December 03, 2012
Some Valuable Advice from a Reliable Source
Professor Emeritus Douglas Whaley (whose casebook I have just adopted for my first attempt at a sales course) offers this advice on exams.
October 22, 2012
Cross-Postings from Concurring Opinions: Online Symposium on Contracts in the Real World
Last week, the Concurring Opinions blog hosted an online symposium on Larry Cunningham's new book Contracts in the Real World: Stories of Popular Contracts and Why They Matter. An introduction to the symposium can be found here. With the permission of the authors, we are cross-posting the commentaries here. Here is a listing of the posts:
Miriam Cherry, Post I
Miriam Cherry, Post II
Miriam Cherry, Post III
Ronald K.L. Collins
Larry Cunningham, Post I
Larry Cunningham, Post II
Larry Cunningham, Post III
Susan Schwab Heyman
Law Student Umo Ironbar
Donald C. Langevoort
Jennifer S. Taub
Those of you in the teaching world, we hope that you will have a look at Larry's book and give serious consideration to the possibility of adopting it for your courses or recommending it to your students. To our student readers, this is a really fun book that will enhance your enjoyment of and appreciation of the law of contracts.
Larry Cunningham Responds, Part III: What’s Next for Contracts in the Real World?
Lawrence A. Cunningham is the Henry St. George Tucker III Research Professor of Law at the George Washington University Law School. He is also the author of Contracts in the Real World.
Thanks to all participants for their wonderful contributions to the on-line symposium about Contracts in the Real World: Stories of Popular Contracts and Why They Matter.
As the reviews suggest about readers finding the stories fun and the lessons enjoyable, you may be able to guess that I found researching and writing them fun and enjoyable too. Many of the stories were originally written, in a slightly different form, for this blog. Many of those stories generated productive comments.
I therefore must thank not only my fellow perma-bloggers here at Concurring Opinions for the opportunity to develop these ideas on this site, but also to many readers of the site for their thoughtful contributions. Double that gratitude for having allowed so much space to be devoted to the book these past several days.
Beyond contracts, several publishers and I believe that there is a series in this approach to the content and presentation of many law school subjects. That would certainly seem apt for other traditional 1L courses such as Torts, Property, Criminal Law and Civil Procedure.
Many are tempted to envision that such a series would resemble that forged a decade or so ago by Paul Caron, but it would be entirely different in substance and audience. Paul’s series dug deeply into the classics in the spirit of legal archeology, of tremendous interest and value to scholars, but less to students. This series is almost the opposite: using the classics but moving away from them toward contemporary cases that draw upon and illuminate them.
As envisioned, each book in the new series would be written by a single author and consist in drawing on contemporary events to illustrate how the principles from the classic cases continue to be relevant. Professors are a target audience, of course, but as colleagues such as Susan and others stress, students get enormous value from such works. We also continue to believe that such books have strong appeal to some cohort within the segment of general readers of non-fiction.
What else is next for Contracts in the Real World? Miriam has written a full-length review essay of the book, entitled “Learning Contracts Through Current Events,” which will appear in the Hawaii Law Review. (If there ever should be a live symposium of the book, the next book, or the series, I know where I’d propose it be held.) Ron Collins and his colleagues have invited me to come to the University of Washington next term to give a faculty presentation on the book and its pedagogical aims.
In addition, the chief editor at Cambridge University Press, John Berger, promises to have a stack of the books with him at CUP’s booth at the 2013 AALS annual meeting in New Orleans (another potential symposium destination). Scholars noodling on the idea of a series might wish to let John know about that–please let me know as well as I will be eager to coordinate such a project as series editor.
Thanks again to everyone who contributed to this symposium (and to the preparation of the book).
[Posted by JT]
Larry Cunningham Responds, Part II: Method for Contracts in the Real World
Lawrence A. Cunningham is the Henry St. George Tucker III Research Professor of Law at the George Washington University Law School. He is also the author of Contracts in the Real World.
Before wrapping up the symposium about Contracts in the Real World, this is the second of two posts on main themes drawn by the wonderful contributions. This one concerns methodology, the book’s approach, content and organization—and what more might be done in pursuit of such a new model of pedagogy.
The approach of using contemporary examples to illuminate venerable principles and classic cases seems warmly received, for many different reasons, elaborated in many different ways by all the contributors, including two students. It is nice to know the many different ways in which the book has spoken to readers. The value of that reach was summed up best, perhaps, by Nancy, when she stressed that retaining student attention is at least half the battle in law teaching.
I appreciated Tom’s point that reading this book does not feel like work in the way that reading many teaching books can. As Nancy, Don and Ron stated explicitly and others noted implicitly, the current teaching environment imposes new demands on teachers of contracts (really profs throughout the law school and much of the university). Finding ways to draw students in is vital.
Worth expanding on a bit are Erik’s interesting observations about the book’s layout and compatibility with given casebooks. Susan referenced having assigned Contracts in the Real World as a companion to the Dawson, Harvey, Henderson, Baird casebook, which I have used many times, including during the period when I was writing this. My selections of potential stories, and how to build them (in the ways Dave and Jake and others helpfully explained) was initially strongly influenced by that book.
But I wanted to be sure it fit with others. So I carefully examined a dozen of the most popular casebooks and prepared correlation charts between my discussions and those books. I tried to fill in the connections by drawing on the most often reprinted cases. I tried to find the most interesting stories that could connect to them. I ended up with more than 100 stories in various draft forms and settled on the 45 that are in the book.
That process and inventory posed a challenge concerning organization and sequencing. But it also gave me the advantage of freedom—not being wedded to any given table of contents. Erik notes the effect when he compares my organization to that of the casebook he uses: expanding a reader’s understanding.
