Friday, August 31, 2012
A lease is both a contract between parties—the landlord and the tenant—and an interest in land. However, this duality has created conflict in determining whether a landlord has a duty to mitigate damages in the event of a tenant's early termination of a lease. The rule that a landlord has a duty to mitigate derives from basic principles of contract law. The doctrine that the landlord has no duty to mitigate, which views a lease not as a contract but as an interest in land, was seemingly mandated by the Appellate Division, Second Department, in Rios v. Carrillo in 2008. Now, four years later, uncertainty still abounds as courts waver in applying contract principles to lease breaches and carve exceptions into the rule that a landlord has no duty to mitigate. This article attempts to identify the factors relied upon by courts where a duty to mitigate has been applied in contravention of established case law.
[Meredith R. Miller]
Wednesday, August 22, 2012
Last week, the Australian High Court upheld a ban on company logos on cigarette packages. The law that was upheld also requires that the front of cigarette packages show images of the harmful effects of smoking (e.g. mouth ulcers, tumors, etc).
Okay, you might be wondering what this has to do with contracts. One of my current research interests (obsessions) is the idea of notice substituting for actual assent, especially with online contracts. A dinky hyperlink nestled at the bottom of a page can serve as "notice," at least in the eyes of some courts although most people don't actually notice them. The fuss over the cigarette packaging (and Big Tobacco really fought hard over this one) underscores something that is often lost on courts evaluating notice in contract cases -- the quality of the notice matters. A warning label in a small text box gets ignored; graphic visual depictions of injured human organs do not. Snazzy corporate labels make smoking seem cool; plain labels don't have that same cachet. Websites, too, could draw more attention to their contracts, but they don't. They certainly know how to grab our attention when they want it, with images and sounds. So why make legal terms so unobtrusive? Could it be that they don't really want us to read them?
Tuesday, August 21, 2012
On August 9th, 2012, David Rakoff died of cancer. David and I went to college together. We had two things in common: before college, we had both belonged to the same socialist zionist youth group, and we both danced. Since college, we stayed in touch a bit, because David was a very generous person, but he was out of my league, and we both knew it (although only I would say it). David was probably the most creative person I ever knew.
David was incredibly good at so many things. He made things all the time. I still remember vividly the characters he created for our college's variety show circa 1984: the Neanderthal, bone-through-the-nose ladies' man who runs into some toughs from the Male Feminist League; the director of Cliffs' Notes music videos, all of whose productions involve columns and leather-clad women with odd markings all over their bodies dancing erotically; and of course the lead in his short, 16mm spoof of French New Wave cinema, Pain D'Amour, in which he falls in love with a baguette. That was thirty years ago. I've seen so much theater since then, and so little has stayed with me as David's work has done.
But he was creative in very basic ways. One evening, three of us were trying to figure out what to do for dinner. We went into our friend's kitchen and catalogued the food in her refrigerator and cupboards. While I mentally reviewed my list of affordable restaurants within walking distance, David gleefully rattled off the useful ingredients he had come across, "Et voilà!". I could think of no way that the named ingredients could be combined to make something edible, so I asked, "We put all those together, and what do we have?" "Dinner!" David exclaimed. It turned out to be a quiche, and it was delicious. I didn't know it was possible to just make one of those. Forgive me, I was 20, but David was 19.
Around the same time, David made me a hand-painted birthday card that was also a sort of portrait. The card congratulated me at the beginning of my third decade. I had to get out a calculator to figure out how I could be entering my third decade at the age of 20. David accompanied me when I cut off my pony tail. He kept the hair to use for paintbrushes, or so he said. I hope he wasn't fibbing.
Although I have all these intimate memories of David, I probably never counted as one of his closest friends. But who knows? I think David was still coming to grips with the consequences of his homosexuality in the age of AIDS when we knew each other. As a result, there were parts of his private life that were closed off to me in that unenlightened era. David wrote about how he never really formed close attachments to people. I think his line is "loved by everybody; beloved by none." If you go to David's Facebook page, you'll see that there are probably hundreds of people who can share memories of David similar to mine in their fondness and intimacy. If he wasn't capable of true compassion, he did a damn good job of faking it. For all of his argumentative skills, David succeeded in convincing only himself that he was anything but a mensch.
