Friday, June 14, 2013
I just finished reading contracts prof Amy J. Schmitz's article, Sex Matters: Considering Gender in Consumer Contracting, 19 CARDOZO J. LAW & GENDER 437 (2013) which I thought was particularly timely given all the interest in consumer contracts. As Schmitz points out, too often discussions about "context" are left out of discussions about consumer contracts, especially from efficiency theorists who "mistakenly assume that market competition and antidiscrimination legislation address any improper biases in contracting." Schmitz's article is a thoughtful and comprehensive work that canvasses and synthesizes existing research, including behavioral economics and consumer legislation, in this area. She does a great job of highlighting ways in which existing legislation falls short of protecting against gender discrimination and incorporates a great deal of empirical and cognitive research regarding how gender affects both parties in consumer contracting scenarios. She notes that the available data suggests that women receive "less financially attractive sales and loan contracts, which may lead to higher debt loads for women." (at 447) Schmitz also conducted her own survey and shares the results which indicated gender disparities in areas such as confidence in ability to negotiate terms and ability to get companies to change terms. She argues in this article (as she has elsewhere) that context and "contracting culture" matters, and argues that gender be considered among the factors contributing to a contracting culture. For those who think that the free market is a fair market, Schmitz's paper should provide food for thought (as should this article that discrimination in housing persists against non-whites).
*Yes, I knew that putting "sex" in the title would increase traffic.
Thursday, June 13, 2013
The United States Supreme Court rarely has occasion to opine on contract law, the contours of which are largely left to state courts. However, a couple of recent arbitration cases provided the court with a unique opportunity to point out the difference between contract terms implied-in-fact and contract terms implied-in-law. As any diligent first-year Contracts student should know, the former must rest upon the actual consent of the parties (even though not clearly expressed), while the latter are given effect through default legal rules, applied, as necessary, where the parties’ agreement is silent. This distinction between the two (and between contract “interpretation” and “construction”) is, of course, not always made clear in contract cases addressing one or both. However, these two recent opinions, Stolt-Nielsen v. Animal Feeds Int’l Corp., 130 S.Ct. 1758 (2010), and Oxford Health Plans, LLC v. Sutter, 2013 WL 2459522 (U.S.) (June 10, 2013) illustrate the difference quite nicely—whatever one may think about the content of the Court’s arbitration jurisprudence animating these decisions.
In Stolt-Nielsen, a panel of arbitrators had reasoned that an agreement permitted class arbitration, because it did not preclude it. Stolt-Nielsen at 1766. In effect, the parties’ silence required the arbitrators to supply an omitted essential term—a default rule—and they did so, thereby construing the agreement as allowing for class arbitration. Id. at 1768-69 and 1781. While acknowledging the power of arbitrators to craft procedural rules, generally, the Court explained that a “default rule,” allowing for class arbitration was sufficiently inconsistent with the fundamental nature of arbitration as to be beyond the power of arbitrators. Id. at 1668-69, 1775-76 (referencing the Restatement (Second) of Contracts § 204 on default rules and relying on FAA § 10(a)(4) to hold that the arbitrators had exceeded their powers). After Stolt-Nielsen, some might have expected that class arbitration would require some sort of “clear and unmistakable” expression of party intent (as the Court purports to require for a “delegation” clause, assigning jurisdictional decisions to the arbitrator). This is not necessarily so, however, as we learned this week in Oxford Health Plans.
In Oxford Health Plans, a claimant sought to bring class arbitration claims, and respondent asserted they were not allowed under the arbitration agreement. Both parties agreed to submit the question to a sole arbitrator, who “interpreted” the parties’ agreement and determined that it impliedly allowed class arbitration. Id. In affirming the arbitrator’s decision, Justice Kagan explained that the arbitrator was merely interpreting the actual intent-in-fact of the parties—a task clearly assigned to the arbitrator by those same parties. Id. Therefore, the arbitrator’s decision was fully within his power, even if erroneous—in fact, even if “grievously erroneous.” Id.
