ContractsProf Blog

In the NYLJ: "Is Your Arbitration Clause Helping or Hurting You?"

Victoria Kummer writes in the NYLJ:

Arbitration is a creature of contract, and just as you would draft any other contract with provisions carefully tailored to your company's specific needs, so too should you put such effort into drafting your arbitration clause. As a party to the contract, you are empowered to structure the arbitration process in any way you please. If you have an appetite for protracted litigation and relish the possibility that disputes under your contract will involve a comprehensive airing of every conceivable claim, with far-reaching discovery and exhaustive interim motion practice—just leave your arbitration clause silent as to these issues.

If, however, you want to structure the process so as to achieve the swift, efficient resolution that is (or should be) the hallmark of arbitration, it would be wise to include any desired procedural limitations within the arbitration clause itself. Attempting to impose such limitations after the arbitration has already commenced can be significantly more difficult, requiring you (or more likely, your litigation counsel) to negotiate with a hostile adversary in the heat of battle, and often leads to drawn-out disputes over a range of procedural issues—especially discovery protocols and the money pit known as e-discovery or ESI.

Here's the complete article (subscription required).

[Meredith R. Miller

 

Effects of a Government Shutdown: Contractors Get Stiffed

Last week, as a shutdown of the federal government seemed imminent, the General Services Administration  (GSA) issued this order clarifying the ramifications of such a shutdown for government contractors.  In short, they get stiffed.  

Under the Anti-Deficiency Act, which dates back to 1884, prohibits agency officials from incurring obligations in the absence of appropriations.  As a result, a shutdown would have the following consequences:

• The 1500 federally-owned buildings and 8000 leased buildings which the GSA maintains will operate in "weekend mode," enabling tenant agencies to provide essential services;

• GSA will provide workspace, products and services ordered before the shutdown based on continuing need, but with certain exceptions, it will not process new orders; 

• GSA will not make payments for products or services not funded before the funding lapse;

• GSA will not maintain or update websites, except on an emergency basis; and 

• No animals will be harmed in the making of this political circus

[JT]

New in Print

Scott Anderson, The Enforcement Approach to Coercion, 5 J. Ethics & Soc'l Phil. 1 (2010)

Timothy Arcaro & Laura Miller Cancilla, The Illusory Imputation of Income in Marriage Settlement Agreements, 35 Nova L. Rev. 157 (2010)

Major David Allen Dulaney, Where the Harm? Release Unit Prices in Awarded Contract under the Freedom of Information Act, Army Lawyer, November 2010, at 37 

Daryl Fuchihara, Contracts: A Million Dollar Mistake -- Business Bank v. Hanson, 37 Wm. Mitchell L. Rev. 298 (2010)

Florian Wagner-von Papp, European Contract Law: Are No Oral Modification Clauses Not Worth the Paper They Are Written On? 63 Current Leg. Problems 511 (2011)

[JT]

New Masthead

We have been having a hard time updating our masthead on the left side of our page.  We are not at liberty to discuss the reasons for the delay beyond saying that it involved an act of dog.  In the meanwhile, we will leave this temporary masthead up so that our readers know from whom they are hearing.  

Our new contributing editors are Heidi Anderson (left) of the Florida Coastal School of Law and Eniola Akindemowo (right) of the Thomas Jefferson School of Law.  

The rest of our masthead is largely unchanged, except that Frank Snyder has been promoted to the exalted status of Founding Editor and Editor Emeritus.  Jeremy Telman is now serving as editor. 

[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 
February 10, 2011 to April 11, 2011

Rank	Downloads	Paper Title
1	269	Keynote Address – Identifying and Managing Systemic Risk: An Assessment of Our Progress  Steven L. Schwarcz
2	219	Emerging Policy and Practice Issues (2010)  Steven L. Schooner, David J. Berteau
3	183	Trust, Expert Advice, and Realtor Responsibility  Brent T. White
4	181	Contract is Not Promise; Contract is Consent  Randy E. Barnett
5	146	Contracts: Law in Action, Volume I: The Introductory Course – Introduction (Chapter 1)  Stewart Macaulay, Jean Braucher, John A. Kidwell, William C. Whitford
6	137	American Indian Tribal Law  Matthew L. M. Fletcher
7	132	Metaphor, Models, and Meaning in Contract Law  Jeffrey M. Lipshaw
8	113	A New Legal Theory to Test Executive Pay: Contractual Unconscionability  Lawrence A. Cunningham
9	108	The Normativity of Private Law  Stephen A. Smith
10	107	Contract and Procedure  Christopher R. Drahozal, Peter B. Rutledge

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
February 10, 2011 to April 11, 2011

Rank	Downloads	Paper Title
1	180	Contract is Not Promise; Contract is Consent  Randy E. Barnett
2	146	Contracts: Law in Action, Volume I: The Introductory Course – Introduction (Chapter 1)  Stewart Macaulay, Jean Braucher, John A. Kidwell, William C. Whitford,
3	113	A New Legal Theory to Test Executive Pay: Contractual Unconscionability  Lawrence A. Cunningham,
4	71	Five Political Ideas of European Contract Law  Martijn W. Hesselink
5	70	Intolerable Abuses: Rendition for Torture and the State Secrets Privilege  D. A. Jeremy Telman
6	54	Afterthoughts: International Commercial Contracts and Arbitration  Luke R. Nottage
7	52	Contracting in China: Comparative Observations on Freedom of Contract, Contract Formation, Battle of Forms and Standard Form Contracts  Nicole Kornet, Nicole Kornet
8	43	Optional Law: A Plea for Multiple Choice in Private Law  Jan M. Smits
9	37	Digital Evolution in Law School Course Books: Trade-Offs, Opportunities, and Vigilance  Lawrence A. Cunningham
10	24	Delaware Dissolves the Glue of Capitalism: Exonerating from Claims of Incompetence Those Who Manage Other People’s Money  Daniel S. Kleinberger

[JT]

Suit v. KBR Turns on Whether Wrongful Death Claim Relates to Contract with the Government

In January of 2008, Staff Sergeant Ryan Maseth died after being electrocuted in a shower at a U.S. military base in Iraq for which private defense contractor Kellogg, Brown and Root, Inc. (KBR) contracted to provide services. In 2009, according to CNN an investigator for the U.S. Army Criminal Investigations Division deemed Maseth’s death a “negligent homicide” that resulted from a failure to ensure that electrical and plumbing work was being performed adequately by qualified technicians and a failure to inspect the work performed. 

