ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, April 15, 2016

Gilmore Girls, Netflix, Derivative Works, and Contracts in a Changing Television Landscape

Gilmore Girls

(image from IMDB)

Gilmore Girls fandom rejoiced when it was announced that the show would receive a revival on Netflix (and, even better, that it will include Sookie!). But, as often seems to be the case, developments that bring a fandom joy can come with legal entanglements. In this case, producer Gavin Polone's production company Hofflund/Polone has filed a lawsuit against Warner Bros., alleging breach of contract. The lawsuit, Hofflund/Polone v. Warner Bros. Television, Case No. BC616555 (behind paywall), was filed in the Los Angeles County, Central District, Superior Court of California. 

The case revolves around the agreement between the parties concerning the original production of Gilmore Girls. The parties agreed, according to Hofflund/Polone, to provide Hofflund/Polone with "$32,500 for each original episode of Gilmore Girls produced in any year subsequent to 2003," along with some percentage of the gross and with "executive producer" credit. With the news of the recent Netflix revival, Hofflund/Polone allegedly reached out to Warner Bros. seeking compensation under the agreement. According to the complaint, Warner Bros. took the position that the Netflix version of Gilmore Girls is a derivative work based on the original series, and so therefore does not trigger compensation to Hofflund/Polone. 

It's an interesting question that highlights one of the debates copyright scholars have: What, exactly, is a "derivative" work? Copyright owners have the exclusive right to reproduce their own works or works substantially similar to those works. They also have the right to produce derivative works based on those works, which, in the jurisprudence, has ended up using the same substantially similar standard to elucidate the "based on" language. Which means: what is the point of the derivative work right, if its standard seems the same as the reproduction right? This case has the potential to force confrontation with that problem: Where do we draw the line between infringement of the reproduction right and infringement of the derivative work right? When does a substantially similar work cross the line between reproduction and derivative work? 

One thing that's been noted about the derivative work right is it tends to be talked about when there's some kind of change in medium or other kind of adaptation different from the original form (book to film, or translation from one language to another). The definition in the statute points us to that focus.  Which raises the question: Is a Netflix revival more like a translation or adaptation of Gilmore Girls than it is like an exact copy of Gilmore Girls? Does this depend on how true it is to the original show? 

The "television" landscape has shifted dramatically since Gilmore Girls premiered. It'll be interesting to see how contracts formed pre-Netflix-and-Amazon-production-era function going forward. 

April 15, 2016 in Celebrity Contracts, Commentary, Current Affairs, In the News, Recent Cases, Television, True Contracts | Permalink | Comments (1)

Tuesday, April 5, 2016

Unconscionable “Out-of-Network” Medical Service Charges

I recently blogged here about the healthcare insurance problem of patients not knowing ahead of time for what they will ultimately be charged and by whom. California is now introducing a bill (“AB 533”) seeking to prevent the problem of patients being unexpectedly charged out-of-network charges at in-network facilities when the facility subcontracts with doctors that are (allegedly) out-of-network.

The practice is widespread, at least in California. Nearly 25% of Californians who had hospital visits since 2013 have been very unpleasantly surprised with unexpectedly high bills after the fact for “out of network” services. This even after inquiring about the contractual coverage ahead of time and ensuring – or attempting to – that their providers were in network. Th

I personally had the same experience once as described in my recent blog. I also recently encountered a similar problem in South Dakota when, after asking about billing prices from an emergency room, was assured of one relatively modest price, only to be billed roughly ten times that amount a couple of months later for various unrecognizable items on the bill that the service provider, to add insult to injury, subsequently did not want to even discuss with me. (Yes, that is right: sick and in the emergency room, I was leery of hospital pricing and asked, only to still not get correct information.)

The onus of information-sharing should be on doctors and other medical provider. They should tell their patients if they are not in network, patients shouldn’t have to jump through an almost endless row of hoops just to find out their ultimate contractual obligations. Doctors will know immediately once you swipe your health insurance card, whereas patients have no way of knowing, as these stories show. Making matters even worse: what are patients supposed to do when they often don’t even see all the involved doctors ahead of time? Wake up during anesthesia and ask, “Oh, by the way, are you in network”? This practice is unconscionable and must stop. It is arguably an ethical obligation as well.

Because some hospitals, for instance, only accept employer-provided plans and not individual ones, some patients will always be out of network, thus allowing doctors to bill full charge. “This is a market failure. It allows doctors to exploit the monopoly that they have.”

Although it seems ridiculous, patients may, for now, have to turn the tables on the providers and scrutinize as many providers and facilities as they get in touch with 1) what the prices charged to the patients will be, and 2) if the providers are truly, actually, really in network (!).

Contractually, would patients win if they informed providers that they will only pay for in-network providers and only up to a certain amount? What else can a reasonable patient do in situations of such blatant greed and ignorance as these stories depict? Comment below!

April 5, 2016 in Commentary, Current Affairs, In the News, Legislation | Permalink | Comments (2)

Monday, March 28, 2016

Assent in Healthcare Contracts

Here, Stacey Lantagne reports on a very sad story of what can happen if health care customers fail to follow accurate procedure and, at bottom, dot all the I’s and cross all the T’s when contracting for health care services.

For me, this speaks to the broader issue of whether or not patients can truly be said to have given consent to all the procedures and professionals rendering services to patients. I think this is often not the case. As you know, Nancy Kim is an expert on this area in the electronic contracting context. She kindly alerted me to this story in the health care field.  (Thanks for that.) The article describes the practice of “drive-by doctoring” whereby one doctor calls in another to render assistance although the need for this may be highly questionable. The NY Times article describes an instance in which one patient had meticulously researched his health care insurance coverage, yet got billed $117,000 by a doctor he did not know, had never met, and had not asked for. That doctor had apparently shown up during surgery to “help.”

Of course, this is a method for doctors to make end runs around price controls. Other methods are increasing the number of things allegedly or actually performed for patients. Other questionable practices include the use of doctors or facilities that all of a sudden turn out to be “out of network” and thus cost patients much more money than if “in network.” I personally had that experience a few years ago. I had to have minor surgery and checked my coverage meticulously. The doctor to perform the surgery was in network and everything was fine. She asked me to report to a certain building suite the morning of the surgery. All went well. That is, until I got the bill claiming that I had had the procedure performed by an “out of network” provider. This was because… the building in which the procedure was done by this same doctor was another one than the one where I had been examined! When I protested enough, the health care company agreed to “settle” in an amount favorable to me.

In these cases, patients typically have very little choice and bargaining power. In the emergency context, what are they going to do? There is obviously no time to shop around. You don’t even know what procedures, doctors, etc., will be involved. The health care providers have all the information and all the power in those situations. However, in my opinion, that far from gives them a carte blanche to bill almost whatever they want to, as appears to be the case, increase their incomes in times when insurance companies and society in general is trying to curb spiraling health care costs.

In the non-emergency context, how much of a burden is it really realistic and fair to put on patients who are trying to find out the best price possible for a certain procedure, only to be blind-sighted afterwards? That, in my opinion, far exceeds fair contracting procedure and veers into fraudulent conduct. Certainly, such strategies go far beyond the regular contractual duty to perform in good faith.

