Friday, June 1, 2012
Are bedbugs sucking your blood and selling them to black market blood banks while you sleep?!?
Is an alien convict about to escape from his prison on the moon and travel back in time to pave the way for his species to invade the earth?
TUNE IN AT 10 PM TO FIND OUT
But the answer to the local news questions is invariably a disappointed, "probably not, but still . . . think about it." And the answer to our question is: likely yes!
According to this report in the New York Times, and this report from the United States Public Interest Research Group Education Fund (US PIRG), about 900 colleges and universities have formed partnerships with financial institutions. The colleges and universities issue student IDs which also function as debit cards that bear the logos of the partner institutions. The banks thus effectively control the disbursement of student aid.
The partnerships vary in their terms. Some provide large payments to the universities in return for giving the banks exclusive access to students. So, for example, The Ohio State University has apparently brought in $25 million through its contract with Huntington Bank. The money helps, since state legislatures are cutting funding for higher education. In return, Huntington gets to open branches and A.T.M.’s on campus and gains exclusive access to more than 600,000 students, faculty, staff and alumni.
Others permit colleges to save money by hiring banks or other vendors to provide financial services to students. It's not entirely clear from the Times article, but this seems to mean that the universities save themselves administrative costs by having government loan money sent to financial instittuions rather than to the universities. The financial institutions then disburse the money, but until they do, it would seem, they have the benefit of having the money. In addition, according to the US PIRG report, banks and financial firms have “an unprecedented opportunity to market add-on products — bank accounts, A.T.M./debit cards and even loans and credit cards — to students with virtually no competition,” Students may also have to pay ATM fees when they withdraw their loan money. US PIRG characterizes the debits cards as wolves in sheep's clothing because the student do not realize that they are paying fees to a bank when they access their loan money.
The report highlights one financial institution, Higher One, which provides services on over 500 campuses. But the Times quotes one of Higher One's co-founders, who points out that the alternative to Higher One's services is not some magical free world in which there would somehow be no expenses involved in the disbursement of student loan funds.
Still, all of this seems to be a clever work-around to evade provisions of the CARD Act that were supposed to crack down on predatory lending practices that targeted students. None of this is illegal, but it replicates the tactics that the banks used to entice students to sign up for credit cards and which the CARD Act was supposed to prevent.
Wednesday, May 30, 2012
This weekend, I had a chance to see Tim Burton's latest, Dark Shadows. I mention it because it contains a tidbit about our favorite subject here at the blog - CONTRACTS. If you saw the movie, you might be wondering - huh? Too distracted by the blood (there's a vampire, what d'ya expect) and the erratic tone, you might have missed it. In fact, there are two scenes where contracts play a pivotal role. The first is when Johnny Depp's character, Barnabus Collins, approaches a fisherman honcho (I can't remember his name) and tries to get him to break his contract with the evil Angelique (I won't go into the details but basically Barnabus and Angelique are running competing fish canneries). You might be thinking, That's interference of contract, right? That's a tort - what's it doing on this blog? But when the fisherman honcho refuses to do it, professing loyalty (and embodying the notion that trust plays a vital role in contract performance), Barnabus puts him under a spell. I'm not quite sure whether that would constitute duress - there's no "improper threat", although there is "no reasonable alternative" and the so-called assent certainly wasn't voluntary. I think a stronger defense for the fisherman honcho would be a variation of an intoxication or insanity-like defense to show that he wasn't in his right mind and the assent was not voluntary.
The second contractual plot point sees Barnabus under duress this time. Angelique makes Barnabus an offer he can't refuse - in other words, she makes an improper threat that leaves him with no reasonable alternative. But rather than taking it, he makes her a "counterproposal" which is that she kiss off (or something along those lines). It's not really a counteroffer though, since there's no bargain. It's really just a rejection that he phrases as though it were a counteroffer - Hollywood again playing fast and loose with contract doctrine. Angelique, of course, hates being rejected. Her response is to throw him in a box (aka a coffin) and lock him up for eternity -- proving that there really was no reasonable alternative for ol' Barnabus. (Of course, he can't use duress as a defense because he took the unreasonable alternative to be locked in a box).
Anyway, other than the contract issues, the movie didn't really work for me. But reasonable minds may differ.
Watchdog.org reports a recent change made by the Ohio House concerning the statute of limitations (SoL) for lawsuits alleging causes of action for breach of contract. Until recently, a party in Ohio had up to 15 years after a cause of action accrued to file a lawsuit for breach of written contract. However, S.B. 224, which was unanimously passed on Thursday, May 24, 2012, reduces the time period to eight years. In most states, the SoL for braech of contract is six years or less.
