ContractsProf Blog

A Desperate Times Calls for Desperate Measures

We at the blog often link to stories that we find in The New York Times.  Why?  Because it's the paper of record, because it's comprehensive and reliable, and most of all, because it's free.  Well, it was free.  As the Old Grey Lady announced today, the Times now will allow non-subscribers to read twenty stories a month.  After that, if you want to continue to access the Times's content, you have to pay $15/month to become a "digital subscriber."

Why is the Times doing this when, as the Times's publisher, Arthur Sulzberger Jr. acknowledged, it has long been almost an article of faith that "people would not pay for the content they accessed via the Web"?  It appears that financial pressures are forcing the Times to find new ways to generate revenue.  As the Times reports:

“This is practically a do-or-die year,” said Ken Doctor, an analyst who studies the economics of the newspaper business. “The financial pressures on newspapers is steady or increasing. They’re in an industry that is still receding. Newspapers are trying to pay down their debt, but they have fewer resources to do it.”

The debate consuming the newspaper business now centers on the question that The Times hopes to answer: Can you reverse 15 years of consumer behavior and build a business around online subscriptions?

Not all visits to the Times's website will count towards the monthly twenty-visit limit.  If you get to a Times story via a search engine or a social networking site, you get a free pass, but only five free passes a day are allowed.  The Times, in an odd lapse in its comprehensive coverage, does not mention whether or not clicking on a link to the Times posted on the ContractsProf Blog counts.

Of course, if you are not inclined to keep a pad next to your computer so that you can keep track of your monthly visits, you can always just subscribe to the newspaper, which entitles you to unlimited access to the website.  Otherwise, the $15/month fee is not too pricey.  It's the cost of two lunches at McDonald's.  How do we arrive at that figure?  Simple.  We read it in The New York Times.

[JT]

The Future of Television Is Netflix

Netflix's strategy is like that of the wise player in the board game Risk, who starts in Australia and patiently builds armies while the super powers fight amongst themselves.  For those of you who think we have just exceeded the acceptable nerd quotient by: 1) blogging; 2) about contracts; and 3) mentioning a board game (at least it's not D&D), here is a clip to illustrate the effects of such a noiseless-patient-spider approach:   

According to the New York Times, Netflix has gradually developed its assets so that it can compete with traditional TV networks like HBO and AMC and shift from “a DVD-by-mail service to an online library of films and TV programs.” Up until now, Netflix has focused on acquiring the rights to concurrent access to several network TV shows.

This all might change soon, however, as The Atlantic reports that Netflix is the lead bidder to purchase the exclusive rights to House of Cards, a new marquee television series created by Kevin Spacey and David Fincher.  Not only would this deal signal the beginning of Netflix’s foray into original programming, but it is significant due to the potential terms of the contract as well. Netflix has offered $100 million upfront for two full seasons, each with 13 episodes. Such a bold commitment has never been done before for a TV drama, and if the bid is accepted, according to New York Magazine it could “upend the way television deals are made…” just like an angry Ukrainian can upend a Risk game.

Many analysts are calling the move a necessary step for Netflix to stay competitive with rivals coming from all sides. Nellie Adreeeva of Deadline.com points out that Netflix has been under great pressure as of late from various challengers in the streaming movie market, like HBO, Amazon.com, and even Facebook. Original content would differentiate Netflix from its rivals and branch out into a new customer base.

Some are skeptical, however. the Atlantic's Megan McArdle highlights some of the drawbacks and risks. While Netflix may have dominated the DVD rental market, pinpointing the next hit TV show requires an entirely different skill set, one that Netflix has not demonstrated thus far. Netflix could not expect that many people would subscribe to Netflix's service, if they haven’t already, in order to get access to a single program.  Netflix thus likely will have to make significant investments in several original programs before it starts to see real returns from this kind of investment, which heightens the risk inherent in branching out.

Regardless, if Netflix wins the contract for the rights to House of Cards, it could herald a major shift in the way TV programming contracts are negotiated and transform Netflix into a major competitor for traditional TV networks. 

[Jon Kohlscheen & JT]

Gottfried Gottfired Because Ducks Shouldn't Tweet

Gilbert Gottfried, pictured at left, is a comedian, but he is probably best known for providing the voice of that delightful duck in those Aflac commercials.  Who knew insurance companies could be so charming?!?  On the right, we have a picture of a duck, but this duck is not the actual Aflac duck, as far was we know.

