ContractsProf Blog

Seinfeldian Unilateral Contract?

I often am surprised by how many of my current students bring me clips from Seinfeld. Having aired from 1989-1998, the show started when most of my 20-something students were toddlers or, gasp, not even born. I suppose we have syndication to thank for that. This latest clip (embedding disabled) involves a possible unilateral K.

Elaine, the offeror, offers to exchange her bike for a particular type of performance (her own neck-fixing). Kramer potentially accepts via his prompt neck-fixing efforts, which Elaine initially appreciates.  Kramer would argue that Elaine's statement was an offer due to the “first person who” language (see Lefkowitz) and the specific requirements Elaine set forth.  Elaine could argue (among other things) that there was no offer due to the lack of specificity she used in her so-called offer or the jesting nature of it. Elaine's best argument may be that Kramer did not provide a substantively valid acceptance because he only fixed her neck temporarily—and that was not the performance for which she was bargaining.  Kramer then could argue that, via his part performance, he at least has bought himself some time to finish.  And so on and so on.  

Elaine and Kramer later decided to let their friend Newman resolve their issues through his own type of binding arbitration.  

 

I can't say that I agree with "Judge Newman" on this one.  However, I can say that I enjoyed watching it.

[Heidi R. Anderson, h/t to student Phillip Kuye]

Court Grants Certiorari in American Express Co. v. Italian Colors Restaurant

[When we learned that SCOTUS had granted cert. in this case, since David Horton (pictured) has guest blogged for us before, repeatedly, we threatened to hold him hostage until we could complete our science fiction fanstasy movie called Argo unless he could supply a post on the case.  Beacuse of the following post, it looks like the film will never be made.  Can someone get John Goodman and Alan Arkin out of our blog offices?]

Jeremy has kindly asked me to say a few words about the U.S. Supreme Court’s cert grant in American Express Co. v. Italian Colors Restaurant, No. 12-133, 2012 WL 3096737 (U.S. Nov. 9, 2012) (“Amex”).  For years, scholars like Jean Sternlight and Myriam E. Gilles have warned that the Court’s expansive interpretation of the Federal Arbitration Act (“FAA”) will kill off the consumer and employment class action.  Amex may drive the final nail into this coffin.  In fact, as I’ll explain, the case has the potential to sweep even further.

 As many readers of this blog know, Amex comes hot on the heels of AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011).  Before Concepcion, courts routinely held that class arbitration waivers were unconscionable when applied to numerous, low value, state law claims.  The idea was that these small-dollar grievances—which usually invoked state consumer protection statutes—would either be pursued as a class action or not at all.  However, Concepcion (arguably) held that section 2 of the FAA preempts this line of authority.  (I say “arguably” because Concepcion’s precise holding remains contested, and to plug my forthcoming article, which urges courts to read Concepcion narrowly).  Justice Scalia’s majority opinion reasoned that using the unconscionability doctrine to mandate class arbitration—which is slower and more formal than two-party arbitration—violated the FAA’s purposes and objectives.  Justice Scalia then dismissed concerns about deterring small claims by declaring that “[s]tates cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.”   

Yet the unconscionability defense wasn’t the only tool that judges employed to invalidate class arbitration waivers.  In Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 90 (2000), the Court suggested (but did not hold) that plaintiffs don’t have to arbitrate if they prove that they can’t effectively vindicate their federal statutory rights in the arbitral forum.  Specifically, the Court cited high arbitral costs as a reason to strike down an arbitration clause for thwarting federal statutory rights.  Since then, many lower courts have applied the vindication of rights doctrine to nullify class arbitration waivers in situations where individual lawsuits are cost-prohibitive.   Because Concepcion dealt with state unconscionability principles and section 2 preemption, its effect on the vindication of rights doctrine—a matter of federal common law—is unclear. 

Amex falls into this gap.  The plaintiffs, a group of merchants and a trade association, claim that American Express violated the Sherman and Clayton Acts.  Although the parties’ agreements contain a class arbitration waiver, the plaintiffs claim that the expense of proving their allegations (between several hundred thousand and a million dollars) dwarfs any individual’s potential recovery (a maximum of $38,000, even if trebled under the antitrust statutes).  Thus, the Court (minus Justice Sotomayor, who sat on a Second Circuit panel that considered an earlier iteration of the case) will decide whether Concepcion’s rhetoric about the evils of class arbitration extends to negative-value federal statutory claims.