There should be other books in this line. I appreciate Jennifer’s suggestion that this could be a stand alone teaching text for a law school course, but Miriam Cherry and I envision a more complete coursebook being built out of this one. Several publishers have expressed interest in such a project and we are working to develop it. Much of the organization would follow that of Contracts in the Real World, with “main cases” or “main deals” consisting of opinions or contracts summarized there, along with the supporting classic cases now found in most books.
It would be a coursebook, as Ron imagines, and could well include the effort to discern questions, to which Don referred, such as “what were they trying to do?” and “was this a good way to do it?” It will continue the bridge-building between worlds that Tom applauded. I think it would be wonderful to include, in the book or in an on-line companion, as Erik suggests, the text of at least some of the contracts for inspection. In preparing Contracts in the Real World, I obtained every contract that I could and have them in electronic form. I hasten to add that not every one of them would prove to be a useful teaching tool, but many would.
It is also important, I believe, as Don and Erik both suggested, to give many more examples of deals not resolved in court—such as the Conan-NBC deal and many others discussed in the book. We will try to develop case study modules to present such material in a way that both works within the prevailing law school teaching model and advances pedagogical imperatives.
[Posted by JT]
Larry Cunningham Responds, Part I: Politics in Contracts
Lawrence A. Cunningham is the Henry St. George Tucker III Research Professor of Law at the George Washington University Law School. He is also the author of Contracts in the Real World.
Before wrapping up the symposium about Contracts in the Real World, I wanted to offer two posts on main themes of the contributions–which were wonderful.
The first concerns the role of politics in contract law adjudication. It emerged as a theme from several posts, explicitly by Dave and Miriam, implicitly byJake’s discussion of Baby M and by Nancy’s of ProCD, and more obliquely in Tom’s (and Miriam’s) reference to my notion of the “sensible center” in contract law.
Perhaps the safer way to put the point would be to say that the common law of contracts is among the least political of subjects in law. The book does recognize the potential for political factors, of course, including variation among states. And while it celebrates the impressive power of the common law of contracts to deal neutrally with change, it also notes limits.
This is most explicit in the case of Baby M and its contrast with California’s Baby Calvert. I agree with Jake, and his agreement with Dave, that these two cases illustrate the driving role that judicial worldviews, and perhaps local state outlooks, can play in the approach to a case and the outcome.
The pairing of the two cases helps to show such features, in a context where opposition seems particularly acute. This is the context of “public policy,” an area where the common law of contracts is often inferior to administrative or legislative solutions precisely because at stake are exquisitely political decisions. That’s why p. 56 notes that judges on both (or all) sides of the debate about surrogacy contracts “usually concede that better solutions are likely to come from legislation. As magisterial as the common law of contracts is, many of society’s vexing puzzles should be resolved by the legislative branch of government.”
The differences between California and New Jersey on surrogacy contracts reminds me of the differences, to which Dave adverts, between California and New York on the parol evidence rule. In California, Chief Justice Roger Traynor helped to forge a weak parol evidence rule, stressing context and reflecting skepticism of the unity of language, compared to New York, where judges since Andrews and Cardozo (noted at pp 7-8) have shown greater interest in finality and the security of exchange transactions.
Those differences, in the doctrine and underlying attitudes, are real. But as this example shows and Dave notes, this is not so easy to classify in political or ideological terms. It may be due more to New York’s history as a commercial center and may reflect something about how California is just a more relaxed place in general.
I think the example of ProCD, about which Miriam, Nancy and Jake commented, is an instance of the potential but vague role of politics or judicial worldview in contract adjudication. In the book, I summarize the case as a possible precedent for the main case, which concerned consumers “assenting” to inconspicuous terms in an on-line license—the Netscape spyware case. The ProCD precedent, I note, pointed in opposite directions for the Netscape case, forcing the judge to choose whether to follow in its path or not. The judge chose not to. The related facts seem to support that outcome. So far so good.
But given the charged setting of electronic commerce, I suspected that readers would have a sneaking suspicion that something else is going on. So I identify the judges—something done rarely in the book, as follows: at page 28 “[ProCD was written by] Frank Easterbrook, the federal judge in Chicago appointed by President Ronald Reagan” . . . and at page 27 “Netscape was written by Judge Sonia Sotomayor for a federal appellate court in New York, several years before her promotion by President [Barack] Obama to the U.S. Supreme Court.”
The real problem with ProCD may be more akin to the real problem with Baby M: even the common law of contracts nods. The issues are so novel and vexing that legislatures should act. Even the UCC—part of a long tradition in sales law recognizikng the limits of the common law—may not be readily adaptable to the world of electronic commerce, as Miriam’s post about ProCD hints.
But to return to the broader thrust of the sensible center and the generally apolitical quality of contract law, consider two points Jennifer made in her post. The first concerns the political fury that erupted amid the AIG bonus contracts. While politicians were calling for scalps and the company’s PR team intoned about the sanctity of contracts, Jennifer notes the op-ed I wrote summarizing the comparatively cool tools and results recognized by the common law of contracts.
Jennifer also calls attention to the list of conclusions at the end of Contracts in the Real World. Look at those statements of earthy contract law (some listed here) and it will be difficult to deny the truth or to detect a political or ideological edge within the spectrum of American political discourse. Let contract law do its knitting, and my own answer to Dave’s excellent question is that contract law really is pragmatic.