The New York Times reported this week that Aflac has fired its spokesduck -- or at least its voice -- on the ground that Mr. Gottfried posted some insensitive jokes on his Twitter account about the earthquake and tsunami that have had devastating effects in Japan.  Aflac did not find Mr. Gottfried's jokes funny -- his jokes rarely are -- but the company found these particular jokes especially unfunny, given that Aflac derives 75% of its revenue from the Japanese market, according to the Times.  Friends of the blog will not be surprised to learn that, in canning Gottried effective immediately, Aflac invoked a morals clause, according to the Times.  These clauses raise no end of interesting issues.  I mean, is it really credible for Aflac to claim that it is shocked, shocked to learn that Gottfried posted tasteless jokes on his Twitter page?  What else does Gottfried post?

Interestingly enough, the same week, Cappie Pondexter, a member of the WNBA's New York Liberty team, made a series of posts on her Twitter page reasonably construed to indicate that Pondexter believed that the Japanese deserve whatever happened to them.  As reported in the New York Times as well, the Liberty and the WNBA seem to have elected not to discipline Pondexter for her tweets.  Pondexter has apologized and both the league and her team seem to think the apology suffices.  Safe to say that Japan does not account for 75% of the WNBA's market.  

[JT]

 

New in Print

Stephen F. Befort, Unilateral Alteration of Public Sector Collective Bargaining Agreements and the Contract Clause, 59 Buff. L. Rev. 1 (2011)

William P. Johnson, Understanding Exclusion of the CISG: A New Paradigm of Determining Party Intent,59 Buff. L. Rev. 213 (2011)

Samuel V. Jones, The Moral Plausibility of Contract: Using the Covenant of Good Faith to Prevent Resident Physician Fatigue-Related Medical Errors, 48 U. Louisville L. Rev. 265 (2009)

Alison Stanger, One Nation Under Contract: The Outsourcing of American Power and the Future of Foreign Policy (Yale U. Press 2009)

We mention Alison Stanger's book not because it is especially new but because she was just on The Daily Show talking contracts! [hat tip to Steven Schooner and the Government Contracts at GW Law Facebook Page].

 

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Allison Stanger
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

 [JT]

Lady Gaga and Target to Part Ways?

 In what we expect will be the second (here's the first) in a steady stream of posts relating to Lady Gaga's contractual exploits (Sorry, Charlie, you will be upstaged), we are please to announce that  Rolling Stone reports that Lady Gaga and Target have apparently parted ways.  Tensions have arisen only about a month into a deal that was to give Target an exclusive license to sell the deluxe edition of Lady Gaga’s new album Born This Way.  The timeline of the conflict is a bit confusing.  Apparently, Lady Gaga's contract with the big box store included a clause that Target was to increase support of LGBT charity groups. 

Lady Gaga is (now?) upset with Target because last election season (i.e., well before Lady Gaga entered into a contractual relationship with the company) Target gave $150,000 to MN Forward- a Minnesota advocacy group that backed Tom Emmer in his losing run for governor of Minnesota. Tom Emmer is decidedly pro-life and anti gay marriage, as evidenced by his promotion of a state constitutional amendment to ban gay marriage and contributions to a Christian Rock organization that promotes violence against homosexuals.

Lady Gaga knew about Target's support for MN-Forward before entering the agreement.  She told Billboard last month she was not “comfortable” with the arrangement from the beginning but was trying to use this agreement to turn Target around and push them into making amends for their past wrongdoing. So why bring this up after Target has already given away free MP3s of her latest single?  As of now, Target is still pre-selling the album, which is to release in May.  Given those facts, it's not clear how Lady Gaga is going to be able to back out of the deal, unless of course she just goes back into her egg. 

[Katherine Freeman and JT]

Weekly Top Tens from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 
January 13, 2011 to March 14, 2011

Rank	Downloads	Paper Title
1	504	Choice of Law in the American Courts in 2010: Twenty-Fourth Annual Survey  Symeon C. Symeonides,
2	222	Policy Options for Progress Towards a European Contract Law: Comments on the Issues Raised in the Green Paper from the Commission of 1 July 2010, COM (2010) 348 Final  Jürgen Basedow, Gregor Christandl, Walter Doralt, Matteo Fornasier, Martin Illmer,Jens Kleinschmidt, Sebastian A.E. Martens, Hannes Rösler, Jan Peter Schmidt,Reinhard Zimmermann,
3	204	The Role of Securitization in Mortgage Renegotiation  Sumit Agarwal, Gene Amromin, Itzhak Ben-David, Souphala Chomsisengphet,Douglas D. Evanoff,
4	133	Emerging Policy and Practice Issues (2010)  Steven L. Schooner, David J. Berteau,
5	130	American Indian Tribal Law  Matthew L. M. Fletcher,
6	120	Metaphor, Models, and Meaning in Contract Law  Jeffrey M. Lipshaw,
7	111	Contract as Convention  F. H. Buckley,  George Mason Univers
8	106	The Regulation of Reputational Information  Eric Goldman,
9	106	When Money Grew on Trees: The Untold Story of Lucy v. Zehmer  Barak D. Richman, Dennis Schmelzer,
10	92	A New Legal Theory to Test Executive Pay: Contractual Unconscionability  Lawrence A. Cunningham,