Although his short film, The New Tenants won an Academy Award, David moved on from film and acting to writing. He wrote three books, and I learned on Saturday from This American Life, that a novel in verse is forthcoming. A novel in verse!
But wait, there is a contracts hook here. Here is a link to a hilarious contract that David wrote and read for another episode of This American Life.
David's life was far too short, but he lived it very, very well.
Monday, August 20, 2012
An article posted on TechCrunch, available here, discussed a new site which reviews terms of service (TOS) of various websites. The site provides a "grade" for website policies and can be accessed here (btw, it is looking for people to get involved).
Tuesday, August 14, 2012
Docracy is an open source legal document site. The site has launched a video campaign called "Don't Get Screwed Over" - it very effectively conveys the importance of freelancers having written contracts:
A free open source contract site is a great idea. I am not convinced, however, that it obviates the need for an attorney. That said, it is true that, regardless of whether an attorney is involved, freelancers should always get their deals in writing and carefully express expecations and payment schedule. The site's founder Matt Hall appears to share in my sentiment and believes that his site is a starting point for freelancers to figure out what they need and to find an attorney. Hall told .net magazine:
[T]he video was designed to "make sure freelancers are aware how important it is to have a contract for work they do, and that there are resources like Docracy that can take the fear and mystery out of the process". He said it's increasingly common that freelancers don't get paid for work they've done, starkly highlighted by projects like the World's Longest Invoice.
Hall recommended "upfront and clear communication with your client about what's expected, when it's expected and when you'll be paid", and then getting this all down in writing and signed. "Clear communication can go a long way to avoiding problems in the future," he added. And while Docracy can be a starting point, Hall said such sites are not a replacement for proper legal advice: "A good lawyer who understands your business will save you money over the long term, so get educated and then find a good lawyer you like working with. We have a bunch of great, tech-savvy lawyers on the site who have already shown their willingness to help freelancers, so they might be a good start."
[Meredith R. Miller]
Friday, August 10, 2012
I try to avoid reading the Yahoo stories with the headlines that try so hard to pique your interest, but this one was sent to me by someone who knew I'd be interested in the contracts-related issues. Maryann Sahoury is suing a production company, Meredith Corp., after she particpated in an instructional breast feeding video that was used by a third party to create pornography. Sahoury participated in the video to help other moms who might have trouble breastfeeding their children. She was told by the producer that only her first name would be used in the video. After the filming and while juggling her baby, she was asked to sign a "piece of paper" which she did without reading it.
When she later conducted a search of her name, she found numerous links to pornographic sites and found one that showed her breastfeeding video spliced with another pornographic one containing a woman with similar features. Even a search of her baby's name turned up links to pornographic sites and videos. Her lawsuit is not claiming that the production company is responsible for creating the pornographic spliced video; rather her lawsuit states that the production company posted the breastfeeding video on YouTube and used her full name, when it represented it would only post it on Parents TV and cable television and use her first name.
The production company, Meredith, said that Sahoury had signed a release that allowed the company to use her "image, voice and name."
I find the company's response infuriating. Any dummy knows that posting a video anywhere on the internet can be misused - especially when the video contains a woman's breast. It doesn't sound like Sahoury is trying to make money from this - the article states that she is seeking only an order prohibiting the defendants from using the video featuring her and her daughter for any purpose (and attorney fees).
This situation raises a host of legal and policy related issues, but I'm going to try to focus on the contract ones. The first issue that comes to mind is whether the release is even enforceable. Was there consideration for the release given that it was signed after filming ended. (She wasn't paid for her participation in the filming). I also wonder whether there might be an interpretation issue that could work in her favor - "image, voice and name," - does that mean first name or first and last name? If nothing more is stated in the release, the verbal assurance that only her first name would be used should be highly relevant to interpret the meaning of the word "name". Furthermore, did the release state in what medium or outlet the video could be used? If it wasn't worded sufficiently broadly, the verbal assurance that it would only be posted on Youtube should limit the scope of the license she granted. In addition, was there an integration clause in the event to allow oral statements (and get around the parol evidence rule). Along the same lines, was the assurance that it would be posted only on Parents TV and cable television given before or after she signed the release?
