ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, January 7, 2011

Melanie Thernstrom on Surrogacy in the New York Times Magazine

Oocyte_granulosa_cellsTwo years ago, we posted about a New York Times Magazine article by Alex Kuczynski in which she recounts her experience as the mother of a child born through the use of a surrogate mother.  That article was problematic for reasons touched on in the previous post, which mostly focused on the criticisms directed at people who enter into surrogacy contracts and ended with the following plea: "Rather than simply bashing people who enter into surrogacy contracts, let's talk about the implications of the options."

The New York Times Magazine has now published Melanie Thernstrom's essay, "My Futuristic Insta-Family,"  aka "Meet the Twiblings" in the online version, which does precisely that.  In the article, Thernstrom briefly recounts her experience with infertility treatments and then describes how she and her husband decided to have two children using two different surrogate mothers.  Thernstrom's "Twiblings" were born five days apart.

For those interested in the topic, I recommend reading the article, because I cannot do it justice in a blog post.  What amazes me about Thernstrom's piece is that she manages to raise just about every issue relating to surrogacy contracts -- legal issues, moral issues, socio-economic issues, political issues, linguistic issues -- and she has something interesting to say about each one, but she does not try to provide satisfactory solutions to any of them.  She acknowledges that this stuff is messy and personal and that we lack the ability right now to figure a way out of the mess that satisfies all interested parties.  Such is life.  We muddle through.  

She also writes so well that I will not try to paraphrase her.  Rather here are some choice quotations that struck me as especially appropriate for this blog:

The legal status of surrogacy is varied. In a number of states, the status is unclear or surrogacy is prohibited. There were several cases of surrogacy in recent years in which the surrogate succeeded in keeping the baby despite an absence of any genetic connection. 

There are objections to it on the right, on religious grounds, as violating the natural order and the trinity of father-mother-baby, or as being part of a slippery slope that would lead to abominations like human cloning. There are objections on the left by those who say that surrogacy is exploitative and degrading for the women, irrespective of what the women who become surrogates say about it. (Some people believe only paid surrogacy is exploitative but unpaid surrogacy is fine.)

The role of a gestational carrier’s husband is, in some ways, more difficult than that of the carrier herself. The husband is, as Fie puts it, “a bystander to a miracle,” who partakes in the inconvenience of his wife’s pregnancy but has fewer emotional rewards (as well as the occasional negative reaction from a stranger whose congratulations for a new chip off the old block can turn to disapproval).

A childless friend of mine compared surrogacy to prostitution, saying that she personally would prefer to be a prostitute. 

We wanted to pay, because it made the relationship feel more reciprocal. There was one woman who responded to my surrogacy listing who said she didn’t want any financial compensation. . . . “That’s our contribution,” I said, flummoxed — “one of the things we can give back.” 

Third-party reproduction creates all kinds of relationships for which there are not yet terms. For example, there is no word to describe the relationship between our children and the carriers’ children, but it feels to me that they are, somehow, related. 

There is also no word to describe our children’s relationship with each other. 

 Not surprisingly, not every reader reacted positively to Thernstrom's article.  She responds to her critics here.


January 7, 2011 in In the News, True Contracts | Permalink | Comments (0) | TrackBack (0)

Thursday, January 6, 2011

AALS Meeting Affected By Labor Dispute

AALS As many readers of this blog already know, many of us are currently in San Francisco attending the annual meeting of our bricks and mortar mother ship, the Association of American Law Schools.  That meeting has been the subject of some controversy this year, as its official home is San Francisco's Hilton Union Square Hotel, which has been the subject of a union-organized boycott for over a year now.  

Unfortunately, this is not the sort of situation that lends itself to neutrality.  The workers are encouraging consumers to boycott the affected hotels rather than striking.  Consumers thus choose whether to side with management or with the union by booking at the Hilton or booking elsewhere.  And the union faces a challenge because without a strike and picket lines, boycotted hotels look pretty much like other hotels.  You would not know when you walked by or entered the hotel that it is the subject of a labor dispute.  Information about the boycott can be found here.

