ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, May 4, 2017

A Mistake Case Results in Rescission of a Contract

Sometimes rights can get passed along like a game of telephone. A recent case out of California, M.U.S.E. Picture Productions Holding Corp. v. Weinbach, B261146 (behind paywall), deals with a mistake that voids the original contract for those rights. 

Muse agreed to develop a film based on the book and screenplay "The Killer Inside Me," which Weinbach claimed to own the rights to. After about a decade during which Muse did not produce the film, Muse sold its rights to Windwings, and then Windwings sold its rights to Kim, who eventually produced a movie. In the meantime, Muse sued Weinbach for intentional misrepresentation during the original negotiation for the right, and Weinbach cross-claimed for breach of the agreement stemming from Kim's production of the movie. (Windwings and Kim were also involved in litigation with Weinbach, not relevant to this blog entry, but you can find a ruling from it here.)

Basically, Muse contended that Weinbach did not have the right to produce the film based on the novel at the time that he transferred those rights to Muse. Weinbach contended, however, that this was not a mistake of fact but rather one of judgment because it relied upon a later court interpretation of the extent of Weinbach's rights. The court agreed with Muse, however. Weinbach had repeatedly told Muse that he had the right to produce a movie from the book and never wavered from that, so it wasn't like Muse ever thought it was negotiating for a dubious right; Muse thought Weinbach had the right, because that's what Weinbach asserted. A later court ruling raised doubts, but Muse had had no reason to ever expect a later court ruling on the question. This mistake was material because Muse would not have entered into the contract if it had thought Weinbach didn't possess the right in question. And there was no evidence that Muse assumed the risk that Weinbach didn't have that right. Therefore, this mistake justified rescission of the contract. 

May 4, 2017 in Current Affairs, Film, In the News, Recent Cases, True Contracts | Permalink | Comments (0)

Wednesday, May 3, 2017

Forum non conveniens Doesn't Overcome Forum Selection Clauses

A recent case out of Delaware, SRL Mondani, LLC v. Modani Spa Resort, Ltd., C.A. No. N16C-04-010 EMD CCLD, deals with forum issues. In the case, the parties had entered into a number of contracts. The contracts at issue in the dispute between them both contained forum selection clauses that disputes should be brought in Delaware court. A third contract between the parties, not explicitly at issue in the dispute, had a forum selection clause that disputes should be brought in Israeli court. Modani argued that the Israeli forum selection clause should control, but SRL was seeking to enforce the Delaware agreements, not the Israeli one, and so the court found the Israeli forum selection clause didn't matter. 

In the alternative, Modani tried to argue that the action should be dismissed under forum non conveniens. Modani's argument was that the relevant documents were located in Israel. The court, however, noted that "modern methods of communication" meant it was relatively easy to get the documents over to Delaware. While Modani alleged that the relevant witnesses were located in Israel, it failed to explain exactly what testimony those witnesses might have and why they were relevant, so the court was not convinced. The court did acknowledge that Modani's principles were located in Israel and had no ties to Delaware but at all but the court also pointed out that the contracts at issue had resulted from negotiations between two sophisticated businesses with millions of dollars at stake, so it was unpersuaded by Modani's allegations of hardship. Because the dispute was about enforcement of contracts with clauses requiring the application of Delaware law, Delaware was the best forum. 

May 3, 2017 in Current Affairs, In the News, Recent Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0)

Tuesday, April 25, 2017

Contractual Rights to Prince's "Vault"

On April 14, the Wall Street Journal reported that Universal Music Group has won the licensing rights to late pop/rock star Prince's music in the "vault" he apparently kept on his property.  The price tag was $30 million.  Now, however, Warner Music Group, the singer's first record label, claims that it has conflicting rights in the material.  

That turn of events is hardly surprising, but what is is the fact that Universal "hadn't seen a copy of Prince's 2014 contract with Warner, so it asked [a relevant party] to clarify the details afters signing the deal and running into roadblocks as it tried to move forward." Unknown

Of course, legal disputes also arose as Prince did not leave a will, thus ceding his entire estate to his sister and five half-siblings.

Textbook lessons of what NOT to do in the contracts and wills and estates areas of the law.

April 25, 2017 in Celebrity Contracts, Commentary, Famous Cases, In the News, Music | Permalink | Comments (0)

Tuesday, April 11, 2017

Flying the Friendly Skies after the Suffering Through the Violent Boarding Process?