I know I'm missing other issues so please feel free to add your thoughts in the comments.
Friday, August 3, 2012
HelloFax, the company that lets you send and receive digital faxes, has spun off its digital signature service into a new stand-alone product: HelloSign.
“Everyone has to sign documents, and it’s done in a really poor way right now, which is what we’re trying to fix,” Joseph Walla, CEO of HelloSign (and HelloFax) told Mashable.
Documents can be signed and securely returned to their sender from both the web and the company’s new iPhone application. Unlike some similar services and apps that are already out there, digital signatures using the service are free and unlimited so you can send and receive just a few documents — or all the contracts for your business — with the service at no cost.
On the iPhone application, you sign a document with your finger on the screen. Once you’re done signing, the signature is brought back into your document, then you can place it where you want it to go. The same experience can be done on your home computer using a mouse.
When you send documents to be signed with HelloSign you can also track those documents with read receipts and audit trails, so you know exactly what’s going on with the document every step of the way.
Walla says that, while digital signatures have been legal in the U.S. for any document that can be signed with a pen for the past 12 years, many companies are still using pen and paper to get the job done. He sees the service as being invaluable to companies and businesses that are faced with delays waiting on paperwork to be signed.
“What we found out is that the only reason people fax things is that the vast majority of these documents are being signed,” Walla said when we spoke to him about HelloFax earlier this year. “What we’ve found is a lot of people joined us for faxing, and now they’ve converted to electronic signatures. We have a lot users who were fax users and now they don’t fax at all.”
With HelloSign, contracts and the like can be handled almost instantly, saving everyone involved in the process valuable time. The only type of document the service can’t handle is one that requires a notary.
HelloSign and its iPhone app are available now. For a limited time, those who sign up for HelloSign will also receive 25GB of free storage from Box.
[Meredith R. Miller]
Wednesday, August 1, 2012
When did you realize you had a passion for contract law?
I fell in love with contracts while working in the legal department of a Fortune 500 company during a 15-month period early in my legal career (on loan from my law firm through a secondment). I’ve long been fascinated by business, and contracts are where the rubber meets the road and business deals are hammered out. Nothing is more satisfying than looking at a deal through lawyer goggles and identifying important business issues that your client hasn’t thought of.
Who is your typical client?
I do M&A and general corporate work in addition to commercial transactions, and the typical client profile varies depending on the type of work. Contracts clients tend to be larger companies in industries where a business’s relationship with its suppliers or customers is complex. The best clients are those who’ve found contract religion as the result of being involved in litigation over a contract and having an unfavorable result. Those clients tend to appreciate the danger of time bombs sitting in their file cabinets in the form of bad contracts.
What is something interesting you worked on recently?
One of the most interesting projects I’ve done involved a franchisor that wanted its franchisees in the US and Canada to refresh the look of their stores. I represented the contractor that won the bid to perform the work. The project involved drafting and negotiating an agreement between the contractor and the franchisor that balanced the interests of the franchisor and contractor, while properly inducing the franchisees to participate. It was interesting work for a wonderful client with exceptional opposing counsel.
What is the single most valuable lesson you learned in the first year (or so) of practice?
Always produce quality work product. In the rough and tumble of practice you often have to juggle deadlines and multiple projects and sometimes something has to give. Shoddy work product is always the wrong answer. Also, for those who plan to practice in large firms, the proper method of genuflection varies from partner to partner. Keep a list.
What do you wish someone told you when you were in law school?
What are your 3 favorite legal blogs or websites?
Who should ContractsProf readers be following on Twitter?
Has legal scholarship ever been valuable to you in your practice?
I often go to the journals when I’m doing in-depth research. One of the most useful articles I’ve read is “After the Battle of the Forms” by Francis J. Mootz III in I/S: A Journal of Law and Policy. The article has informed my thinking about the battle of the forms in today’s contracting world. Plus, it introduced me to the term “sign-wrap,” which I think is a good way to think of on-line contract terms that are incorporated into paper contracts by reference.
