October 11, 2012
Sausage or Pepperoni?
On the way in to work this morning, I heard on the radio that Pizza Hut is making an offer for a unilateral contract (okay, that’s not exactly the way the d.j. put it, but anyway…). The offer is free pizza for life to anyone who manages to ask either one of the presidential candidates during the town hall debate, “Do you prefer sausage or pepperoni on your pizza?” The debate will take place October 16 at Hofstra University. (It turns out that the offer is not actually “free pizza for life” it’s actually a $520/year gift card for up to 30 years). A silly contest, of course -- but a good example to illustrate the difference between a unilateral and bilateral contract and related issues having to do with effective offers and acceptances. Often, it doesn’t really matter if an offeree accepts by performing by by promising to perform– but in some cases (i.e. bets, dares), it really does. I used to refer to the bet in the book, HOW TO EAT FRIED WORMS to explain the difference between a unilateral and bilateral contract (15 worms in 15 days for $50). This year I might use the more election -season- friendly example of the Pizza Hut offer.
October 10, 2012
New in Print
Edward P. Boyle & David N. Cinotti. Beyond Nondiscrimination: AT&T Mobility LLC v. Concepcion and the Further Federalization of U.S. Arbitration Law, 12 Pepp. Disp. Resol. L.J. 373 (2012)
Jack Graves, Court Litigation over Arbitration Agreements: Is It Time for a New Default Rule? 23 Am. Rev. Int'l Arb. 113 (2012)
Sachin S. Pandya, Unpacking the Employee-Misconduct Defense. 14 U. Pa. J. Bus. L. 867 (2012)
Steven L. Schooner & student Collin D. Swan, Dead Contractors: the Un-examined Effect of Surrogates on the Public's Casualty Sensitivity, 6 J. Nat'l Sec. L. & Pol'y 11 (2012)
October 9, 2012
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
August 9, 2012 to October 8, 2012
Challenge to Religious Arbitral Bodies Referred to European Court of Justice
As reported in The Guardian here, a challenge to a series of UK rulings permitting parties to specify the religion of their arbitrator is being referred to the European Court of Justice. The UK Supreme Court case at issue, Jivraj v. Hashwani, was decided in July 2011. The two parties to the dispute are members of the Ismaili Muslim community, and they agreed that any disputes involving their joint venture would be decided by an arbitrator who belonged to that same community.
The parties fell out and, after some complicated litigation, their chosen arbitrator resigned. Hashwani wanted to replace the Ismaili arbitrator with a retired judge, but Jivraj objected that the nomineed was not Ismaili. Hashwani contended that the part of the paties agreement specifying the ethnicity of the arbitrator is s unenforceable under European legislation and the Equality Act 2010 because it unfairly discriminates against non-Ismaili arbitrators. The Supreme Court ruled in Jivraj's favor, finding that the Equality Act does not apply to arbitrators and, even if it did, the requirement that the arbiter be Ismaili was a "genuine occupational requirement" and thus permissible.
A new, Ismaili arbiter was appointed, but he too resigned, and Hashwani then asked the European Commission to refer the issue to the European Court of Justice. Given that the dispute is clearly commercial, rather than religious in nature, Hashwani believes that there is no need for the arbitrator to be from the Isamili Islamic community. The Guardian suggests that an ECJ ruling could have far-reaching consequences for religious arbitration, but it would seem that there is room for a narrow holding that religious arbitration is perfectly appropriate when there are issues of religious law to be adjudicated.
[JT, with hat tip to my student, Alex Seciuch]
Whaling Contracts in Moby Dick, Part II
Yesterday, in light of the on-going Moby Dick Big Read, we considered the contract to which Herman Melville's protagonist, Ishmael, signed in Moby Dick. Today, we consider the contractual fate of his friend, Queequeg as set forth in the book's 18th chapter. Ishmael agreed to sign on to the Pequod for a 1/300th share of the ship's take. He did so if only to keep the ship's part-owners and agents, Captains Peleg and Bildad from coming to blows over what was equitable and just. Ishmael's harpooning friend, Queequeg was another matter.
Upon seeing the tatooed savage, Peleg and Bildad initially protested that they do not ordinarily enlist cannibals and insisted that Queequeg must show evidence that he had converted to Christianity. Ishmael gamely lies, insisting that Queequeg is a Deacon in the First Congregation Church. Bildad is having none of this "skylarking," but Queequeg offers a quick demonstration of his skills with a harpoon, and the next thing you know, Peleg is offering "Hedgehog" or "Quohog" a 1/19th share of the ship's take. But there remained the uncomfortable issue of how one signs up an unlettered savage who cannot sign his name.
Queequeg was not at all put out by this difficulty:
Queequeg, who had twice or thrice before taken part in similar ceremonies, looked no ways abashed; but taking the offered pen, copied upon the paper, in the proper place, an exact counterpart of a queer round figure which was tattooed upon his arm; so that through Captain Peleg's obstinate mistake touching his appellative, it stood something like this: -- Quohog his mark
To this, the pious Bildad appended a brief sermon advising Queequeg to abandon his heathen ways. But Peleg was having none of it.