[Posted by JT]
Umo O. Ironbar on Cunningham: A Law Student’s Viewpoint on Contracts in the Real World
As promised, the following is contributed by Professor Miriam Cherry's student, Umo O. Ironbar:
As a 1L student at Saint Louis University, reading the conditions materials in Professor Lawrence Cunningham’s Contracts in the Real World Stories of Popular Contracts was refreshing.
We looked at a deal that Kevin Costner went into for the creation of massive bronze bison sculptures which would be put in place in his luxury resort in South Dakota named The Dunbar (a tribute to his successful production of his 1990 movie “Dancing With Wolves). Another case we looked at was Charlie Sheen’s “play-or-pay” contract with Warner Brothers.
These cases are still so vivid in my mind because I actually knew who the parties were. Unlike other cases that could have been found in my regular contracts textbook, I did not have to wait until the notes and questions sections after the cases to know why these cases were so important or infamous, or why they made the selection into the textbook out of the hundreds of thousands of cases that have been tried.
I grew up watching Kevin Costner and Charlie Sheen on the big screen and television. They are both successful actors – and both had more than their share of controversy. When we read about Charlie Sheen our class was abuzz and more people wanted to speak and contribute to the class discussion. For me and many of my fellow classmates, the excitement came in part because Charlie Sheen was everywhere in the news and Internet. Everyone was just waiting to see what new eccentric behavior he was going show at any given time or day.
And here in my contracts class, we were actually talking about his legal issues. For me, it made the concepts we were learning more real. Conditions as defined by Restatement (Second) of Contracts, Section 224 made more sense to me. Conditions were no longer just words that were only used in law school academia.
I feel like many of the law students who will read Professor Cunningham’s contracts book will find it easier to follow the parties who are involved in the cases. Sometimes the biggest obstacle in understanding a case and what it is about is just being able to follow who the parties are and thus why they are in court. In using cases that involve people and stories we as students are familiar with, the materials make it easier for us to grasp the concepts and laws the courts are using to resolve breach of contract cases.[Posted by JT]
Jennifer Taub on Cunningham: “Unpopular” Contracts and Why They Matter
Professor Lawrence Cunningham knows the law and his audience. With Contracts in the Real World: Stories of Popular Contracts and Why They Matter, he brings contract doctrine to life. Cunningham concisely, yet colorfully, covers how courts resolve a variety of deals gone wrong. This book is ideal to help students develop an understanding of how the law is used to sort between those bargains that will be enforced and those that will not, as well as what remedies are available when things do not go as the parties to the agreement initially planned.
Contracts in the Real World has considerable range. It starts with a wrecked wedding party, an event few experience though many may fear. A dispute between a couple and a banquet hall venue results from a regional power outage during the reception. This fact pattern echoes the type of phone call a recent law graduate might receive from an exasperated family member punctuated with the dreaded question — you’re a lawyer, can we get our money back? The book provides a sensible explanation of how the wedding dilemma would resolve, and weaves together this type of personal situation with more public, celebrities’ disputes and classic contract decisions. These classic decisions are better appreciated in this fashion, when they are used to explain the outcomes of more modern disputes. For example, Sherwood v. Walker (the fertile cow – mutual mistake case) dating back to 1887 resonates when it is used to analyze a divorce settlement dispute concerning millions of dollars invested with Bernard Madoff’s Ponzi scheme.
What makes the book particularly compelling, is that mixed in with relatable fact patterns and entertaining battles are significant matters of policy.Contracts in the Real World accomplishes this, for example, when it covers some very unpopular contracts. These include the infamous agreements under which American International Group (AIG) paid out $165 million in cash bonuses to roughly 400 employees. According to the New York Times, among those who received more than $1 million a piece were 73 employees of the AIGFP business unit. This was the same business unit that helped enable the housing bubble and related Financial Crisis of 2008 by providing credit protection (selling credit default swaps) on high-risk mortgage-linked securities. The AIG bonuses were announced in 2009, just months after the US government paid $85 billion for a nearly 80% ownership stake in AIG. This was a part of the $182 billion government commitment to rescue the giant insurance firm when it approached insolvency due, in large part, to its inability to make payments to counterparties on its credit default swaps.
The public outrage over the AIG bonuses is included in Chapter 3 which covers the concepts of “excuses and termination.” These bonus contracts were entered into in early 2008, well before the bailout. The agreements which promised bonus payments in 2009 and 2010 were designed to encourage employees to stay with AIGFP. In response to an irate public, in 2009, AIG which was by then a ward of the state, insisted that the contracts with these employees were ironclad. Yet, the company did not publicly reveal the actual language of the agreements nor were legal theories that would have excused performance discussed. Those opposed to paying the bonuses, including certain members of Congress suggested imposing up to a 100% tax on them. In this manner even the opposition seemed to treat as true the faulty premise that contract law requires all agreements to be performed without any exceptions. Cunningham attempted to correct this misperception. In a contemporary op-ed in the NYT and in Contracts in the Real World he suggested that contract doctrine might have been a moderating measure, an alternative to either unexamined payments on the one hand or demands for government confiscation, on the other. It also would have been a teachable moment. Though that moment passed, through this book, the lesson is not lost.
Finally, beyond these thoughtful presentations of popular and unpopular contracts, this book includes in the final chapter twenty statements the reader is invited to determine are true or false, to test comprehension of contract law. This useful list serves as a proxy for the book’s (and a course’s) intended learning outcomes. Given the comprehensive scope and easy style of Cunningham’s book, this is a natural choice to assign as a supplement to a casebook. Or, one might be tempted to use it as the primary textbook, and supplement it with the UCC, a number of the referenced cases and other favorites, highlighting where jurisdictions vary. Students may learn faster when they are so guided and engaged. Should this leave extra time in the semester, it might be used for contract negotiation and drafting, skills that nearly all attorneys need but few learn in law school.