Best efforts or reasonable efforts?
Reasonable efforts. If anything beyond reasonable is expected, it should be spelled out in the contract.
What is your favorite restaurant in St. Louis?
[Meredith R. Miller]
Monday, July 2, 2012
Because the enforceability of online contracts depends upon "reasonable notice," I often wonder whether we've stretched the term "reasonableness" to unreasonable extremes. Is it really reasonable to expect website visitors to click on hyperlinks? Hyperlinks within hyperlinked text? Because my research focuses on notice of contract terms, I am always interested in how to provide better, more effective notice.
Companies can provide notice with words, but they can also use images or video. Unfortunately, images, like text, can also be ignored. For example, how many times have you actually watched an airline safety video? What most airlines do is put attractive crew members on the screen who recite the basics and hope that people will pay attention. I recently took an Air New Zealand flight that took a very different approach - comedy! The safety video starred Richard Simmons of 80's spandex fame leading the crew through an aerobicized safety routine. One segment had crew members wearing body paint (you need to watch carefully - the paint is very skillfully applied). Several members of the super-popular rugby team, the All Blacks, made appearances - because they appeal to a broad cross section of the population (men, women, children), more passengers were likely to be engaged. The video was very funny and I watched the entire thing, both to and from my destination. I wasn't the only one. It seemed that everyone on the plane was paying attention. The video was just the right combination of humor, safety, and annoying-in-a-good-way (Richard Simmons excels at that). Was it effective? Well, I remembered where the exit rows and my life jacket were. Watch it yourself and just try to tear your eyes away from the screen.
Friday, June 29, 2012
I have returned from an enriching 5 weeks in Southeast Asia, mostly in frenetic Ho Chi Minh City, where I taught a class titled "Workplace Law in Global Context." I blogged about my travels at Saigoner, which would be of interest only to those readers with curiosity about what I ate (e.g., spider).
I'll be back in the contracts blogging saddle next week. In the meantime, I wanted to share some thoughts and pictures that might be of interest to ContractsProf readers.
We stayed in a government owned hotel in Ho Chi Minh City. I was amazed by its efficiency - in the U.S., a hotel run by the government would operate like the post office.
I've shared a few pictures of a floating market in Can Tho on the Mekong Delta. The floating markets are the main tourist attraction in Can Tho and they start up early in the morning. A guide took us to see the boats; from the boats, people were all selling fruit wholesale. To the masts of their boats, the sellers tie the fruit they have for sale. Pineapples, watermellons and bananas were the main offering that day. There was a little boat that went around like a convenience store for the sellers, in it a lady offered the sellers coffee and hot bowls of pho.
Along the banks of the Mekong, people live in clapboard houses made of whatever they can find – mostly pieces of shipping containers and plastic tarps. The houses are on log stilts. One of the houses was partly constructed with a plastic advertisement for Kaplan University.
processing factory were wooden and dusty and it seemed improbable that they still functioned the way they did. We were told that Vietnam is second to Thailand as the world's largest rice producer.
The Vietnamese have a refreshing lack of anxiety about heavy machinery. In the U.S., we would not have been able to get that close to those rickety rice machines, and certainly not without a helmet and a waiver form. Same goes for firing automatic weapons (I fired an AK-47 and an M-16 at the Cu Chi tunnels) and renting or hitching a ride on a moto-bike.
Another eye-opening field trip was a garment factory
tour I arranged for my class. After a presentation on the company, we were toured around the factory. It had over 1000 workers in the Ho Chi Minh outpost. You really cannot picture a room of 600 people making jackets for Columbia and Izod in assembly lines until you see it. After the tour, we asked a million questions through an interpreter. Most of the factory's buyers are U.S. and European companies. I found it interesting that (at least thelast time I checked), Vietnam is not a signatory to the CISG. This is especially so given that their garment exports apparrently rose 14% in the first 4 months of 2012 (and their claim as the world's second largest rice producer).