Thus, the Court neatly distinguished between the power of an arbitrator to determine actual, factual party intent, when assigned that task by the parties, and the power of the arbitrator to craft legal default rules (at least beyond the scope of general arbitration procedures). This distinction is of course analogous to the distinction between contract interpretation—generally an issue for the jury, if in question—and contract construction—generally an issue for the court.
Perhaps of greater interest to those who follow the Court’s arbitration jurisprudence, Oxford Health Plans appears to continue the inexorable march towards a seemingly unreviewable form of contractual Kompetenz-Kompetenz, see Jack Graves & Yelena Davydan, Competence-Competence and Separability: American Style in, International Arbitration And International Commercial Law: Synergy, Convergence and Evolution (Kluwer 2011) (Part 2) and Jack Graves, Arbitration as Contract: The Need for a Fully Developed and Comprehensive Set of Statutory Default Legal Rules, 2 William & Mary Bus. L. Rev. 225, 276-85 (2011), initially announced in First Options, Inc. v. Kaplan, 115 S.Ct. 1920 (1995), further expounded upon in Rent-A-Center, West, Inc. v. Jackson, 130 S.C t. 2772 (2010), and made even more seemingly absolute in Oxford Health Care. The Court had already made abundantly clear that a decision as to whether the parties had in fact agreed to arbitrate a dispute—when the decision was “delegated” to an arbitrator—was beyond court review, except as provided under FAA § 10(a). In Oxford Health Care, the Court further clarified the extraordinarily narrow scope of FAA § 10(a)(4).
[posted by Meredith R. Miller on behalf of Jack Graves]
Wednesday, June 12, 2013
For those of you who cannot get enough input on Margaret Jane Radin's Boilerplate: The Fine Print, Vanishing Rights and the Rule of Law, we have yet another review. This one is from friend of the blog Steven Feldman. Links to other contributions from our online symposium on the book can be found here.
In her book, Boilerplate: The Fine Print, Vanishing Rights, and The Rule of Law, Professor Margaret Jane Radin suggests the expansion of tort law as the centerpiece remedy for what she terms abusive mass market contract boilerplate. (Radin, p. 216). As a complement to existing contract remedies, she posits a new tort, i.e., “intentional deprivation of basic legal rights.” (Radin, pp. 198, 211, 216). According to Radin, this intentional tort would cover abusive boilerplate, i.e., “a firm that imposed severe remedy deletions of rights that are at least partially market-inalienable, under circumstances of non-consent and mass market distribution . . . .” (Radin, p. 211).This intentional tort would be a companion to another new tort reconceptualizing abusive boilerplate as a defective “product” under the law of product liability. (Radin, pp. 198, 222-23).
Radin’s proposal to use the tort law system to remedy boilerplate abuse has attracted support from respected academic commentators. Professor Omri Ben-Shahar in his review of the book calls Radin’s suggestion a “welcome new framework” and “an immensely creative idea, surely to become a legacy of the book, and it deserves careful attention . . . .” Omri Ben-Shahar, Regulation Through Boilerplate: An Apologia, ___ Mich. L. Rev. ___ (2013) (forthcoming) (available at the SSRN Electronic Library). Because I believe that Radin’s suggested tort remedies contradict numerous legal principles, my critique will explain why the chances are minimal that any U.S jurisdiction would accept her proposals to make a tort out of a contract dispute.
Radin: Precedent exists for the creation of new torts by common law courts, such as the torts involving invasion of privacy. (Radin, p. 198).
Response: Radin is correct that the torts involving invasion of privacy were judicially created. What Radin omits is that although some courts claim the common law authority to create new torts, they characteristically “tread cautiously” in this area, Rees v. Smith, 301 S.W.3d 467, 471 (Ark. 2009), as they balance numerous legal and substantive considerations, Burns v. Neiman Marcus Group, Inc., 93 Cal. Rptr. 3d 130, 136 (Cal. Dist. App. 2009)(listing considerations). Thus, for example, courts considering a new tort must balance the need to meet society's changing needs against the prospect of boundless claims in an already crowded judicial system. Rees, 301 S.W.3d at 471. In another policy, courts “[w]ill decline to recognize a new cause of action if there are sufficient other avenues, short of creating a new cause of action, that serve to remedy the situation for a plaintiff.” Id.