Speaker William Batchelder, R-District 69 said “this law has dated back to the days of early statehood, when businesses and consumers moved at a much slower pace. Obviously the speed at which industry moves has increased rapidly since then and S.B. 224 brings Ohio more in line with today’s fast-paced world.”
We'll see if the governor signs the law and brings Ohio's SoL into line with that of other states.
[Christina Phillips & JT]
Tuesday, May 29, 2012
According to USAToday.com, Wayne Newton, aka Mr. Las Vegas, is being sued for breach of contract by the company that teamed with Newton to turn his 40-acre estate, called Casa de Shanandoah, into a museum. The company, CSD, LLC (CSD), purchased the rights to convert Newton’s 40-acre estate, which features South African penguins, Arabian horses, paintings by Renoir and 17th century antiques collected from European castles, into “Graceland West." CSD now alleges that Newton, along with his wife and her mother have unreasonably delayed the project.
The complaint states that under the terms of the museum deal, the Newtons agreed to move to a $2 million home on the estate constructed by CSD, so that the mansion, which serves as the Newtons current residence, could be converted into a museum. However, CSD alleges that the Newton family refused to relocate or turn over personal memorabilia. Graceland West is supposed to feature certain animal attractions as well, but right now there are an extra 35 horses on the property along with large vicious dogs that Mr. New ton allows to roam freely, in spite of the fact that the dogs have attacked and bitten people on more than a dozen occasions. The dogs are also credited with killing 75 birds in the estate's aviary, as well as the occasional peacock.
The complaint details the delapidated condition of Casa de Shanadoah before its infusion of $30 million and its efforts to improve the conditions on the estate. If you have a interest in descriptions of horses wallowing in their own feces, this is the complaint for you.
Adding additional spice to the story, the complaint also claims that Newton sexually harassed a female equine management speicalist who was hired to train the horses for hte exhibit. She is allegedly threatening suit against the parties to the lawsuit. As reported by USAtoday.com, Newton’s lawyer, J. Stephen Peek, responded to the sexual harassment claims saying the accusations are merely an attempt to “obtain financial gain,” and the woman has been fired.
Foxnews.com reports that the lawsuit seeks to have the Newton family immediately vacate their estate, Casa de Shenandoah, and allow the $50 million project to move forward. However, the Newton family claims the lawsuit is a preemptive strike based on their plans to sue the company for breach of contract after multiple construction delays. The family plans to file a countersuit challenging CSD’s allegations.
For some reason, Wayne Newton has not played in Valparaiso recently, so we had to go to YouTube to get a sense of what this incomparable performer is like. Here's a taste:
[JT & Christina Phillips]
Here is the first guest post by guest blogger Danielle Rodabaugh
It's no secret that the economy plays a huge role when it comes to competition in the construction industry. When the economy is down, competition goes up, and small contracting firms typically have trouble competing with larger ones. When construction professionals are unprepared to pay for the surety bonds required for large projects, the opportunity for small firms to gain access to business becomes even more limited.
Before I go much further, I'd like to review the use of surety bonds in the construction industry, as the surety market remains relatively mysterious to those who work outside of it. As explained in more detail here, the financial guarantees provided by contractor bonding keep project owners from losing their investments.
Each surety bond that's issued functions as a legally binding contract among three entities. The obligee is the project owner that requires the bond as a way to ensure project completion. When it comes to contract surety, the obligee is typically a government agency that's funding a project. The principal is the contractor or contracting firm that purchases the bond as a way to guarantee future work performance on a project. The surety is the insurance company that underwrites the bond with a financial guarantee that the principal will do the job appropriately.
Government agencies require construction professionals to purchase surety bonds for a number of reasons that vary depending on the nature of a project. For example, bid bonds keep contractors from increasing their project bids after being awarded a contract. Payment bonds ensure that contractors pay for all subcontractors and materials used on a project. Performance bonds ensure that contractors complete projects according to contract. When contractors break these terms, project owners can make claims on the bonds to gain reparation.
The federally enforced Miller Act requires contractors in every state to file payment and performance bonds on any publicly funded project that costs $100,000 or more. However, state, county, city and even subdivisions might require contractors to provide additional contract bonds, such as license bonds or bid bonds, before they can be approved to work on certain projects. Or, sometimes local regulations require payment and performance bonds on publicly funded projects that cost much less than $100,000. Contractors should always verify that they're in compliance with all local bonding regulations before they begin planning their work on a project.
Although the purpose of contractor bonding is to limit the amount of financial loss project owners might have to incur on projects-gone-wrong, the associated costs can limit the projects that smaller contracting firms have access to.
