ContractsProf Blog

The (fairly) short goodbye . . . .

 
Well, not "goodbye," exactly, but after six years I'm stepping aside as the point dog on the ContractsProf sled.  Our esteemed limerickist (if that's a word), longtime contributor, and all-around good guy Jeremy Telman (Valparaiso) is taking over.

I've enjoyed helping to build the blog, and I expect to still frequently appear as a contributor, but I'm working on another web project that's going to be taking too much time to keep posting as often here.  (Details will follow in a month or two.)  But we have a bevy of new contributors who will be bringing a host of new perspectives, and I'm sure you'll enjoy their work.  Since I'm on vacation with the family (above, me with the boys cruising on the river in Tokyo) I'll let Jeremy introduce them in the near future.  You'll be happy to know that Meredith, Miriam, and Keith will be sticking around.

Thanks to all our regular readers and our visitors who've made this so much fun, and to LPBN Czars Paul Caron and Joe Hodnicki who invited me to do this.  Have a very Merry Christmas and a Happy New Year!

FGS

Spurlock helps bring rule of law to Mongolia

My contracts colleague at Texas Wesleyan, Joe Spurlock, has been working for a decade helping the judiciary of Mongolia make its transition from Soviet authoritarianism to a free and independent group that helps further the rule of law in the country.

Joe is a former Texas state legislator, gubernatorial advisor, and judge at both the trial and appellate levels, and he runs TW's Asian Judicial Institute.  Over the years he's brought scores of Mongolian legal officials to Texas in the summer to learn about the American system.

I mention this now because if you happen to be flying American Airlines this month, you'll see a piece about Joe's work in the American Way magazine.  If you're staying home, you can read it online here.

FGS

TJSL's Green promoted

Congratulations to contracts professor Kevin Greene, who’s just been promoted to full professor at Thomas Jefferson School of Law.

Greene has been at the San Diego school -- where he also teaches Entertainment Law, Intellectual Property, and Music Law -- since 1997.

FGS

Lipshaw on Concept, Metaphor and the Synergy of Teaching and Scholarship

Jeffrey Lipshaw has a characteristically thoughtful post over at the Faculty Lounge about how his scholarship is informing his teaching of contracts and a "nascent article" on that topic.  He's even illustrated his thoughts in diagrams.

As always, interesting stuff - go check it out.

[Meredith R. Miller]

Albert H. Kritzer: 1928-2010

Albert H. Kritzer, who founded Pace Law School's Institute of International Commercial Lawand its immensely helpful online CISG Database, passed away June 1, while in Egypt to receive the 2010 Arab Conference for Commercial and Maritime Law Career Achievement Award.  The Institute's home page bears the sad news and provides links to an external site for photos and tributes.  Pace Law School's notice, including comments from Dean Michelle Simon, is available here.

I met Al Kritzer only once, and briefly, in person, while attending the November 2007 conferenceat Pace Law School that his colleague Jim Fishman hosted commemorating Wood v. Lucy, Lady Duff-Gordon. However, Al and I corresponded (mostly by e-mail) and he was kind enough to introduce much of the domestic and international CISG community (via the CISG Database) to my analysis of the then-entire corpus of published U.S. CISG case law in the chapter on the CISG that I comprehensively revised and greatly expanded a few years ago for Howard O. Hunter's Modern Law of Contracts. Al subsequently invited me to contribute substantive case commentaries to the CISG Database -- at task at which I have been largely remiss for a variety of reasons, none having anything to do with my enthusiasm for the project or my desire to work with Al. I hope that his successor will allow me to honor Al's invitation and his work of the past quarter-century.

[Keith A. Rowley] (partially cross-posted at the Commercial Law blog)

Now in Print

Benito Arruñada, Leaky Title Syndrome?, [2010] New Zealand L.J.1195 (discussing electronic documentation of realty title and conveyances).

Erin Burrows & F. John Podvin, Jr., Revisiting the FDIC's "Superpowers": Contract Repudiation and D'Oench Duhme, 127 Banking L.J. 395 (2010).

J.W. Carter & Yihan Goh, Concurrent and Independent Rights to Terminate for Breach of Contract, 26 J. Contract L. 103 (2010).

Charles Y.C. Chew, The Application of the Defence of Non Est Factum: An Exploration of its Limits and Boundaries, 13 U.W. Sydney L. Rev. 83 (2009).

Kevin E. Davis,* Case Comment, Penalty Clauses through the Lens of Unconscionability Doctrine: Birch v. Union of Taxation Employees, Local 70030, 55 McGill L.J. 151 (2010).

Robert W. Emerson, Franchise Encroachment, 47 Am. Bus. L.J. 191 (2010).

