July 5, 2012
New in Print
The Three and a Half Minute Transaction: Boilerplate and the Limits of Contract Design, 40 Hofstra L. Rev. 1-114 (2011)
Mitu Gulati and Robert E. Scott, Foreword, 40 Hofstra L. Rev. 1 (2011)
Robert A. Cohen, "Sometimes a Cigar Is Just a Cigar": The Simple Story of Pari Passu, 40 Hofstra L. Rev. 11 (2011)
Stewart Macaulay, Notes on the Margins of Lawyering, in Three and a Half Minutes, 40
Hofstra L. Rev. 25 (2011)
Rodrigo Olivares-Caminal, The Pari Passu Interpretation in the Elliott Case: A Brilliant Strategy but an Awful (Mid-Long Term) Outcome? 40 Hofstra L. Rev. 39 (2011)
Larry E. Ribstein, Sticky Forms, Property Rights, and Law, 40 Hofstra L. Rev. 65 (2011)
Barak Richman, Contracts Meet Henry Ford, 40 Hofstra L. Rev. 77 (2011)
Preston M. Torbert, The Crisis Exposed by Pari Passu. 40 Hofstra L. Rev. 87 (2011)
Philip R. Wood, The Bankruptcy Ladder of Priorities and the Inequalities of Life. 40 Hofstra L. Rev. 93 (2011)
Mark L.J. Wright, The Pari Passu Clause in Sovereign Bond Contracts: Evolution or Intelligent Design? 40 Hofstra L. Rev. 103 (2011)
July 4, 2012
I Choose Not to Run!
For those of you who do not follow track and field sports or the Olympics, there was an interesting development in the women's 100 meter final at the U.S. Olympic trials. There was a tie for third. It's actually kind of a nice story. Allyson Felix and Jeneba Tarmoh share a coach and train together. They are friends. Even a photo finish could not determine who came in third.
Unfortunately, a lot rides on the difference between third and fourth. A country can send no more than three competitors for each event. So, nothing's worse than fourth. Both runners have contracts with Nike and those contracts, according to the New York Times, likely include significant bonuses if the runners make it to the Olympics. The situation is apparently unprecedented. There is no official tie-breaking mechanism, and for a time it seemed that the two women would run against one another to determine who goes to London.
But Tarmoh is now re-enacting a Seinfeld episode (see the animated version below), although nobody is claiming she got a head start. Earlier this week, as reported in the New York Times, she announced in an e-mail that she would not run and was conceding her place on the U.S. 100 meter team to Felix.
Tarmoh was initially declared the third place finisher, but that finding was quickly reversed. According to the Times, Tarmoh is refusing to run again because she believes she already won the race, although she did not make use of the available protest mechanisms. Her high school track coach explains that Tarmoh is mentally and physically exhausted due to the stress brought on by the tie. Tarmoh will likely be a part of the U.S. 100 meter relay team, so she should still get a chance to run at the Olympics.
Meanwhile, the sprinters in the Tour de France went at it for the fourth consecutive day. Today's sprint finish was won by Andre Greipel after the favored Mark Cavendish took a nasty spill in the build-up to the sprint finish. Cavendish won the intermediate sprint during the nearly 160 kilometer stage. Despite getting knocked off his bike at speeds likely in excess of 35 mph, I suspect Mark Cavendish will be in the hunt for a stage win tomorrow. He's also supposed to ride for his country in the Olympics about two weeks after completing the 2000-mile, three-week Tour de France.
July 3, 2012
How Does One Value One's Flying (or Waiting) Experience?
Moshe's post today got me thinking about a recent experience that I had not thought about in contracts terms. I was returning from a conference in Las Vegas (don't ask!) on my favorite airline, Southwest. Because it was Southwest, I know exactly why my flight was delayed.
There was a mechanical problem with a plane bound for San Franciscio. Because that flight had some connections that gave it priority over our flight to Chicago, Southwest decided to pull our plane and give it to the good folks heading off for San Francisco. At first, they told us there would be a two-hour delay while until they could find a replacement jet for us.
As two hours became three hours, passengers became upset. They voiced their anger at the gate attendants who were incredibly patient professional, courteous, and firm. They provided the limited information they had; they acknowledged that the information was incomplete and that the lack of complete information caused the passengers to be justifiably frustrated. They accommodated the needs of passengers, including someone who had checked her medication thinking that she would not need it on a three-hour flight that now was going to take (at least ) six hours. And then, as David Bromberg would put it, they did something so incredible that to this very day I indict my own susceptibilities and reject my own anachronisms.
They called passengers up in alphabetical order and gave us $100 vouchers. Some rejected the offer, saying they would never fly Southwest again. "Who you gonna fly?" I thought, but the Southwest employees, just confirmed that the passengers were rejecting the offer and apologized again for the inconvenience. The passengers responded by complaining that this was the worst travel experience they had ever had. "You don't fly much," I thought but the Southwest emplyoees just apologized again and assured the passengers that they would be departing soon.
Then we switched gates and eventually piled into a plane.
Which wouldn't start. Whatever machine was supposed to start it wasn't working, and then the cart holding the backup to the backup broke, and then the backup to the backup to the backup didn't have enough power. Word. It was 100 degrees outside of course, and without power in the aircraft, it was more than a little uncomfortable inside as well. But there would be no second $100 voucher.