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
January 14, 2011 to March 15, 2011

Rank	Downloads	Paper Title
1	111	Contract as Convention  F. H. Buckley,
2	107	When Money Grew on Trees: The Untold Story of Lucy v. Zehmer  Barak D. Richman, Dennis Schmelzer,
3	92	A New Legal Theory to Test Executive Pay: Contractual Unconscionability  Lawrence A. Cunningham,
4	82	Exit and the American Illness  Erin A. O'Hara, Larry E. Ribstein,
5	68	Legal Process and the Discovery of Better Policies for Fostering Innovation and Growth  Henry N. Butler, Larry E. Ribstein,
6	59	Contracts: Law in Action, Volume I: The Introductory Course – Introduction (Chapter 1)  Stewart Macaulay, Jean Braucher, John A. Kidwell, William C. Whitford,
7	45	Five Political Ideas of European Contract Law  Martijn W. Hesselink,
8	42	Privatizing the Adjudication of International Commercial Disputes: The Relevance of Organizational Form  Kevin E. Davis,
9	41	Contracting in China: Comparative Observations on Freedom of Contract, Contract Formation, Battle of Forms and Standard Form Contracts  Nicole Kornet, Nicole Kornet,
10	34	Afterthoughts: International Commercial Contracts and Arbitration  Luke R. Nottage,

[JT]

Nice Hypo from the World of Art Law

As reported in the New York Times, one day, art collector Charles Cowles thought to himself, "Hey I could use some money."  So, he decided to see Mark Tansey's 1981 painting, "The Innocent Eye Test," in which a cow gazes at a painting of a two cows.  Monaco-based British collector Robert Wylde purchased the painting for $2.5 million through the Gagosian Gallery.  For that price, Mr. Wylde thought he had purchased a 100% interest in the painting.  Apparently, Mr. Tansey forgot to mention that the Metropolitan Museum of Art already owned a 31% interest in the painting.  Oops.  Now Mr. Wylde is suing the Gagosian Gallery.

By the way, we are envious of the first comment from "Freddie" in the Times link.  "Heifer cow is better than not having any part of one."  That's rich!  And Mr. Cowles is now Cowless!  Brilliant!

Freddie notes that that the case is reminiscent of "one of those nutty issue spotter exams we'd get in law school."  Now there my friend, you have gone too far.  If this were an issue-spotter exam, we would add the following twist: Mr. Tansey was willing to sell the painting of the cow in part because he thought it was a barren painting.  Mr. Wylde discovered shortly after the purchase that the painting was not only fertile but was with calf.  Mr. Tansey sought to void the sale based on the doctrine of mutual mistake.  

[JT]

Move Over Tiger Mother...

Here's the story from the Daily News:

A Manhattan mom is suing a $19,000-a-year preschool, claiming it jeopardized her daughter's chances of getting into an elite private school because she had to slum with younger kids.

Nicole Imprescia yanked 4-year-old Lucia from the York Avenue Preschool last fall, angry the tyke was stuck learning about shapes and colors with tots half her age - when she should have been prepping for a standardized test.

"This is about a theft where a business advertises as one thing and is actually another," said Mathew Paulose, a lawyer for the mom.

"They're nabbing $19,000 and making a run for it."

Impressed by the school's pledge to ready its young students for the ERB - a test used for admission at top private elementary schools - Imprescia enrolled her daughter at York in 2009.

A month into this school year, she transferred the child out of the upper East Side center because she had been lumped in with 2-year-olds.

"Indeed, the school proved not to be a school at all, but just one big playroom," the suit says.

Imprescia's court papers suggest the school may have damaged Lucia's chances of getting into a top college, citing an article that identifies preschools as the first step to "the Ivy League."