Stephen J. Leacock, Echoes of the Impact of Webb v. McGowin on the Doctrine of Consideration Under Contract Law: Some Reflections on the Decision on the Approach of its 75th Anniversary, 1 Faulkner L. Rev. 1 (2009).

Eliza Mik, "Updating" the Electronic Transactions Act? — Australia’s Accession to the UN Convention on the Use of Electronic Communications in International Contracts 2005, 26 J. Contract L. 184 (2010).

Catherine Mitchell, Contract Interpretation: Pragmatism, Principle and the Prior Negotiations Rule, 26 J. Contract L. 134 (2010).

Nicholas F. Pompelio, Note, Restitution in Favor of the Party-in-Breach: Contract Law in Massachusetts Remains a Breeding Ground for Unjust Enrichment, 43 New Eng. L. Rev. 617 (2009).

Mark R. Shulman & Lachmi Singh, China's Implementation of the UN Sales Convention Through Arbitral Tribunals, 48 Colum. J. Transnat'l L. 242 (2010).

Marcia J. Staff, United Nations Convention on Contracts for the International Sale of Goods: Lessons Learned from Five Years of Cases, 6 S.C. J. Int'l L. & Bus. 1 (2009).

Robert Steinbuch, Why Doctors Shouldn't Practice Law: The American Medical Association's Misdiagnosis of Physician Non-Compete Clauses, 74 Mo. L. Rev. 1051 (2009).

Charles A. Sullivan, The Puzzling Persistence of Unenforceable Contract Terms, 70 Ohio St. L.J. 1127 (2009).

Christopher W. Weller, Enforcing Non-Compete Agreements in Alabama, 1 Faulkner L. Rev. 135 (2009).

* - Yes.  That's my friend, and Beller Family Professor of Business Law at NYU, Kevin Davis.  As the 20th anniversary of receiving his B.A. in Economics from McGill draws near, Kevin -- or at least his work -- has ventured back to k.d. lang's homeland to publish a case comment (normally the province -- pun intended -- of law students South of the 49th parallel), as well as an article on legal universalism that's forthcoming in the Spring 2010 University of Toronto Law Journal symposium issue hono[u]ring Michael Trebilcock, whose The Limits of Freedom of Contract (Harvard 1993) is but one of his several "must reads" for those interested in contract theory and, more particularly, economic perspectives on contract law.

[Keith A. Rowley]

The Case of the Vague & Ambiguous Contracts Exam Instruction

As always, quality investigative reporting from Above the Law.  Apparently, a contracts prof at Cornell told the students that there would be a word limit on the exam, and said it would be "well, maybe 1000 words."  Then, once the exam was given, no word limit was stated.  The students were unsure whether they needed to stay within 1000 words (and, if so, per question or per the whole exam?)  Some students chose to stay within 1000 words, others chose not to.

If you were the dean, how would you resolve this?  Read more of the story over at ATL to see how the situation has apparently been resolved.

[Meredith R. Miller]

Jeff Lipshaw Has a Question for You

Over at the Legal Profession Blog, Jeff Lipshaw has a post in which he asks the non-musical question, "Can a discussion of contract theory up front allay the usual first-year angst about consideration (and everything else)?"  

Having read Jeff's discussion, my answer to his question would be as follows: I doubt it, but there might be other reasons to set out one's theoretical approach to contracts law in advance.  I ask my students to read my casebook's theoretical introduction, which covers Socratic teaching and the case method, formalism, realism and all that jazz, giving a critical perspective on each.  I do it, not in the expectation that students will get much out of the assignment on the first reading, but it contains material to which I can refer back throughout the semester.

My own preference is to reveal my own theoretical perspectives piecemeal, when they seem relevant to particular subjects that come up throughout the course.  But I am also often cautious to present such perspectives, whether or not they are my own, as possible perspectives one might have on contracts law and contracts theory.  Because law students are so often attempting to get the "right answer" in their notes, I try to present them with possible answers and perspectives so that they are not tempted to confuse the "right answer" with my opinion.  I want them to be formulating their own approaches to the material and to give them as many perspectives as possible.  I prefer to offer theoretical approaches to them in digestible chunks, over the course of the semester, so that they can wrestle with it on their own.

It is far easier for me to adopt such an approach than it might be for Jeff because I have the advantage of not having developed a systematic approach to contracts theory.  A slipshod eclecticism is the hobgoblin of my little mind.

