Monday, January 30, 2012
Dozens of applicants to Vassar College celebrated their acceptances -- but only for a couple of hours. (The link is here - I wonder what Lisa Kudrow and Meryl Streep think about this snafu...?) These applicants were later informed, also electronically, that those acceptances were sent in error. At least Vassar didn't text their rejections....
Did the acceptances create an enforceable contract? Over at Concurring Opinions, Lawrence Cunningham has a post arguing that they probably did not. I don't think the answer is clear without knowing more about the circumstances of the early decision process. Another possibility - could Vassar argue this was merely preliminary negotiations and there was no agreement until the enrollment contract was signed and accepted? (This might not get Vassar off the hook with at least some students since the article indicates that a few paid their deposit and so might have sent in their enrollment contracts....) It's an interesting issue - and one that is bound to arise more often with electronic communications. Speaking of which, I wouldn't be surprised if there is a browse- or clickwrap contract for Vassar's website which covers this scenario. If there isn't, there will be soon.
Could a computerized letter error made by Vassar College (the alma mater of the pictured Meryl Streep) potentially serve as an instructive hypo for students beginning their study of Contracts? My tentative thought is "yes," at least for those who start with formation versus damages. As the NYT reported over the weekend, Vassar College recently emailed decision letters to its "early decision" undergrad applicants. For many of those applicants, euphoria ensued. A few hours later, that euphoria was replaced by anger and grief. Why the emotional switcheroo? Well, it seems that some of the applicants mistakenly received a test-version of an acceptance letter (all of which said, "Congratulations...") instead of their actual decision letter (some of which said, "Congratulations..." but many more of which said, "We are sorry to inform you that..."). Because all of the posted test-version letters were acceptances, many applicants initially thought they had been accepted only to find out later that: (i) the letter they first saw was the wrong one, and (ii) the "right" letter was a denial. What makes this difficult situation particularly interesting from a Contracts perspective is that the early decision applicants reportedly had to commit to attending Vassar if admitted. Thus, one may be able to characterize their applications as binding "offers to attend," which Vassar then arguably accepted via the test-version letter, thereby forming a contract and making Vassar's later attempted revocation invalid. Alternatively, one could view the application as an invitation to deal, with the test-version of the letter as the offer, which Vassar then promptly revoked prior to acceptance. Although the applicants also could emphasize reliance, the short period of time between the posting of the test-version letter and the right letter likely mimimizes that possibility (that said, at least one applicant reportedly considered withdrawing her applications elsewhere upon receipt of the acceptance so perhaps there's more potential reliance here than the time lapse would indicate). As with many stories like this one, the precise facts matter. But that's what class time is for--considering the "what if..." questions using facts of our own creation.
[Heidi R. Anderson, h/t to Anonymous Contracts I student]
Thursday, January 26, 2012
Country singer Garth Brooks recently won a breach of contract case against an Oklahoma hospital that the jury found promised to build a women's center in honor of the singer's mother in exchange for $500,000. The jury concluded that Brooks had been defrauded by the hospital. As contracts profs know, fraud it not an easy thing to prove especially where the case involved an oral agreement. The hospital has to return the original $500,000 and also has to pay $500,000 in punitive damages. Punitive damages are not an easy thing to win in breach of contract cases so congrats to Brooks and to his lawyers.
Monday, January 23, 2012
Forget the Republican primaries, the real news this week is fine print. As Jeremy Telman blogged, there are some troubling contract issues relating to the Costa Concordia disaster. The Wall Street Journal noted the prevalence of fine print everywhere, and the vast amounts of it. Finally, yesterday's New York Times had plastered on the front page of the Sunday Review this article about the mess of disclosure requirements that often leave consumers more confused and overwhelmed than enlightened.