* * *

York's owner, Michael Branciforte, declined comment on the suit, which seeks a refund and class action-status on behalf of similarly wronged toddlers.

On its website, York Avenue Preschool touts its music and physical education programs, weekly library trips and French classes for four-year-olds.

"Our goal is to reach each child and work with them towards their 'next steps,'" the site says.

Its claim of offering age-specific learning environments is a "complete fraud," Imprescia charged.

Sounds like Imprescia is seeking rescission of the contract based upon fraud.  If there is no fraud or misrepresentation, query whether the preschool is even in breach (what is an "age-specific learning environment"?).  If the school is in breach, the story provides a nice example of the limitations on contract damages.  Imprescia might get a refund for the remainder of the year, but she's not going to be compensated for her 4-year-old daughter's lost chance at admission to Harvard.... and all the attendant shame and suffering.

[Meredith R. Miller]

Killing Two Birds With One e-Bay: Boyfriends, Buyers Beware.

Reading about yet another disciplinary use of eBay, a mad girlfriend who ebayed her cheating boyfriend’s things provides food for thought about contractual expectations in relationships. 

A relationship, in pseudo contractual terms, is the interaction of two persons who, because of mutually agreeable expectations, have chosen to spend time together and are willing to perform in certain ways.  "I am willing to commit to this relationship", a prospective girlfriend might say, "because I want to have a companion for social events – a liberator from the dating jungle - and I’m attracted to you and want to get to know you better".  Marriage, the ultimate relational commitment, is thus described as a marriage contract, while actions for breach of promise to marry - aka heart balm actions - are not unheard of.  (Who on earth, you may wonder,  even thinks of suing for breach of promise to marry these days?  Evidently the few that live in a jurisdiction where the cause of action still exists, and are both extraordinarily peeved and brave enough to pursue a claim.) 

Once upon a time, the idea of an eBaying paramour would have been unthinkable.  Monogamous marital relationships were the default sixty years ago.  Faithfulness was expected ‘till death do us part’, children out of wedlock were a disgrace, and adultery was a heinous wrong.  To put it mildly, times have changed.  Marriage is not the objective of a relationship for many nowadays .  In fact, some statistics would have us believe that marriage is depressingly out of reach for some.   So what might two people be committing to – or to rephrase for the commitment phobic - what might their expectations be when people decide to ‘become an item’?  Monogamy as in a faithful, exclusive, romantic relationship with only one person at a time?  An enjoyable companionship in which compatibility rather than passion is key?  Expectations of trust and respect driving good faith efforts to abstain from all others, or an ‘open relationship’?  Symbiotic cohabitation, or merely a friendship ‘with benefits'?  The last two do not infer expectations of fidelity or exclusivity, so what was the girlfriend expecting?  This incident clearly illustrates the hellish wrath of a woman scorned.  Since the catalyst for her titillating revenge was discovering her boyfriend had been seen with other women, it is safe to infer that she expected fidelity from the guy.

So, she is furious. We don’t know if he expressly or implicitly promised to be faithful, but she clearly expected that he would be.  Likely she would assert, if asked, that he induced her to believe that he would be faithful – that is, if she was not explicitly promised faithfulness (i.e. as an express term of their relational agreement) by the guy.  However they arose, her expectations of faithfulness were disappointed.  Should her ex be allowed to get away with his relational crime – or should he be estopped from denying his obligation to be true (if any) and be accordingly punished?  Presumably she doesn’t want the guy back.  Her actions indicate that she wants to make him pay for the betrayal and she wants it to hurt.  How she goes about this is the crux of the story. The boyfriend preferred her to dress conservatively during their relationship so what does she do?  She posts scantily clad pictures of herself draped with the items in question on eBay.  Revenge and liberation in one fell swoop – so take that, ex boyfriend!

But wait a minute – who’s hurting whom?  To a more conservative eye, she cut her nose off to spite her face by baring – on a global auction site no less – her assets in a demeaning display.  Undignified perhaps, but understandable all the same?  Relationships are more often emotional affairs than business arrangements so it is to be expected that the behavior of the parties will be illogical at times.  A person braver than I might even suggest a correlation between the frequency of illogical responses and the sex (of the actor) involved - but I won’t venture into that particular minefield.  The response of the scornee in this scenario is what should be our focus.  She eBayed the scorner's clothes.  She set up a website.  She advertised the items for auction on eBay.  She linked the risqué auctions to her new website.  This drummed up traffic to her website.  Immodest yes, but maybe not so illogical after all.