[Jeremy Telman]

Introducing Karen Halverson Cross and the Arbitration Roundtable

The John Marshall Law School's Professor Karen Halverson Cross has been generous enough to volunteer to be a guest on our blog to help us and our readers understand the issues in Rent-A-Center West v. Jackson, which is to be argued before the U.S. Supreme Court at the end of the month. Professor Cross's introductory post will appear tomorrow.  Readers can find a summary of and a link to the Petitioner's brief in the case here.  They can find a summary of and a link to the Respondent's brief in the case here.  Links to the nine amicus briefs filed in the case can be found on the SCOTUSblog Wiki here.  

Professor Cross is especially well-qualified to guide the Blog's discussion of Rent-A-Center West because she is the author of a recent article about the case, Letting the Arbitrator Decide?  Unconscionability and the Allocation of Authority between Courts and Arbitrators, which was cited in the Respondent's brief in Rent-A-Center West, and because she is one of the signatories on an amicus brief submitted by professional arbitrators and arbitration scholars. 

Letting the Arbitrator Decide provides both a historical and comparative perspective on the question of how courts allocate jurisdictional questions relating to unconscionability in the context of arbitration agreements.  In order to address this issue, courts must balance competing policies: "freeing arbitration from litigation tactics designed to delay or evade the process while also allowing sufficient court intervention to ensure that the arbitration award is legitimate."  Professor Cross notes that U.S. courts seem to be evolving towards letting arbitrators decide the issue of arbitrability.  Professor Cross expresses concern that, in deciding Rent-A-Center West, the Court might adopt a broad interpretation of its dictum in the earlier First Options case and strip courts of the power to rule on the inconscionability issue, not only initially but also at the award-enforcement stage.  She argues for a narrower interpretation of the First Options dictum.

Part II of Letting the Arbitrator Decide provides a thorough historical introduction that underscores what is at stake in Rent-A-Center West. Unconscionability challenges to the enforcement of arbitration agreements have increased dramatically in the past two decades from nearly zero to between 60 and 100 a year.  In addition, while unconscionability arguments rarely succeed in other areas, in recent years around 40% of unconscionability challenges to the enforcement of arbitration agreements have been successful.  There are two types of issues involved in cases adjudicating the allocation of competence between courts and arbitrators.  First, there is the question of timing -- can courts review prior to an arbitral decision or only at the award-enforcement stage -- and second there is the question of scope of review.  Here, the question is the amount of deference due to an arbitral decision.  First Options is potentially relevant to both types of issue. 

The remainder of  Part II, continuing into Part III then leads the reader through the tangled path through which the Supreme Court has sought to clarify when the question of arbitrability is for the court and when for the arbitrator.  First Options is relied on for the proposition that the parties may choose to authorize an arbitrator to decide her own jurisdiction.  The question is whether that means that the parties may choose to let the arbitrator determine the scope of her jurisdiction or that the parties may empower an arbitrator to decide the validity and enforceability of an arbitration agreement.  Professor Cross concludes that "both common sense and fundamental principles of arbitration require a strict and narrow reading" of First Options.  According to Professor Cross, letting the arbitrator decide unconscionability challenges "significantly weakens the unconscionability safeguard in the mandatory arbitration context" and thus "eliminates an important protection for consumers, franchisees and employees against one-sided arbitration agreements." 

In Part IV, Professor Cross reviews the law of foreign jurisdictions and finds that judicial review of an arbitrator's jurisdictional findings is central to the arbitration regimes of all major legal systems.  This foreign law supports Professor Cross's argument that First Options should be more narrowly construed than it has been by lower courts in the U.S.  In Part V, Professor Cross reviews recent proposed legislation that suggests that Congress is beginning to take note of the inequality in bargaining power among the parties subject to mandatory arbitration.  If the Supreme Court overturns the Ninth Circuit's opinion in Rent-A-Center West, Professor Cross suggests, Congress might step in to restore parties' power to challenge arbitration agreements in court.

In her conclusion, Professor Cross suggests that there are two situations in which First Options may apply to permit arbitrators to decide whether or not an arbitration agreement is enforceable.  First, parties could be permitted to agree to have the arbitrator determine questions relating to the scope of the arbitration clause.  Second, First Options could be limited to the facts of that case, in which one party alleged that the parties to an existing arbitration agreement made a post-dispute submission to the arbitrator to make a final determination of arbitrability.  According to Professor Cross, Rent-A-Center West does not fall into either of these two categories, and the court should thus be permitted to address plaintiff's unconscionability challenge to the enforceability of the arbitration agreement.