Surety bonds do not function as do traditional insurance policies. When insurance companies underwrite surety bond contracts, they do so under the assumption that claims will never be made against the bonds. As such, underwriters closely scrutinize every principal before agreeing to issue a contract bond.
Furthermore, the premiums construction professionals have to pay to get bonded might come as a surprise to those who know little about contractor bonding. Contractors often get tripped up with how much surety bonds will cost and how they'll pay for them — especially when it comes to independent contractors who operate small firms. Surety bond premiums are calculated as a percentage of the bond amount. The higher the required bond amount, the higher the premium. Thus, purchasing bonds for large projects obviously costs contractors more than purchasing bonds for small projects.
The percentage rate used to calculate the premium depends on a number of factors, including the contractor's credit score, years of professional experience and record of past work performance. The stronger these variables are, the lower the surety bond rate. The weaker these variables are, the higher the surety bond rate.
As such, small firms often find it hard to compete for large projects because they struggle to either qualify for the required bonds or pay the hefty premiums. When contractors are unable to secure contractor bonding as required by law, they are not permitted to work on projects. This, consequently, typically limits large public projects to large contracting firms that can both qualify for and afford to purchase large bonds. Fortunately, when small contracting firms fail to qualify for the commercial bonding market, the Small Business Administration does offer a special bonding program to help them secure the necessary bonding.
Smaller contractors can improve their situation by reading up on the surety bond regulations that are applicable to their area. Those who understand the surety process and how various factors affect their bond premiums should find themselves better prepared to apply for the bonds they need.
[Posted by JT on behalf of Danielle Rodabaugh]
Monday, May 28, 2012
I've realized that I don't have much more time in beautiful New Zealand and that I've not come close to fulfilling my promise to share my observations about how N.Z. contracts (and contracting styles) differ from those in the U.S.( I also realized I haven't come close to fulfilling my twice-a-week posting promise to our blogmeister, JT, so guilt is building, especially now that Meredith has taken unpaid leave).
As I've previously mentioned, I've been struck by how infrequently I've been forced - er, asked - to sign a form contract while here in NZ. The primary reason is probably that there is much less need to worry about tort liability (since it's already quite limited). One thing I have noticed, however, is that the merchants here check my signature when I use my credit card. As Alex Kuczynski notes in this amusing essay, merchants in the U.S. tend not to check that your signature matches the one on the back of the card. In New Zealand, however, it happens all the time. When it first happened, I was admittedly a little offended. Was it my shabby clothing? My scuffed up shoes? It turns out there was no need to be so sensitive - it apparently happens to everyone.
Another contracting practice that differs is that the few times I have had to sign a consumer contract, it was emailed to me in pdf form. Unlike receiving a hyperlink to terms which you don't read, receiving a pdf somehow made me read the contract. It made me feel as though the company (in this case, a camper van rental company) really did want me to read the terms. After making a reservation online, I got a confirmation letter with a pdf containing the contract terms. Since I made the reservation 2 weeks in advance, I had that much time to read the contract. When I picked up the camper van, they handed me the same contract and I signed it (I could have also printed it out, signed it, and brought it with me if I had been better organized). Yes, it was still a contract of adhesion, but at least I knew what I was getting myself into.
I've always suspected that the contracting of everything tends to make consumers disregard contracts - how could we function if we actually read all the legal terms that are thrust our way (online terms included)? Maybe if companies cut back on some of the legalese, consumers might start to take contracts a little more seriously. Here's hoping...
Every year when I cover the Statute of Frauds, I think about the contracts that I learned were within the Statute: MYLEGS: contracts relating to Marriage; contracts that cannot be performed within one Year; contracts for the sale of Land; Executorship contracts; contracts for the sale of Goods in excess of $500; and Suretyship contracts. The SoF case law that we cover in first-year contracts is always about goods, land, and the one-year limitation, so I've never really had to worry about the fact that I know nothing about suretyship.
That may change now, because Danielle Rodabaugh (pictured) will be guest posting here starting tomorrow on topics relating to suretyship law.
Danielle is the chief editor for SuretyBonds.com, an online surety bond insurance agency that works with professionals across the nation. As a part of the company's ongoing educational outreach program, Danielle writes informational articles that help construction professionals better understand the legal implications involved with the bonding process.
Danielle is the chief editor of the Surety Bonds Insider, an online publication that tracks legal developments within the surety industry and explains how they affect working professionals across the nation. As a graduate of the Missouri School of Journalism, Danielle has a special interest in writing about issues related to changing insurance and finance policies.
We look forward to some enlightening posts.