Everyone is surely, by now, aware of the (most recent) United Airlines scandal.  Numerous questions abound: Was the airline racist in asking a non-white person to give up his seat or was the selection of which passenger to bump truly random? If the latter, was the airline racist in pursing this action after seeing that the selected passenger was not white whereas it might have given up taking such drastic action if it the passenger had been white? Equally importantly, what in the world is going on when law enforcement officers act as they did in this situation?! Is it fair to consider United Airlines responsible for actions that were, after all, not taken by its employees, but rather by the authorities?

While these questions are being addressed in many other locations, I find it interesting that several news sources correctly point out that United was legally entitled to bump a passenger, but that several sources seem to incorrectly state that under Department of Transportation rules, airlines may only pay passengers “up to a” $1,350 limit for delays of more than two hours. I have not had the time to fully research this rule, but as I read the rules, there is nothing saying that there is a limit to how much airlines may choose to pay, only what the DOT rules guarantee a pay-out (that one can, incidentally, insist on getting as payment, not a voucher) of $1,350, not more under the federal rules. The DOT guideline states as follows (from a website version only, admittedly):

“If the substitute transportation is scheduled to get you to your destination more than two hours later (four hours internationally), or if the airline does not make any substitute travel arrangements for you, the compensation doubles (400% of your one-way fare, $1350 maximum).”

If my understanding is correct, United could have chosen to voluntarily pay out a lot more than what they reportedly did ($800-1,000) and, as many correctly point out, most likely found some taker.  Surely, the rules do not prohibit this.  Instead, however, United chose to do what seems to increasingly be the order of the day: stand on their own rights and disregard the interests of their customers in the name of making a few extra dollars. Why am I not surprised?

April 11, 2017 in Commentary, Contract Profs, Current Affairs, Famous Cases, In the News, Travel | Permalink | Comments (0)

Monday, April 3, 2017

University Decisions on Disciplinary Procedures Receive Deference; Cannot Be Arbitrary, Capricious, or in Bad Faith

A recent case out of the District of Nevada, Janati v. University of Nevada, Las Vegas School of Dental Medicine, Case No. 2:15-cv-01367-APG-CWH (behind paywall), discusses the leeway universities have in enforcing the policies in their student manuals. The student was suspended from UNLV Dental School for plagiarism, and, in addition to raising constitutional due process and First Amendment issues, she contended that UNLV breached its Student Policy Manual and as such was in breach of contract. UNLV agreed that the Student Policy Manual constituted a binding contract between the school and the student but contended that its decisions on disciplinary procedures under the manual were entitled to "significant deference." 

The court agreed. The standard for determining if the university had violated its disciplinary procedure was "arbitrary, capricious, or bad faith," "without any discernable rational basis." The university's actions did not rise to that level in this case. The complaint concerning the student's Honor Code violations was required by the manual to "include specifics" of the conduct at issue, including any witnesses to the conduct. The complaint against the student here neglected to name two of the faculty members involved and left off the names of some of the witnesses, but the student admitted that she knew who everyone involved with the complaint was, even prior to its filing. There was also some confusion about whether the university failed to solicit information from one of the witnesses during the first Honor Council proceeding, but all of the parties agreed that, to the extent that witness was overlooked, he did provide information during the second proceeding the parties held. 

The court found that none of those rose to the high bar of violation of the disciplinary procedures and therefore the student could not sustain a breach of contract claim. 

April 3, 2017 in Current Affairs, In the News, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Friday, March 31, 2017

Prison Telephone Service Provider Continues to Lose on Enforcing Arbitration Provision

I have already blogged about a related case out of the Western District of Arkansas, in which the court concluded that prison inmates did not consent to arbitrate when they funded their telephone accounts to enable them to make calls. This case out of the Third Circuit, James v. Global Tellink Corp., No. 16-1555, affirms a similar conclusion by the District of New Jersey. To refresh your memory, GTL provides telephone services to prison inmates. Inmates sign up for accounts and deposit funds into the account, either through GTL's website or through its automated telephone service. When interacting with GTL's automated telephone service, users are alerted that their transactions are governed by the terms of use found online but they are not required to indicate their assent to those terms. Inmates have brought a class action alleging that GTL's charges are unconscionable. GTL moved to compel arbitration based on its online terms of use, but the district court found that those who used GTL's automated telephone service never agreed to be bound by those terms of use. 