Friday, January 20, 2012
When I was a teenager, I used to read Mad Magazine (when I wasn't reading Dostoevsky, Kafka or Sartre, of course). I retain very few memories of my childhood, but one Mad feature stuck with me, although only vaguely. The idea was to take a story and present it as it would be presented in magazines with very different perspectives on the world. The story that Mad worked with was a football game, so of course one version was just to report on the game. Another version was a medical journal featuring an image of some bone that had been broken during the game. Another version that I remember distinctly featured a photograph of a football taken at very close range. The image was supposed to represent how the football game would be featured in a photography magazine. It described all of the particulars of the way the photograph was taken -- film speed, lens type, etc., and then mentioned that the photograph was of the ball as it soared through the uprights for the winning field goal, just before it smashed the photographer's camera. A nice touch, in the estimation of my 13-year-old mind.
I've often thought that this blog plays out Mad Magazine's idea, as do many other blogs and even the lamestream media. And so, we pick over the carcass of a human and environmental catastrophe for a tidbit of contracts doctrine. But we are not alone. As the New York Times reported yesterday, it will be very difficult for any victims of the Costa Concordia wreck to go after the ship's corporate parent, Carnival Cruise Lines, for reasons that will strike a chord with fans of the civil procedure chestnut, Carninval Cruise Lines, Inc. v. Shute.
According to the Times, at least 70 passengers of the ill-fated cruise ship have signed on to a class-action lawsuit, but their ability to get at the corporate defendant will be greatly hindered by the Convention on Limitation of Liability for Maritime Claims, characterized on the International Maritime Organization Website as “a virtually unbreakable system of limiting liability," and by the terms contained in the 6,400-word contracts attached to their cruise tickets.
The contract could provide great fodder for a few sessions on contractual remedies.
Tuesday, December 20, 2011
Some clues as to how the Greeks have spent all their money are available now from the Congressional Research Service.
A few other random thoughts on the data:
- African governments clearly are not doing all they could to help the U.S. economy through purchases of U.S. weaponry
- Hooray for Canada's unexpected militarism
- And while we're at it, good on ya Australia!
- Eastern Europe (other than Poland), don't look now but there's still a big Russian bear behind you. Can we interest you in some supersonic jets?
Thanks to Steven Aftergood of the Federation of American Scientists' Secrecy News blog for providing the link!
Sunday, December 11, 2011
Last week was a big week for contracts to "keep-your-mouth-shut". The L.A. times had this article about the recent exchange between "The Girl with the Dragon Tattoo" producer, Scott Rudin, and New Yorker film critic, David Denby. It seems that Denby broke his promise not to publish a review of an early screening of the movie. While these "agreements" are common in the film and publishing industry, they are much harder to enforce because of the Internet and the ability to post instantaneously.
On the flip side, more businesses that would otherwise not have considered such agreements are doing so. Paul Levy discusses one type of agreement that has been receiving some attention in the blogosphere, "medical confidentiality" agreements. Dave Hoffman blogged about it as well here. While I can understand, on a personal level, the desire to contain what one considers to be unfair negative reviews on an easily googleable website (not that it's ever happened to me, ahem...), these contracts raise a lot of troubling issues. And while it may seem like bad business for a doctor or dentist to have a patient sign a "zip-it" contract, if these practices are widely adopted, they become standard practice, leaving consumers with no real choice (kind of like the intrusive tracking policies adopted by so many websites which we can't really seem to prevent....).
Thursday, December 8, 2011
Jeremy Telman recently posted about this front page article in the NYT about oil and gas well leases, and the contractual traps for the unwary. This article mentions and explains some common terms in such leases.
There are additional contract issues that were raised by the article having to do with the bargaining process. There's a bargaining imbalance where you have one party with greater financial resources than the other or one with greater financial need. Another bargaining disparity involves knowledge - the oil and gas companies are much more familiar with these types of transactions and more knowledgeable about what could go wrong. It's their business. The landowners, on the other hand, presumably don't enter into these transactions often.