The AALS is caught in the middle, as it made its contractual  commitment to the Hilton long before the boycott began and apparently could not back out without incurring very high costs.  The AALS's leadership set forth their reasoning for not cancelling or relocating here.  Subsequently, the vast majority of section organizers determined that their sessions will be held elsewhere, including two very exciting sessions organized by the Contracts section, as detailed in Keith's post below.  I believe that our other regular bloggers will be in attendance, and we would all welcome the opportunity to meet with our readers and discuss ways to improve the blog.



January 6, 2011 in Conferences, Current Affairs, Labor Contracts | Permalink | TrackBack (0)

Wednesday, January 5, 2011

Update on Madoff Mutual Mistake Case: NY Appellate Division Reverses

We've been following the Madoff mutual mistake case -- that is, the lawsuit (also previously mentioned here and here) 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." 

The trial court had dismissed the complaint in its entirety.  Yesterday, over a two-judge dissent, the Appellate Division reversed, mainly on the reasoning that a motion to dismiss must accept the allegations of the complaint as true.  The majority wrote:

Plaintiff pleads mutual mistake with the requisite particularity (see CPLR 3016(b); Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486, 491 [2008]), and the amended complaint states a cause of action for reformation based on mutual mistake (see e.g. Banker v Banker, 56 AD3d 1105 [2008]; House v Wechsler, 104 App Div 124 [1905]). Contrary to defendant's contention, mutual mistake can be based on a statement by a third party (see e.g. D'Antoni v Goff, 52 AD2d 973 [1976]; House, 104 App Div at 127). The cases cited by defendant where claims were dismissed pursuant to CPLR 3211(a)(5) did not involve mutual mistake.

The documentary evidence proffered by defendant (see CPLR 3211(a)(1)) does not utterly refute plaintiff's factual allegations or conclusively establish a defense as a matter of law (see e.g. McCully v Jersey Partners, Inc., 60 AD3d 562 [2009]). With respect to the branch of defendant's motion based upon CPLR 3211(a)(7), even though defendant submitted documents, "dismissal should not eventuate" unless she shows that a material fact alleged by plaintiff "is not a fact at all and unless it can be said that no significant dispute exists regarding it" (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Such is not the case here.

The motion court and the dissent both err in relying on the claim - which was not in defendant's affidavit - that, for several years after the parties' agreement, plaintiff could have redeemed what the parties believed to be their account for cash in excess of its supposed value as of the cut-off date selected by the parties (see e.g. Rovello v Orofino Realty Co., 40 NY2d 633, 636 [1976]). Both the motion court and the dissent also err by resolving a fact - the assumption on which the parties relied in dividing their property - in defendant's favor on a motion to 
dismiss (see Viskovich v Walsh-Fuller-Slattery, 16 AD2d 67 [1962], aff'd 13 NY2d 1100 [1963] [trial was held when the plaintiff alleged that state of facts assumed to exist at time of the parties' agreement did not, in fact, exist]).

Indeed, the dissent speculates as to plaintiff's expectations that the "Madoff account [. . .] continue its highly profitable performance" and asserts "[a]ccordingly, he alone took on the risk that he might not be able to recoup his investment" citing Reiss v Financial Performance Corp. (97 NY2d 195, 201 [2001]).

A couple of observations are in order: First, in the context of a CPLR 3211 motion, plaintiff's motivations as alleged by defendant are irrelevant because the allegations in the amended complaint must be accepted as true. Second, Reiss is a declaratory injunction action concerning a stock swap; no allegation of mutual mistake is present.

Further, even though there is an express contract between the parties, it is unclear whether it covers the current dispute; therefore, plaintiff may plead unjust enrichment (see e.g. IIG Capital LLC v Archipelago, L.L.C., 36 AD3d 401, 405 [2007]), and the amended complaint states such a cause of action (see Simonds v Simonds, 45 NY2d 233, 242 [1978]).