Of course, part of this is what health care insurance is for. But even with good health care insurance, patients often end up with large out-of-pocket expenses as well. The frauds in this context are well known too: most health care providers blatantly offer two pricing scheme: one (higher) if they have to bill insurance companies, and a much lower price if they know up front to bill as a “cash price.”

We have a long ways to come in this area still, sadly.

March 28, 2016 in Commentary, Current Affairs, Miscellaneous, Science, True Contracts | Permalink | Comments (1)

Friday, March 11, 2016

Can We Just Get J.K. Rowling to Arbitrate Everything?

20160302_085631

I bet we'd have a lot fewer people fighting arbitration clauses if arbitration = tweeting J.K. Rowling. 

As reported around the Internet, a student and her high school science teacher entered into a contract concerning whether Rowling would write another Harry Potter book. The contract called for the loser to declare the victor "Mighty" (a much more charming form of consideration than payment of a sum of money). 

The article (from last month) reports that there were two possible Harry Potter pieces of creativity to be contended with. One is the prequel movie Fantastic Beasts and Where to Find Them. Rowling wrote the original textbook (which already existed at the time the contract was entered into and so isn't part of the dispute) and also wrote the screenplay for the movie, which could have been in dispute. However, the article points out that Rowling wrote the screenplay to the movie, and the contract concerns a Harry Potter "novel." Even if you wish to make an argument that screenplays should have been included in the definition of the contractual term "novel," it seems like Fantastic Beasts would fail because it does not "feature the character Harry Potter as part of the main plotline," as required by the contract. (At least, so I assume from what I know about the movie so far.)

The other piece of Harry Potter creativity being debated under the contract, and the one for which Rowling was called in to arbitrate, concerned Harry Potter and the Cursed Child, a play focusing on Harry as an adult and his relationship with his children, especially his son Albus. Cursed Child raised issues: It was a play but it is being billed as "the eighth story," the script will be published in text form, and the website claims it's "based on an original story by J.K. Rowling, Jack Thorne and John Tiffany." It does seem as if, considering this is a "play," even its published script would not be considered a "novel" under the contact. However, the student who was a party to the contract sought further clarification from Rowling. 

Using the convenient method of Twitter, the student explained her contract to Rowling and asked for a decision on whether Cursed Child would fulfill the terms of the contract. Rowling responded, confirming that Cursed Child is a play and also noting that, while she had contributed to the story, Jack Thorne was the "writer" of the play. 

The student was pleased that her clear contractual terms meant that she was still the victor, but also noted that the term of the contract had not yet run. Since the publication of the article and the arbitration of the Cursed Child dispute, J.K. Rowling has announced a new set of stories to be collected under the title History of Magic in North America. So far, these stories also seem not to fulfill the terms of the contract, as they seem more like "extra books" rather than "an entirely new book," and they do not seem to feature Harry Potter at all. However, Rowling seems to be dancing right around the edges of this contract's terms. 

March 11, 2016 in Commentary, Current Affairs, Film, In the News, True Contracts | Permalink | Comments (0)

Tuesday, March 8, 2016

"Crowdwork" or How to Stiff Your Employees – Twice

Outsourcing work to locations where employees earn even less than many in the United States do has already become commonplace. Now comes the corporate idea of “taskifying” work to people eager to obtain some work, even if just in bits and pieces. “Crowdwork,” as it is known, lets companies use online platforms such as Amazon Mechanical Turk or www.fiverr.com to find people willing to do routine tasks such as drafting standardized reports, filing forms, coordinating events and debugging websites, but also much more complex ones such as designing logos, ghostwriting, etc. Many of today’s work tasks can be broken up into bits and farmed out online, and many employers are already doing so. Could this also come to encompass routine lawyerly work? Quite possibly so. Researchers at Oxford Univesity’s Martin Programme estimate that nearly 30% of jobs in the U.S. could be organized in a crowdwork format within just twenty years.

In this context where few regulations or laws yet govern the contracts, workers would no longer be either “employees” or “contractors,” (which has already proved to be troublesome enough for companies such as Uber), but rather “users” or “customers” of the websites that enable, well, workers and companies (“providers”) to find each other. These transactions would not be governed by employment contracts, but by online “user agreements” and “terms of service” that currently resemble software licenses more than employment contracts. There are few, if any, legal obligations towards employees in the current legal landscape that also offers employees very few means for obtaining and enforcing something so basic pay for the work performed.

Employers today require a flexible and eager workforce that is constantly on the ready and that can maybe even work 24 hours a day. Crowdworkers provide just such availability and demand very low salaries because the name of the game seems to be to compete on prices. The problem is that workers, to have a decent life, need the opposite: stability, higher salaries than what is often currently the case, retirement, salary, and medical benefits. Do these come with crowdwork tasks? Sadly, no.

What could go wrong? Consider this case: Mr. Khan, an Indian man living in India, was eager to make some money. He decided to try Amazon’s Mechanical Turk. On good days, he would make $40 in ten hours; more than 100 times what his neighbors made as farmers. He even outsourced some of his own work to a team that he supervised. This must have violated Amazon’s Participation Agreement as all of a sudden, Mr. Khan received the message that his account was closed and “could not be reopened.”Amazingly, Mr. Khan was also notified that “[a]ny funds that were remaining on the account are forfeited, and we will not be able to provide any additional insight or action.” Talk about lopsided contracts! Using a “Contact Us” link, Mr. Khan was eventually able to get through to Amazon, which simply referred him to a contractual clause stating that Amazon had the “right to terminate or suspend any Payment Account … for any reason in our sole discretion.”

ImagesWith these types of ad-hoc online agreements, people who should arguably at least have been classified contractors if not, as in some current cases, employees. Of course, this only pertains to U.S. law, but it is important to note that not all jobs are “taskified” to foreign workers. Thus, employees risk being “stiffed” twice: once for losing their jobs to cheaper folks willing to be crowdworkers and, if they chose to work under such contracts and don’t do exactly as the “provider” requires in their apparent almost exclusive discretion, not being paid and not having any effective means of enforcing their contracts. An undisputedly troublesome development both in this nation and beyond.

How could at least the issue with medical and other employee benefits be solved? It might via universal payment systems such as those typical in EU nations. There, when employees change jobs, their vacation time, medical and other benefits travel remain in a centrally administered pool (whether government administered or privately so with tough regulations in place), they do not become discontinued with the employment only to have to be restarted under other plans as typical in this country. This system could potentially be transferred to the crowdwork arena. A percentage of each job (sometimes even called “gigs”) could be centra lly administered in a more employee-centric version than the still American employer-centric solutions. Such systems are, of course, largely seen here in the U.S. as “socialist” and thus somehow inherently negative.

As if the employment situation for workers around the world is not already bad enough, add this new development, called “a tsunami of change for anyone whose routine work can be broken into bits and farmed out online.” Our students’ future work tasks may, at least in the beginning of their careers, constitute just such work. This is a worrying development as workers in our industry and in this country in general are not seeing improved working conditions in general. Crowdworking could add to that slippery slope.