[Jeremy Telman]

Guest Post by Deborah Post: Contract and Structural Inequality

[Cross-posted to SALTLAW blog]

Last week we learned that Jim Perdue,  Chairman of Perdue Foods Inc., spoke to Maryland legislators on behalf of the small farmers he claimed would be forced out of business if the environmental law clinic at University of Maryland Law School is allowed to sue Perdue and one of its growers.  I was familiar with Perdue’s relationship with small farmers.  Some years ago — in 1998, to be precise — I wrote a contracts exam using the pleadings filed in Monk v. Perdue Farms, Inc., 12 F. Supp.2d 508 (D.Md. 1998),  by plaintiff’s attorney, Roger L. Gregory, then partner in the firm of Wilder and Gregory, now judge on the Fourth Circuit Court of Appeals.

Monk was a case about racial discrimination. Several black farmers alleged that they were not accorded the same treatment under the terms of Perdue’s standard form contract as white farmers.  In that respect, the Monk case bore some resemblance to Reid v. Key Bank of Southern Maine, Inc., 821 F.2d 9 (1st Cir. 1987), a case I cover in contracts when I teach students about the implied duty of good faith. Mr. Reid was the only borrower at the bank to have his line of credit cut off, his note accelerated, his collateral seized without the bank officers first calling him in to the bank for a meeting.  Reid is still mentioned in other casebooks in notes about lender liability or the subjective test for good faith, but these notes appear to sidestep the issues of race and motive altogether.  The relationship between motive, malice and racial prejudice is admittedly somewhat ambiguous in Reid  because the jury found there was no racial discrimination by the bank.  Nevertheless, Reid is still a case that calls attention on the disparate treatment one black businessman received and the inferences that could be drawn from that fact.

But I chose the Monk case for my final examination because it was not just a case about discrimination and bad faith.  The pleadings alleged behavior by Perdue that could be analyzed variously as misrepresentation, economic duress, bad faith unrelated to any allegation of racial prejudice, and failure to perform many of its obligations under the contract.

The genesis of all of these claims was the ironclad control Perdue had over the manner in which the farmer ran his business. The farmer was contractually obligated to take chicks supplied by Perdue, use the food or grain supplied by Perdue, build housing for the chickens or purchase equipment if Perdue decided it was necessary, administer antibiotics to the chickens as required by Perdue. The chickens were collected, weighed and delivered to the plants by Perdue employees (the status and plight of chicken collectors is a story for another day). According to the pleadings, a rider to the contract, not negotiated with the farmers but unilaterally imposed by Perdue, shifted all risk of disaster – flood or disease or excessive heat – to the farmers. If the chickens died, there would be no compensation forthcoming, although the practice in the past had been to pay a minimum amount per chicken received and raised.

The current conflict with Perdue reminded me of that old exam  because back then chicken manure was part of the problem. Perdue has known for some time that farmers were storing chicken manure on their property. In  Chapter 3 of  a 2001 report , Professor Neil D. Hamilton of the Drake University Agricultural Law Center  reviewed the terms in several contracts used by producers, noting that whether the contracts were silent on the issue of chicken manure or expressly placed responsibility for disposal on the farmer, the cost of the removing chicken manure fell on the farmer. By most reports, chicken growers don’t make much money, somewhere between  $16,000 -$18,000 a year. Perdue, in contrast, reports on its website that it has annual sales of $4.6 billion a year. Perdue had to have  known that the cost of removing manure would be significant  for  famers whose profit margin is so slim.

Apparently, Perdue did see and plan for a future when environmental regulation would prohibit the use of chicken manure as fertilizer and  require its removal from poultry farms.   Perdue Farms is now trumpeting its environmental stewardship and its farsightedness in constructing the Perdue AgriRecyle plant. The plant has been in operation for nine years and was built, says Perdue, to offer the growers the option of taking poultry litter ( chicken manure) somewhere at “no cost to them.”  In fact, Jim Perdue proudly claims that Perdue was willing to bear that cost “in order to help the growers satisfy the new rules around nutrient management in the Chesapeake Bay region.”   The ‘cost’ to Perdue of taking the growers’ manure without charging those growers a fee  is questionable. This manure is the raw material Perdue uses to manufacture MicroStart 90, a fertilizer that that it  sells to the Scotts Co., golf course management companies and organic farmers as “processed manure.”  Chicken manure may well become a new profit center for Perdue.

Perdue offered the plaintiffs in Monk a standard form contract on a take-it-or-leave-it basis that gave Perdue  control over production and placed much of the risk of loss associated with growing poultry on the farmer. The power differential, the structural inequality between farmer and producer, is explicit in the contractual terms that governed their relationship, in the asymmetry of duties and obligations, and in the disparity in wealth perpetuated by the method and terms of compensation.