We learn from the Appellate Law Blog that since 2008, KBR has used everything from the political question doctrine to the combatant activities exemption of the Federal Tort Claims Act to evade a wrongful death lawsuit filed by the Maseth's parents.  The District Court didn't buy those arguments initially, but it denied KBR's motions to dismiss without prejudice.  Unhappy with this result and unwilling to proceed with discovery, KBR attempted an interlocutory appeal.  Last August, the Third Circuit ruled that it was not entitled to appeal, since the District Court's ruling was not conclusive.  So far, Maseth’s parents have been successful in warding off KBR’s legal challenges, but now the future of the lawsuit may depend on an interpretation of KBR’s contract with the U.S. government.

As reported in the Philadelphia Inquirer, on April 5^th, KBR’s attorneys contended in the Federal District Court of Western Pennsylvania that U.S. soldiers in Iraq have no expectation of protection under U.S. law. They argue that Iraq, as the location of the accident, has more of an interest in having its law applied than does the U.S. CNN speculates that KBR is pushing for the application of Iraqi law because under Iraqi law, punitive damages are not allowed in civil cases.

Maseth’s parents counter that KBR’s contract with the Defense Department states that U.S. law should apply for all claims arising from the contract. KBR’s attorneys claim that this clause only applies narrowly to contract disputes, rather than tort claims. However, the plaintiffs point to the provisions of the contract which refer to KBR’s duties in maintain the electrical system on base, which mentions US. safety regulations and electrical codes, not Iraqi regulations or codes.

So, while KBR's other affirmative defenses remain issues in the case, for now U.S. District Judge Nora Barry Fischer will have to determine whether a wrongful death lawsuit is a claim arising from KBR’s contract with the DOD. 

[Jon Kohlscheen & JT]

Law Prof Smacks Down Apple for Faulty iPad Cover

As the picture below illsturates, Apple is very proud of the new smart cover for the iPad 2.  It's held on by magnets.  Magnets!  And look!  It doubles as a carpal-tunnel reducing stand.

Perhaps the new cover isn't quite so smart as it at first appears.  Ohio State University Moritz College of Law Professor Emeritus Douglas Whaley reports on his blog about how he went mano a corpo with Apple over the cover. and came out smelling as sweet as a new tablet.  Here's the story, as told by Professor Whaley:

[T]he Apple people are very proud of the new cover for iPad 2. They shouldn't be. First of all, it only covers the front of the iPad which has a glass facing. Secondly, it's held on by magnets at one end. Seven days after I got the new iPad, it slipped from my car seat in the garage, stripping its magnet cover as it fell to the floor, creating a crack on the glass. Seven days.

When Professor Whaley tried to return the iPad, the Apple folks told him that the warranty did not cover accidental damage.  Big mistake, Apple.  Big mistake.  You messed with the wrong guy!  Professor Whaley wrote to Apple, told his story, and then issued the following warning:

Your cover is in violation of the implied warranty of merchantability, section 2-214 of the Uniform Commercial Code, a statute in effect in all jurisdictions in this country except Louisiana. My Small Claims action (the court has jurisdiction up to $2000) will be filed with that as the theory. 

But Professor Whaley is both good cop and bad cop, so he offered a reasonable settlement:

I don't want to sue. I want an iPad 2 (which I otherwise love) that isn't scratched with cracking glass within two weeks of purchase. If you will replace the iPad 2 and refund the money for my cover and I'll be a happy man. 

Please let me hear from you about this by next Wednesday, April 13, 2011.

He then called Apple's customer support and had the following conversation with a supervisor who again tried to rely on the express warranty limitations:

I told him that was probably right, but didn't get rid of the implied warranty under the Uniform Commercial Code, and a cover that won't protect its product won't do. He asked if I sued a lot. Never before, I replied, but a Small Claims Action is easy and we'll let the court decide if a cover that detaches this easily is merchantable. . . . Eventually he returned to the phone and, very efficiently, told me that since I'd always been a good Apple customer they'd decided to make an exception in my case, and would replace my iPad2 at the Apple Store. I told him I was very grateful, he gave me the case number, and the next day I had a new iPad2 (my third). Indeed, at the store it was determined I'd originally been overcharged at the original purchase by $138, for which the store gave me a gift card—I immediately used it to buy insurance on the new iPad2! With Apple's permission, I'm returning Apple's original cover; I'll buy a sturdier one elsewhere.

And so we learn a useful lesson about how to use the law to protect yourself as a consumer without spending a dime on attorneys' fees.  But Professor Whaley leaves us with one final lesson:

I also should note that I do think the Apple cover is badly designed and in breach of the warranty mentioned. It would be unethical to threaten something in which you do not have a good faith belief. 

Amen to that. In addition, keep in mind that the warranty likely does not cover using your new iPad to chop salsa, although for fans of Stephen Colbert, that might now count as an intended use.

 

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Stephen Gets a Free iPad
www.colbertnation.com
Colbert Report Full Episodes Political Humor & Satire Blog Video Archive

 

[JT]