Friday, September 2, 2011
I recently introduced my Contracts students to the concept of destroying offers via lapse and the associated topic of option contracts. Thanks to Grammy-winning artist Bruno Mars, I now have a current example of what happens when an option is not exercised. In his recent complaint, Mars requests a declaratory order that his contract with Bug Music was terminated when Bug Music failed to exercise its option within the time frame specified. In the original agreement, Bug Music agreed to pay Mars some money in advance and to publish his songs in exchange for a 50% interest in the copyrights for those songs and for Mars’s promise to deliver a certain minimum number of songs. The agreement further specified an initial term of one year with Bug Music having the option to continue the agreement for additional one-year periods. If Bug Music did not exercise its option within 10 days after Mars fulfilled his promise to deliver songs, and after receiving an “Option Warning” notice from Mars, the contract would terminate for good. In his complaint, Mars shows that Bug Music apparently failed to exercise its option within that 10 day period, perhaps due to its current ownership instability. According to one source, Bug Music also sent an additional payment to Mars along with its allegedly late option exercise notice, which Mars returned (perhaps because he was wise to Bug Music's attempt to form a new contract with new consideration?). Mars is seeking the declaratory order so that he may freely negotiate a new deal with a different music company. Perhaps Bug Music now needs to listen to the opening line of Mars's unrequited love anthem to fully understand his perspective--"Easy come, easy go..."
Thursday, September 1, 2011
International Sales Law Conference: Global Challenge of International Sales Law - University of Florida
Friday and Saturday, November 11-12, 2011, Hilton University of Florida Conference Center, Gainesville, Florida
The United Nations Commission on International Trade Law (UNCITRAL), Center for Business Education and Research (CIBER) (University of Florida), University of Florida Warrington College of Business Administration, International Commercial Law Institute, Center for European Studies (CES) (University of Florida) presents a global conference on International Sales Law with a primary focus on the United Nations Convention on Contracts for the International Sale of Goods (CISG) to be held at the Hilton University of Florida Hotel and Conference Center on Friday, November 11 and Saturday, November 12, 2011. The conference will run from Friday morning through Saturday afternoon. Registrants have the option of attending Friday-Saturday or a single day (Friday or Saturday).
OVERVIEW: The Conference brings together CISG scholars from twenty countries, as well as practitioners and members of international organizations. It will provide a working knowledge of the CISG's substantive rules, as well as the surrounding case law. It will review the CISG case law in numerous countries, as well as arbitral decisions, and provide insights into recent trends in its use. The key substantive issues covered include writing requirements, contract formation and battle of forms scenario, firm offer rule, notice provisions, fundamental breach, excuse, remedies and damages, among other provisions. The Conference will show in what ways the CISG is pro-seller or pro-buyer and how to use this knowledge in the negotiation and drafting of an international sales contract. The Conference will also provide a review of the English Sales of Goods Act, UNIDROIT Principles of International Commercial Contracts, and an update on the new trade terms manual-INCOTERMS 2010, as well as the issue of recovering attorney fees. The contributors come from twenty (20) different counties and include internationally-known CISG scholars, practicing attorneys, and representatives from the United Nations Commission on International Trade Law (UNCITRAL). Some of the questions to be answered include:
- How has the CISG evolved? Why it is important?
- What are the best sources for CISG law? How does one conduct research in international sales law?
- How is the CISG different from the Uniform Commercial Code, English Sale of Goods Act, and other national laws?
- How have substantive provisions of the CISG been interpreted and applied by national court systems and arbitral panels?
- What are the problems of uniform law?
- Can the differences between the common law and civil law be overcome in the application of the CISG?
- Why should legal practitioners embrace or partially embrace the CISG in serving their clients?
- How should one negotiate and draft an international sales contract.