Unfortunately, contract law doesn't usually recognize these kinds of bargaining disparities, especially outside of the consumer context -- at least not to invalidate the contracts. A court might consider them in interpreting ambiguous contractual clauses. In addition, the landowners might be able to raise a lack of good faith argument that might affect the interpretation or construction of some of the contractual clauses or the parties' performance under the contract. For example, one lease cited in the article contained language that said that "preparation" to drill would allow the gas company to extend the duration of the lease. The landowners had negotiated what they considered a bad deal and planned to renegotiate it after it expired. A day before the expiration date, the gas company "parked a bulldozer nearby and started to survey an access road. A company official informed them that by moving equipment to the site, Chief Oil and Gas was preparing to drill and was therefore allowed to extend the lease indefinitely." I don't know about you, but that strikes me as performance that's not in good faith. I hope a judge would agree.
Something else that struck me in reading about these leases was how they highlight the overconfidence and optimism bias in these types of deals. Landowners are likely to focus on the potential upside of these deals - which can be pretty sky high. But things can and do go wrong in any type of transaction. The long term nature of these contracts makes it even more important to think carefully about the risks and not just the upside -- but a long time horizon also makes it harder to evaluate those risks.
And of course, as Jeremy mentioned in his post, there's the Peevyhouse issue. Even if you carefully draft a "clean up" or similar clause, a court may find performance to be economically wasteful and not enforce it. To safeguard against that, the parties might consider putting clean up costs in an escrow account and including a liquidated damages provision.
While this article was about gas well leases, I can see similar issues arising with other long term contracts, particularly those between landowners and energy companies. I predict we'll see a slew of innovative solutions around alternative energy (such as windfarms on private land) which is great - but again, it's important to take a large dose of caution with that optimism, especially if you are representing the "little guy/gal."
Monday, November 21, 2011
The legal blogs are afire (see our very own Jeremy Telman's post here, and others here , here and here ) about this article about the impracticability of the law school curriculum. The article takes aim at “chin-stroking scholarship” that supposedly “nobody” reads. I'm puzzled about labeling scholarship as worthless because it's not more widely read - that doesn't necessarily reflect the potential value of the article. The article grossly over generalizes the nature of legal scholarship. Maybe it’s my chosen areas (contracts and cyberlaw), but most of what I read --and yes, I do read a lot of law review articles-- tackles real world, sticky social and legal issues caused by technological developments and contemplates possible solutions based on (surprise!) legal doctrine. Theoretical articles, as we contracts profs know, shed light on the “why” questions and thus help in the application of doctrinal rules to novel situations. The bad rap that scholarship receives seems to come from a handful of articles which are published by a handful of journals that push the envelope and get all the attention of (some) journalists and (some) judges. (I’m not commenting about the articles cited in the NYT piece because, unlike the journalist, I try not to judge an article I haven’t read by its title). I don’t think that’s a problem in and of itself – not all of legal scholarship should be about real world solutions and what might seem like an outrageous, pie-in-the-sky idea now may not seem so outrageous in a few years. (The anti-intellectual criticisms in the article remind me of equally inane arguments about the irrelevance of a humanities curriculum, literary novels, classical music and art). What is problematic is when journalists or judges use a handful of articles as examples of what all law review articles are like. These folks just don’t know the good stuff that’s out there -- many articles do in fact explain doctrine, have at least the potential for practical application or contribute in some way to our understanding of the law. The fact that more articles don't get cited by courts is a shame and may reflect more about the elitist bent of (some) judges than it does about the nature of legal scholarship generally. The real problem with legal scholarship is that it's not more widely read. I think that more judges should read more legal scholarship, and in a wider variety of journals. Maybe then we wouldn’t have short-sighted, doctrinally confused cases like ProCD v. Zeidenberg – a case about which many of us contracts profs have written. Unfortunately, not enough courts seemed to have read those articles. Maybe the state of contract law would be better if they had.