Finally, defendant and the dissent ignore the allegations of mutual mistake as to the actual existence of the account itself. Both defendant and the dissent attempt to foreclose plaintiff's claims by transmogrifying the claim of mutual mistake into a claim of mistake in valuation. [*3]

The dissent states: "[a]t the time of the agreement, Steven had an account in his name with [Madoff]." Untrue. Steven never had an account in his name with Madoff; on Madoff's own admission there were no accounts within which trades were made on behalf of investors.

The dissent then states, "Steven liquidated part of the account to fund his payments to Laura." Untrue. In Madoff's Ponzi scheme what appeared to Steven and Laura to be a partial liquidation of an account was simply a payment to Steven that came from funds deposited by a more recent "investor" in what the "investor" believed was his own account.

The dissent further observes, "[Steven] did not liquidate the rest of the Madoff account . . . and he continued to invest in it." Untrue. There was no account which could be liquidated, as became apparent when Madoff received $7 billion worth of "liquidation" calls from investors in 2008. Nor was Steven "investing" in an account; his further contributions went directly to pay other "investors" in the scheme.

Read the entire decision and dissent here.  There is a roundup of coverage over at Above the Law.

Simkin v. Blank, 2011 NY Slip Op 00001 (App. Div. 1st Dep't Jan. 4, 2011).

[Meredith R. Miller]

January 5, 2011 | Permalink | Comments (0) | TrackBack (0)

Contract Issues in True Grit

Here is a trailer for the Coen Brothers' True Grit


I expected to love this Coen Brothers' film, as I love most of their work, but I did not expect that the first half hour of the film would consist of a series of contracts law hypotheticals and repeated threats by the young protagonist, Mattie Ross, to "go to the law."  

I'm afraid I would have to consult the screenplay -- which I do not have -- if I were to do justice to the issues raised, but the short summary is as follows:

Mattie's murdered father purchased two ponies from a dealer just before he was killed by the villanous Tom Chaney (played in this version by the IMHO too good-looking Josh Brolin).  Mattie returns to the dealer for a refund of her money plus various other amounts she claims she is due.  At some point, she also threatens the dealer with a writ of replevin, a phrase I was delighted to hear issuing from the mouth of the young Hailee Steinfeld, who is absolutely fabulous as Mattie.  I think the writ had to do with her claim to her father's saddle.  The dispute is settled out of court and Mattie somehow rides off with one of the ponies and enough cash to finance the remainder of the plot. 

Additional disputes arise when Mattie advanced $50 to Rooster Cogburn (played in this version by Jeff Bridges) who had promised to take her along on the hunt for Tom Chaney but then had left for the Choctaw Territory without her.  That contractual dispute was settled in the Choctaw Territory.  I understand that the Mattie of Charles Portis' novel is wont to quote scripture; the Coen Brother's Mattie seems to have focused more on the law, as is evident when she explains to the baffled Rooster the difference between malum prohibitum and malum in se.  Her knowledge of Latin endears her to Matt Damon's Laboeuf.  By the way, Damon's ability to morph from action hero to the buffoonish LaBoeuf, with a brief interlude playing Sarah Silverman's lover, really demonstrates what a complete actor he has become.

The film has other elements to recommend it, but one could certainly enjoy it just for the legal environment that it either captures or creates.