Farmers fought for fairer terms in their contracts, but were thwarted by contractual terms that made the provisions of the Packers and Stockyards Act inapplicable to to producers like Perdue.  In the 1980s,  a grower in North Carolina filed suit against Perdue claiming that the company was violating a provision of the Act which prohibited “live poultry dealers from engaging in or using “ any unfair, unjustly discriminatory, or deceptive practice or device.”  Wiley B. Bunting Jr. v. Perdue Inc., 611 F. Supp. 682 (EDNC 1985). The plaintiff lost the case  because Perdue does not sell poultry to the growers. It retains title to the chickens and the growers are paid for the service they provide in raising the chickens.  The court found no legislative history to support an expansive interpretation of the term “live poultry dealer.” 

More recently, arbitration provisions in the standard form contracts drafted by producers thwarted the efforts of farmers, like the plaintiffs in Monk, to challenge the terms or the manner in which the contract was performed by Perdue.

Fortunately, agrarian sentiment worked to the benefit of poultry growers when Congress passed the last farm bill.  Under the amended version of the Packers and Stockyards Act, a poultry farmer cannot be coerced into assenting to an arbitration provision.  ”Any livestock or poultry contract that contains a provision requiring the use of arbitration to resolve any controversy that may arise under the contract shall contain a provision that allows a producer or grower, prior to entering the contract, to decline to be bound by the arbitration provision.” 7 U.S.C.S. Section 197(c).

The revised statute and new regulations effect a redistribution of power between grower and producer; they address structural inequality by regulating the process of contract formation in a situation where the terms otherwise would not have been negotiable. The statute restored to farmers the freedom of contract that contemporary contract jurisprudence has theorized out of existence. Maybe this is a development that judges need to think about. Why was legislation needed to remedy the abuses that stem, inexorably and inevitably, from structural inequality?

Which brings me back to contracts and to the final examination I gave in the Spring of 1998. A final examination matters to students. They probably read it more carefully than any case they read all year. If questions of social justice have been explored in class, students may reflect, as they construct their answer, on the meaning of power, the reason why a drafter would include terms that are extremely favorable, perhaps even ‘disproportionately favorable,’ to a client, the strength or weakness of doctrines which arguably restrain the use or abuse of power. A final examination is an instrument that assesses what students learn. If we truly want our students to learn something about social justice, a final examination should raise issues about the inequities and the inequality that law perpetuates and the potential the law might have to address or even remedy them.

[Deborah Waire Post (Touro)]

Ian Roderick Macneil, 1929-2010

Contracts Professors around the world are mourning the loss of Ian Macneil, known to the world as 46th Chief of the Macneil clan and the 26th Macneil of Barra, and known to contracts professors as the father of relational contracts theory.  Obituaries can be found in the Times of London here and in the Telegraph here.   

Wikipedia has a lengthy entry here.

Reading of Professor Macneil and hearing the remembrances of those who knew him, one gains an appreciation of what it means to stand on the shoulders of giants.

[Jeremy Telman]

Spring Contracts Conference: Day One

The 2010 Spring Contracts Conference begins today at UNLV's William S. Boyd School of Law.  Here's Friday's line-up:

The Contract Law System and Power – Past, Present, and Future

Chair: Jay M. Feinman (Rutgers-Camden)

Hila Keren (Hebrew U. of Jerusalem), Considering Affective Consideration

Nancy S. Kim (Cal Western), ‘Wrap Contracts as Sword, Shield, Crook, and Drawbridge

Amy J. Schmitz (Colorado), Pizza-Box Contracting: An Empirical Exploration of Consent

Danielle Kie Hart (Southwestern), Smoke, Mirrors & Contract Law

Incomplete Information and Contract Law

Chair: Keith A. Rowley (UNLV)

Robert Anderson (Pepperdine), Information, Incentives, and Disclosure in the Law of Contracts

H. Allen Blair (Hamline), No-Reliance Clauses

Yair Listokin (Yale), Bayesian Interpretation

Shawn J. Bayern (Florida State), Rational Ignorance, Rational Closed-Mindedness, and Modern Economic Formalism in Contract Law

Contract Law’s Intersection with Business Law

Chair: Nancy B. Rapoport (UNLV)

Daniel S. Kleinberger (William Mitchell), Battle Report from the Undiscovered Territory – The Law of “Contractual Organizations” Continues its Silent War on the Common Law of Contract

Andrew A. Schwartz (Colorado), A “Standard Clause Analysis” of the Frustration Doctrine and the Material Adverse Change Clause

Lydie N. Pierre-Louis (St. Thomas (FL)), Mini-Tender Offers: The Lack of Federal Jurisdiction and the Failure of Fundamental Contract Law Principles to Protect Investors

Keynote: Omri Ben-Shahar (U. of Chicago), The Failure of Mandated Disclosure

Arbitration and Unconscionability in Rent-a-Center West v. Jackson and Elsewhere

Chair: Jean R. Sternlight (UNLV)

