October 19, 2012
Contracts in the Real World and the Law School Curriculum
[Like Jake Linford's post, this is a cross post from Concurring Opinions, which had an online symposium about Professor Cunningham's book, Contracts in the Real World. I previously blogged about the book here.]
There’s been a lot of noise recently about the law school curriculum and real world training. In contracts courses, that typically means that we should give students experience reviewing and drafting actual agreements. I think there’s another aspect of training that we need to provide students, and that’s to show them the relevance of the cases we assign from musty books, and show them how to apply those cases to new fact patterns. That’s where Professor Cunningham’s book comes in. It is chock full of fun contracts disputes ripped out of today’s headlines. Of course there’s the People magazine allure of reading about celebrities and their unreasonable demands and unbelievable predicaments. Cunningham’s book tells tales of love children and blackmail, bad bets and bad defenses. It was so entertaining that I almost felt guilty reading it – which makes me think that my students will enjoy the engaging tales and humorous anecdotes just as much as I did. Cunningham does a great job of weaving old cases with new ones, and new cases with newer ones. In showing how everything old is new again, Cunningham wages a strong case that contract law is alive and well. It made me feel that my chosen subject area was relevant and timely – and interesting. Sure, Contracts as a 1L course may not have the sex appeal of Con Law, or the life-and-death importance of Crim Law, but Cunningham shows that the subject can be intriguing just the same.
As Professor Collins put it (better and more eloquently) in his post, what makes this book unique is not just its readability but that it places contracts within their business context. For students who haven’t yet worked on a deal or negotiated a contract, it helps them to understand abstract concepts to have some sort of setting, something they can imagine. When that setting is one that they’ve read about in the paper or heard in the news, it just makes it more fun.
I did have one minor quibble with the book, and it’s that Cunningham’s “alive and well” view of contracts was misleading with respect to one infamous case. Yes, I’m talking about the quick gloss given to ProCD (and by extension, the slew of cases that followed in its wake). Cunningham provides what could be interpreted as a rationale for ProCD, but I wish he would have been a bit more critical. I’m not so sure that the case can be justified doctrinally – Easterbrook’s whole bit about ProCD being the master of the offer and the notice of terms in a box – it stretches the truth a bit much. I’m not quibbling with the result in the case so much as the rationale, and I think the rationale matters for the simple reason that it establishes precedent. Precedent that’s been followed by too many other courts even where the facts don’t warrant it. The court in ProCD could have enforced the contract against Zeidenberg under a quasi-contract theory or maybe an unfair competition claim (although I can’t recall off hand whether ProCD ever raised either). But it didn’t, and now we’re stuck with rolling contracts and the contracting of everything online. But Cunningham comes around in the next section when he acknowledges the challenges of applying old doctrine to new encounters. He comes down hard against those who would make blanket statements that website privacy policies cannot be contracts. As Cunningham notes, “They can be enforceable contracts or promises when meeting traditional tests of manifested intention, assent, and either consideration or reliance.” I couldn’t agree more.
Contracts in the Real World does what may seem impossible to wary 1Ls – it makes an old topic like Contract law seem dynamic, fun - and relevant.
October 18, 2012
Guest Post from Jake Linford on Cunningham, Contracts in the Real World
[Jake Linford (left) of the Florida State University College of Law, has allowed us to cross-post his contribution to a symposium about a new book by Lawrence Cunningham (right) Contracts in the Real World, about which we have previously blogged here.]
I am participating in a online symposium on Concurring Opinions, where we are discussing Larry Cunningham's fantastic new book, Contracts in the Real World, and where you should check out the rest of the commentary.
As I read "Facing Limits," Larry's chapter on unenforceable bargains, I had to pause and smile at the following line:
People often think that fairness is a court's chief concern, but that is not always true in contract cases (p. 57).
I still remember the first time someone used the word "fair" in Douglas Baird's Contracts class. "Wait, wait," he cried, with an impish grin. "This is Contracts! We can't use 'the f-word' in here!"1 Of course, Larry also correctly recognizes the flip side of the coin. If courts are not adjudicating contracts disputes based on what is "fair," we might think that "all contracts are enforced as made," but as Larry points out, "that is not quite right, either" (p. 57).
Pedagogically, Contracts in the Real World is effective due to its pairings of contrasting casebook classics, juxtaposed against relevant modern disputes. In nearly every instance, Larry does an excellent job of matching pairs of cases that present both sides of the argument. I don't mean to damn with faint praise, because I love the project overall, but I feel like Larry may have missed the boat with one pairing of cases.