The Third Circuit agreed with the district court's conclusion. The subject of how to form a binding contract through interactive telephone services was a new and different one, as most of these cases involve websites these days. GTL argued that the inmates manifested the requisite assent by continuing to use the telephone services after being notified there were terms of use. But the inmates never had to perform any affirmative act to indicate their assent, and they were never told that their continued use alone would constitute such assent. None of the inmates in question who used the automated telephone services had ever taken the necessary extra step to access GTL's website to see the terms of use, so they were never presented with the terms of use or the arbitration provision in question. The inmates simply never received the terms, and were never told that use of the telephone system would bind them to the terms. 

March 31, 2017 in Current Affairs, Government Contracting, In the News, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Sunday, March 19, 2017

The Oxford Comma is (Still) Important

In case you have not yet heard about the recent First Circuit Court of Appeals case discussing the legal importance of a comma, here goes: A Maine statute lists the following activities as not counting for overtime pay: Images

The canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of: (1) Agricultural produce; (2) Meat and fish products; and (3) Perishable foods.

Does that mean that drivers can get overtime because driving does count for overtime since “packing” covers both “shipment or distribution”? Or should the sentence be read as “packing for storage” as one thing and “distribution” another, thus precluding the drivers from earning overtime pay?

Circuit judge David J. Barron concluded that “the exemption’s scope is actually not so clear in this regard. And because, under Maine law, ambiguities in the state’s wage and hour laws must be construed liberally in order to accomplish their remedial purpose, we adopt the drivers’ narrower reading of the exemption.”

So, commas still matter. Consider too how “I love my parents, Lady Gaga and Humpty Dumpty” and “I love my parents, Lady Gaga, and Humpty Dumpty” are a little different. Language aficionados take note! Precise drafting still matters. Was this an outcome-oriented holding? Perhaps. But if so, a holding in favor of workers over a company in a case of interpretive doubt may, in today’s increasingly tough economy for middle and low-income earners, not be such a bad idea from a public policy point of view.

The case is O’Connor v. Oakhurst Dairy, No. 16-1901 (1st Cir. 2017).

March 19, 2017 in Commentary, Current Affairs, Famous Cases, In the News, Legislation, Miscellaneous, Recent Cases | Permalink | Comments (1)

Saturday, March 4, 2017

Inmates Didn't Consent to Be Bound to a Contract Every Time They Used the Telephone

Myanna has already blogged about the problem of inmate telephone rates being set unreasonably high. Myanna's blog post was about a dispute in California but a recent decision out of the Western District of Arkansas, In re Global Tel*Link Corporation ICS Litigation, Case No. 5:14-CV-5275 (behind paywall), deals with the same issue. (There are several of these litigations, as well as other government debates about regulation of these rates.) In the Arkansas decision, the court refuses to compel arbitration. 

Global Tel*Link's allegation was that the inmates consented to the terms of use when they funded their accounts to enable them to make phone calls, and the terms of use contained an arbitration clause. Every time the inmates put money on their accounts with Global Tel*Link, they heard a message similar to the following: 

Please note that your account, and any transactions you complete with GTL or any of its affiliates, are governed by the terms of use and the privacy statement posted at www.connectnetwork.com . The terms of use and the privacy statement were most recently revised on March 30, 2015.

The court determined, however, that a reasonable person would not have understood this message as referring to a contract and as constituting consent to be bound by that contract, since it never used any contract buzzwords like "contract," "consent," "agree," "assent," "offer," "accept," etc. The court said that, as far as the inmate listening to the message was concerned, the terms of use and privacy statements could have been just generally applicable legal rights imposed by regulators. The court characterized Global Tel*Link's behavior as basically hiding the contract ball: Global Tel*Link could have straightforwardly said the inmates were entering into a contract but instead "invite[d] [them] to visit a website where [they] might accidentally stumble across this fact." (I went to connectnetwork.com. The terms of use are located at the bottom of the page and required me to scroll to find them, and I just blogged about a case where the persistent location of the terms of use hyperlink at the bottom of the page didn't constitute enough notice.)