Charles L. Knapp (UC-Hastings), Blowing the Whistle on Mandatory Arbitration: Unconscionability as a Signaling Device

Karen Halverson Cross (John Marshall (IL)), Letting the Arbitrator Decide?  Unconscionability and the Allocation of Authority Between Courts and Arbitrators

Christopher R. Drahozal (Kansas), Rent-A-Center and Institutional Arbitration Rules

Thomas J. Stipanowich (Pepperdine), Contracts and Conflict Management: Another Look

Forming Contracts and Similar Relationships

Chair: James W. Fox, Jr. (Stetson)

Michael Pratt (Queen's U. (Ontario)), What is a Promise?

Val D. Ricks (South Texas), The Continued Relevance of Consideration

Janet Ainsworth (Seattle), Beyond Status and Contract: Relational Estoppel as a Source of Rights and Obligations in Intimate Relationships

Andrea B. Carroll (LSU), Reviving Proxy Marriage

Vive la Différence!: Comparative Contract Theory

Chair: Daniel D. Barnhizer (Michigan State)

Robin J. Effron (Brooklyn), Revisiting The Death of Contract: Gilmore’s Thesis in Comparative Perspective

Wayne R. Barnes (Texas Wesleyan), French Subjective Theory of Contract: Separating Rhetoric from Reality

Tadas Klimas (Kaunas, Lithuania), Lessons American and Continental Contract Theory Can Teach One Another

Franklin G. Snyder (Texas Wesleyan), Cross-Cultural Adoption of Legal Rules: The Case ofHadley v. Baxendale

[Keith A. Rowley]

Tribute to Professor Richard E. Speidel

The University of San Diego School of Law and the San Diego Law Review have published a tribute issue for Professor Richard E. Speidel.

 The authors and their topics included in the tribute issue, in alphabetical order, are as follows:

Jay M. Feinman, Distinguished Professor of Law, Rutgers University School of Law, Camden: The Insurance Relationship as Relational Contract and the “Fairly Debatable” Rule for First-Party Bad Faith.

William H. Henning, Distinguished Professor of Law, University of Alabama, and William H. Lawrence, Professor of Law, University of San Diego: A Unified Rationale for Section 2-607(3)(a) Notification.

Robert A. Hillman, Edwin H. Woodruff Professor of Law, Cornell Law School: Maybe Dick Speidel Was Right About Court Adjustment.

Charles L. Knapp, Joseph W. Cotchett Distinguished Professor of Law, University of California Hastings College of Law: Blowing the Whistle on Mandatory Arbitration: Unconscionability as a Signaling Device.

William W. Park, Professor of Law, Boston University: Arbitrator Integrity: The Transient and the Permanent.

Joseph M. Perillo, Distinguished Professor Emeritus, Fordham University School of Law: The Collateral Source Rule in Contract Cases.

Robert S. Summers, William G. McRoberts Professor of Research in the Administration of Law, Cornell Law School: Good Faith Revisited: Some Brief Remarks Dedicated to the Late Richard E. Speidel—Friend, Co-Author, and U.C.C. Specialist.

James J. White, Robert A. Sullivan Professor of Law, University of Michigan Law School: Warranties in the Box.

[Jeremy Telman]

Cosmic Contracts: Forever and Throughout the Universe

 
Great article in today's WSJ titled "Lawyerese Goes Galactic as Contracts Try to Master the Universe."  Read it.  Here's a taste:

Decked out in sequined black and gold dresses, Anne Harrison and the other women in her Bulgarian folk-singing group were lined up to try out for NBC's "America's Got Talent" TV show when they noticed peculiar wording in the release papers they were asked to sign.

Any of their actions that day last February, the contract said, could be "edited, in all media, throughout the universe, in perpetuity."

She and the other singers, many of whom are librarians in the Washington, D.C., area, briefly contemplated whether thy should give away the rights to hurtling their images and voices across the galaxies forever. Then, like thousands of other contestants, they signed their names.

Ms. Harrison figured the lawyers for the show were trying to hammer home the point that contestants have no rights to their performances, "but I think they're just lazy and don't want to write a real contract," she says.

Lawyers for years have added language to some contracts that stretches beyond the Earth's atmosphere. But more and more people are encountering such everywhere-and-forever language as entertainment companies tap into amateur talent and try to anticipate every possible future stream of revenue.

Experts in contract drafting say lawyers are trying to ensure that with the proliferation of new outlets -- including mobile-phone screens, Twitter, online video sites and the like -- they cover all possible venues from which their clients can derive income, even those in outer space. FremantleMedia, one of the producers of NBC's "America's Got Talent," declined to comment on its contracts.