Monday, November 14, 2011
But does the language in the 2007 (as opposed to the 2010) policy create a reasonable expectation that the IP address information would not be released to law enforcement authorities. I don't think it does as a matter of interpretation, especially because the 2007 version specifically states that Twitter "may disclose any information to respond "to claims, legal process (including subpoenas)….to prevent or stop any illegal, unethical, or legally actionable activity, or to comply with the law."
Friday, November 11, 2011
Tadas Klimas, a contracts (among other things) prof in Lithuania and a friend of the blog has shared with us a link to his blog, Civitatus in which he reports on a new opt-in sales law for Europe. His introductory content is pasted in below, but you can get the full story on his blog:
“The train has left the station.” These were the words of Viviane Reding, Vice-President and Commissioner for Justice, Fundamental Rights and Citizenship, spoken at the ECR European Contract Law Hearing held at the European Parliament in Brussels on May 3rd, 2011 (which I attended). This is how the question of whether there will or will not be a pan-EU Contracts Code was answered. The “Commisar” was trying to convey the idea that a political decision has been made and that there indeed will be an EU Contracts Code.
Commissioner Reding did not speak with forked-train. It’s been a slow train coming, but the official proposals have now been made. In words more understandable by American standards, the bill has now (just about a month ago – October 11) been proposed and is in committee.
- Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law (includes the text of the new Sales Law)
- Impact Assessments
- Executive Summary
Here is an alternate link to the EU Sales Law
Among the highlights of the new trans-European code are these:
- It is an opt-in code. This is the reverse of the CISG, which is opt-out.
- It is both Business To Business and Business to Consumer.
- It affects all cross-border trading, including online sales.
- It is applicable to cross-border trading and is not applicable to internal (within-country, national) sales. Thus the regime it imposes is one in which consumers purchasing from a seller within the country the consumer resides in will find their contracts governed as per usual by the national law. But consumers from another EU country, if the contract so states, will find the contract (and their consumer-protection laws) governed by this new opt-in EU UCC (Art. 2) (EU Common Sales Law).
- Supposedly this regime will lower information-costs and enhance, encourage, and expand cross-border trading.
- And my favorite: it contains a facilitative section enabling the new code’s adoption by EU Member States for national (within-border) sales.
The rationale for the code is more or less the standard iteration in defense of such legal regimes (such as the CISG).
Wednesday, October 12, 2011
The Occupy Wall Street movement has gained momentum as it spreads to affiliate movements across the country, including in San Diego (Usha Rodrigues has a post about the protest in Athens, GA, and Frank Pasquale has thoughtful observations about the movement in general here). As I alluded briefly in a prior post,the movement highlights some of the difficulties in mobilizing disparate individuals into collective action. You may not have thought the Occupy Wall Street movement was about contracts, but I think it is, at least in part.
Many of the problems arising from the financial crisis and the mortgage crisis (which are mentioned in the movement’s first official declaration ) originated from contracts – contracts that were hard to understand, contracts that were too long, contracts that contained aggressive and surprising terms. Contracts conferred legitimacy on transactions that later turned out to be problematic.Contracts were and are part of the problem in another way. The growing anger and frustration exhibited by the Occupiers of Wall Street stem from a general feeling of helplessness.
Contracts contribute to that feeling. Consumers have given up reading contracts – there are too many, and they are too long and convoluted. If all consumers actually read each contract they “agree” to, the economy would grind to a halt. Imagine– every time you download music, log on to Facebook, rent a car, check your bank balance. You’d never get anything done. Can you imagine if everyone who bought a house read all the paperwork that they signed? It takes an hour just to sign through all the different documents. The lender and the broker and all the various drafting parties don’t actually want you to read the documents – they just want you to sign them. (Heck ,the lenders don’t even read their own documents if the robo-signing controvery is any indication).