From reading the petition for certiorari—which was supported by amicus briefs from the usual defense-side suspects—it seems that the vindication of rights doctrine itself will come under fire.  Of course, it’s unlikely to be the flagship argument.  I think American Express et al. will first try to stretch Concepcion as far as possible and then distinguish the plaintiff’s costs (which are mostly expert fees) from other vindication of rights holdings (which tend to involve expenses that wouldn’t normally be incurred in litigation, such as arbitrator’s fees).  But at least some of the briefs are already challenging Green Tree as dicta.  If the Court takes the bait and throttles back on the vindication of rights doctrine, it would affect the entire sprawling institution of arbitration—not just class actions.  Even plaintiffs with righteous, non-class claims under important federal statutes wouldn’t be able to challenge egregious arbitration clauses under federal law.  (To be sure, the unconscionability defense might still prune away the worst provisions, but it (1) is notoriously unreliable and (2) also hangs by a thread in the arbitration arena).  Thus, Amex could be another large step toward a proposition that the Court seems increasingly willing to embrace: claims must be sent to arbitration even if they can’t or won’t be arbitrated.    

[Posted on David's behalf, by JT]

Contract as Public Law Conference at Emory

 Contract as “Public Law” at the Intersection of Globalization and Privatization 

March 1 - 2, 2013 

Emory University School of Law, Atlanta, Georgia 

Conference Oragnizer, Martha Fineman (pictured)

The process of privatization relies heavily upon contracting in a variety of forms, from outsourcing or the complete transfer of functioning to a private entity to the creation of public-private partnerships. The bargains that are struck are generally justified in terms of efficiency and effectiveness, and work to funnel social assets and obligations into private hands in exchange for a promise that certain goods and services will eventually be returned to the public. These mechanisms complement the more general flow of wealth into private hands as our systems and structures of governance increasingly cede to private ordering. Indeed, states are increasingly acting in service to the private sphere, justifying interventions to protect corporations from the vagaries of the market even as they profess a concern for the public good. At the same time, the negative effects of corporate excesses and mismanagement on the well-being of individuals are deemed to fall within the category of individual or “personal responsibility.”

The expansion of contractual relationships has been the direct result of these processes of privatization. Yet in a ‘post-privatization’ world more individuals are exposed, in more areas of their lives, to contractual ordering and therefore to contract law. What awaits our societies under this alternative legal regime? Is such a regime prepared to handle the masses of people who are not necessarily seasoned market players? And crucially, if and how are such questions taken into account by those considering and crafting concrete privatizations?

While the privatization of public functions may seem unstoppable at this point, we believe it is important to pause and rethink certain private law principles and traditional contract doctrines. Is it possible to incorporate and reflect a vital public interest in the substance and processes of performance of these potentially society-transforming arrangements?

  Workshop Details: 

The Workshop begins Friday at 4PM in room 575 of Emory Law School (1301 Clifton Rd, Atlanta, GA), followed by dinner in the Hunter Atrium. Panels continue on Saturday from 9:30 AM to 5PM. Breakfast and lunch will be provided. 

 Workshop Contacts: 

 Martha Albertson Fineman, Emory University School of Law, mfineman@law.emory.edu 

 Hila Keren, Southwestern Law School, hkeren@swlaw.edu 

 Teemu Ruskola, Emory University School of Law, teemu.ruskola@emory.edu 

Submissions Procedure: 

Email a proposal as a Word or PDF document by 11/30/2012 to Emily Hlavaty at: emily.hlavaty@emory.edu 

**Decisions will be made by December 14th 2012 and working paper drafts will be due February 8th 2013 so they can be distributed prior to the Workshop 

 

 Topics May Include: 

 What relationships have been moved from status to contract and what is the justification for doing so? Is this progress? 

 What are the limitations and strengths of existing contract law, and what existing doctrines might prove fruitful for the imposition of public values into private contract? 