Radin fails to point out that the usual outcome is “countless refusals” by judges to create new torts. Anita Bernstein, How To Make A New Tort: Three Paradoxes, 75 Tex. L. Rev. 1539, 1546 n.38 (1997)(citing decisions). Indeed, some courts decline altogether to create new actions in tort. Their rationale is that legislatures have better institutional capability to balance the competing public policy considerations attendant with new forms of liability. Murphy v. American Home Products Corp., 448 N.E.2d 86, 89-90 (N.Y. 1983); Accent Store Design, Inc. v. Marathon House, Inc., 674 A.2d 1223, 1226 (R.I. 1996)(“We have long held … that the creation of new causes of action is a legislative function.”). Radin does not mention this split of authority and does not make a convincing case that existing contract remedies, such as contract invalidation based on unconscionability, are inadequate to address meritorious consumer claims.
Estimates are that ninety-nine percent of all contracts are standard form adhesion contracts. Wayne R. Barnes, Toward A Fairer Model of Consumer Consent To Standard Form Contracts: In Defense Of Restatement Section 211(3), 82 Wash. L. Rev. 227, 233 (2007). Because Radin’s new torts would conceivably cover a high percentage of these standardized mass distribution contracts nationwide, courts should think twice before hampering the use of a business tool that “[i]s essential to the functioning of the economy.” See 1-1 Corbin on Contracts § 1.4. (Rev. ed. 1993). A real possibility also exists that Radin’s proposals would incite boundless claims in an already crowded judicial system. Thus, it is highly unlikely that any court would approve Radin’s proposals for expansive new tort liability. Also improbable is whether any state legislature--with many dominated by conservative representatives--would expand consumer rights beyond existing consumer protection statutes.
Tuesday, June 11, 2013
|1||215||The Hague Principles on Choice of Law for International Contracts: Some Preliminary Comments
Symeon C. Symeonides,
Willamette University - College of Law,
|2||205||Regulation Through Boilerplate: An Apologia
University of Chicago Law School
|3||121||Contract Law in Europe and the United States: Legal Unification in the Civil Law and the Common Law
Hein D. Koetz,
Max Planck Institute for Comparative and International Private Law
|4||118||Preemption Without Borders: The Modern Conflation of Tort and Contract Liabilities
Max N. Helveston,
DePaul University - College of Law
|5||113||On the Applicability of the Common European Sales Law to Some Models of Cloud Computing Services
Chris Reed, Clarice Castro, Ruy de Queiroz,
Universidade Federal de Pernambuco, Queen Mary University of London, School of Law, Centro de Informática - Univ Federal de Pernambuco
|6||108||Damages versus Specific Performance: Lessons from Commercial Contracts
Theodore Eisenberg, Geoffrey P. Miller,
Cornell University - Law School, New York University (NYU) - School of Law
|7||92||Lochner, Liberty of Contract and Paternalism: Revising the Revisionists?
Harry G. Hutchison,
George Mason University - School of Law
Alan Scott Rau,
University of Texas at Austin School of Law
|9||80||Shame, Regret, and Contract Design
Eric A. Zacks,
Wayne State University Law School
|10||80||The Information Privacy Law of Web Applications and Cloud Computing
Columbia University - Department of Computer Science
Irma S. Russell is Dean and Professor of Law at the University of Montana School of Law.
Kenneth Adams’ recently released third edition of A Manual of Style for Contract Drafting, is a hefty volume. When I opened the package containing this manual my first thought was: “Wow, this is bigger than expected. It looks really time consuming.” At 455 pages, the book is closer to Fowler’s than Strunk & White. It is worth the time to read it. In fact, once you start reading, it is hard to put down. The writing is clear and concise, the tone is engaging, and the range of usage addressed is impressive.