March 8, 2016 in Current Affairs, E-commerce, Labor Contracts, Law Schools, True Contracts, Web/Tech | Permalink | Comments (1)

Friday, March 4, 2016

Did Trump University Peddle Degrees of Deception?

I am pleased to be able to post the following from guest blogger Creola Johnson of the Ohio State University Moritz College of Law:

“His promises are as worthless as a degree from Trump University,” said Mitt Romney during a speech denouncing Donald Trump’s candidacy for the presidency. This statement has prompted additional inquiries into lawsuits filed against Trump University by New York Attorney General Eric Schneiderman and others. (See Petition from New York v. The Trump Entrepreneur Initiative LLC.)

In a class-action lawsuit, many attendees of Trump University alleged that they paid as much as $35,000 to be personally mentored in learning how to earn millions investing in real estate. Despite numerous attempts by lawyers for the Trump defendants to get these lawsuits to dismiss, courts have given the green light for the lawsuits to continue against the Trump defendants. See, e.g., Makaeff v. Trump Univ., LLC, No. 10-CV-940-IEG (WVG), 2010 WL 3988684 (S.D. Cal. Oct. 12, 2010) (refusing to dismiss claims against the for-profit Trump program on educational malpractice grounds because the court was not convinced “Trump University” was “an educational institution to which this doctrine applies.”). For the most recent decision permitting Mr. Schneiderman’s case to proceed, go to: http://www.courts.state.ny.us/courts/AD1/calendar/appsmots/2016/March/2016_03_01_dec.pdf.

What can we say for sure at this juncture about the lawsuits? First, “Trump University” was not a university. There are numerous educational standards and laws that must be complied with for an institution to legitimately claim to be a university. The question then becomes: did the people running Trump’s real estate program (the Trump Program) make promises that arose to level of being a contract. For example, the consumer-plaintiffs alleged that the Trump Program promised that the instructors and mentors running the program would be “hand-picked by Donald Trump.” However, this promise was allegedly breached because most of the instructors and mentors were unknown to Mr. Trump and that they didn’t actually teach any real estate techniques.

We’ll have to wait for a court or jury’s finding regarding what promises were actually made by Donald Trump and the people running the Trump Program. The good news for the plaintiffs and Mr. Schneidermann is that they do not have to prove the existence of a contract. New York, along with every state, has laws that prohibit businesses from engaging in deceptive and unfair business practices.

Consumers should be leery of any language that appears to promise an educational outcome—e.g., “you will earn a six-figure salary after graduation.” While a state’s attorney general, such as Mr. Schneiderman, has the authority to make businesses stop deceptive practices, the attorney general may not be able to get back the money consumers have lost. If it sounds too good to be true, it probably is! For an in-depth discussion of deceptive degrees, see my article, Degrees of Deception: Are Consumers and Employers Being Duped by Online Universities and Diploma Mills?

Creola Johnson,

President’s Club Professor of Law,

The Ohio State University Moritz College of Law

Profile at http://moritzlaw.osu.edu/faculty/professor/creola-johnson/

(professor.cre.johnson@gmail.com)

March 4, 2016 in Commentary, Current Affairs, Famous Cases, In the News, Teaching | Permalink | Comments (0)

Tuesday, February 23, 2016

Contract Interpretation by Market Muscle: Gogo Caves and American Airlines Nonsuits

Well THAT was fast--apparently faster than Gogo's in-flight internet service. American_Airlines_Jets_630x420

American Airlines has nonsuited (i.e., dismissed without prejudice to refilling the lawsuit) its declaratory judgment claim against Gogo. American had recently asked a Texas state court to determine whether the provision of the availability of "better service" (or some similar term) in its 2012 contract had been triggered such that American could force Gogo to submit a competitive bid to retain its service.

As discussed in a previous post, American's negotiating leverage arose as much from the publicity surrounding it filing of a lawsuit as it did from the actual contract term.  The term was apparently vague enough that Gogo could (and did) take the position that its rights as American's exclusive in-flight service provider had not been called into question by American's request for a new proposal. Upon American's filing of a declaratory judgment lawsuit in Texas state court, however, Gogo's stock price dropped 27 percent.

Today, the word is out that Gogo has changed its position and accepted American's interpretation of the contract. The Fort Worth Star-Telegram reports:

[American Airlines had said] that its contract with Gogo allowed it to renegotiate or terminate its agreement if another company offered a better service. Gogo had disputed that clause in the contract, but Friday agreed to the contract provision and said it would provide a competitive bid within 45 days.

Gogo_logo“American is a valued customer of Gogo, and Gogo looks forward to presenting a proposal to install 2Ku, our latest satellite technology, on the aircraft that are the subject of the AA Letter,” Gogo said in a government filing Friday. “We acknowledge the adequacy of the AA Letter and that our receipt of the AA Letter triggered the 45 day deadline under the agreement for submission of our competitive proposal.”

*   *   *

Once American reviews Gogo’s proposal, if it does not beat out a competitor’s proposal, American can terminate Gogo’s contract with 60 days’ notice.

Shares of Gogo [ticker: GOGO] jumped on the news of the dropped lawsuit, up almost 10 percent....

The swift manner in which this episode had played out emphasizes the extent to which contract doctrine and interpretation it frequently not the principal driver of business relationships. Gogo could have marshalled a team of lawyers and stood on its interpretation of the contract up to final judgment--likely a summary judgment based on a question of law.  But what would be the reputational and business cost? Eventually, the marketplace won't allow contract rights to serve as a substitute for proof of the quality of a product.

A challenge I find in teaching future transactional lawyers is to ensure that they do not become enamored with legal rights as being the be-all and end-all of deal making. Law is important, but a business lawyer must employ practical wisdom, as well. That wisdom includes the fact that law itself is only one part of practicing law... and it sometimes isn't even the most important part.


Read more here: http://www.star-telegram.com/news/business/aviation/sky-talk-blog/article61775272.html#storylink=cpy

 

February 23, 2016 in Commentary, Current Affairs, E-commerce, In the News, True Contracts, Web/Tech | Permalink | Comments (0)

Saturday, February 20, 2016

FTC Settlement with Bitcoin Mining Rig Company

Speaking of contract law and Bitcoin, my colleague William Byrnes over at our sister blog, International Financial Law Prof Blog, reports on recent activity by the Federal Trade Commission in this area:

FTC Consumer Protection LogoButterfly Labs and two of its operators have agreed to settle Federal Trade Commission charges that they deceived thousands of consumers about the availability, profitability, and newness of machines designed to mine the virtual currency known as Bitcoin, and that they unfairly kept consumers’ up-front payments despite failing to deliver the machines as promised.

*   *   *

“Even in the fast-moving world of virtual currencies like Bitcoin, companies can’t deceive people about their products,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These settlements will prevent the defendants from misleading consumers.”

Read the entire post here. While the federal interest in regulating in the virtual currency space has most prominently been in the area of financial crimes, consumer protection is certainly not off the table as agencies like the FTC and (potentially more prominently) the Consumer Financial Protection Bureau explore their reach.