REGISTRATION: There is a nominal fee for academics or students (not including dinner and event fees), unless taking for Florida CLE credit (14.5 for both days). You may register online at:
Or contact: Jeri Shell at: firstname.lastname@example.org
AGENDA & PRESENTERS: The Conference Agenda and List of Presenters are as follows:
Session 1 - History & Researching the CISG
- Vikki Rogers - "History of CISG & CISG at the Present"
- Marie Newman - "CISG Sources and Researching the CISG"
- Camilla Baasch Andersen - "CISG in National Court Systems"
- Lisa Spagnolo - "CISG as Soft Law & Choice of Law"
- Andre Janssen - "CISG Use in Commercial Arbitration"
Session 2 - Interpreting the CISG & Substantive Provisions
- Franco Ferrari - "General Principles and Interpretive Methodology"
- Francesco Mazzotta - "Principle of Good Faith"
- Morton Midtgaard Fogt - "Contract Formation"
- Bruno Zeller - "Battle of the Forms"
Session 3 - Substantive Provisions
- Harry Flechtner - "Conformity of Goods: Inspection and Notice"
- Alastair Mullis - "Fundamental Breach and Nachfrist Notice"
- Ulrich Magnus - "Remedies: Price Reduction Remedy, Avoidance, Damages, Litigation, & Preservation"
- Martin Davies - "Excuse (Impediment)"
- Burghard Piltz - "CISG, INCOTERMS 2010, & Attorney Fees"
Session 4 - Country Analyses
- Wolfgang Faber - "Austria"
- Stefan Kroll - "Germany I"
- Soerren Kiene - "Germany II"
- Sonja Kruisinga - "The Netherlands"
- Milena Djordjevic -"The Balkans"
Session 5 - Country Analyses
- Corinne Widmer Luechinger - "Switzerland"
- Edoardo Ferrante - "Italy"
- Tadas Klimas - "Baltic States, Belarus, Bulgaria & Ukraine"
- Robert W. Emerson - "United States - Canada"
- Virginia G. Maurer - "Central & South America"
Session 6A - Country Analyses
- Li Wei - "Peoples' Republic of China"
- Yehuda Adar - "Israel"
- Hossam A. El-Saghir - "Islamic Legal Systems & the CISG"
Session 6B - Insights
- Jan Smits - "Problems with Uniform Laws"
- Sieg Eiselen - "Bridge Between Civil and Common Law"
Session 7 - CISG in Context
- Olaf Meyer - "Using the CISG in Practice"
- Qi Zhou - "CISG and the English Sale of Goods Act"
- Luca Castellani - "CISG in Context: Complementary Texts"
Session 8 - Practitioner's Perspective
- Keith Rowley - "Is the CISG Pro-Seller and/or Pro-Buyer?"
- Ulrich Schroeter - "To Exclude, to Ignore or to Use? Empirical Evidence on Courts', Parties', and Counsels' Approach to the CISG (with some Remarks on Professional Liability)"
- Helena Haapio - "Using the CISG Proactively"
Note: This Schedule is subject to change.
CONFERENCE HOTEL: Hilton University of Florida Hotel and Conference, Gainesville, Florida. There is a limited bloc of rooms reserved at the rate of $119 per night. The homepage for the Hotel is:
Location and phone number: 1714 SW 34th Street, Gainesville, FL, United States 32607; Tel: 1-352-371-3600. If you have any questions or problems with reservations please contact Jeri Shell at: email@example.com
Wednesday, August 31, 2011
Judge Margaret Chan (New York County Supreme Court) recently invalidated a non-compete in an employment contract as unduly restrictive. [Ed. side note: Is "Eyes of the World," a Grateful Dead song title, really a good name for a personal grooming business?] Anyway, the facts:
Defendant Boci ("Boci") was an employee of plaintiffs Eyes of the World, Inc. D/B/A Shobha and Shobha, Inc. (collectively "Shobha") performing hair removal services at plaintiffs' business locations from 2006 to 2009. On February 15, 2009, defendant Boci voluntarily resigned her position with Shobha and began working for NYC Waxing, LLC. Plaintiffs settled their claim against NYC Waxing, LLC, which is no longer a party to this action.
Boci's employment agreement with Shobha, dated March 24, 2006, stated in part:
For a period of one (1) year following termination of your employment for any reason, you agree not to provide Salon Services in New York City to any client of Eyes of the World, Inc. or Shobha, Inc. for whom you provided services during the last twelve (12) months of your employment with Eyes of the World, Inc.
Plaintiffs seek to enforce this restrictive covenant in the employment agreement and seek damages. Plaintiffs allege that Boci performed services on former Shobha clients at her new place of employment. In fact, plaintiffs assert Boci performed services for eighty six (86) former plaintiffs' clients at her new employer within one (1) year of her termination.
The court invalidated the restrictive covenant in its entirety. The court waxed poetic:
"In order to be enforceable, an anticompetitive covenant ancillary to an employment agreement must be reasonable in time and area, necessary to protect the employer's legitimate interests, not harmful to the public, and not unreasonably burdensome to the employee" (Crown IT Servs., Inc. v. Koval-Olsen, 11 AD3d 263 [App Div, 1st Dept 2004] citing BDO Seidman v. Hirshberg, 93 NY2d 382 [Ct App 1999]). Restrictive covenants are generally frowned upon by courts due to public policy considerations that seek to prevent restrictions on a person's livelihood (see Kanan, Corbin, Schupak & Aronow, Inc. v. FD International, Ltd., 8 Misc3d 412 [Sup Ct, NY Cty 2005] citing Purchasing Associates, Inc. v. Weitz, 13 NY2d 267, 271 [Ct App, 1963]). It has been held that "[s]ince there are 'powerful considerations of public policy which militate against sanctioning the loss of a [person's] livelihood' restrictive covenants which tend to prevent an employee from pursuing a similar vocation after termination of employment are disfavored by the law" (Columbia Ribbon & Carbon Mfg. Co. v. A-1-A Corp., 42 NY2d 496, 499 [Ct App 1977]). Consequently these covenants, "will be enforced only if reasonably limited temporally and geographically and then only to the extent necessary to protect the employer from unfair competition which stems from the employee's use or disclosure of trade secrets or confidential customer lists", or if the employee's services are unique or extraordinary (id. at 499; Reed, Roberts Assoc. v. Strauman, 40 NY2d 303, 307-308 [Ct App 1976]).