The article provides Prof. Eric Goldman's view of these intergalactic contracts clauses:

[Goldman] says the language could be "a stroke of brilliant foresight." Referring to geographical limits loosely can be dangerous, he says. For instance, "the United States is an ambiguous term...American Samoa, yes or no?"

"Throughout the world" would be one alternative, but that excludes possible future markets, he says. Some day, Mr. Goldman adds, people might ask, "What were they thinking? Why didn't they get the Mars rights?"

Cosmic. 

[Meredith R. Miller]

Welcome, Alan White!!

 I am pleased to welcome to the blog my friend and colleague, Alan White.  Avid fans of the blog might think that name sounds familiar.  And sure enough, we have had reason to mention Professor White's scholarship previously on this blog here, and we've advertized one of his conferences here (he's got another one planned for later this semester, so stay tuned!),  But now the real excitement begins, because Alan has agreed to do a guest blogging stint this semester in which he will blog about his first-year contracts course. 

I will be posting Alan's comments as he writes them.  In separate posts, I will then add my own blow-by-blow account of what is going on in my contracts course.  Alan and I both adopted the same casebook last year, so we started out in a relatively similar place, but this year our teaching approaches are diverging, as we supplement the casebook we are using with our own ideas about what first-year students need from a contracts course.  I think we both have found the three-way conversation involving the two of us and our casebook a fruitful one.  We hope it will interest readers of the blog as well. 

In any case, we here at the blog are grateful to Alan for his willingness to share his thoughts and experiences.  Our readers will enjoy getting inside the mind of a still young contracts prof who is still willing to try new ways to stimulate his students and to prepare them for practice.

[Jeremy Telman]

Plaudits for (Living) Contracts Professors

Brian Leiter's Law School Reports, a reliable source of information about moving and shaking in legal academia, reported yesterday that Contracts professor and current dean of the Seattle University School of Law Kellye Testy will become the new dean at the University of Washington School of Law.  I met Kellye at the 1999 AALS Conference on Contracts in Washington, DC and have had several opportunities to talk and correspond with her since then.  She's terrific.  Congratulations, Kellye!

This also affords me the opportunity for long overdue acclaim for our friend Tadas Klimas, who has made the trip from Lithuania to the International Contracts Conference and the AALS Contracts Mid-Year in Montreal.  Some of you may recall that Tadas was the dean for several years of the Vyatus Magnus University School of Law in Vilnius and actively sought to Westernize legal education in his country.  He has also taught as a visiting professor at Stetson, as well as at universities in Spain and Brazil.  Earlier this year, Lithuanian President Valdas Adamkus decreed Tadas a Cavalier of the Lithuanian Order of Merit.  Sveikiname, Tadas!

[Keith A. Rowley]

Environmentalism Through Breach of Contact

Over at Concurring Opinions, fellow contracts prof and fellow Sidley & Austin alum, Nate Oman (pictured) [at this point we exchange the secret S&A signal of recognition across cyberspace], has an interesting commentary on a Washington Post news story about an environmentalist who bid on land contracts in Utah in order to postpone their exploitation by the oil and gas industries.  University of Utah economics student, Tim DeChristopher ended up buying leaseholds on 22,000 acres.  Unfortunately, he has no means of paying the $1.8 million he bid on the 13 properties he won at auction. 

De Christopher is represented by Pat Shea, who headed the Bureau of Land Management under President Clinton.  Shea describes DeChristopher as virtuous and the legal system as Kafkaesque.  This explains the fate of Joseph K during the 1990s.  Professor Oman has some sympathy for the DeChristopher, but ultimately, I think DeChristopher is better off with his current attorney, Professor Oman thinks DeChrisopher ought to pay for what he bid on, and since he lacks capital, his only means of doing so is with"moderate" jail time, just enough to deter other potential DeChristophers out there from pulling the same stunt.  By the way, Professor has no problem with environmentalists with means who enter into good faith agreements to purchase land in order to prevent them from being used for oil and gas exploration.

[Jeremy Telman]

Dick Speidel Tribute at AALS Annual Meeting

From our friend Mike Kelly at the University of San Diego:

Northwestern University School of Law and the University of San Diego School of Law are hosting a reception honoring the career of Richard Speidel, who passed away this past semester. Dick was a major figure in contracts, commercial law, and international arbitration.

The reception will be held at the AALS Annual Meeting in San Diego on Friday, January 9, from 6:30 to 8:30 p.m. in the Warner Center Room, 4th floor, south tower of the San Diego Marriott Hotel & Marina, with a short program beginning at 7:00 p.m.  We will also videotape remarks from those who knew Dick or his work and will provide a copy to Dick's family.