This book provides far more than drafting tips. This author
has considered language in a deep way and gives thoughtful and sometimes
provocative assessments of the usages he endorses. His discussion of the
language of belief, the language of intention, the language of recommendation
and the distinctions among the categories is notable for its logic and even
philosophical assessment as well as for its authority of declaring a particular
usage superior to other constructions.
(Be sure to look for his treatment of "between" and
"among" in reference to multiple parties. This discussion may also apply to my last
sentence before this parenthetical.)
The manual is useful for all lawyers who draft agreements, and most do of course. Indeed few lawyers can separate themselves from contract drafting or the need for precise language. A plea arrangement in the criminal context is as subject to the risk of ambiguity as a lease agreement. A tort settlement is in as great a need of careful word choice as a corporate merger. The trap for the casual drafter can involve malpractice claims as well as disappointed expectations of clients.
The author’s introduction makes clear the work’s goal of providing precise and
consistent language in contracts. He endorses consistency “because
differences in wording can result in unintended differences in meaning.”
He notes the necessity of a manual of style “because traditional contract
language needs a thorough overhaul.”
This point underscores the need for the point-by-point treatment
provided in the book.
The goals the author sets for this work are indeed as worthwhile (and as hard to achieve) in today’s world as in Fowler’s. Creating documents with few opportunities for confusion means that the careful drafter will not need to see his words in court and the client will not need to roll the dice of litigation in arguing for his belief or assumptions about the intentions of the parties.
The book delivers on its promise to serve to help its user find "greater clarity and consistency in written usages." Though modest in its succinct statement, this is an ambitious promise, and one that the book fulfills. The principle of Occam's razor is at work here despite the heft of the volume. Each discussion of a phrase or word is brief and to the point. The length of the book results from the number and scope of the issues addressed rather than from any drawn out discussions. More elegant contract language is the result of the guidance offered here. While Strunk & White is certainly shorter, it does not take on the range of issues Adams reaches, and I am convinced both revered authors would approve of this manual of style.
Opening this book was a Pandora-type move for me, and now I am hooked on the author’s blog: Adams on Drafting. You can access it here but I warn you now: You can’t read just one. The risk for the reader opening either the book or the blog is getting caught up in the fascinating world of contract drafting. Even after you find the answer to the specific question that sent you to the book, you may be unable to stop reading. I’m heading back to the blog now to look for more on “between” and “among.”
[Posted, on Irma Russell's behalf, by JT]
Monday, June 10, 2013
Kenneth Adams’ third edition to the Manual of Style for Contract Drafting (“Contract Drafting”) delivers invaluable advice to any attorney or professional who drafts contracts or contract terms. The book is also highly suitable for law school classroom use in drafting classes, business school, or undergraduate business courses. This book has found a permanent place on my shelf among my go-to style manuals.
Contract Drafting is a style manual that goes well beyond explicating basic contract conventions, admonishing attorneys to use “plain English” and avoid “legalese,” and providing lists of awkward or ambiguous words and phrases to excise from the drafting lexicon. Adams does all of these things effectively and efficiently, but Contract Drafting delivers on many more levels.
Like previous editions, this book will be useful across a wide range of applications. As Adams notes in the introduction:
This manual should be of use to readers in every contract ecosystem—a solo or small-firm general practitioner handling a broad range of contracts . . ., a contract-management professional responsible for negotiating contracts with customers; a big-law associate drafting mergers-and-acquisitions contracts; an in-house lawyer overhauling the company’s template sales contract; a paralegal reviewing confidentiality agreements a company is asked to sign; a judge trying to make sense of a confusing contract provision.
In this list, Adams omits another important audience – law students. Contract Drafting is a nearly ideal tool for teaching a contract drafting course. As discussed below, the content of the manual goes beyond listing blackletter principles and providing tables of words and phrases to avoid. In this most recent edition of Contract Drafting, Adams carefully walks the reader through detailed explanations of his drafting principles while at the same time presenting an extraordinarily complete manual that teaches the inexperienced and informs the senior practitioner. Any professional – lawyer or non-lawyer – or law student who deals with contracts in any manner should keep this book near at hand.