February 20, 2016 in Current Affairs, E-commerce, In the News, Web/Tech | Permalink | Comments (0)

Friday, February 19, 2016

Regulation of Virtual Currency Businesses Act

ULCLogoAt any given time, the Uniform Law Commission/NCCUSL is engaged in many important and useful state-law drafting projects, but one of the more interesting ones for me is its current work in drafting a proposed Regulation of Virtual Currency Businesses Act. I have had the fantastic opportunity to act as an observer to the drafting committee and watch the stakeholders and commissioners navigate disparate policy perspectives and try find as-common-as-possible ground, while Chair Fred Miller keeps the group on task and Reporter Sarah Jane Hughes assimilates an incredible amount of debate into a rapidly evolving draft. The experience is a wonder that I would recommend to anyone with a serious interest in legislative policymaking. It also, for present purposes, helps illustrate both the benefits and limits of contract law in a nascent market-space.

Bitcoin_logo1The current drafting project arose out of the phenomenon of Bitcoin, the first technologically viable means of electronically transmitting value without the possibility of double spending or the need for a financial intermediary, like a bank. While the use cases for virtual currency technology are still in their relative infancy, states began to consider and enact disparate regulatory schemes, with New York's BitLicense regulatory framework being the most prominent example. While federal regulators and law enforcement have understandably focused on preventing the use of pseudonymous cryptocurrency to advance criminal enterprises and finance international terrorism, the state concerns have tended more toward protection of consumers and other users engaged in perfectly legal transactions. While Bitcoin does not require an intermediary any more than paper cash requires use of a bank, intermediaries--like digital wallet services--have arisen to fill the convenience role analogous to bank accounts. These virtual currency intermediaries are, for the most part, the principal target of state-law regulation and current work of the Uniform Law Commission.

Contract1What is the contract law angle here? It's this: In the absence of specially-crafted law of the sort now under consideration, the common law of contracts fills the void to enable some degree of enforceable private ordering. The flexibility of contract law is such that it can allow for the birth of business models no one contemplated as recently as the eve of Bitcoin's creation in 2008. The flexibility of such a legal regime is amazing. Contract law can, nonetheless, only facilitate business so far. Public-protective regulation is necessary to achieve widespread market acceptance beyond the universe of early-adopters and risk takers. Regulation carries its own risks, however, as a heavy-handed approach can stifle innovation and create anti-competitive barriers to market entry.

That--in many different flavors--is the policy question being grappled with in the Regulation of Virtual Currency Businesses Act, and the question is relevant in any other space where rapidly developing technology exceeds the capacity of existing law. Where do we apply protective public law, and what do we keep within the realm of private contracts?

 

February 19, 2016 in Commentary, Current Affairs, E-commerce, Legislation, Web/Tech | Permalink | Comments (0)

Wednesday, February 17, 2016

American Airlines v. Gogo: A Contract Litigation Object Lesson?

American_Airlines_Jets_630x420American Airlines wants out of its 2012 contract with Gogo to provide internet service for about 200 of American's planes.  The Fort Worth Star-Telegram reports on the airline's use of a declaratory judgment claim to construe the contract:

In the lawsuit, American says its contract with Gogo allows it to renegotiate or terminate its agreement if another company offers a better service. The airline is asking a judge to declare that it provided proper notice under its contract and that Gogo’s rejection is without basis.

“After carefully evaluating the new technology and services in the marketplace, American has decided to exercise its rights under the Agreement and recently notified Gogo that ViaSat offers an in-flight connectivity system that materially improves on Gogo’s air-to-ground system,” the suit says.

American says ViaSat offers a faster service that is currently installed on United Airlines, Jet Blue and Virgin America planes. American uses Gogo for its regional aircraft and on domestic flights, primarily Boeing 737s. The carrier uses Panasonic to provide satellite-based Internet services for international flights on its wide-body fleet, including Boeing Dreamliners and 777s.

The story is an interesting object lesson on several fronts. First, the use of an indeterminate term like "better service" or its ilk as the trigger for termination of the original agreement was probably a dispute waiting to happen at its inception. Still, could a 2012 transactional lawyer have really done any better?  The most forward-thinking contract lawyer for American Airlines in 2012 could not have known what the state of in-flight wireless technology would be in 2016 beyond what actually happened--something "better" might come along.

Gogo_logoA second lesson is that the litigation and attendant publicity may already have accomplished more for American Airlines than the legal system ultimately will. News of the litigation "sent shares of Chicago-based Gogo plummeting on Wall Street. Gogo stock [ticker: GOGO] declined 27 percent, or $3.81 to close at $10.08 on Tuesday." Gogo is now at the bargaining table in a way that apparently was not going to happen before the litigation. Contract law is important to the operation of commerce, but market forces are much more important.

Finally, the publicity also speaks to the wisdom of not including arbitration clauses and confidentiality provisions in certain commercial contracts--at least not without carefully weighing the costs and benefits. Would American be better off if it did not have the court system (Texas state courts, at the moment) available as a forum? The answer is obvious, but certainly not the same one Gogo would reach at the moment. Transactional lawyers have a great deal to consider when judging the mists of an uncertain future. (H/T to my colleague Wayne Barnes for the story).


Read more here: http://www.star-telegram.com/news/business/aviation/sky-talk-blog/article60577901.html#storylink=cpy

Read more here: http://www.star-telegram.com/news/business/aviation/sky-talk-blog/article60577901.html#storylink=cpy

 

February 17, 2016 in Current Affairs, True Contracts | Permalink | Comments (3)

Monday, February 15, 2016

No Contract Contingency Left Behind: Zombies in Amazon's "Lumberyard"

AmazonLumberyardForward-thinking deal lawyers draft contracts addressing contingencies that clients might not perceive or address if left to their own devices. Amazon has, however, now taken contingency planning--if I may borrow from esteemed legal scholar Buzz Lightyear---to infinity and beyond.

One of Amazon's many businesses is Amazon Web Services, and one of the available services from AWS is Lumberyard, a game development system which, according to Amazon, "consists of an engine, integrated development environment, and related assets and tools we make available at aws.amazon.com/lumberyard/downloads or otherwise designate as Lumberyard materials (collectively, 'Lumberyard Materials')." See AWS Service Term 57.1. 

So far so good. But then, perhaps recognizing the possibility of dire emergencies requiring use of a video-game development engine, we reach section 57.10 (with emphasis added):

57.10 Acceptable Use; Safety-Critical Systems. Your use of the Lumberyard Materials must comply with the AWS Acceptable Use Policy. The Lumberyard Materials are not intended for use with life-critical or safety-critical systems, such as use in operation of medical equipment, automated transportation systems, autonomous vehicles, aircraft or air traffic control, nuclear facilities, manned spacecraft, or military use in connection with live combat. However, this restriction will not apply in the event of the occurrence (certified by the United States Centers for Disease Control or successor body) of a widespread viral infection transmitted via bites or contact with bodily fluids that causes human corpses to reanimate and seek to consume living human flesh, blood, brain or nerve tissue and is likely to result in the fall of organized civilization.