Update: Professors Jim White (Michigan) and Bob Summers (Cornell), Dick's long-time collaborators, and Deans Kevin Cole (San Diego) and David Van Zandt (Northwestern) are confirmed speakers.

[Keith A. Rowley]

Business Associations Limerick of the Week: McConnell v. Hunt Sports Enterprises

McConnell v. Hunt Sports Enterprises, though a Business Associations case, has a strong contractual element to it. The question at hand is, to what extent can the members of an LLC contract around their fiduciary duties in the LLC agreement. The answer is, quite a bit, actually. Lamar Hunt and John McConnell formed an LLC called Columbus Hockey Limited in order to draw an NHL franchise to the city of Columbus, Ohio. Seems improbably, no? Nationwide Insurance didn't think so. That's why the Columbus Blue Jackets play their hockey in Nationwide Arena (pictured). Nationwide approached Hunt with an offer to build an arena and then lease it to the LLC. Hunt, purportedly acting on behalf of the LLC, turned down Nationwide's offer. McConnell later learned of the offer and decided to take it up on his own, acting with new partners and directly competing with the LLC.

Seems like a clear breach of fiduciary duty on McConnell's part, but the LLC agreement had some boilerplate language that permitted the parties to compete with one another. The court concluded that Hunt did not have authority to turn down Nationwide's offer and that McConnell breached no duty to Hunt or the LLC when he took up that offer on his own. Parties to an LLC agreement can contract around standard duties of loyalty, so long as they do not eliminate the duty entirely.

McConnell v. Hunt Sports Enterprises

McConnell, who always competes,
Was fed up with Hunt's rank deceits.
Hockey's new franchise
Is McConnell's new gran' prize
And Hunt haunts the nose bleed seats.

[Jeremy Telman]

contracts Limerick of the Week: Hoffman v. Red Owl Stores

Hoffman v. Red Owl Stores is the classic case for illustrating the grounds for liability in cases of pre-contractual reliance. Generations of students have been drawn to the drama of Mr. Hoffman's heroic efforts. He started a grocery store in Wautoma, and then sold that profitable business, as well as a bakery, (while raising a family, volunteering as a local firefighter and inventing the internet in his spare time) based on his good faith belief in the pondscum he was dealing with from Red Owl Stores. Well, it's a nice story, but Columbia University's Robert E. Scott says it's not true. In his article, Hoffman v. Red Owl Stores and the Myth of Precontractual Reliance, 68 Ohio State Law Journal 71 (2007), Professor Scott contends that the case wasn't really about precontractual reliance and that lawyers would be leading unwary clients down the primrose path if they encouraged them to seek recovery based on that doctrine, which courts treat with great skepticism. Here's Professor Scott's abstract:

For decades there has been substantial uncertainty regarding when the law will impose precontractual liability. The confusion is partly attributable to the unfortunate case of Hoffman v. Red Owl Stores and to the unusual degree of scholarly attention that it has attracted. A careful examination of the record of the Hoffman case reveals facts that are much different from conventional understanding. The disagreement between Joseph Hoffman and Red Owl Stores resulted from a fundamental misunderstanding between the parties regarding the terms of Hoffman’s capital contribution to the franchise. The misunderstanding was largely a product of Hoffman’s penchant for moving assets around during the negotiation period, his failure to clarify the terms of his $18,000 capital investment, and the “no debt” condition attached to loans from his father-in-law. These facts show that neither promissory estoppel, negligent misrepresentation, unjust enrichment, or a failure to negotiate in good faith would have been a proper ground for imposing liability on Red Owl Stores. This result is consistent with a systematic survey of the case law showing that courts overwhelmingly decline to impose liability for representations made during preliminary negotiations. The preoccupation with reliance on preliminary negotiations has led scholars to ignore an important recent development in the law. A number of modern courts now impose a duty to bargain in good faith when parties make reliance investments following a “preliminary agreement” in which the parties agree to some terms but leave others open for further negotiation. Professor Scott argues that lawyers and academic commentators should turn their attention away from the Hoffman paradigm and instead focus on key issues that the contemporary cases have yet to resolve: when have parties reached sufficient agreement to trigger the duty to negotiate further in good faith, and precisely what does that duty entail?

Fair enough, but the court's approach in Hoffman v. Red Owl Stores, faulty though it may be, remains Limerickworthy.

Hoffman v. Red Owl Stores

Hoffman moved from Wautoma to Chilton
And his finances were slowly wiltin'.
Because legal science
Protects sound reliance,
He recovered from Red Owl's jiltin'.

or

He's more popular than Paris Hilton

[Jeremy Telman]