Facing Limits on Surrogacy Agreements
As I mentioned, the chapter on Facing Limits is in part about the difficulty of balancing fairness, or equitable intuitions, against freedom of parties to be bound by their agreements. Larry pairs In re Baby M, a case where the New Jersey's highest court invalidated a surrogacy agreement with Johnson v. Calvert, a case where the California Supreme Court upholds such an agreement. I'm troubled that the Court in Baby M could be on the wrong side of both fairness and freedom.
In re Baby M was arguably the first case on surrogacy agreements to reach national prominence. The court found unenforceable a surrogacy agreement between William and Elizabeth Stern, who hoped to raise a child that Elizabeth could not bear, and Mary Beth Whitehead, who wanted to give another couple "the gift of life" and agreed to bring William's child, Baby M, to term. Mrs. Whitehead and her then-husband Richard were in tight financial straits, and the surrogacy deal promised $10,000, "on surrender of custody of the child" to the Sterns.
Once she gave birth, Mrs. Whitehead found it difficult to part with the baby girl she called Sara Elizabeth, but the Sterns planned to name Melissa. To avoid relinquishing the child, the Whiteheads fled to Florida with the baby. When Baby M was returned to the Sterns and everyone made it to court, the trial judge determined that the interests of the baby were best served by granting custody to the Sterns. The Supreme Court of New Jersey agreed with that assessment, but on its way to that conclusion, rejected the validity of the surrogacy contract itself, in which all parties stipulated, prior to the birth of Baby M, that it was in the child's best interest to live with the Sterns.
The Supreme Court's decision ostensibly turned on the unenforceability of the contract because, even in America, "there are, in a civilized society, some things that money cannot buy" (p. 55). But the decision is full of language suggesting that, in the Court's opinion, Mrs. Whitehead didn't know what she was doing. In the very paragraph that the Court assumed that she could consent to the contract, the Court marginalized her capacity to consent.
The Court bought into two tropes often trotted out by those who aspire to protect the poor from themselves: the coercive effects of money, and the inability of the poor to fully understand the consequences of their decisions. The Court was troubled that Mrs. Whitehead, "[t]he natural mother," did not "receive the benefit of counseling and guidance to assist her in making a decision that may affect her for a lifetime." The Court was perhaps suspicious she could not. After noting the distressing state of her financial circumstances, the Court posited that "the monetary incentive to sell her child may, depending on her financial circumstances, make her decision less voluntary."
Fairness and Freedom
It strikes me as unfair to conclude that a mother of two is incapable of considering what it might mean to give birth to a third. Holding the surrogate to the bargain can seem unfair at the difficult moment where she hands over the baby, but I struggle to see how it is any less unfair to allow the parents to invest their hearts and energy into planning for a baby that will come, but will not become theirs.
Turning to the question of the coercive effect of money, the problem with paternalistic protections is they often protect the neediest from the thing they ostensibly need the most. Many interested parties find ways to make money on adoption and surrogacy. It's puzzling, if we are truly serious about protecting the needy, that we would protect them from also acquiring some of the money that we seem to assume they so desparately need.
Here's another way to make the same point: in the wake of Baby M, some states allow surrogacy contracts, and some don't. Hopeful parents who can afford to enter into surrogacy contracts will go to states, like California, where those contracts are enforced. Surrogacy providers who hope to make their money as an intermediary will focus on markets where their contracts will survive judicial scrutiny. Our potential surrogates, however, are more likely to be tied to the jurisdictions in which they reside, at least if the assumptions about poverty in the Baby M opinion are generalizable. So altruistic surrogates will be able to carry a child to term in every state, but those who desire to make a bargain can do so only in those states willing to recognize them. To me, that sounds neither free nor fair.
Larry takes some comfort in the common law inquiry into the best interests of the child, and with that I take no issue. In a case where the contract and the child's interests are at loggerheads, it seems appropriate in the abstract for the best interests to be a heavy thumb on the scale, or even to trump the prior agreement. I'm just not sure that In re Baby M -- a case where the Court knocked out the contract even though the contract terms and best interests were essentially in line -- is a case where the value of the best interest test are best brought to light.
Jake Linford is Assistant Professor of Law at the Florida State University College of Law. Some of his scholarship can be found on SSRN.