AmazonLogoHere at Texas A&M, my colleague (and Blog Editor Emeritus) Frank Snyder raised some quibbles with this provision's drafting: "First, why does it apply only to a viral infection and not to bacterial infections, mutation-causing chemicals, or (as in Night of the Comet) weird alien space rays?   And is the last clause ('likely to result in the fall of organized civilization') modified by the clause that requires CDC certification, or is that an independent determination that can be made by the judge?"  

All good questions. I'll also note that the answer to whether a zombie outbreak would constitute commercial impracticability in a sale-of-goods case has just edged a closer to "no." Apparently, this is precisely the sort of contingency that parties can foresee and should contract around with appropriate force majeure clauses.

What are your thoughts on this significant outbreak of zombie-contingency contracting? Leave your answer in the comments below. H/T to Henry Gabriel via Bill Henning for highlighting this provision.

 

February 15, 2016 in Current Affairs, E-commerce, True Contracts, Web/Tech | Permalink | Comments (1)

Sunday, February 14, 2016

Solar Contracts - Still Trouble on the Horizon

Change is coming to the energy field, finally. As the realization is broadening that fossil fuels have to be left in the ground, solar and wind energy are becoming more popular to investors and private households alike.

The problem is still the types of contracts and financing options available. An average solar system costs $14,700. If paying that in cash, homeowners would typically save around $50 a month on their electric bills. However, most people cannot afford to pay that in cash. Financing options will reduce the monthly savings to about $20-30 a month. “Net metering,” which allows homeowners to sell electricity back to the utilities, may result in bigger savings.

Problems still loom on the horizon with contracts in this area. A new financing program known as the “Property Assessed Clean Energy” financing program (“PACE”) allows solar panel buyers to finance the system and add the loan to the property as a tax assessment. Some are criticizing that for making it difficult or sell the homes or refinance mortgages.

More importantly, utility companies are complaining that the electric grids were designed to send electricity to consumers, but not receive it back. The utility industry is even referring to individually owned power systems as “disruptive technologies.” This new interaction will force changes in the market and infrastructure. But so what? Utilities have had a chance to make quite a lot of money for years on end, often in pure or monopoly-like situations. Now the market is changing. Utilities must adapt to necessary societal changes. This is clearly one of them. The resentment towards new technological change by parties in an industry that is per se technological is inexpedient and childish. Yes, utilities have invested much money in the existing electricity infrastructure, but they have surely never been promised that the market wouldn’t change and that users won’t demand other product sources than what has been the case for, now, more than a hundred years. Time has come to innovate. La-2451929-fi-0204-agenda-solar-panels-009-ik-jpg-20160207

The industry is also complaining that in the future, new rules are going to force the industry to provide more services, which will cost more money and thus result in fewer savings via alternative energy sources. Yeah, let’s see about that one. That still sounds like a contrarian, outmoded argument against inevitable progress.

What could be more troublesome is the expected erosion of benefits such as solar credits. For example, the existing 30% federal solar tax credit will end in 2019 unless, of course, Congress renews it. Hopefully under the new Paris Agreement on climate change and with the looming risks, financial and otherwise, on continually rising global temperatures (2015 was yet another hottest year on record), such and other benefits will be increased, not decreased.

For anyone wishing to buy a solar system, the best deal on the market still seems to be buying outright, even if via a property tax assessment. Many of the still-typical 20-year lease contracts are still too lengthy in nature. Too many things could change in this marketplace to make them seem like a viable option.

It is too bad that with as many hours of sunshine as many parts of this nation has, there still is not a really good, viable option for solar energy contracts for middle- or low-income private homeowners.

February 14, 2016 in Commentary, Current Affairs, Science, True Contracts, Web/Tech | Permalink | Comments (0)

Thursday, February 11, 2016

Emerging Payment Systems and the Primacy of Private (Contract) Law

CLS-logoIs the public commercial law of payment systems being displaced by private contract law? The short answer is "yes." Recently, I had the opportunity to write an invited post for the CLS Blue Sky Blog, Columbia Law School's Blog on Corporations and the Capital Markets, and I hope you'll indulge me a moment to share about it here.

Emerging Payment Systems and the Primacy of Private Law is a synopsis of a larger project on how the public law and Uniform Commercial Code aspects of the regulation of payments have become marginalized over the last few decades--and how the marginalization isn't necessarily a bad thing.  Contract law is presumptively a better organizing instrumentality, but there still remains a significant and robust role for public regulation. Or, as I state in part of the longer post:

Payment systems have now clearly exceeded the regulatory capacity of public legal institutions to govern them via a comprehensive code like the UCC. Public law protection of the end user, however, has proven so successful and facilitated such industry growth that complete privatization of payments law is not the best response either. Emerging payment systems should be subject to a division between private law and public law in which private law is predominant, but not exclusive.

Private contract law is best equipped to deal with both current and future developments as the primary governance mechanism for emerging systems of payment. This market-friendly primacy of private law is only assured, nonetheless, by ceding to public law specific protections for payment system end users against oppression, fraud, and mistake.

If this particular intersection of contract law and commercial law is of interest to you, read the complete post. Or, if you are a particular glutton for punishment, the draft article on which the CLS Blue Sky Blog piece is based is here

 

February 11, 2016 in Commentary, Current Affairs, E-commerce, Recent Scholarship | Permalink | Comments (0)

Sunday, February 7, 2016

YouTube and Annoying Plaintiffs

In a case that is a sad testament to today’s apparently increasing loneliness in the Western world despite much technological progress that could have alleviated some of that, but instead only seems to have made it worse, a woman created a YouTube channel bearing the rather uncharming name “bulbheadmyass.” On it, she posted 24 music videos of her band. These videos gathered almost half a million views and many favorable comments. There was no commercial component to the videos. The woman was not trying to sell video or audio versions of the band’s music. Instead, her “sole reward was the acclaim that she received from the YouTube community and the opportunity to make new friends.” (The case is Lewis v. YouTube, H041127, California Court of Appeal Images.)

Claiming that this woman had breached the company’s Terms of Service, YouTube removed the videos from its website. The woman filed suit claiming breach of contract and seeking specific performance. She alleged that YouTube breached the contract with her when it removed her videos from the website against her will and without notice. The trial court sustained YouTube’s demurrer on the basis that the Terms of Service contained a liability limitation stating that “[i]n no event shall YouTube … be liable … for any … errors or omissions in any content.” Plaintiff had argued that the case was not one of errors or omissions in any content, but rather a deletion of content without prior notice. The appellate court, however, held that the liability limitation governed the issue and that the trial court had correctly sustained the demurrer.

YouTube did, though, agree to restore plaintiff’s video content. YouTube, of course, does not charge for featuring anyone’s videos. Rather, it makes money off the advertising it can generate because of the many hits it receives. (Its revenue is several billion dollars a year.) However, YouTube did not restore the videos to their pre-deletion status, i.e. with comments, URLs from other users who had linked to it, and view counts. (Compare this to SSRN resetting your scholarship records: you’ll lose your view count and all other tracking data should that happen). The court contrasted the case with another where the contract had set forth exactly how to grant specific performance in case of a breach (also a technology case). But in the YouTube case, said the court, “no provision in the Terms of Service can serve as the basis for the relief that [plaintiff] seeks.”