Plaintiffs attempted to establish that the services provided by Boci are unique and extraordinary, however, there is nothing to support such a contention. Boci did not have access to trade secrets, client lists, or proprietary information (see Columbia Ribbon & Carbon Mfg. Co., Inc. v. A-1-A Corp., 42 NY2d 496 [Ct App 1977]; Reed, Roberts Assoc. v. Strauman, 40 NY2d 303; Maltby v. Harlow Meyer Savage, Inc., 223 AD2d 516 [App Div, 1st Dept 1996]; Michael G. Kessler & Associates, Ltd. v. White, 28 AD3d 724 [App Div, 2nd Dept 2006]).
The covenant at bar is unreasonable in its limitation, burdensome to the employee, and not necessary to protect the employer's legitimate interests. The Appellate Division First Department in Investor Access Corp. v. Doremus & Co., Inc., 186 AD2d 401, did not enforce a restrictive covenant of one (1) year that prevented the employee, a public relations account executive, from soliciting or servicing any current or former client of the plaintiff employer. The court held that the restrictive covenant did not protect the legitimate interests of the employer because the defendant did not provide unique or extraordinary services to his employer, and had not misappropriated any trade secrets or confidential information. The court went on to find that clients' decisions to follow the defendant were based upon the clients' needs and the employee's outstanding ability in the field (id. at 404).
Similarly here, when considering all the prongs necessary to enforce such an agreement, the employers' legitimate interests do not mandate such a restrictive covenant (see BDO Seidman v. Hirshberg, 93 NY2d 382 [restrictive covenant will not be enforced in the absence of circumstances evincing a need for the protection of the former employer]). As discussed above, despite Boci's training, her job and skills used for that job are not legally considered unique or extraordinary. Likewise to the situation in Investor Access Corp. v. Doremus & Co., Inc., it appears that clients opted to follow Boci based on their needs and her ability. Shobha's restrictive covenant is overly broad and unenforceable.
Eyes of the World v. Boci, CV 46549/09, NYLJ 1202512541125, at *1 (Sup., NY, Decided August 19, 2011).
[Meredith R. Miller]
Tuesday, August 30, 2011
The top risk faced by technology companies is a client suing them for breach of contract, according to data from Hiscox. The business insurer analysed data from over five years to establish that 49% of all technology professional indemnity claims handled have stemmed from contract breach.
Some of the most common causes that tech companies’ clients use as the basis to sue include project delay and the supplied service being regarded as not fit for purpose. However, Hiscox has also seen disagreements over fees and material defects such as loss of client data.
Alan Thomas, technology risks and insurance expert at Hiscox, said: "Breach of contract is the most common cause of professional indemnity claims we see when it comes to the technology sector. Very often this is down to poorly worded contracts which can lead to misunderstandings between suppliers and their clients.
"Smaller businesses can also often feel pressured into signing customers’ contracts or terms and conditions without feeling able to challenge or even review specific clauses.
"One of the most effective ways to reduce the chance of a claim being made, which in turn reduces the chance of expensive litigation and, as importantly, a breakdown in relationships, is to ensure that contracts drafted at the outset lay out clear responsibilities and that there is an agreed process if mediation is required ."
Other risks that technology companies face include intellectual property claims, for example accidentally breaching someone else’s copyright, and theft of high value equipment from offices or data centres.
[Meredith R. Miller]
All over the country, tens of thousands of students are starting law school. Law school gets a bad rap in many quarters, and so right here at the start, it's important to remind new recruits why we do it.
What makes a King out of a slave?
What makes the flag on the mast to wave?
What makes the elephant charge his tusk, in the misty mist or the dusky dusk?
What makes the muskrat guard his musk?
What makes the sphinx the seventh wonder?
What makes the dawn come up like thunder?
What makes the Hottentot so hot?
What puts the "ape" in apricot?
Consideration, that's what!