 What is the role for judges in navigating the space between the public and private spheres in the context of post-privatization? 

 Might the public be formally included as a third-party beneficiary to a privatization transaction and what would that accomplish, if anything? 

 Can we develop a body of “public contract” law that would cover privatization situations? What would such a body of law look like and how might it differ from existing private contract law? 

 Are there tools set out in other bodies of doctrine that might be expanded to supplement certain contracting situations? 

 What should the duty of good faith mean when it applies to market actors (such as corporations) that replace public institutions? 

 What are the duties of providers of privatized services? Do and should they have duties to provide services on an equal basis? 

 Can competition and cost/benefit concerns justify a closure of a branch of a privatized service in a distressed neighborhood or should the private provider maintain access to services at all cost? 

 Can the discourse regarding contract law as a public law be informed by theories such as feminism, CRT and queer theory, which emphasize the importance of context in legal analysis? 

 Are there nuances in interpreting or implementing arrangements such as the “labor contract” or the “marriage contract” that are deemed contractual, but have obvious and clear public and social content, that might be imported into general contract principles? 

 Can the policies and principles underlying suggested reforms of consumer contracts to afford more protection for “weaker” parties in some European countries be transplanted to the USA? 

 To what extent can the above questions be answered by existing contractual doctrines and what are the obstacles to their use? 

  Various resources on vulnerability and resilience can be found on the VCH Initiative website.

[JT]

Tweet This: Social Media Guarantees

From the ABA Journal:

Movie studios and marketers are recognizing the power of social media with new contract clauses for stars with Twitter and Facebook requirements.

Some studios contracts now require actors to make best efforts to use social media to support their work, an unidentified lawyer tells the New York Times. And companies paying for celebrity endorsements are writing social media guarantees into contracts, Advertising Age reported last year.

"We're starting to hear in negotiations, ‘We'd like to include X number of tweets or Facebook postings,' " Peter Hess, co-head of commercial endorsements for Creative Artists Agency, told Advertising Age.

The Times profiled a new company called theAudience that helps manage the social media presence for celebrities, movie marketers and record labels. According to the story, a star with a huge online following has more leverage when negotiating compensation packages to star in a movie or endorse a product.

[Meredith R. Miller]

Closing in on 1 Million!!!

If our numbers hold, we will welcome our 1 millionth visitor within the next week. If we could gather all of our visitors in one place, we'd like to think they would look something like this:

You people, you are the real heroes!

Thanks for visiting.

[JT]

New in Print

Gregory M. Duhl, International Sale of Goods. 67 Bus. Law. 1337 (2012). 

Paula A. Franzese, A Short and Happy Guide to the Law of Sales (West, 2012)

Kouslaa Tunee Kessler-Mata, Empowerment through Incorporation? The Trouble with Agreement Making and Tribal Sovereignty, 47 Tulsa L. Rev. 599 (2012)

Jennifer S. Martin, Sales. 67 Bus. Law. 1227 (2012)

Ann Morales Olazabal, Robert W. Emerson, Karen D. Turner and Rene Sacasas, Survey. Global Sales Law: An Analysis of Recent CISG Precedents in U.S. Courts 2004-2012, 67 Bus. Law. 1351 (2012)

Paul Spruhan, Standard Clauses in State-Tribal Agreements: The Navajo Nation Experience, 47 Tulsa L. Rev. 503 (2012)

[JT]

Villanova University School of Law to Host Symposium on the CISG

On January 18, 2013, the Villanova Law Review will be holding a symposium on "Assessing the CISG and Other International Endeavors to Unify International Contract Law: Has the Time Come for a New Global Initiative to Harmonize and Unify International Trade?"  This topic is both timely and important as the United Nations is considering a proposal to study whether it should undertake the drafting a new convention on international sales law.  The symposium will feature the leading authorities on the subject of international sales law from across the globe, including the Secretary of the United Nations Commission on International Trade Law (UNCITRAL), The Honorable Renaud Sorieul.  Here is a list of the confirmed participants:

• Yesim Atamer, Professor of Law at Bilgi University and Vice Director of Istanbul Bilgi University European Union Institute
• Eric Bergsten, Professor Emeritus at Pace University School of Law, Deputy Director of the Institute of International Commercial Law, and Administrator of the Willem C. Vis International Commercial Arbitration Moot
• Michael Bridge, Cassel Professor of Commercial Law at the London School of Economics
• Sieg Eiselen, Professor of Private Law at University of South Africa
• Harry Flechtner, Professor of International and Domestic Commercial Law at University of Pittsburgh School of Law
• Alejandro Garro, Adjunct Professor of Law and Senior Research Scholar of the Parker School of Foreign and Comparative Law at Columbia University School of Law
• John Y. Gotanda, Villanova University School of Law
• Keith Loken, Assistant Legal Adviser for Private International Law, U.S. State Department
• Alejandro Osuna-González, Founding Partner of Osuna González y Asociados, S.C.
• Jan Ramberg, Professor Emiritus at University of Stockholm, and former Chairman of the CISG Advisory Council
• Dr. Djakhongir Saidov, Professor of International Sales Law at University of Birmingham and Birmingham Law School
• Dr. Ulrich Schroeter, Chair for Private Law, International Corporate Law and European Business Law at the University of Mannheim
• Dr. Ingeborg Schwenzer, Professor of Private and Comparative Law, University of Basel
• Han Shiyuan, Professor of Civil Law at Tsinghua University School of Law and Tsinghua University Director of European and Comparative Law Center
• Hiroo Sono, Professor of Law at Hokkaido University
• Lisa Spagnolo, Assistant Lecturer in Property Law at Monash University
• Renaud Sorieul, Secretary, UNCITRAL and Director of the International Trade Law Division of the United Nations Office of Legal Affairs
• Pilar Perales Viscasillas, Chair of Commercial Law at University Carlos III of Madrid
• Peter Winship, Professor of International and Domestic Commercial Law at SMU Dedman School of Law

The symposium is being sponsored by Villanova University School of Law, the United Nations Commission on International Trade Law, the Committee on International Contract and Commercial Law of the International Section of the New York Bar, the Pennsylvania Bar Association, the Philadelphia Bar Association and Global Philadelphia.

More details are available here.

[JT]

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 
September 13, 2012 to November 12, 2012

Rank	Downloads	Paper Title
1	245	Queues in Law  Ronen Perry, Tal Zarsky,  University of Haifa - Faculty of Law, University of Haifa - Faculty of Law
2	156	Seduction by Contract: Law, Economics and Psychology in Consumer Markets - Introduction  Oren Bar-Gill,  New York University (NYU) - School of Law
3	140	Express Contract Terms and the Implied Contractual Covenant of Delaware Law  Mohsen Manesh,  University of Oregon School of Law
4	139	Another Step Towards Harmonization in EU Contract Law: The Common European Sales Law  Maud Piers, Cedric Vanleenhove,  Ghent University, Ghent University
5	114	The Cross-Border Freedom of Form Principle Under Reservation: The Role of Articles 12 and 96 CISG in Theory and Practice  Ulrich G. Schroeter,  University of Mannheim - Faculty of Law
6	105	Contract in My Soup: Chinese Contract Formation and Ritual Eating and Drunkenness  Mary Szto,  Hamline University School of Law
7	99	Intellectual Property and Agriculture: The Case on Soybeans and Monsanto  Marcelo Dias Varella, Marcelo Dias Varella,  University of California, Berkeley - School of Law, University Center of Brasilia
8	83	Lewellyn Slept Here: A Short History of Sticky Contracts and Feudalism  Cheryl B. Preston, Eli McCann,  Brigham Young University - J. Reuben Clark Law School, Unaffiliated Authors - affiliation not provided to SSRN
9	79	CISG and CESL  Ulrich Magnus,  c/o Max Planck Institute for Comparative and International Private Law
10	71	Dodd-Frank, Securitization, and the Subprime Mortgage Crisis  Stephen Hoffman,  University of Arizona - James E. Rogers College of Law

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
September 13, 2012 to November 12, 2012