[Posted by JT]
Dave Hoffman on Cunningham: Is Contract Law Really Pragmatic?
Dave Hoffman is the James E. Beasley Professor of Law at Temple University's Beasley School of Law.
I’ll begin by joining the others who’ve written in already to praise Larry’s excellent Contracts in the Real World. It is highly accessible, entertaining, and offers a ream of examples to make concrete some abstract and hard doctrinal problems. Larry has the gift of making complex problems seem simple – much more valuable and rare than the common academic approach of transforming hard questions into other hard questions! This would be an ideal present to a pre-law student, or even to an anxious 1L who wants a book that will connect the cases they are reading, like Lucy, Baby M, or Peevyhouse, to problems that their peers are chatting about on Facebook.
Larry’s typical approach is to introduce a salient modern contract dispute, and then show how the problem it raises was anticipated or resolved in a famous contract case or cases. Larry often states that contract “law” steers a path between extremes, finding a pragmatic solution. This approach has the virtue of illustrating the immediate utility of precedent for guiding the resolution of current disputes, and comforts those who might believe that courts are alwayspolitical actors in (caricatured) Bush v. Gore or Roberts/Health Care Cases sense. It has the vice of de-emphasizing state-by-state differences in how contract law works, as well as the dynamic effects of judicial decisions on future contracts. But I think that for its intended audience, these vices can be easily swallowed.
I wanted to offer one question to provoke discussion: is it actually true that politics is as removed from contract law as Larry’s narrative appears to suggest, and how would we know? The contracts law professor listserve is full of laments about judges turn away from Traynor & his perceived progressive contract doctrines – and I certainly know of colleagues who teach that there are “liberal” and “conservative” versions of the parol evidence rule, for instance. But what does this actually mean, and how does it connect with the scholarship on judicial politics generally? As it turns out, this question has been understudied, probably because political scientists have yet to find a way carefully operationalize what a “liberal” or a “conservative” outcome in a contracts case would be, and thus to usefully regress case outcomes against a judge’s political priors. Many authors (Sunstein et al. 2004; Christy Boyd and I, 2010) have found ideological effects outside of the typical con law regime (particularly in “business law” areas). But I’m aware of a few empirical papers analyzing the political valence of how contract doctrine comes to be. (Snyder et al. n.d.) Some have suggested that contract law is a particularly hard area to study because selection effects loom so large. I would also note that most contract law “work” occurs at the state court level, where ideological measures are either explicit or very obscure.
If we found good measures, my own hypothesis would be that a particular judge’s worldview matters a great deal to how he or she resolves contract disputes – with priors about how much a person should be responsible for their own choices, and their perspective on market discipline, shaping how they understand the facts and thus apply the law. Contract cases are powerfully controlled by judges – probably more so than in other areas of private law. Contract doctrine would reflect these individual choices, and we’d thus be left not withone ”pragmatic” contract law, but rather many competing strands. I’d thus close by urging readers of Larry’s book to think a bit about the cases not picked out and illuminated in the narrative – where the judges are less wise and more human.[Posted by JT]
Cherry on Cunningham, Post III: Using Contracts in the Real World in the Classroom
Aside from the deeper theoretical questions that Prof. Cunningham raises about contract theory in Contracts in the Real World, the heart of the book is in its fun, rollicking, and thoroughly modern examples.
Every contracts professor should take a look at this book to glean ideas for real-world examples and hypotheticals. Even if your textbook is stuck in the world of itinerant homesteaders, ships using astrolabes for navigation, and delayed industrial components (shout out to Kirksey, Raffles, and Hadley v. Baxendale!), your students will appreciate the use of some fun celebrity stories to liven up the classroom discussion.
The last time that I taught Contracts, for example, I did a series of hypotheticals based on Charlie Sheen’s contractual troubles. Based on Prof. Cunningham’s materials, I was able to structure some hypotheticals based on Sheen for my unit on conditions. The students seemed to appreciate it, and in fact, I have asked a student from my class last year to share her impressions with our blog readers. It appears here.
[Posted by JT]
Don Langevoort on Cunningham: Contracts and "Contracting"
Donald C. Langevoort is the Thomas Aquinas Reynolds Professor at Georgetown Law.
Like all the reviewers so far, I am a big fan of Larry’s book. My interest in his approach comes partly from his way of bringing the subject alive, but more (and the book varies in the extent to which it does this deliberately) because it moves readers toward situating themselves in the time and place at which the bargain was struck and events play themselves out. Erik Gerding makes this point, too, and I want to elaborate on it. A case like Wood v. Lucy Lady Duff Gordon asks why the deal was expressed as it was, and thus what was the deal, really? There is a good bit of writing in law and economics that tries to theorize about deal-making, and Victor Goldberg, among others, have done some very rich work on Lucy, among other cases. I desperately want to engage my contracts students with these ideas, but find it hard to do without devoting more time than my 4 credits in a semster allows. “Contracts in the Real World” gives the students a base for many of these intuitions (especially the chapter on interpretation and parol evidence), and I hope that it will at least stimulate their interest in thinking more about contract doctine in this way. What I hope for most is that Larry or some reader will follow up on this volume with another dealing more explicitly with the “what were they trying to do?” and “was this a good way to do it?” questions. I’m familiar with a couple of efforts in this direction, but so far they don’t work for me. The person who pulls off that book in a rich, sophisticated but engaging way will earn my undying gratitude. For now, however, I’m happy enough that Larry has given contracts students and teachers not only a great introduction to the human workings of contract law, but also some valuable impressions of the work-a-day world out of which some very interesting deals were conceived.