Some contracts scholars defend standard form contracts by stating that if the majority of consumers don’t like certain terms, they will push back. It’s the familiar, the “market will respond” argument. The assumption is that if enough consumers really don’t like terms, we will eventually hear about it. The problem is that, given the coordination problems associated with mobilizing individuals who are strangers to each other and dispersed across the country, we may not hear a clear, unified message. More troubling, we won’t hear about mass scale dissatisfaction until mass scale societal harm has already occurred. The “market will respond” argument is a regressive argument, not a progressive, improving one. The Occupy Wall Street Movement is a reaction, not a preventative movement (and David Brooks of the NYT thinks it is a weak one because of it).
But, you might ask, in a free society and in a free market,shouldn’t we respect what two parties voluntarily agree to do? To a certain extent, yes. But it depends. It depends upon the meaning of the word voluntarily. It depends upon the meaning of the word agree. And it depends upon whether (and how and how much) what the contracting parties agree to do impacts the rest of society. Contracts are the vehicle through which banks and other financial institutions carry out their business. They were the tools that lent legitimacy to socially harmful practices. The agreement of two private actors shouldn’t be enforced if it threatens the well-being of society, violates important policy principles, and cripples the economy.
Monday, October 10, 2011
Steve Jobs made quite an impact on the world, rethinking the way people use technology and introducing beautifully designed, innovative products. Because this is a contracts blog, I want to discuss the interesting way his company, Apple, uses contracts in its business. Before iTunes, most music was sold to consumers on CDs. Apple is not the first or only company to license rather than sell digital music, but it is the most popular. Because of the enormous popularity of the iPod and iTunes, Apple made it acceptable to license rather than sell music - a concept that at one time seemed strange and somewhat outrageous. The way Apple uses contracts is closely tied to the nature of its innovative products and services (which meld the tangible and the digital), the way they are delivered to the customer, and Apple’s business model. Apple markets itself as more than a purveyor of technology products. Its customers don’t buy a product, they enter into a relationship. Apple reminds customers that they have a relationship, not a one time transaction, and they remind them via contracts. Apple has its customers click each time they purchase a song and each time they download an updated version of iTunes. It's mass consumer relational contracting. (Other companies may do this, too, but I can't think of one offhand that does it the way Apple does). Apple also closes the gap between offline and online contracting. When I bought my iPad not long ago, after I had paid for it, the salesperson (aka the “Genius”) had me click “I agree” to the terms of an agreement on my new iPad before he would hand it over. It made me wonder, will we see more rolling clickwraps? Will clickwraps replace paper contracts in the mass consumer setting? As products become more digital than tangible, will we see more licenses and fewer sales? (I think the answer is yes). As products incorporate more software than hardware, will they no longer be considered “goods”? What types of innovative contracting forms might we expect to confront in the future?
Thursday, October 6, 2011
On September 28, 2011, Judge Blackburn of the Northern District of Alabama upheld against federal challenge most of Alabama's new immigration law, proclaimed to be the "toughest in the nation" when it comes to undocumented aliens. The case is United States v. State of Alabama and the opinion is here (Thank you, thank you, New York Times! Why do so few organizations provide links to public legal documents?!?).
Among the challenged provisions of the law was Section 27, which bars courts from enforcing contracts with undocumented aliens, assuming the other party to the contract knows of that immigration status. The federal government challenged this section as preempted by federal immigration laws. Judge Blackburn spent less than a page on the topic, finding that no federal law specifically addresses the enforceability of contracts with undocumented aliens. She therefore refused to preliminarily enjoin the enforcement of Section 27.
Why no Contracts Clause challenge? Even given that such claims are very difficult to win, it seems like the sort of situation where at least some consideration ought to be given to the Clause. After all, the language of the Constitution seems to clearly prohibit states from interfering with contractual obligations. But the Constitution does not mean what is seems to mean (anymore). In Energy Reserves Group, Inc. v. Kansas Power & Light, the Supreme Court ruled that even if state action amounts to "substantial impairment" of private contracts, such laws can be justified if designed to address a significant and legitimate public purpose, such as remedying a broad or general social or economic problem. Since the states are not involved in the contracts at issue, courts are generally to defer to the legislature's judgment as to the appropriateness of the chosen remedy.