Really? Does it take all that much technological savvy by a court to simply ask YouTube to restore plaintiff’s accounts to their “as were” condition? YouTube may actually not simply have deleted the accounts altogether. If they had, they would undoubtedly have backups. Instead, various technological accounts are simply “turned off” and are thus not accessible to the general public, but they still exist. What really seems to have been at issue here was an annoying plaintiff who was unlikeable to both the court and YouTube. It seems that the court was too eager to dismiss plaintiff’s specific performance claim and chose the too-easy way out by claiming lack of technological knowledge. In 2016, it does not seem to strain the imagination too much to expect billion-dollar IT companies to have ways of doing just what plaintiff sought here. Then again: with a name such as “bulbheadmyass,” maybe it was a case of “you got what you asked for.”

February 7, 2016 in Current Affairs, E-commerce, Film, Music, True Contracts, Web/Tech | Permalink | Comments (0)

Thursday, February 4, 2016

The Pink Tax

Although some things bear little direct relation to Contracts Law, they are still worth mentioning here for their inherent news value and for potential classroom use by creative law professors. Here’s one such story:

Both British and American studies show that women pay an average of… 48% more for items targeted for women compared to those for men.  This “sexist pricing” pattern is reflected in, for example, razors costing 11% more for women than those for men, jeans allegedly 10% more (I would personally have thought more than that, but that’s another story), skin lotion around $15 for women, but similar lotion $10 for men.

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A report by the New York City Department of Consumer Affairs, released in December, found similar patterns. It compared nearly 800 products with clear male and female versions from more than 90 brands sold in New York, both online and in stores. It found that women pay more in 42% of cases.

Similarly, a bill in California calling for lawmakers to exempt tampons and sanitary pads from the state sales tax got a big endorsement in January from the board that administers the state's sales taxes. A few other states such as Utah, Virginia and New York have introduced similar bills. Even President Obama seems to subscribe to the notion that women should not have to pay tax on products they simply have to have because of Mother Nature’s demands. When asked in a recent interview if he felt it was right that tampons are taxed, he said, “I have no idea why states would tax these as luxury items. I suspect it's because men were making the laws when these were passed.” Well, not quite: states typically just tax all goods and exempt some. But states such as California don’t tax foods, for example. Time truly seems to have come to exempt some other goods.

British Labor Party MP Paula Sheriff sums up the issue well “[w]omen are paid less and are expected to spend more on products and services ... they are charged more simply for being women.” The only thing that should also be mentioned, in all fairness, is the price of clothing and shoes. I personally find those items much cheaper than men’s clothes, but I’m also not a brand-conscious person.   As long as it fits and looks good, I don’t care whether it’s called one thing or another, so my anecdote may not fit into the “pink tax” story and protests which are gaining momentum in several nations.

February 4, 2016 in Commentary, Current Affairs, In the News | Permalink | Comments (0)

Uniform Commercial Code: 2016 Legislative Agenda

ULCLogoThe Uniform Commercial Code is widely recognized as one of the great successes in the more-than-a-century-long history of drafting uniform state laws and model acts. Most parts of this joint enterprise between the American Law Institute (ALI) and Uniform Law Commission (ULC) have been adopted in all 50 states and other United States jurisdictions. Perhaps more remarkable than the UCC’s original wide adoption in the late 1960s is that the Code has been the subject major revisions over the past fifty years that themselves have gained widespread adoption, as we previously documented in some detail here.

These enactments don't just happen on their own, however, as the Uniform Law Commission targets and supports efforts to gain particular enactments in particular jurisdictions. Below is a copy of the ULC's Legislative Agenda for the Uniform Commercial Code for 2016. US Virgin IslandsOne piece of the agenda that stands out to me, as it affects a topic I've previously written about, is the plan to seek enactment of the 2008 version of Article 1's section 1-301 in the U.S. Virgin Islands.  The Virgin Islands is a noteworthy jurisdiction for being the only adopter of the 2001 rewrite of UCC Article 1 in its entirety, including its controversial (to Americans, at least) choice-of-law section that permitted parties to non-consumer UCC-governed contracts to choose governing law that had no relationship to the contract. The 2001 version of section 1-301 achieved no other enactments before being abandoned by the Commission in 2008 in favor of language tracking original-section 1-105, which required chosen contract law to bear a "reasonable relation" to a transaction.

Read on to see if there is any activity planned of interest to you or your state.

2016 LEGISLATIVE UPDATE FOR UCC ARTICLES

  • UPDATE ON UCC ARTICLE 1 (2001) [1] :  

 

    • Plans for introduction in 2016: Missouri; U.S. Virgin Islands (UCC1-301 Amendment).
    • UCC Article 1 (2001) has been adopted in 51 jurisdictions: Alabama[2], Alaska, Arizona2, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii2, Idaho2, Illinois2, Indiana2, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland2, Massachusetts, Michigan2, Minnesota, Mississippi, Montana, Nebraska2, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Ohio, Oregon, Pennsylvania, Rhode Island2, South Carolina, South Dakota, Tennessee, Texas, Utah2, Vermont, Virginia2, U.S. Virgin Islands, Washington, West Virginia, Wisconsin, Wyoming.
  • UPDATE ON UCC ARTICLE 2A (1987) (1990): 

 

    • UCC Article 2A (1987)(1990) has been adopted in 51 jurisdictions. It has not been adopted in Louisiana, Puerto Rico.
  • UPDATE ON UCC ARTICLES 3 AND 4 (1990):  

 

    • Plans for introduction in 2016: New York.
    • UCC Articles 3 and 4 (1990) have been adopted in 52 jurisdictions. They have not been adopted in: New York.
  • UPDATE ON UCC ARTICLES 3 AND 4 (2002):  

 

    • Plans for introduction in 2016: Massachusetts, Ohio.
    • UCC Articles 3 and 4 (2002) have been adopted in 12 jurisdictions: Arkansas, District of Columbia, Indiana, Kentucky, Michigan, Minnesota, Mississippi, Nevada, New Mexico, Oklahoma, South Carolina, Texas.
  • UPDATE ON UCC ARTICLE 4A (1989): 

 

    • UCC Article 4A (1989) has been adopted in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
  • UPDATE ON UCC ARTICLE 4A AMENDMENT (2012):   

 

    •  Plans for introduction in 2016: Connecticut, Delaware, Florida, Kansas, Oklahoma, U.S. Virgin Islands, Utah.
    • UCC Article 4A Amendment (2012) has been adopted in 44 jurisdictions: Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin.
  • UPDATE ON UCC ARTICLE 5 (1995): 

 

    • UCC Article 5 (1995) has been adopted in 52 jurisdictions. It has not been adopted in: Puerto Rico.
  • UPDATE ON UCC ARTICLE 6 (1989): 

 

    • UCC Article 6 (1989) has been revised in one state: California. UCC6 has been repealed in 51 jurisdictions. It has not been repealed or revised in: Maryland.
  • UPDATE ON UCC ARTICLE 7 (2003):  

 

    • Plans for introduction in 2016: Missouri, U.S. Virgin Islands.
    • UCC Article 7 (2003) has been adopted in 50 jurisdictions: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.
  • UPDATE ON UCC ARTICLE 8 (1994): 