Were the items in question hers to sell?  She claims to have bought most of the items.  But even if she did, surely it was with the intention of giving them to him as a gift.  If so, the clothes became his property at that point.  She did not have title to the items and had no right to dispose of them if that was the case.  She didn’t, that is, unless the relationship was based on the understanding – a sub provision of an implicit termination clause? – that in case of unfaithfulness or other just cause, all gifts given to an offending donee will revert to the affronted doner.   Her disposal of the property would be justified alternatively, if it had been abandoned by its owner.  As she reportedly locked him out by changing the locks and has been impervious – thus far - to his alleged pleas to return, the latter is unlikely on the facts.  If in her rage, she has treated someone else’s property as her own, the legal ingredients for conversion –and perhaps theft – have been satisfied.  

Will the scorner-donee-ex-boyfriend have the gumption to strike back – say by suing his scorned ex-girlfriend for the return of his property?  Might he seek damages for whatever injuries he has sustained from this now very public exacting of revenge?  In that case (if you will forgive the puns) , the shoe would be on the other foot – a suit for an intentional tort or negligence, rather than a case for breach of promise to marry (jilting).  Assuming that he chooses not to press criminal charges, that is.  But it seems the boyfriend has attempted at least one retaliatory blow – the auctions were taken down by eBay staff, allegedly at the instigation of her ex, for being too sexy.  Undeterred, the enterprising Miss re-posted the listings in the ''art'' category.  Although the ‘art’ advertised for sale is the collection of photographs showing her modelling different items (of her ex’s clothing), the ingenious gal still manages thus to accomplish her aim of profiting from, and getting rid of, her ex’s clothes.   As an incentive to buy each photograph, she offers to ‘throw in’ (or should that be ‘throw out’?) the actual item photographed as a ‘gift’.  Contractually, prospective buyers more interested in the ‘gift’ item than the photograph may be reassured in at least two ways.  Either the promise of a ‘gift’, though made before the sale, induced the sale, and for that reason may be deemed a term of the contract (i.e. ‘gift’ is a misnomer as the item is jointly supported by the consideration provided by the price paid for ‘the photograph’).  Alternatively,  the promise of the gift, though unsupported by consideration  -  and to that extent not contractually mandated – may still be enforced by means of an estoppel.  Bottom line, the girlfriend followed up her saucy baseline serve with a volley (that was ultimately met by eBay restricting the most risque pictures to the adult section). 

But she may have moved on.  It seems girlfriend has other fish to fry.  Initially motivated by anger, she is now enjoying the attention of being a guest on TV networks here and overseas.  More, she has a new business venture to think about.  "I'm realising that maybe there's something there to explore with a website where I can invite women to also share their breakup stories and maybe also give them the opportunity to sell products and things like that as well," she has reportedly said.  With careful execution, perhaps the conversion of her website into a portal for jilted lover-sellers will not create an exponentially greater liability minefield. 

Of such a budding entrepreneurial empire however, one can only caution: buyers beware – the scorners may strike back!  The Machiavellian tangles of sweet revenge reach far.

Eniola O. Akindemowo.

Audiofile of Interview with Son of Plaintiff in Lucy v. Zehmer

Barak Richman (pictured, left) and Dennis Schmelzer (pictured right) have a new article up on SSRN on the celebrated case of Lucy v. Zehmer, about which we have posted in the past.  Here is the abstract of the article:

This article reexamines Lucy v. Zehmer, a staple in most contracts courses, and makes the following discoveries: (1) Lucy, acting as a middleman for southern Virginia’s burgeoning pulp and paper industry, sought the Ferguson Farm for its rich timber reserves; (2) Lucy was one of scores of aggressive timber middlemen eager to purchase timberland across the region, in what amounted to a chaotic land grab that left a wake of shady transactions and colorful litigation; and (3) Within the eight years of winning injunctive relief from the Virginia Supreme Court and purchasing the Ferguson Farm from Zehmer for $50,000, Lucy earned approximately $142,000 from the land and its natural resources. These findings bring into question the opinion’s assertion that $50,000 was a fair price, its conclusion that Zehmer’s actions indicated contractual intent, and its confidence that the objective method captured the relevant background in which Lucy’s and Zehmer’s exchange took place. More generally, they suggest that conclusions reached by the objective method are highly dependent on the facts that are retold and the context in which they occur.

Professor Richman was kind enough to share with us an audiofile of an interview with John C. Lucy's son, John II, recounting his memories of his father's business and the case.  The audio file is available here. 

[JT]