Monday, August 29, 2011
In a case that appears to be about a breach of a construction contract, the plaintiff's attorney receives a benchslap from Judge Markey in Queens [ouch!]:
On August 5th, the Ninth Circuit issued its opinion, reinstating plaintiff's claim for breach of the covenant of good faith and fair dealing in Ginsberg v. Northwest, Inc.
Plaintiff, Rabbi, S. Binyomin Ginsberg had been a member of Northwest's frequent flyer program, WorldPerks, since 1999. By 2005, he was such a macher, Northwest granted him Platinum Elite Status (oy, what nachas!). In 2008, Northwest revoked his membership. Ginsberg claims that Northwest took this action because he was a kvetch. We weren't there, of course, but we can imagine that Ginsberg was vocal about the inadequacies of modern air travel. Northwest's customer service department no doubt took the usual approach of such departments, wondering why anyone would complain about the quality of service provided by U.S. domestic airlines. When Ginsberg persisted, the corporation threw up its hands, said "Hock mir nisht kein chainek," or words to that effect, and terminated his membership.
The official reason provided for the termination was that Northwest had discretion "in its sole judgment," to cancel a member's account due to abuse of the program. Apparently, such judgment includes the ability terminate a membership if complaints persist after the "Enough with the complaining already!" warning. Ginsberg sued, asserting four causes of action, but Northwest moved for dismissal, arguing that the Airline Deregulation Act (ADA) preempted all of Ginsberg's claims. The nichtgutkeit District Court dismissed all of Ginsberg's claims, which was a real shonda. The only issue on appeal was whether the ADA preempted Ginsberg's claim for breach of the implied covenant of good faith and fair dealing.
The Ninth Circuit reviewed the purposes behind the ADA's preemption clause and determined that prior precedents had given that clause a narrow reading. Claims for breach of contract do not seem to be preempted. More specifically, the Ninth Circuit found that Ginsberg's "claim for breach of the implied covenant of good faith and fair dealing does not interfere with the [ADA's] deregulatory mandate." Moreover, the Ninth Circuit rejected the Distrct Court's finding that Ginsberg's claim related to prices and services. The Ninth Circuit found the link to prices too tenuous and found that the preemption clause was only intended to prevent states from dirctly "regulating rates, routes or services." Ginsberg claim was not within the narrow scope of the preemption clause and thus was reinstated. Such a mechaya!
Fuhr gesunderheit, Rabbi Ginsberg!
Thanks to Steven L. Schooner and the Government Contracts at GW Law Facebook page, we have word of this juicy decision by Judge Sweeney of the Court of Federal Claims in Systems Applications and Technologies, Inc. v. United States. The opinion is long, but as Professor Schooner points out, the headings alone are enticing.
This basically a Fatal Attraction case. Michael Douglas's character, played by the United States Army Aviation and Missile Life Cycle Management Command Contracting Center (the Army), gets tired of its long-time partner, Anne Archer, played by Madison Research Corporation, a wholly owned subsidiary of Kratos Defense & Security Solutions, Inc. (Kratos). It takes up with Glenn Close's character, played by Systems Applications & Technologies, Inc. (SAT). In this version of the movie, which we admit is far less cinematic than a knife fight, the Army returns to its old partner after a brief dalliance with SAT. The return takes the form of a renewed solicitation of bids followed by a bid protest from the jilted suitor.
The facts go back to June 2010, when the Government issued a solicitation of bids for "aerial target flight operations and maintenance services in support of its subscale, ballistic, rotary wing, and ballistic missile target systems." The Army had to choose among three qualified offerors, and to cut to the chase, it chose SAT. Kratos immediately filed a bid protest, which the Government Accountability Office found had merits. The Arny thus proposed corrective action, including canceling the contract with SAT and reopening the bid process. SAT sued to enjoin the corrective action. On cross-motions to dismiss/for judgment on the adminsitrative record, the court ruled for SAT.
After 10 pages on jurisdiction and justiciability (i.e. non-contractual stuff = BORING), the court gets to the meat of its decision. The headers tell it all:
A. The Army’s Decision to Take Corrective Action Constitutes a Significant Error in the Procurement Process
1. The Army’s Reliance on the GAO Attorney’s April 20, 2011 Electronic-Mail Message Renders Its Decision to Take Corrective Action Irrational
2. The Army’s Decision to Take Corrective Action Is Irrational and Unlawful
a. The Army’s Decision to Take Corrective Action Lacks a Rational Basis
b. The Army’s Decision to Take Corrective Action Violates Procurement Statutes and Regulations
B. SA-TECH Is Prejudiced by the Army’s Decision to Take Corrective Action
The Army is thus enjoined from canceling its contarct with SAT and re-opening the bid process.