Because the inmates never signed anything, never clicked or punched any button signifying acceptance of contract terms, never had an opportunity to review the terms of use prior to using Global Tel*Link's services, and would not reasonably have understood the message to be referring to contractual terms, the inmates did not assent to the contract and thus are not bound by the contract's arbitration provision. 

March 4, 2017 in Current Affairs, Government Contracting, In the News, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Sunday, February 26, 2017

Iowa Bill Proposal: To Get Faculty Position, Must Have Correct Political Affiliation

Just when you think the political debacle in this country cannot get anymore grotesque, here's a recent proposal by Iowa State Senator March Chelgren: to counter the liberal slant at Iowa's three public universities, the job candidates' political affiliations would have had to be considered.   Why?  To ensure "balanced speech" and avoid the "liberal slant" in public universities these days. 

Under SF 288, the universities would use voter registration information when considering job applicants, and could not make any hire that would cause declared Democrats or Republicans on the faculty to outnumber the other party by more than 10%.

Demonstrating the very deep and logical (not!) argument, check this line of thinking: Chelgren said professors who want to be hired could simply change their party affiliation to be considered for the position.  "We have an awful lot of taxpayer dollars that go to support these fine universities," he said. "(Students) should be able to go to their professors, ask opinions, and they should know publicly whether that professor is a Republican or Democrat or no-party affiliation, and therefore they can expect their answers to be given in as honest a way possible. But they should have the ability to ask questions of professors of different political ideologies."

Duh!

February 26, 2017 in Commentary, Contract Profs, Current Affairs, Government Contracting, In the News, Labor Contracts, Legislation | Permalink

Thursday, February 23, 2017

No Deal, No Exchange of Money or Possession, No Ownership in Elvis Guitar

The National Music Museum (“NMM”), located in South Dakota, brought suit against Larry Moss and Robert Johnson asking the court to declare it the legal owner of a Martin D-35 guitar formerly owned by Elvis Presley. Images

Moss and Johnson, both interested in collectibles, have been friends for thirty-five years. In 2007, Johnson contacted Moss stating that he may be interested in acquiring three guitars previously owned by Elvis, which included the D-35. Johnson originally was going to negotiate a deal for Moss to buy all three guitars for $95,000 from a third-party seller. In 2007, a two-part contract for $120,000 was finally drafted stating that (1) Moss would pay Johnson $70,000 and take immediate possession of two of the guitars, and (2) that Johnson would deliver two remaining guitars – including the D-35 – in exchange for the remaining $50,000.

At trial, Moss testified about the 2007 interaction and said, “Well, we never had a deal. I never gave him the money. He never gave me any guitars. There was no deal.” Moss’s actions in 2007 and from 2008-2010 are consistent. Moss never asserted title of the Martin D-35 during either time period because Moss did not believe he had title to the guitar. Moss knew he would not own the Martin D-35 until Johnson delivered it and Moss paid him for it. Because delivery never occurred, Moss never acquired title to the Martin D-35.

Nonetheless, in 2013, Moss contacted a friend of Johnson's inquiring about the status of the D-35. Moss then contacted the NMM where the guitar was on display claiming that he owned the D-35. A lawsuit was filed and removed to federal court seeking declaratory judgment on who was the rightful owner of the guitar.

Under Article 2 of the Uniform Commercial Code, which is the governing law for Tennessee and South Dakota, “[u]nless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes performance with reference to the physical delivery of the goods . . . .” Tenn. Code Ann. § 47-2-401(2) (2008); SDCL 57A-2-401(2). Here, Johnson never physically delivered the Martin D-35 to Moss. Moss never had physical possession of the Martin D-35. Because Johnson never delivered the guitar and Moss never had possession of it, Moss never acquired title to the Martin D-35. Peeps-with-guitar

Furthermore, in spite of Moss's attempt to seek specific performance under a breach of contract theory, the court did not find this persuasive because the contract specifically stated that Moss would not pay the $50,000 balance until there had been delivery of the guitar. Based on the plain text of the contract, delivery was set to be a future date. Additionally, Moss and Johnson exchanged emails for five years, but Moss never asked Johnson to deliver the guitar, nor did he claim to the owner of the guitar. As a result, the court found Johnson had the title to the D-35 guitar, and transferred it to the NMM. Thus, the NMM is the rightful owner of the guitar.

The case is National Shrine Museum; America’s Shrine to Music v. Robert Johnson and Larry Moss.