1 I may have slightly dramatized this exchange, although my classmates assure me I did not invent it from whole cloth.[Posted by JT]
October 17, 2012
New in Print
Clayton P. Gillette, Bondholders and Financially Stressed Municipalities. 39 Fordham Urb. L.J. 639 (2012)
Jeffrey F. Pan, Preventing Small Business Fraud, Including Small Business Contracting Fraud Prevention Act, 11 Fla. St. U. Bus. Rev. 13 (2012)
October 16, 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 16, 2012 to October 15, 2012
|1||225||Allocating Risk Through Contract: Evidence from M&A and Policy Implications
John C. Coates, IV,
Harvard Law School
Anna Gelpern, G. Mitu Gulati,
American University Washington College of Law, Duke University - School of Law
|3||105||Disarming the Trojan Horse of the UAAA and SPARTA: How America Should Reform its Sports Agent Laws to Conform with True Agency Principles
Barry University - Dwayne O. Andreas School of Law
|4||98||Economic Analysis of Contract Law from the Internal Point of View
New York University School of Law
|5||96||Express Contract Terms and the Implied Contractual Covenant of Delaware Law
University of Oregon School of Law 2012
Last Revised: September 30, 2012
||When Nudges Fail: Slippery Defaults
Lauren E. Willis,
Loyola Law School Los Angeles
||Rethinking the Nature of the Firm: The Corporation as a Governance Object
York University - Osgoode Hall Law School
|8||50||Misrepresentation: The Restatement's Second Mistake
Stephanie R. Hoffer,
Ohio State University (OSU) - Michael E. Moritz College of Law
|9||47||Prohibiting the Freedom of Contract: A Fundamental Restriction
David P. Weber,
Creighton University - School of Law
|10||47||Lexis Nexus Complexus: Comparative Contract Law and International Accounting Collide in the IASB-FASB Revenue Recognition Exposure Draft
Kurt S. Schulzke, Gerlinde Berger-Walliser, Pier Luigi Marchini,
Kennesaw State University, University of Connecticut, University of Parma - Department of Economics
October 15, 2012
Some Spy Suits Are Justiciable
We have reported previously on the fact that the Totten doctrine bars suits against the United States by people who enter into espionage contracts with the government. But what if you are engaged in espionage for the Church of Scientology?
As reported here in the Tampa Bay Times, Paul Marrick and Greg Arnold are suing the Church of Scientology for breach of contract. The two men claim that David Miscavige, the Church's leader, hired them to spy on the Church’s rivals, especially Pat Broeker, who was ousted during a power struggle in 1986, and whom it was believed still constituted a threat to Miscavige’s power over the church. The theory was that Broeker had misappropriated $1.8 million in Church funds and that he was in possession of invaluable records entrusted to him by Church founder L. Ron Hubbard (pictured).
Marrick and Arnold allege that the Church has been paying them up to $500,000 a year since 1988 to keep the Church informed of the comings and goings of Broeker, among others, including Indiana governor Mitch Daniels when he was with Eli Lilly, and promised that their positions were permanent. However, they allege that the Church stopped paying them two earlier this year, and they have now filed suit.
Marrick and Arnold claim that, while no written agreement existed, the assurances given to them by the church constitute a verbal agreement that the church breached when it stopped paying them. Statute of Frauds much? They claim to have kept ample records detailing their work, and according to the Tampa Bay Times, when they suggested that they would share that information with the newspaper, the Church initiated settlement talks in a suit it characterized as a "shakedown." The Church acknowledges that the two men worked for them, providing "various services" as "independent contractors."
[Christina Phillips and JT]
Contracts Limerick of the Week: Halbman v. Lemke
In Halbman v. Lemke, Lemke sold an Oldsmobile to young Halbman, who being under the age of 18, was entiteld to avoid his contractual obligations. The sale price was $1250, part of which was payable in installments. However, apparently only weeks after the exchange was made, a connecting rod in the vehicle's enging broke. Although Lemke, who was the manager at a gas station, offered to install a used engine in the car if Halbman could find one. Instead, Halbman took the car to a repair shop, which charged him $637.40 for the repairs.
Although Halbman ceased payments on the car at that point, Lemke transferred title. Halbman returned the title, sought to avoid the contract and demanded the return of the $1100 already paid on it.
Halbman did not pay for the repairs, so the repair shop exercised its garageman's lien and canibalized the car for parts. It towed what remained of the car to Halbman's father's residence, where it sat, degraded and became unsalvageable. So matters stood when Halbman sued for the return of his $1100.
Those of you who read last week's Limerick can probably guess how this came out:
Halbman v. Lemke
Halbman, the young contract signer
Admitted that he was a minor.
When the car blew a rod
Lemke, poor sod,
Was left with some scrap and a shiner