January 5, 2011 in Commentary, Film | Permalink | TrackBack (0)

Tuesday, January 4, 2011

Weekly Top Tens from the Social Science Research Network

SSRN RECENT HITS (for all papers announced in the last 60 days)

October 31, 2010 to December 30, 2010

TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 


Rank Downloads Paper Title
1 201 Party Autonomy in Rome I and IΙ from a Comparative Perspective
Symeon C. Symeonides,
Willamette University - College of Law,
Date posted to database: October 25, 2010
Last Revised: October 26, 2010
2 194 Suing the Government as a 'Joint Employer' - Evolving Pathologies of the Blended Workforce
Steven L. Schooner, Collin D. Swan,
George Washington University - Law School, George Washington University - Law School,
Date posted to database: October 21, 2010
Last Revised: November 16, 2010
3 193 The Gold Clause Cases and Constitutional Necessity
Gerard N. Magliocca,
Indiana University School of Law - Indianapolis,
Date posted to database: November 17, 2010
Last Revised: November 21, 2010
4 157 Divided Loyalties: The Attorney’s Role in Bankruptcy Reaffirmations
Gregory M. Duhl,
William Mitchell College of Law,
Date posted to database: November 17, 2010
Last Revised: November 17, 2010
5 148 The Regulation of Surrogate Motherhood in Greece
Aristides N. Hatzis,
University of Athens - Department of Philosophy & History of Science,
Date posted to database: October 10, 2010
Last Revised: October 10, 2010
6 148 Access or Expectation: The Test for Fiduciary Accountability
Robert Flannigan,
University of Saskatchewan,
Date posted to database: October 29, 2010
Last Revised: December 17, 2010
7 137 When Do Fiduciary Duties Arise?
James J. Edelman,
University of Oxford - Faculty of Law,
Date posted to database: October 26, 2010
Last Revised: November 13, 2010
8 126 Contract, Uncertainty and Innovation
Ronald J. Gilson, Charles F. Sabel, Robert E. Scott,
Stanford Law School, Columbia University - Law School, Columbia University - Law School,
Date posted to database: November 20, 2010
Last Revised: December 3, 2010
9 98 Does Disclosure Matter?
Florencia Marotta-Wurgler,
New York University (NYU) - School of Law,
Date posted to database: November 24, 2010
Last Revised: December 7, 2010
10 96 Structure and Reform of Corporate Governance in the United Kingdom in Relation to the Shareholder Versus the Stakeholder Theory
Rohit Arora,
Unaffiliated Authors - affiliation not provided to SSRN,
Date posted to database: September 29, 2010
Last Revised: September 29, 2010


RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)

October 31, 2010 to December 30, 2010

Rank Downloads Paper Title
1 91 Strategic Default: The Popularization of a Debate Among Contract Scholars
Meredith R. Miller,
Touro College - Jacob D. Fuchsberg Law Center,
Date posted to database: October 3, 2010
Last Revised: November 17, 2010
2 87 The English vs. The American Rule on Attorneys Fees: An Empirical Study of Attorney Fee Clauses in Publicly-Held Companies’ Contracts
Theodore Eisenberg, Geoffrey P. Miller,
Cornell University - School of Law, New York University (NYU) - School of Law,
Date posted to database: November 11, 2010
Last Revised: November 15, 2010
3 55 An Optional Instrument on EU Contract Law: Could it Increase Legal Certainty and Foster Cross-Border Trade?
Martijn W. Hesselink,
University of Amsterdam - Centre for the Study of European Contract Law (CSECL),
Date posted to database: October 23, 2010
Last Revised: December 15, 2010
4 49 An Optional Contract Law for Europe? (Rote Karte oder grünes Licht für den Blue Button) (German)
Walter Doralt,
Max Planck Institute for Comparative and International Private Law,
Date posted to database: November 11, 2010
Last Revised: November 11, 2010
5 38 Rudolf Von Jhering’s Influence on Karl Llewellyn
Robert Whitman, Julie E. Wynns,
University of Connecticut School of Law, Unaffiliated Authors - affiliation not provided to SSRN,
Date posted to database: October 1, 2010
Last Revised: October 1, 2010
6 36 How Organisational and Structural Weaknesses Impacted the Harmonisation Process and What it Implies for European Private Law (Strukturelle Schwächen in der Europäisierung des Privatrechts – Eine Prozessanalyse der jüngeren Entwicklungen) (German)
Walter Doralt,
Max Planck Institute for Comparative and International Private Law,
Date posted to database: November 11, 2010
Last Revised: November 11, 2010
7 35 The Double Soul of Promissory Estoppel - A Comparative View
Paolo Pardolesi,
Università degli Studi di Bari - Faculty of Law,
Date posted to database: November 5, 2010
Last Revised: December 8, 2010
8 26 Arbitration's Suspect Status
Hiro N. Aragaki,
Fordham University - Fordham University Schools of Business,
Date posted to database: November 29, 2010
Last Revised: December 28, 2010
9 20 Autonomy and Paternalism from a Common Law Perspective: Setting Aside Disadvantageous Transactions
Stephen Michael Waddams,
University of Toronto - Faculty of Law,
Date posted to database: October 25, 2010
Last Revised: October 25, 2010
10 18 Fannie Mae/Freddie Mac Home Mortgage Documents Interpreted as Nonrecourse Debt (with Poetic Comments Lifted from Carl Sandburg)
John Mixon,
University of Houston - Law Center,
Date posted to database: November 19, 2010
Last Revised: November 19, 2010