 

February 23, 2017 in Celebrity Contracts, Current Affairs, Famous Cases, In the News, Music | Permalink | Comments (0)

Sunday, February 12, 2017

The University of the Cumberlands Fights Its Former President over Consideration

 University of the Cumberlands Welcome Sign

A recent case out of the Eastern District of Kentucky, Taylor v. University of the Cumberlands, Civil No: 6:16-cv-109-GFVT (behind paywall), has lots of causes of action, including an interesting dispute over whether an agreement between the university and its former President and Chancellor was supported by consideration. 

While the decision itself, granting in part and denying in part the university's motion to dismiss, is behind a paywall, the dispute has been reported and described in the press. Dr. Taylor served as the President of the university for 35 years. He alleged that the school had agreed to pay him and his wife almost $400,000 annually after his retirement until they were both dead. The school disputed the validity of that agreement. The Taylors then brought several claims against the university, including breach of contract. 

On the motion to dismiss, the main contract argument involved consideration. The university argued that the contract was given in recognition of the Taylors' successful fundraising efforts and service to the school, which had already occurred. This, the university contended, meant it was past consideration and rendered the agreement unenforceable. 

The court acknowledged that the agreement discussed the Taylors' past behavior. However, the court also identified five current promises the Taylors made under the agreement: to continue to serve as president until he decided to retire; to accept the role of Chancellor until he decided to retire; to serve as an Ambassador of the university; to serve the university in any capacity requested; and to continue to fundraise for the university. Therefore, there was consideration. 

The university then argued that the agreement had no definite end date, which would mean it was terminable at will. However, the court noted that that rule applies to contracts that would otherwise run forever. In such a circumstance, the right to terminate at will can be considered appropriate. In this case, the contract would terminate once both of the Taylors were dead. No one knew when that date would be, but presumably the Taylors will not live forever and therefore the contract will not run forever. Therefore, the contract was not terminable at will, and the Taylors lived to fight another day on their breach of contract claim (although the court noted that there were significant disputes surrounding the execution of the agreement and its proper interpretation). 

February 12, 2017 in In the News, Labor Contracts, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Sunday, January 22, 2017

Apollo 11 Moon Rock Bag Stolen, Sold to BFPV at Auction, Now Government Wants it Back

In times with enough serious and often depressing news, I thought I would bring you this little neat story (with profuse apologies to everyone, including my co-bloggers, for my virtual absence for a few months):

An Apollo 11 bag used to protect moon rocks samples was stolen by Max Ary, a former curator convicted in 2006 of stealing and selling space artifacts that belonged to the Cosmosphere space museum in Hutchinson, Kansas. Mr. Ary subsequently served two years in prison and was sentenced to pay more than $132,000 in restitution. Space artifacts found in his home, including the Apollo 11 bag, were forfeited to meet that debt. However, the Apollo 11 bag was incorrectly identified as Ary's and subsequently sold to Nancy Carlson for $995 in February 2015 at a Texas auction held on behalf of the U.S. Marshals Service. MoonRockBack

The government petitioned the court to reverse the sale and return the lunar sample bag to NASA, alleging that due to a mix up in inventory lists and item numbers, the lunar sample bag that was the subject of the April 2014 forfeiture order was mistakenly thought to be a different bag and that no one, including the United States, realized at the time of forfeiture that this bag was used on Apollo 11. The government cited cases where federal courts vacated or amended forfeiture orders, including where inadequate notice was provided to a property owner, as a justification for the bag's return to NASA.

Judge J. Thomas Marten ruled in the U.S. District Court for Kansas that Ms. Carlsen obtained the title to the historic artifact as "a good faith purchaser, in a sale conducted according to law." With her title to the bag now ordered by the Kansas court, Carlson needs to file a motion in the U.S. District Court for Texas for its return from NASA's Johnson Space Center in Houston. However, “[t]he importance and desirability of the [lunar sample] bag stems solely and directly from the efforts of the men and women of NASA, whose amazing technical achievements, skill and courage in landing astronauts on the moon and returning them safely [to Earth] have not been replicated in the almost half a century since the Apollo 11 landing," the judge wrote … Perhaps that fact, when reconsidered by the parties, will allow them to amicably resolve the dispute in a way that recognizes both of their legitimate interests," J. Marten wrote.