Monday, October 3, 2011
Maybe it’s because my Contracts class is discussing unconscionability and I’ve got bargaining on my mind, but it seems that bargaining was everywhere in the news this week. Jesse Jackson, for example, seems to be calling out Capital’s One’s bargaining naughtiness when he criticizes its marketing practices aimed at vulnerable borrowers. In a different context altogether, Ohio’s governor John Kasich has waded into the collective bargaining fray. Finally, there’s this article about the increase in debit fee charges to consumers. Consumers, of course, don’t like these increases but are in a take ‘em- or- leave ‘em position given the difficulties of mobilizing disparate individuals to bargain collectively. [This article advocates the leaving 'em -- and joining a credit union-- alternative, whereas this article touches upon the problems of mobilizing disparate individuals to bargain collectively]. Super star executives are in a much different bargaining position. As this article and Jeremy's recent post points out, they can negotiate highly lucrative compensation packages , where they receive millions in severance pay even when they are essentially fired for poor performance.
Thursday, September 22, 2011
Friday, September 16, 2011
Texas Rangers outfielder Josh Hamilton previously has earned media attention in some rather depressing ways, including via his own battle with drug addiction and his attempt to throw a ball to a fan that led to the fan's death. This time, he is in the news for something that makes others--including Contracts professors--very happy. A Texas flooring retailer recently ran a promotion promising a refund on their flooring purchase if Hamilton hit a grand slam during September. And he did! Click here for the story, the actual ad "as seen on TV," and some written commentary. I think the clip serves as a fun way to review some contracts issues just prior to midterms. My students saw partial parallels to Lefkowitz, Leonard, and even Carbolic Smoke Ball and I'm sure there are others. Go Rangers!
[HR Anderson w/ hat tip to student Matthew Lynn]
Friday, August 26, 2011
Many of us who start our Contracts classes with contractual formation likely are, or soon will be, discussing offers, acceptance, and the Objective Theory in class. This recent clip from the popular reality television show, So You Think You Can Dance, may be a fun way to spice up those discussions. I plan to use it to illustrate the difference between an offer and a mere invitation to offer but I could see using it for other concepts, too, such as the importance of context when judging whether a reasonable person would view the discussion as an offer.
The relevant portion should begin automatically after a commercial or two. If not, jump directly to the 26-minute mark. The exchange is between a contestant on the show, the host of the show, and one of the judges. The primary potential offer is one to perform in the judge's upcoming re-make of Dirty Dancing.
Friday, July 29, 2011
For anyone in need of a current case/hypo to help illustrate promissory estoppel (and perhaps the statute of frauds along with unjust enrichment), consider the latest suit filed by famous actor, Joe Pesci. In his breach of oral contract complaint,* Pesci claims that he was promised the role of round-faced Angelo Ruggiero in a new film about famed gangster, John Gotti, to be played by John Travolta. In reliance on that promised role, Pesci abandoned his usual diet and exercise routine and gained thirty pounds to look more like Ruggiero. After the weight gain, producers advised Pesci that he no longer would be playing Ruggiero in exchange for the initially-promised $3 million; instead, he would be offered a lesser role (playing the man who allegedly killed Gotti) for $1 million. Pesci alleges that the film producers were enriched because they used his established mobster-playing cache to help promote the movie and obtain funding. The film's current producer claims that Pesci was the one who backed out of the deal after Pesci's preferred director, Nick Cassavetes, quit. Pesci acknowledges that there was no written contract but a signed writing likely would not be required in this case. If Pesci can't show an otherwise valid oral contract, promissory estoppel issues to ponder include...Was there an actual promise? (Pesci points to a press conference and a website announcement as possible sources of the promise.) Was Pesci's reliance reasonable? Is there injustice absent enforcement of the promise? And what exactly are his damages?
* Pages missing