January 4, 2011 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

American Airlines Wins Favorable Ruling in Fight with Orbitz

Last week, Judge Martin Agran of the Cook County Circuit Court issued a ruling in Travelport, LP v. American Airlines, Inc. Case No. 10 CH 48028.  Unfortunately, I have been unable to find the opinion on the web, so I am relying on other reports that I have found on the web.  As reported in The Mercury here, American threatened to pull its flights from Orbitz's site on December 1st as a result of a dispute over American's attempts to provide information about its flights directly to Orbitz and thus to cut out middlemen known as global distribution systems which track the airlines and provide the information to travel sites such as Orbitz.  While Travelport, which owns 48% of Orbitz was initially granted an injunction forcing American to continue posting its flights on the travel site, Judge Agran now has ruled that no injunction is necessary, as American can simply pay damages if it is found to have breached its contract with Orbitz.

American Airlines Apparently, under the current system, airlines such as American have to pay a fee to Orbitz when its customers book a flight with the airlines and also to the global distribution systems, which make flight information available.  As anyone who has paid to check a bag, or to have legroom or to have a snack or a drink on an American Airlines flight known, American prefers to charge money rather than spend it.  So it is now proposing to provide its own flight information and have Orbitz pay for access to that information.  Travel industry experts claim that cutting out the middlemen will make it harder for consumers to comparison shop and will create confusion.  

I checked on December 30th, and Orbitz does not seem to be offering flights on American Airlines right now. The short-term effect of Judge Agran's decision will thus make matters a bit more difficult for consumers.  The website reports that the Business Travel Coalition is unhappy with the ruling for that reason.  eTurboNews provides a quotation from BTC Chairman Kevin Mitchell here:

The stakes in this conflict are clear: either an improved airline industry and distribution marketplace centered around the consumer, or one that subordinates consumer interests to the self-serving motivations of individual airlines endeavoring to impose their wills on consumers and the other participants in the travel industry.  Single-supplier direct connect proposals, like the one advanced by American Airlines, can cause massive fragmentation of airfares and ancillary fees depriving consumers of the ability to compare the total cost of air travel options across all airlines.

The same article provides survey results indicating business travel managers' hostility to American's new strategy.  It appears that American is trying to learn from its more efficient rival, Southwest, which already has its own information distribution system.  

For reasons unexplored in the articles I found, American's flights are listed on Expedia.  In order to book with Southwest, you have to go to their website,  And that may be the future for American as well.


Update: The New York Times, frustrated at having been scooped once again by this blog, has now published a full report with more information.  Among other things, the report notes that American has taken down its flights from as well now.  It looks as though Delta might follow American's lead.  The Times report is also the clearest I have thus far found about what is motivating this move, beyond the general observation that the big airlines are looking for ways to cut costs and increase revenues.

January 4, 2011 in E-commerce, Recent Cases, Travel | Permalink | Comments (0) | TrackBack (0)