H/t to Professor Miriam Cherry for bringing this story to my attention.

January 22, 2017 in Commentary, Contract Profs, Current Affairs, Famous Cases, Government Contracting, In the News, Miscellaneous, Science | Permalink | Comments (0)

Saturday, January 7, 2017

When the Break-Up of a Marriage Is Also a Breach of Contract

HGTV

Photo Source: hgtv.com

The main reason I have cable these days, honestly, is because of my HGTV addiction. I like that the shows are so predictable and formulaic, which makes them low-stress. It's a habit I started years ago as a stressed-out lawyer in a law firm, when I needed to come home and watch something that didn't require thought, and it's kept me company as I transitioned into academia. And I'm apparently not alone in using it as comfort television

I use HGTV a lot in my Contracts class as the foundation of hypotheticals (so much that I'm contributing a chapter to a book detailing how I use it) and so I'm always interested when there is a real-life HGTV contract problem...such as is happening right now with "Flip or Flop." 

You might not be anxiously following HGTV shows, so let me tell you that the world was recently rocked (well, a small corner of the world) by the revelation that Christina and Tarek, the married couple with two young children at the center of the house-flipping show "Flip or Flop," were separated and/or getting divorced. And now come reports that HGTV has threatened them with a breach of contract action if their ongoing marital problems affect the filming of the show.

This is an example of the interesting issues that arise when your personal life becomes the equivalent of your contractually obligated professional life. Christina and Tarek no longer want to be married to each other, apparently, which is a stressful enough situation, without adding in the fact that their marriage is also the source of their livelihood. HGTV has a point that the show is less successful when you know that their personal life is a mess. The network was running a commercial pretty steadily through the holiday season where Christina and Tarek talked about their family Christmas, and every time I saw it I thought it was so weird and that they should pull the commercial. But that was clearly the advertising campaign HGTV had long planned for the show and it was probably costly for HGTV to change it at that point.

I am curious to see what the resolution of this is. I'm unclear how much longer Christina and Tarek were under contract for. They probably hoped to keep their separation quiet for as long as they could (they had, after all, kept it quiet for several months). But now that it's out in the open, we'll have to see how the parties recalibrate not just their personal but also their contractual relationships with each other. There is always a lot of talk about how "real" the shows on HGTV is. This situation is testing where our boundaries on "real" vs. "fake" actually lie. 

January 7, 2017 in Celebrity Contracts, Commentary, Current Affairs, In the News, Labor Contracts, Teaching, Television, True Contracts | Permalink | Comments (1)

Thursday, December 29, 2016

Time Is of the Essence...Or Is It?

Multiple sources report that Syracuse University is suing its long-term law firm over the firm's failure to put a "time is of the essence" clause into one of the university's contracts. I can't seem to track down the docket online so I haven't been able to look at the actual court documents but if you're teaching "time is of the essence" clauses next semester and looking for a recent controversy, here's one!

December 29, 2016 in Current Affairs, In the News, Teaching | Permalink | Comments (0)

Wednesday, December 28, 2016

Contractual Brouhaha in the Fashion World

There is major drama happening in the world of high fashion, and it all revolves around an alleged non-compete. Carolina Herrera has sued Oscar de la Renta to keep Laura Kim from working for the rival company. According to CH, Kim signed a non-compete with CH which gave it the option of paying Kim fifty percent of her salary and health benefits in exchange for Kim not competing against it for six months. The six months seems like a suitably short period of time in the fast-moving fashion industry, especially as it has important impacts on New York Fashion Week in February. 

The judge ordered a TRO which has since been lifted pending a preliminary injunction hearing in the new year. In the meantime, you should go to this article for all of the juicy details on what exactly went down between Kim and CH. 

December 28, 2016 in Current Affairs, In the News, True Contracts | Permalink | Comments (1)

Friday, December 23, 2016

Faculty Handbook as Contract

Just a quick entry in advance of a weekend that is a holiday for many, but this post on Inside Higher Ed caught my eye, discussing an in-progress case against NYU. An appellate court allowed two professors' complaint to survive a motion to dismiss based on sufficient allegations that the faculty handbook was a formal binding contract. One to keep an eye on in the new year. 

However you plan to spend this upcoming weekend, I hope it's full of peace and joy. 