[Posted by JT]
Miriam Cherry on Cunningham, Post II: Modern Technology: A Disruptive Influence on Contract Doctrine?
In my view, modern technology has exacerbated the doctrinal tensions within contract law. Currently, clickwraps and browsewraps stretch the notion of mutual assent to its extreme, perhaps warping it in the process.
The recent literature on form contracting online has been substantial. While some of this literature sees online contracting as a natural inheritance to traditional contract law doctrine, other commentators have argued that contracting online has distorted the doctrine.
In Contracts in the Real World, Prof. Cunningham attempts to reconcile two recent cases, Specht v. Netscapeand Pro-CD v. Zeidenberg, as part of his treatment of the theme of contract formation and mutual assent. As much as he tries, to me the cases still seem to be in conflict.
And if that weren’t enough, two well-known additional cases that dealt with late-arriving terms inside a computer box, Hill v. Gateway and Klocek v. Gateway, blatantly contradict each other, with contrary holdings on virtually identical facts.
In my mind, these contradictions reveal a mismatch in the doctrine and the reality on the ground. If there is no way for consumers to read or understand, or perhaps even see these clickwrap agreements, it hardly seems fair to bind consumers to them. As seen above, however, this leads to contradictory rulings.
Inconsistent holdings create the appearance of an arbitrary justice system, and these disputes, which are governed by the Uniform Commercial Code, should turn out in a uniform manner. When they do not, it only intensifies the debate about how to deal with online contracting and adhesion contracts online.
As we all continue to click our way through countless EULAs and are told that we are subject to “terms and conditions” that no reasonable consumer has had the time to read, I do not believe that it is enough to hope that antiquated laws will handle new situations.
Instead, I would suggest that we need to continue to build on the wisdom of contract law. While there is much to celebrate in the received wisdom of ancient doctrines, we must also recognize that it is the common law’s dynamism and adaptability that have led to its genius.
[Post by JT]
Susan Heyman on Cunningham: Best Book for 1L Contracts
Susan Schwab Heyman is an Associate Professor of Law at Roger Williams University. Some of her scholarship can be found here on the SSRN. Full disclosure: she was once Cunningham’s student in Contracts.
Larry Cunningham’s provocative account of contract law in his new book Contracts in the Real World: Stories of Popular Contracts and Why they Matter is remarkable. First, it provides a clear and easily cognizable overview of many topics including the leading cases covered in most first-year contracts courses. Rather than providing readers with a treatise, he quickly gets to the essence of various topics including formation, unenforceable bargains, excuses, remedies, unjust enrichment, interpretation, modification, conditions, and third party beneficiaries.
The clarity with which Cunningham explains convoluted principles deeply embedded in contract doctrine makes it easy for general readers and particularly first-year students to understand. Remarkably Cunningham is able to write with a flair and without legalese, while still preserving scholarly sophistication and retaining legal detail. His book is therefore enlightening not only for general readers or law school students but also for academics, practitioners or anyone interested in contract law.
Second, Cunningham demonstrates classic contract law’s capacity to resolve popular contemporary problems. He closely examines cases which seemingly only fascinate some of us as students or academics in such areas as mistake and frustration deriving from a fertile cow, a cancelled coronation, and the blockade of the Suez Canal. He then applies these old chestnut cases to recent disputes involving overstated investments due to the Madoff ponzi scheme and Donald Trump’s delayed payments on his loans due to the Great Recession. This approach teaches students that cases with even archaic facts can significantly impact contemporary legal disputes.
This book is a great supplement to traditional contracts casebooks as it puts the issues from century old cases into modern contexts. In fact, I recommended this book to my students as a supplement to the Dawson, Harvey, Henderson, Baird casebook and have received only favorable feedback on the selection. Students have found Cunningham’s approach helpful in conceptualizing how various topics in contract law fit together. The book will not only enlighten students, but will also fascinate general readers, academics and practitioners.
[Posted by JT]
Erik Gerding on Cunningham: Contracts Outside the Box
Erik Gerding is an Associate Professor at the University of Colorado Law School
Let me start out with a criticism of Larry’s book: it is too much fun. I had a hard time breaking off just a chunk of Contracts in the Real World to write about and found myself spending several hours reading one interesting vignette after another on famous and infamous contracts.
The book will make a wonderful companion text to a traditional contracts casebook. Its value is not just in its engaging account of contract stories or in giving context to chestnut cases, but in providing a very intuitive framework for understanding contract law. The traditional contracts course, perhaps by virtue of having the doctrine of consideration at its heart, can be one of the most confusing in the One-L year. Students are often left to divine the inner structure (or lack thereof) of contract law on their own, likely while cramming for finals. Sometimes the epiphany comes. For many students it does not.
Larry has a real genius for laying out the doctrinal building blocks in a very thoughtful and accessible structure. He groups cases around a rough life cycle of contracts, with chapters devoted to “Getting In: Contract Formation,” to “Facing Limits: Unenforceable Bargains,” to “Paying Up: Remedies.” The layout of the book combined with its lucid writing demystifies contracts.
The layout may at first appear to make this book an ill fit as a companion text to many case books, because many of the cases appear in Contracts in the Real World under a different doctrinal heading than in a particular case book. For example, in the case book I currently use Batsakis v. Demotsis appears in the chapter on “consideration.” Larry places this classic next to cases on unconscionability. I also teach Lucy, Lady Duff Gordon in consideration, while Larry situates it in “Performing: Duties, Modification, Good Faith.”