So, Moshe, is $100 a reasonable offer? I mean, there wasn't a corpse next to me, and in fact I didn't expect to get even $100, because frankly getting a sincere apology from an airline is a coup these days. But if Southwest is going to compensate passengers for inconveniences caused by their own faulty equipment, why stop at a $100 voucher?
Moshe Gelbard: An Illustration of Price Reduction in a Service Contract
The remedy of price reduction derives from the action quanti minoris of Roman law. It allows the purchaser to reduce the contract price to what the parties supposedly would have agreed upon had the contract originally been for the purchase of the nonconforming goods. The remedy can be found in most European legal systems today; e.g., Section 1664 of the French Code Civil or Section 441 of the German B.G.B. The remedy is also mentioned in Section 50 of the Convention on the International Sale of Goods. Originally, price reduction was limited to sales contracts, but Section 9.401 of the Principles of European Contract Law proposed extending the remedy to any “tender of performance not conforming to the contract.”
A footnote in my forthcoming article, co-authored with David Elkins, (The Remedy of Price Reduction in Mixed Legal Systems, Stetson L. Rev., forthcoming 2012) recounts the following hypothetical case (derived from Common Frame of Reference and Existing EC Contract Law (Reiner Schulze ed., 2008) 322-323) to illustrate how price reduction might be used in a service contract:
A flies with a ticket for business class. Unfortunately, an economy class passenger dies during the flight. As the economy class is fully booked, the crew decide to transfer the corpse to business class and to tie it to the seat next to the one occupied by A. A may ask for a reduction of price which he or she paid for the flight, because having to sit next to a corpse in business does not conform with the passenger’s legitimate expectations, even if the air operator had no alternative option to solve the problem. In such a case it is difficult to determine a value of the reduction, since there is no market for flights with a corpse placed next to your seat. Possibly the price should at least be reduced to the level of the price for economy class…
Although the case appears to be one of those detached-from-reality hypotheticals that only a law professor could come up with, here’s an excerpt from a recent news story:
Lena Pettersson had just boarded her Tanzania-bound flight at Amsterdam Airport Schiphol when she noticed a man in his 30s looking unwell, the Expressen daily reported. Ms Pettersson, a journalist with Sveriges Radio, told the broadcaster that the man "was sweating and had cramps [seizures]." After the Kenya Airways plane took off, the man died, the Expressen reported. Cabin crew laid out the dead man across three seats and covered him with a blanket - but left his legs and feet sticking out, Ms Pettersson said. For the remainder of the overnight flight, Ms Pettersson was forced to sit near the dead man, with just an aisle separating her and the corpse. "Of course it was unpleasant, but I am not a person who makes a fuss," Ms Pettersson said. After her holiday in Tanzania, Ms Pettersson lodged a complaint with Kenya Airways, eventually receiving a 5000-kronor ($700) refund, half the price of her plane ticket.
Indeed, truth is stranger than (or at least as strange as) fiction.
[Posted on behalf of Moshe Gelbard by JT]
Guest Post by Professor Moshe Gelbard
We are always delighted to post contributions from Contracts Profs not currently associated with the blog. Today we are pleased to introduce Moshe Gelbard, whose work may be familiar to some of our readers because of his presentations at the annual Contracts Law spring conferences.
Professor Gelbard teaches at the Netanya Academic College, where he is a Senior Lecturer in the School of Law. This past Spring Semster, he was a Visiting Professor at Touro College's Jacob D. Fuchsberg Law Center. He has two publications forthcoming in U.S. Law Reviews. His co-authored piece with David Elkins, The Remedy of Price Reduction in Mixed Legal Systems, is forthcoming in the Stetson Law Review, and his Pre-dispute Arbitration Clauses in Consumer Contracts, is forthcoming in the Touro Law Review.
His guest post will appear later today.
Weekly Top Tens from the Social Science Research Network
July 2, 2012
How to Make a Safety Video People Will Actually Watch
Because the enforceability of online contracts depends upon "reasonable notice," I often wonder whether we've stretched the term "reasonableness" to unreasonable extremes. Is it really reasonable to expect website visitors to click on hyperlinks? Hyperlinks within hyperlinked text? Because my research focuses on notice of contract terms, I am always interested in how to provide better, more effective notice.
Companies can provide notice with words, but they can also use images or video. Unfortunately, images, like text, can also be ignored. For example, how many times have you actually watched an airline safety video? What most airlines do is put attractive crew members on the screen who recite the basics and hope that people will pay attention. I recently took an Air New Zealand flight that took a very different approach - comedy! The safety video starred Richard Simmons of 80's spandex fame leading the crew through an aerobicized safety routine. One segment had crew members wearing body paint (you need to watch carefully - the paint is very skillfully applied). Several members of the super-popular rugby team, the All Blacks, made appearances - because they appeal to a broad cross section of the population (men, women, children), more passengers were likely to be engaged. The video was very funny and I watched the entire thing, both to and from my destination. I wasn't the only one. It seemed that everyone on the plane was paying attention. The video was just the right combination of humor, safety, and annoying-in-a-good-way (Richard Simmons excels at that). Was it effective? Well, I remembered where the exit rows and my life jacket were. Watch it yourself and just try to tear your eyes away from the screen.