December 23, 2016 in Current Affairs, In the News, Teaching, True Contracts | Permalink | Comments (0)

Monday, December 19, 2016

The Continuing Impact of Confidentiality Provisions

Confidentiality provisions are everywhere these days, especially in all of those arbitrations most contracts now require. I've blogged about them in connection with Donald Trump, and now they are playing a starring role in the very messy divorce between Johnny Depp and Amber Heard, in which Depp is allegedly refusing to provide Heard's divorce settlement because he alleges she breached their agreement's confidentiality provision when she spoke out publicly against domestic violence. 

It's unclear to me what the wording of the confidentiality provision was and whether Heard's behavior really did violate it. What is clear to me is that the confidentiality provision is being used to prevent communications of encouragement and support to people who are victims of domestic violence. There is a dual tragedy here: Not only are words of encouragement being muffled, but victims of domestic violence are now receiving the message that those words of encouragement could lead to punishing consequences. 

Confidentiality provisions can make sense, and there are definitely situations where they are vital to a deal getting done. But there are also situations where they seem to be operating against public policy. 

December 19, 2016 in Commentary, In the News, True Contracts | Permalink | Comments (1)

Wednesday, December 7, 2016

Prince's Complicated Legal Legacy Continues

When the legendary musician Prince died suddenly, he left behind an enormous volume of music and no will. The courts have already been dealing with how to distribute Prince's assets to a complicated and squabbling cadre of potential heirs. The rights to all of his music have raised their own complicated issues that have most recently manifested themselves in a lawsuit in the District of Minnesota, NPG Records, Inc. v. Roc Nation LLC, Case No. 16-cv-03909

The case revolves around Roc Nation's streaming of Prince's music on its streaming service Tidal, and whether or not it had the contractual rights to do so. Roc Nation alleges yes, based on what it terms both written and oral agreements that it struck with Prince before his death. Commentators have tried to draw conclusions about these agreements based on Prince's statements and other behavior before his death. NPG, meanwhile, claims that there was a single contract between Prince and Roc Nation and that it only allowed Roc Nation to stream a very limited number of songs, which Roc Nation has now violated in streaming a much wider variety of Prince's song catalog. The case has been reported on in multiple places, including here and here and here and here.

If this case progresses, it seems like it's going to require an untangling of written contracts between the parties, whatever oral statements Prince will allege to have been made, and the interaction between the two. It adds an interesting layer to consider that Prince was notorious for fighting for artists' rights to their music and had a fraught relationship with online streaming of music. He does seem to have favored Tidal above the other Internet services. In any case, although NPG claims that there was never any such license and Tidal has been infringing the songs' copyright since it began streaming them, NPG has already proactively sought to cancel any license that Prince may have granted to Roc Nation to stream the music in question. 

(I'd post something Prince-related from YouTube, but Prince didn't like his music to be on YouTube. And, in fact, Lenz v. Universal Music Corp., the recent case that wended its way through the Ninth Circuit and is currently on petition to the Supreme Court, involves a Prince song in a YouTube video.)

December 7, 2016 in Celebrity Contracts, Commentary, Current Affairs, In the News, Music, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Air Force None?

Recently, Donald Trump famously tweeted that “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”  Trump has not said why he believes the planes will cost "more than $4 billion." Boeing says it currently has an Air Force One contract worth $170 million.

Air-force-one-3

This raises several contractual issues that could be used as an interesting issue-spotting practice for our students. At first blush, it seems like an impossible attempt at a breach of contract that would, conversely, at least give very reasonable grounds for insecurity if not constitute an anticipatory repudiation outright.

Needless to say, Trump’s remark that “[w]e want Boeing to make a lot of money, but not that much money” finds no support in contract law. One contractual party has no control over how much money the other party should make. One would have thought that Trump – as a staunch “market forces” supporter – would have understood and embraced that idea, but that either was not the case or he is flip-flopping in that respect as well.

Digging deeper into the story, however, it turns out that “not even [Boeing] can estimate the cost of the program at this time, since the Pentagon has not even decided all the bells and whistles it wants on the new Air Force One." Further, “without knowing all the security features, it is hard to estimate the cost … and the Air Force isn't even sure whether it wants two or three of the planes.” Does a contract even exist at this point, then, when the essential terms have apparently not been mutually agreed upon, or is there simply an unenforceable agreement to agree? A valid argument cold be made for the latter, I think.

