on ContractsProf.  No, you won't get any extra benefit, but we here at the blog, as loyal members of the Law Professors Blog Network, always try to do our best to suck up to our sponsors keep our sponsors happy..

FGS

 

 

December 1, 2010 in Books, Teaching | Permalink | Comments (0) | TrackBack (0)