These differences actually demonstrate a strength of the book. Some disconnect between the organization of a primary case book and a companion text forces students to move beyond a facile understanding of contract law in terms of rigid doctrines. Seeing cases in different contexts and fitting into different doctrinal boxes can help students see that lawyering involves more than memorizing black letter rules and putting issues into the right doctrinal box. Indeed, sometimes different doctrinal boxes can apply to the same problem and lead to the same result (witness rules on past consideration and duress). At other times, the choice of the doctrinal box makes a huge difference (see those same two doctrines). Accomplished students can move from memorizing blackletter law to seeing the possibility of creative lawyering. Larry’s organization – both intuitive and surprising – will help students at both stages.
One final strength of the book is Larry’s choice to include not only court cases but many contemporary contract disputes that never reached the courtroom (such as the dispute between NBC and Conan O’Brien). This brings into the classroom a wider panorama of how lawyers encounter and shape contractual problems in practice. After all, few contracts and few lawyers find their way into a courtroom. Most disputes are resolved in the shadow of law.
I also have a wish list for Larry’s next project (from personal experience, I can tell you how invigorating it is for an author who has just finished a book to be asked “what’s next?’). One of the limitations of the traditional contracts curriculum is how rarely students read and interpret – let alone negotiate or draft – actual contracts. It would be incredibly helpful as a professor to have some of the source contracts behind these stories. Although some of these contracts are already contained in a judicial opinion (Carbolic Smoke Ball) and many will not be public (Conan’s deal with NBC), others might be available with some digging. Having real and full contracts would allow professors to meet many of the items on Professor Collins’ wish list, such as transactional perspectives and drafting exercises. Although some lawyers litigate over failed contractual relationships, many more help parties plan prospectively – including by drafting and negotiating deals. For most attorneys, contracts are not an autopsy subject, to be dissected in a court opinion, but a living thing.
Professor Cunningham’s book provides a joyful reminder of the life in contracts.
[Posted by JT]
Ronald K.L. Collins on Cunningham: Contracts in the Real World – At Last, a Book for Modern Minds
The following post is cross-posted from an online symposium that previously appeared on Concurring Opnions. The original post can be found here.
Ronald K.L. Collins is the Harold S. Shefelman scholar at the University of Washington School of Law. His next book, Nuanced Absolutism: Floyd Abrams and the First Amendment, comes out this January followed in March by Mania: The Story of the Outraged and Outrageous Lives that Launched a Cultural Revolution (with David Skover). In 1995 he edited and provided commentary for the second edition of Grant Gilmore’s The Death of Contract. By way of full disclosure, Professor Collins was one of the internal reviewers for Cambridge University Press when Contracts in the Real World was under publication consideration.
In a world where contract law, as typically taught, has one foot in the quicksand of the past, Lawrence Cunningham’s Contracts in the Real World is a most welcome and liberating alternative. Just consider the domain of what is commonly offered up:
- sales of “Blackacre” circa the 18th and 19th centuries,
- sailingships destined for Liverpool circa 1864,
- carloads of Mason green fruit jars circa 1899,
- a promise to pay ₤100 to anyone who contracted the flu after using a “Carbolic Smoke Ball,” circa late 19th century,
- a 12-word “contract of sale” penned on the back of a “counter check,” circa early 1950s,
- a material breach case about a dispute over the brand of pipe (Reading or Cohoes) to be used in the construction of a home (circa early 1920s),
- representations made in 1959 in connection with a grocery “chain” begun in 1922 (by 2010 the “chain” was down to a lone store in Green Bay, Wisc.),
- promises re an option to buy a ranch, circa 1960s, and
- a 1965 contract involving the 78 year-old actress Shirley MacLaine (co-star of the 1960 movie The Apartment).
One need not be wed to Henry Ford’s maxim that “history is bunk” to appreciate that much of what is presented in contracts casebooks is past tense, past perfect, and past its time. While such an approach to teaching contracts may be a boon to slothful professors averse to updating their class notes, it does little to prepare today’s law students for the challenges facing them in the 2012 marketplace of digital deals.
Given the yester-world of many contracts casebooks, it is refreshing to have a book that brings modernity onto the stage of legal education. While Professor Cunningham pays due deference to the canonical cases (e.g., Lawrence v. Fox, N.Y., 1859), he does so in ways that reveal their contemporary relevance (e.g., as in how that precedent applied to a 2005 Wal-Mart dispute). Moreover, what is so stimulating about his book is that Cunningham highlights the law relevant to current business dealings of everyone from Bernard Madoff and Donald Trump to Lady Gaga and Paris Hilton, and 50 Cent, too. There is even a case involving a dispute over the rights to the HBO TV series The Sopranos.
Likewise, Cunningham both identifies and understands the real-world contexts of modern contract law involving everything from electronic transactions and confidentiality of information, to agreements re season tickets subscriptions for sports events, to entertainment contracts, to Amazon’s provider contracts, to any variety of contemporary non-disclosure agreements, et cetera.
In all of these ways and many others, Contracts in the Real World stands alone as a work that ushers the law of contracts into our times.
At the risk of sounding unduly laudatory, this book was a joy to read. Both stylistically and substantively, it is a work of admirable achievement without a real rival. When one offers such acclaim, there is a corresponding obligation to justify it. Hence, permit me to explain my evaluation, at least in summary fashion.
Pedagogical Approaches & Big-Picture Perspectives
The structure of the book is sound; it reflects both a sober and informed understanding of how the law of contracts should be taught and how best to present the materials in order that they might be adapted for use with exiting casebooks. The author covers all of the major topics and more.