 

    • UCC Article 8 (1994) has been adopted in all 50 states plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
  • UPDATE ON UCC ARTICLE 9 (1999): 

 

    • UCC Article 9 (1999) has been adopted in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
  • UPDATE ON UCC ARTICLE 9 (2010): 

 

  • Plans for introduction in 2016: U.S. Virgin Islands.
  • UCC Article 9 (2010) has been adopted in 52 jurisdictions: Alabama1, Alaska2, Arizona1, Arkansas1, California3, Colorado2, Connecticut2, Delaware2, District of Columbia1, Florida1, Georgia1, Hawaii1, Idaho1, Illinois1, Indiana1, Iowa1, Kansas1, Kentucky1, Louisiana1, Maine1, Maryland1, Massachusetts1, Michigan1, Minnesota1, Mississippi1, Missouri1, Montana1, Nebraska1, Nevada1, New Hampshire2, New Jersey1, New Mexico1, New York1, North Carolina1, North Dakota1, Ohio1, Oklahoma1, Oregon2, Pennsylvania1, Puerto Rico1, Rhode Island1, South Carolina1, South Dakota1, Tennessee1, Texas1, Utah1, Vermont1, Virginia1, Washington2, West Virginia1, Wisconsin1, Wyoming2.

[1] Choice of Law provision:  All enacting jurisdictions except the U.S. Virgin Islands have enacted the choice-of-law provision (Section 1-301) in the 2008 Official Text.  The USVI enactment includes the 2001 text of that section.

[2] Definition of “good faith”:  retains the good faith standard found in pre-revised UCC1.

February 4, 2016 in Current Affairs, Legislation | Permalink | Comments (0)

Sunday, January 31, 2016

Mobile Carriers Give up Two-year Contracts

Mobile carriers seem to have grown tired of, effectively, being in the loan business funding people’s new phones. American consumers were used to this model, which was a way for phone companies to hide the large price of a new phone into a monthly bill.

More recently, consumers want to change their phones more often than every two plus years, so many prefer paying up front for their phones to be able to change plans whenever they want to instead of having to wait out a long-term contract (or risk sanctions if breaching it).

All the major carriers – T-Mobile, Verizon, Spring and now AT&T – have now shifted away from two-year contracts. The question now is whether consumers will truly choose to pay for their phones in full at the point of purchase or, as has been mentioned, opt for installment plans that lets them upgrade more often than before remains to be seen. Given the price of phones, but also the seemingly insatiable need by many for new technology, installment contracts may be the likely end result. If so, it will be interesting to see how carriers will avoid tying people into long-term contracts, which has proved to be undesirable, but at the same time trying to do, at bottom, some of that via “installment contracts.”

January 31, 2016 in Current Affairs, E-commerce, In the News, Web/Tech | Permalink

Wednesday, January 27, 2016

Uniform Commercial Code Adoptions: Here's the Current Scorecard

ULCLogoPerhaps the greatest and most unintended misnomer in the field of commercial law is that the Uniform Commercial Code is called the Uniform Commercial Code. A more accurate name might have been the As-Uniform-as-Possible-Given-that-States-Are-Going-to-Do-Their-Thing Commercial Code. (That name admittedly doesn't roll off the tongue nearly as well as "UCC."). The picture is further complicated by the fact that the official code has itself been amended many times over the last several decades. 

For those of us who are interested in the status of UCC adoptions, however, our friends at the Uniform Law Commission (or NCCUSL, if you prefer the old-school name) have produced a handy one-stop scorecard showing which jurisdictions have adopted which revisions of the UCC. The scorecard is dated December 1, 2015, but I'm told on good authority by my colleague and ULC guru Bill Henning that it remains current today. Use the knowledge below to amaze and impress your commercial law friends around the water cooler--or else to drive your non-commercial law friends away from the water cooler.

On a technical note, you might need a wide screen (i.e., not a smartphone) to view the table in its proper format.

 

UCC SCORECARD

 50+ State Survey of Adoptions of Revised Official Text of the UCC

STATES

UCC

UCC11

(2001)

UCC2A

(1990)

UCC3/4

(1990)

UCC3/4

(2002)

UCC4A

(1989)

UCC5

(1995)

UCC6

(1989)

UCC7

(2003)

UCC8

(1994)

UCC9

(1998)

UCC9

(2010)

Alabama

1965

20042

1992

1995

 

19923

1997

1996

2004

1996

2001

2014 A

Alaska

1962

2009

1993

1993

 

19933

1999

1993

2009

1996

2000

2013 B

Arizona

1967

20062

1992

1993

 

19913

1996

2004

2006

1995

1999

2014 A

Arkansas

1961

2005

1993

1991

2005

19913

1997

1991

2007

1995

2001

2013 A

California

1963

2006

1991

1992

 

19903

1996

Rev 90

2006

1996

1999

2013C

Colorado

1965

2006

1991

1994

 

19903

1996

1991

2006

1996

2001

2012 B

Connecticut

1959

2005

2002

1991

 

1990

1996

1993

2004

1997

2001

2011 B

Delaware

1966

2004

1992

1995

 

1992

1998

1996

2004

1997

2000

2013 B

DC

1964

2013

1992

1994

2013

19923

1997

2015

2013

1997

2000

2013 A

Florida

1965

2007

1990

1992

 

1991

1999

1993

2010

1998

2001

2012 A

Georgia

1962

2015

1993

1996

 

19923

2002

2015

2010

1998

2001

2013 A

Hawaii

1965

20042

1991

1991

 

19913

1996

1998

2004

1997

2000

2012 A

Idaho

1967

20042

1993

1993

 

19913

1996

1993

2004

1995

2001

2012 A

Illinois

1961

20082

1991

1991

 

19903

1996

1991

2008

1995

2000

2012 A

Indiana

1963

20072

1991

1993

2009

19913

1996

2007

2007

1995

2000

2011 A

Iowa

1965

2007

1994

1994

 

19923

1996

1994

2007

1997

2000

2012 A

Kansas

1965

2007

1991

1991

 

1990

1996

1992

2007

1996

2000

2012 A

Kentucky

1958

2006

1990

1996

2006

19923

2000

1992

2012

1996

2000

2012 A

Louisiana

1974

2006

 

1992

 

19903

1999

1991

2009

1995

2001

2012 A

Maine

1963

2009

1992

1993

 

19923

1997

1992

2009

1997

2000

2013 A

Maryland

1963

20122

1994

1996

 

19913

1997

 

2004

1996

1999

2012 A

Mass.