'Avast there, avast there, Bildad, avast now spoiling our harpooneer,'cried Peleg. 'Pious harpooneers never make good voyagers -- it takes the shark out of 'em; no harpooneer is worth a straw who aint pretty sharkish.'
And with that, the two former shipmates launch into another debate on the place of piety on a whaling vessel, as the two new shipmates follow Peleg aboard the Pequod.
October 8, 2012
Contracts Limerick of the Week: Webster Street Partnership, Ltd. v. Sheridan
The Kunz and Chomsky caebook features two cases that highlight the potential for harsh results arising from a mechanical application of the infancy doctrine. The first such case is the subject of this week's Limerick. The second, well, you'll have to wait and see.
In Webster Street Partnership, Ltd. v. Sheridan, the partnership rented an apartment to two infants and expected them to pay $250/month rent, plus some additional incidental costs and a $150 security deposit.. That's right, infants! The nerve! How are two little babies supposed to pay the rent? Sell their diapers for fertilizer? Pose for cute baby pictures? Awww, that is a cute baby!
Well, actually, contracts law considers you an infant if you are under 18. At common law, contracts with infants for non-necessaries are voidable at the election of the infant, and these two boys were under 18 at the time the contract was formed. The boys did not pay their rent, and the partnership sought to collect.
The first issue was whether an apartment is a necessary. Seems like it ought to be, but . . . nope. Second issue was whether the fact that the boys actually had use and enjoyment of the apartment should count for something. Nope. Finally, one of them turned 18 seven days before vacating the apartment, but the court found preposterous the notion that a mere seven days could be a sufficiently lengthy time to permit ratification of the earlier, voidable agreement. The partnership also had to return the deposit. Ugh.
A number of jurisdictions have introduced equitable limitations on the doctrine, and that just seems right. The concept of "necessary" is so elastic as to provide no notice or warning of the possibility of avoidance to parties that might have entered nto contracts with infants in good faith. The result in this case strikes me as highly unfair to the landlords and permits the two young rapscalions escape the consequences of their delinquencies.
Webster Street Partnership, Ltd. v. Sheridan Limerick
For indulging the two boys’
In contracting without capacity,
The landlord must tender,
And the court gets to render
A paean to doctrine’s opacity.
Whaling Contracts in Moby Dick, Part I
I have been immensely enjoying (at a rate of one chapter a day) re-reading Moby Dick as part of the Moby Dick Big Read, through which each of the 135 chapters of Melville's sprawling classic novel is being broadcast in downloadable form. You can read more about the project here, but let me just say that it is a very fine thing to get a five-to-thirty minute dose of Melville's prose delivered in a variety of accents on a daily basis.
Which brings me to the contracts hook (or perhaps harpoon) in this case. Melville's narrator, let's call him Ishmael, signs up on the whaler the Pequod in Chapter 16, a text version of which can be found here. When asked of his experience at sea, Ishmael makes the mistake of telling Captain Peleg, one of the Pequod's part owners and agents, that he had been on serveral merchant voyages. Pressed further, Ishmael admits that he wants to go on a whaling vessel because he wants to see the world. Peleg responds by exhorting Ishmael to look out at the sea.
The prospect was unlimited, but exceedingly monotonous and forbidding; not the slightest variety that I could see.
Ishmael returns with this report to Peleg and yet still wants to "see the world," despite Peleg's insistence that he could travel to Cape Horn and still see only more of the same monotony. At that point, Peleg suspends his skepticism and owns that Ishmael may as well sign the papers. Here is Ishmael's description of his expectations of the agreement to be negotiated:
I was already aware that in the whaling business they paid no wages; but all hands, including the captain, received certain shares of the profits called lays, and that these lays were proportioned to the degree of importance pertaining to the respective duties of the ship's company. I was also aware that being a green hand at whaling, my own lay would not be very large; but considering that I was used to the sea, could steer a ship, splice a rope, and all that, I made no doubt that from all I had heard I should be offered at least the 275th lay- that is, the 275th part of the clear net proceeds of the voyage, whatever that might eventually amount to. And though the 275th lay was what they call a rather long lay, yet it was better than nothing; and if we had a lucky voyage, might pretty nearly pay for the clothing I would wear out on it, not to speak of my three years' beef and board, for which I would not have to pay one stiver. . . .
Upon the whole, I thought the 275th lay would be about the fair thing, but would not have been surprised had I been offered the 200th, considering I was of a broad-shouldered make.
But Captain Bildad, Peleg's business partner, does not share Ishmael's estimation of his value and suggests putting Ishmael down for a 777th lay. After a spirited exchange between the partners and one mad rush by Peleg at Bildad as Peleg shouts "Out of the cabin, ye canting, drab-colored son of a wooden gun- a straight wake with ye!" , Ishmael signs up for a 300th lay.
Tomorrow, we shall discuss how Ishmael's cannibal companion, Queequeg, fares.