The content is classical and contemporary. As I have said, with this book the law of contracts stands to be modernized, something it sorely needs. The book speaks to students in the culture of their times, and not in that of nineteenth-century England. While most contracts casebooks recycle old “stuff” ad infinitum, Contracts in the Real World offers exciting new examples of how the law works today.
The pedagogical approach is instructive. One example of what I mean here is the book’s use of codas. The coda on formal rules versus contextual ones in the formation context, and the coda on formal rules versus flexible ones in the context of restitution and unjust enrichment, offer valuable cautionary lessons that are all-too-frequently overlooked by students barraged with rules and doctrines.
The book’s evolutionary approach (e.g., from the insights of Dean Langdell to the challenges posed by Baby M contracts and beyond) is most attractive. The inclusion of a big picture perspective is also instructive. The author’s “why” and “what” discussions along with his discussion of the “political philosophy” underlying contract law in a highly advanced capitalist culture take his readers outside of the dark and confining cabins of legal doctrine and into the sunlight of jurisprudence writ large.
Along the way, Professor Cunningham skillfully interlaces the main jurisprudential figures – e.g., Williston, Corbin, Langdell, Holmes, Cardozo, et al – into his narrative weave. Cunningham is also quite familiar with the relevant contract law scholarship, whether it be important but long-forgotten articles (e.g., Nathan Isaacs’ 1917 article on standardizing contracts) or significant new articles (e.g., Seana Shiffrin’s 2007 and 2009 articles on contracts, promises, and morals). That said, Contracts in the Real World could have used a dollop of Posner here and there. [See Lawrence A. Cunningham, “Cardozo & Posner: A Study in Contracts,” 36 William & Mary L. Rev. 1379 (1995).]
Welcome to the Real World (of Today’s Commercial World)
The way the author situates his doctrinal and policy analysis in actual commercial contexts is extraordinary. Too much of contract law, as taught and written, is black-letter doctrine crammed into old conceptual boxes (the stuff Grant Gilmore railed against in The Death of Contract). What is missing is “Llewellyn Realism” – that is, the ability to locate the law in the commercial settings in which it actually operates.
Chapter 3 (“Getting Out: Excuses and Termination”) masterfully illustrates how the mechanics of the business world need to mesh with the law’s standards. Clearly, Professor Cunningham knows the commercial world of which he writes and the law (old and new) which governs it. Chapter 3 illustrates this in vivid and educational detail. There, Cunningham puts that knowledge to good use as he explains, among other things, the modern-day plights of the likes of a divorced couple forced to litigate their financial fates in the wake of the Madoff scandal and against the doctrinal backdrop of an 1887 case about an Angus cow. The result is a remarkable narrative that brings the workings of today’s commerce into the world of yesterday’s law but with the added benefit of how that body of old law might be reshaped to suit new circumstances.
An increasing number of law professors are critical, and rightfully so, of the appellate-court-centric perspective offered in so many law school courses and texts. One of the strengths of this book is that its domain is not confined to appellate court decisions. As indicated above, the author has mined the fields of popular and commercial culture to offer up examples of contracts in context, in contemporary contexts moreover. In this transactional world, bargaining for the deal can be more instructive to students than dissecting the entrails of appellate opinions. (See Ronald Collins & Edward Rubin, “To Aid Business, Change Law School,” New York Times, March 5, 1995, sect. 3 (Business), p. 9)
Forward into the Future
The difficulty of framing any concept of “law” is that there are so many things to be included, and the things to be included are so unbelievably different from each other. – Karl Llewellyn (1930)
Contracts in the Real World could become a significant breakout book in its field of study. It does this by weaving historical materials with their contemporary counterparts to produce a useful and thoughtful little book that is engaging to read at every turn from contract formation to contract interpretation to the law of third-party beneficiaries.
With Contracts in the Real World we have tasted Modernity – and what a delight it is to savor! This 254- page book with its nine inviting chapters could serve as a blueprint for a future generation of contracts coursebooks (notice I did not say casebooks). The time has come to start anew, to bid farewell to sailing ships and greet the new world that harbors Modernity. Wearisome conformity aside, the time is ripe and the opportunities are ample. Consider, for example, contracts coursebooks patterned after Contracts in the Real World with added features such as:
* Materials related to various transactional approaches to the law of contracts,
* Exercises in drafting contracts sensitive to the demands of negotiation and the requirements of law, and
* Exercises designed to revisit key concepts such as promise and consent and reconsider questions of interpretation in order to better understand how such matters operate in our current commercial culture.
And if such books were offered up in digital form to be read on iPads or their electronic counterparts, then a host of new materials (including audio-visual and interactive ones) could be presented to students to further enrich their education. (See Edward Rubin, editor, Legal Education in the Digital Age(2012)).
It is difficult to deny: The law is the refuge of the antiquarian. But it need not be simply so. It can step through the wide doors of time and into a world where a new reality beckons to be embraced.
[Posted by JT]
Miriam Cherry on Cunningham: Dichotomies in Contract Theory and Doctrine
In this blog post, I would like to examine some of the dichotomies in contract theory and doctrine that are noted in Professor Cunningham’s Contracts in the Real World. Some would claim that contract law is revolutionary; others would argue that it is reactionary. Compared to the status relationships of the Middle Ages, in which economic power was primarily determined through feudal or family relationships, contract and market relations promised a more egalitarian alternative.
In the classic text Ancient Law, Sir Henry Maine described the radical transformation from a feudal society governed by custom and hierarchy to one transformed by the industrial revolution, in which socio-economic mobility was not only possible, but which was expected. On the other hand, many today would argue that contract acts as a reactionary force, for enforcing bargains strictly as written could result in reinforcing the power imbalances that already exist in society.