Mr. Trump has been accused of overestimating the cost of the planes. Does he, however, have a point? “So far[,] the Air Force has budgeted $2.9 billion through 2021 for two new Air Force Ones.” It is not inconceivable that the price tag may, in these circumstances, run higher than that. That circularity goes back to the essential terms – the price in this case – arguably not having been decided on yet.

There might, of course, be other issues in this that I have not seen in my admittedly hasty review of the story, but it is interesting how the media jumps at a legally related story without thoroughly or even superficially attempting to get the law right.

December 7, 2016 in Celebrity Contracts, Commentary, Contract Profs, Current Affairs, Government Contracting, In the News, Travel, True Contracts | Permalink | Comments (0)

Wednesday, November 30, 2016

A Settlement Agreement That's Too Vague Doesn't Settle Much At All

I am always saying to my students that if they care about something, they should put it in their contract, and they should be specific about what it is they want. I think sometimes people might think there's something to gain strategically by being vague, but introducing ambiguity into a contract can work out very poorly (and also takes control out of the hands of the parties). A recent case out of Florida, Boardwalk at Daytona Development, LLC v. Paspalakis, Case No. 5D15-1944, is a case where the court, faced with an ambiguous description of the land at issue in a contract, just threw up its hands in frustration. 

The dispute between these two parties has been long and contentious. According to this article, it's dragged on for over a decade. It was originally rooted in an eminent domain proceeding in which Boardwalk at Daytona ("BDD")'s predecessor obtained property belonging to Paspalakis and the other appellees. The appellees contested BDD's acquisition of their land and eventually that lawsuit was settled. The settlement agreement provided the appellees with an option to purchase and operate 7500 square feet of retail space on the Daytona Boardwalk. The agreement contained no legal description or street address for the property at issue. The agreement said that the land would: (1) be adjacent to another particular business; (2) have a minimum of 50 boardwalk frontage feet; and (3) have sufficient land to build a 7500-square-foot, one-story building. Unfortunately for the appellees, there were at least three parcels of land that met this description, and they ranged drastically in size from around 7700 square feet to over 17,000 square feet. 

The problem with the description of the land in the settlement agreement was exposed when the appellees tried to operate their option. BDD offered a piece of property that met all three criteria set forth in the settlement agreement. However, the property required unusual structural design features that troubled the appellees and also came with a negative easement for light, air, and unobstructed view that benefitted the BDD property next door. The appellees therefore objected to this plot of land and asked for another one. 

BDD sought a declaratory judgment that the plot of land it proposed was sufficient under the settlement agreement and that it did not have to provide another plot of land. The appellees, in response, sought specific performance that BDD provide  a plot of land fitting the description in the settlement agreement, without the restrictions of the land BDD had offered. In the face of the counterclaim, BDD shifted stance and argued that the settlement agreement was too ambiguous to be enforced. 

The trial court sided with the appellees and ordered BDD to convey the largest possible plot of land to the appellees. BDD appealed, and this court agreed with BDD. The court noted that a description of the land in question is usually considered an essential part of any land purchase agreement, and that without any such description there are serious doubts whether the parties reached a meeting of the minds. The description of the land in the settlement agreement here was ambiguous. The trial court correctly examined parol evidence to try to resolve the ambiguity, but it didn't help. The contract terms at issue here simply could have been fulfilled by any of three very different parcels of land.  To this court, there was no contractual way to choose between them and no parol evidence that shed light on which parcel of land the parties had in mind. Indeed, the court was skeptical the parties ever really agreed on which parcel of land would be conveyed, and so the parties never reached a meeting of the minds that could be enforced. Therefore, the court reversed the order of specific performance and entered judgment for BDD instead. 

A bitter pill here for the appellees, who doubtless thought that they were getting something of value in the settlement agreement they struck and end up with nothing to show for it. But it does seem like there was considerable confusion about which land was affected by the situation here. I guess it's a lesson to all of us: try to be as specific as possible. I tell my students drafting contracts is frequently like playing a game of what-if with yourself. What if BDD offers this parcel of land instead of that parcel of land? If the answer to that question is that you would prefer one parcel of land over the other, best to be specific in the contract. 

November 30, 2016 in Commentary, Current Affairs, In the News, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (2)