Rank	Downloads	Paper Title
1	140	Express Contract Terms and the Implied Contractual Covenant of Delaware Law  Mohsen Manesh,  University of Oregon School of Law
2	139	Another Step Towards Harmonization in EU Contract Law: The Common European Sales Law  Maud Piers, Cedric Vanleenhove,  Ghent University, Ghent University
3	117	Harmonization of Private International Law in Europe and Application of Foreign Law: The Madrid Principles of 2010  Carlos Esplugues,  University of Valencia - Faculty of Law
4	114	The Cross-Border Freedom of Form Principle Under Reservation: The Role of Articles 12 and 96 CISG in Theory and Practice  Ulrich G. Schroeter,  University of Mannheim - Faculty of Law
5	83	Lewellyn Slept Here: A Short History of Sticky Contracts and Feudalism  Cheryl B. Preston, Eli McCann,  Brigham Young University - J. Reuben Clark Law School, Unaffiliated Authors - affiliation not provided to SSRN
6	79	CISG and CESL  Ulrich Magnus,  c/o Max Planck Institute for Comparative and International Private Law,
7	68	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
8	66	Misrepresentation: The Restatement's Second Mistake  Stephanie R. Hoffer,  Ohio State University (OSU) - Michael E. Moritz College of Law,  Date posted to database: September 18, 2012  Last Revised: September 18, 2012
9	62	The Subprime Mortgage Crisis and Economic Checks and Balances  Chunlin Leonhard,  Loyola University New Orleans College of Law
10	60	In Defense of Commercial Capitalism: Lessius, Partnerships and the Contractus Trinus  Wim Decock,  Max-Planck-Institute for European Legal History

[JT]

Post-Election Puzzler

 Will Farrell posted the following video just days before the election:

 

Is this an offer?  If so, how many millions of voters have taken him up on it?  It seems seriously intended, and when I first viewed it, I felt like he was addressing me directly.  It could be a joke, I suppose.  It's hard to tell.  Will Farrell is an actor and his performance here (if that's what it is) is full of nuance.

[JT]

Second Circuit Upholds Summary Judgment in Favor of Holders of Argentina's Defaulted Bonds

In NML Capital v. The Republic of Argentina, the U.S. Court of Appeal for the Second Circuit has affirmed the District Court's grant of summary judgment in favor of bondholders of Argentina's defaulted bonds, but it remanded the case to allow the District Court to clarify the mechanics of its injunction requiring that Argentina pay plaintiffs concurrently or inadvance of payments made to other bondholders.

Argentina began issuing debt securities in 1994, and plaintiffs purchsed the Fiscal Agency Agreement ("FAA") bonds between 1998 and 2010.  When Argentina defaulted on the FAA bonds in 2001, its President declared a "temporary moratorium" on principal and interest payments on more than $80 billion of its public external debt, including the FAA bonds.  That moratorium has been extended, and Argentina has made no principal or interest payments on the FAA bonds.  Instead, Argentina initiated exchange offers in both 2005 and 2010, allowing FAA bondholders to exchange their defaulted bonds for new unsecured and unsubordinated external debt in exchange for waivers of their rights and remedies under the FAA.

While Argentina successfully restructured 91% of its foreign debt under the two exchange offers (the Exchange Bonds), plaintiffs declined the exchange.  The FAA included a pari passu provision which represented that "[t]he payment obligations of the Republic under the Securities shall at all times rank at lesat equally with all its other present and future unsecured and unsubordinated External Indebtedness debt."  Despite the pari passu provision, Argentina made all payments due on the Exchange Bonds. 

Alleging violation of the FAA's pari passu provision, plaintiffis sued Argentina, alleging breach of contract and seeking injunctive relief, including specific performance of the pari passu provision, which should prevent Argentina from discriminating against FAA bonds in favor of other unsubordinated, foreign bonds. The District Court first temporarily and then permanently enjoined Argentina from making payments on the Exchange Bonds without making comparable payments on the defaulted debt. Rejecting Argentina's six arguments that the Distrcit Court had erred, the Second Circuit affirmed the injunction, finding that Argentina had violated the pari passu provision by ranking its payment obligations on the defaulted debt below its obligations to the holders of the Exchange Bonds.  

[JT]