Contracts in the Real World notes these dichotomies and strikes a middle ground between them. Prof. Cunningham characterizes the schism in contract law as a dispute between formalists and realists. This schism, he posits, applies even to foundational matters, such as the question of whether a contract has been formed. Prof. Cunningham notes that extreme formalists would champion a return to the days of the seal and enforce only those deals that meet the strict definitions of offer, acceptance, and consideration.
Realists, on the other hand, favor scrutinizing the context of every bargain, accepting the most informal of deals and even enforcing promises to make gifts as contracts. Thus the dichotomy between formalists and realists turns into a debate over the extent of government or court involvement in private ordering.
Throughout the book, Prof. Cunningham walks a tightrope between these positions, often making reference to contract law’s “sensible center,” and noting that with many common problems, the rules that have evolved over the years make a good deal of sense. In essence, he makes a case for the status quo, eschewing reform in either the direction of more government interference in contract, or government withdrawal from contract.
Prof. Cunningham suggests that current law strikes the proper balance between two rather extreme positions. The book extols the earthy pragmatism of old precedents and wise judges, and suggests that these doctrines will ultimately win out and reach a balance. In my next blog post, I will question whether this assertion holds true in the context of technological change.
[Posted by JT]
Tom Lin: Contracts in the Real World and Contracts in Law School
The following post is cross-posted from an online symposium that previously appeared on Concurring Opnions. The original post can be found here.
The title of Larry’s new book is Contracts in the Real World. Intentionally or not, the title suggests that there may exist another realm for contracts other than the real world, a realm that is perhaps more theoretical and not completely real. The alternate universe that most readily comes to mind is law school. Contracts in the real world exist in partial contrast to contracts in law school.
Contracts in the real world bind parties and counterparties to one another. Contracts in law school bind students to casebooks and laptops. Contracts in the real world frequently revolve around compensation, obligations, and duties. Contracts in law school frequently revolve around precedents, arguments, and defenses. Contracts in the real world are about contracts. Contracts in law school are about cases about contracts. Needless to say more, there exists a meaningful and significant gulf between contracts in the real world and contracts in law school.
Larry’s book serves a bridge across this gulf. Through wide-ranging popular stories about the prominent and the pedestrian crafted in accessible language yet not devoid of legal doctrine, the book connects contracts in law school with contracts in the real world. Law school concepts like offer, acceptance, mitigation, and assignment are illuminated by real world stories of popular contracts involving Pepsi ads, Dateline NBC, Redskins tickets, and Haagen-Dazs ice cream.
The conceptual meditations of contract scholars like Cardozo, Corbin, and Williston are expressed and explained in contract controversies involving well-known figures such as Michael Jordan, Maya Angelou, and Lady Gaga, and through common experiences like purchasing lottery tickets, signing mobile phone agreements, and buying football tickets online. Given the accessible language and popular stories, it is easy for the reader to be lulled into forgetting that they are reading and learning about the law, much in the same way that Tom Sawyer lulled his friends into whitewashing a fence by making it seem more like a treat than a chore.
Through stories, common and classic, Larry reminds us that contracts are not pacts chiseled in stone that bind parties to one another in an empty, static, and monochromatic world without regard for reason or sense. Rather, contracts are dynamic communions between parties that exist in a colorful world filled with complications, change, and consequence. This means that contracts manifest agreements that are frequently honored as intended, but it also means that contracts are sometimes modified, breached, and enforced against another’s preferences because these agreements exist in a dynamic world.
Throughout the book, Larry advocates for a thoughtful, balanced view of contract law; this balanced view departs from heedless, extreme views of contract law based on rigid and impractical notions of freedom of contracts or social justice that frequently find root in irreconcilable moral, political perspectives. Likewise, contracts in law school and contracts in the real world should strive to find what Larry calls a “sensible center.”
Scholars, students, and practitioners of contract law can all greatly benefit from finding this balanced core as well because contract law is perhaps most enjoyable, most thoughtful, and most useful, when theory and pedagogy meets experience and practice, when there is a meeting of the minds between contracts in law school and contracts in the real world.
Larry’s book is a much welcomed addition to the literature on contract law. It will be enjoyed by many who deal with contract law, be it in law school, the real world, or somewhere in between.
[Posted by JT]
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 09, 2012
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 08, 2012
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.
September 06, 2012
My colleague, Alan Morrison (pictured), is keeping us up-to-date on the news from the world of the cotton trade. We posted on Monday about a Wall Street Journal article about an epidemic of broken contracts affecting the cotton trade. On Tuesday, the WSJ published this follow-up story.
In our last post on the subject, we suggested that it was irrational for parties to breach the contracts at issue because contracts law damages are created to eliminate any economic incentive to do so. We noted that the best explanation for why parties might nonetheless breach is a faulty enforcement mechanism. In this case, the problem is that the arbitral body associated with the International Cotton Association (ICA) is unable to enforce its awards in all cases.
On Tuesday, the WSJ reported that the ICA is now cracking down on parties that do not pay the arbitral body's judgments. Currently, such parties are placed on a "default list," warning other parties that these are entities that may not abide by their contractual obligations. However, the default list has been ineffective because a lot of entities in the trade continue to do business with entities on the default list. In addition, entities evade the consequences of their prior defaults by reorganizing their businesses or renaming them.
According to the WSJ, the ICA has set up a task force of investigators to try to establish connections between entities on the default list and new entities that are carrying on the defaulters' businesses under new names. Other possible solutions include new insurance vehicles to protect traders in the event of defaults or increased transparency in the arbitration process. Currently (and rather shockingly), the ICA provides only aggregate data about the number of cases and total awards. It also discloses default lists.