1957

2013

1996

1998

 

19913

1997

1996

2013

1996

2001

2013 A

Michigan

1962

20122

1992

1993

2014

19923

1998

1998

2012

1998

2000

2012 A

Minnesota

1965

2004

1991

1992

2003

19903

1997

1991

2004

1995

2000

2011 A

Mississippi

1966

2010

1994

1992

2010

19913

1996

1994

2006

1996

2001

2013 A

Missouri

1963

 

1992

1992

 

19923

1997

2004

 

1997

2001

2013 A

Montana

1963

2005

1991

1991

 

19913

1997

1991

2005

1997

1999

2013 A

Nebraska

1963

20052

1991

1991

 

19913

1996

1991

2005

1995

1999

2011 A

STATES

UCC

UCC1

(2001)

UCC2A

(1990)

UCC3/4

(1990)

UCC3/4

(2002)

UCC4A

(1989)

UCC5

(1995)

UCC6

(1989)

UCC7

(2003)

UCC8

(1994)

UCC9

(1998)

UCC9

(2010)

Nevada

1965

2005

1991

1993

2005

19913

1997

1991

2005

1997

1999

2011 A

NH

1959

2006

1993

1993

 

19933

1998

1993

2006

1998

2001

2012 B

NJ

1961

2013

1994

1995

 

19943

1997

1994

2013

1997

2001

2013 A

NM

1961

2005

1992

1992

2009

19923

1997

1992

2005

1996

2001

2013 A

New York

1962

2015

1994

   

19903

2000

2001

2015

1997

2001

2015 A

NC

1965

2006

1993

1995

 

19933

1999

2004

2006

1997

2001

2012 A

ND

1965

2007

1991

1991

 

19913

1997

1993

2005

1997

2001

2011 A

Ohio

1961

2011

1992

1994

 

19913

1997

1996

2011

1997

2001

2012 A

Oklahoma

1961

2005

1991

1991

2009

1990

1996

1997

2005

1995

2000

2015 A

Oregon

1961

2009

1989

1993

 

19913

1997

1991

2009

1995

2001

2012 B

Penn.

1953

2008

1992

1992

 

1992 3

2001

1992

2008

1996

2001

2013 A

PR

                   

2012

2012 A

RI

1961

20072

1991

2000

 

19913

2000

2001

2006

2000

2000

2011 A

SC

1966

2014

2001

2008

2008

19963

2001

2001

2014

2001

2000

2013 A

SD

1966

2008

1989

1994

 

19913

1998

1993

2009

1998

2000

2012 A

Tenn.

1963

2008

1993

1997

 

19913

1998

1998

2008

1997

2000

2012 A

Texas

1965

2003

1993

1995

2005

19933

1999

1993

2005

1995

1999

2011 A

USVI

1967

2002

2001

2000

 

2001

2000

2002

 

2002

2002

 

Utah

1965

20072

1993

1993

 

1990

1997

1996

2006

1996

2000

2013 A

Vermont

1966

2007

1994

1994

 

19943

1999

1994

2015

1996

2000

2014 A

Virginia

1964

20032

1991

1992

 

19903

1997

2011

2004

1996

2000

2012 A

Wash.

1965

2012

1993

1993

 

19913

1997

1993

2012

1995

2000

2011 A

WV

1963

2006

1996

1993

 

19903

1996

1992

2006

1995

2000

2012 A

Wisconsin

1963

2010

1992

1996

 

19923

2005

2009

2010

1998

2001

2012 A

Wyoming

1961

2015

1991

1991

 

1991

1997

1991

2015

1996

2001

2013B

TOTAL

53

51

51

52

12

53

52

52

50

53

53

52

(Last updated 12-1-15)

 

1 Choice of Law Provision: All enacting jurisdictions except the U.S. Virgin Islands have enacted the choice-of-law provision (Section 1-301) in the 2008 Official Text. The USVI enactment includes the 2001 text of that section.

2 Definition of “good faith”: retains the good faith standard found in pre-revised UCC1.

3 Adopted the 2012 Amendment to UCC Article 4A.

A Adopted Alternative A of 9-503.

B Adopted Alternative B of 9-503.

C Adopted non-uniform safe harbor in 9-503.

January 27, 2016 in Current Affairs, Legislation | Permalink | Comments (0)

Saturday, January 23, 2016

Futures Contracts for College Education

Since college and traditional student loans can be so expensive, why not create, in effect, “futures contracts” for post-college incomes? Ct-student-loan-debt-20150821

This relatively new and unknown funding idea is being tested by Purdue University in cooperation with financial services company Verno Education.  The loans are called “Income-share Agreements” or “ISAs.” Investors lend money to students in return for a certain percentage of the student’s future income for a set number of years. A few companies and NGOs in the United States are offering contracts on a limited, pilot basis, although the idea itself is not new: Economist Milton Friedman introduced the idea in the 1950s.

Purdue President Mitch Daniels has touted the idea, claiming that the loans “shift the risk of career shortcomings from student to investor: if the graduate earns less than expected, it is the investors who are disappointed; if the student decides to go off … to Nepal instead of working, the loss is entirely on the funding providers….” Voila, truly “debt-free-college” according to Daniels.

Not so fast. First, most college students of course end up finding a job. They will thus have to repay something. That something could easily be very expensive. For example, if a student borrowed $10,000 via a contract to repay 5% of her income for five years after graduation and ends up getting a $60,000 job, she or he will have to pay back $15,000 without compounded interest.

Student protections are currently poor. For example, there is no clarity as to whether the Fair Credit Reporting Act would apply. Further regulations of this area are necessary. Meanwhile, students will have to individually bargain these types of contracts very carefully.

January 23, 2016 in Current Affairs, Labor Contracts, Law Schools, Teaching, True Contracts | Permalink | Comments (0)

Tuesday, January 19, 2016

Contracts Professors: Prepare to Meet Robolawyer

Do law students intending to practice in the areas of contracts and commercial law particularly need to consider the risk of being replaced by artificial intelligence?  It wouldn't hurt.

At this month's AALS annual meeting, Harvard Law School Dean Martha Minnow made some headlines with her comments that the threat to the jobs of human lawyers from artificial intelligence is overhyped:

Minow said she didn’t see computers having a role in matters that require subjective legal judgment. “Assessment and critique of justice and justice mechanisms, I don’t see AI taking that on. Nor do I see AI taking on ethics,” she said. “I don’t mean to suggest there is no relation between AI and ethical suggestions, but I don’t think you’ll ever get rid of the human being. There will always be a need for human beings.”

Robot-lawyer-at-deskDean Minnow's points of optimism--that matters of justice and ethics will require a human component--seem substantially correct, but they highlight a particular problem in the contract and commercial law fields. Matters of human justice, like the administration of criminal penalties and the protection of civil rights, are a natural bulwark against the replacement of lawyers by computers in those fields. The values at stake are ones that we, as a society, would be (fortunately) fundamentally queasy about taking out of human hands. But what if the stakes are "mere" money, as is frequently the case with contracts?  That is the kind of area where increased efficiencies and removal of the human element give less pause.

This sort of automation of transactional work is certainly underway, ranging from the drafting of basic transactional documents through websites like Legal Zoom to the intriguing use of smart contracts that can govern and enforce themselves, such as through application of Bitcoin-style blockchain technology. In short, teachers of Contracts are training students in a field with a high degree of risk of being automated out of existence.

Robolawyer is coming, so how do we prepare our Contracts students to become lawyers whose value-adding proposition is not susceptible to automation?  This question has many answers, I suspect, but we won't reach any of them unless we start by recognizing the problem.

January 19, 2016 in Commentary, Current Affairs, Law Schools, Teaching, Web/Tech | Permalink | Comments (2)