Finally, I thought readers would appreciate this picture from outside the Ho Chi Minh Stock Exchange (oh, the irony). Their statue (as compared to this) is arguably a more honest depiction of markets.
Monday, June 11, 2012
Since much of my research tends to at least recognize that we live in a multicultural, global, interconnected world, I was a bit embarrassed to discover how U.S. -centric I am with some of my assumptions about contract law. During one class, I told my bright and engaging students at VUW how contract law theory might help them address some novel contracting issues that will likely arise in their practice. My "war story" was working at a software company in the early nineties and trying to figure out whether shrinkwrap and clickwrap licenses were enforceable (although we didn't call them that then). My students were too kind to tell me that there are no cases on this topic either in New Zealand or Australia. No New Zealand equivalent of ProCD v. Zeidenberg? No subversion of the rules of offer and acceptance? No replacing consent with reasonable notice? It may be that other laws (consumer protective legislation and the unique tort system) make such issues less relevant. In any event, it's possible that in the southern hemisphere at least there's still time to establish logical and doctrinally coherent precedent with respect to digital contracts. One can always hope...
Monday, June 4, 2012
This article in the Huffington Post provides some tips on how to get out of a contract without paying fees. Tip #1? Read the fine print. Speaking of fees, it looks like it'll take less digging to uncover the fees that are chipping away at your hard earned savings in your 401K plan.
Monday, May 28, 2012
I've realized that I don't have much more time in beautiful New Zealand and that I've not come close to fulfilling my promise to share my observations about how N.Z. contracts (and contracting styles) differ from those in the U.S.( I also realized I haven't come close to fulfilling my twice-a-week posting promise to our blogmeister, JT, so guilt is building, especially now that Meredith has taken unpaid leave).
As I've previously mentioned, I've been struck by how infrequently I've been forced - er, asked - to sign a form contract while here in NZ. The primary reason is probably that there is much less need to worry about tort liability (since it's already quite limited). One thing I have noticed, however, is that the merchants here check my signature when I use my credit card. As Alex Kuczynski notes in this amusing essay, merchants in the U.S. tend not to check that your signature matches the one on the back of the card. In New Zealand, however, it happens all the time. When it first happened, I was admittedly a little offended. Was it my shabby clothing? My scuffed up shoes? It turns out there was no need to be so sensitive - it apparently happens to everyone.
Another contracting practice that differs is that the few times I have had to sign a consumer contract, it was emailed to me in pdf form. Unlike receiving a hyperlink to terms which you don't read, receiving a pdf somehow made me read the contract. It made me feel as though the company (in this case, a camper van rental company) really did want me to read the terms. After making a reservation online, I got a confirmation letter with a pdf containing the contract terms. Since I made the reservation 2 weeks in advance, I had that much time to read the contract. When I picked up the camper van, they handed me the same contract and I signed it (I could have also printed it out, signed it, and brought it with me if I had been better organized). Yes, it was still a contract of adhesion, but at least I knew what I was getting myself into.
I've always suspected that the contracting of everything tends to make consumers disregard contracts - how could we function if we actually read all the legal terms that are thrust our way (online terms included)? Maybe if companies cut back on some of the legalese, consumers might start to take contracts a little more seriously. Here's hoping...
Thursday, May 24, 2012
Tuesday, March 20, 2012
In a putative class action, plaintiffs brought a lawsuit against Facebook alleging that the social networking site violated their right of privacy by misappropriating their names and likenesses for commercial endorsements without their consent. Plaintiffs, minors residing in Illinois, commenced the action in the Southern District of Illinois. Facebook moved to transfer the case to the Northern District of California pursuant to a forum selection clause in Facebook’s terms of service.
Before addressing the validity of the forum selection clause, the court had to determine whether plaintiffs (minors) could disaffirm the clause under the infancy doctrine. The court held that, because plaintiffs have used and continue to use Facebook, they could not disaffirm the forum selection clause. The court reasoned:
The infancy defense may not be used inequitably to retain the benefits of a contract while reneging on the obligations attached to that benefit. * * * Thus, “[i]f an infant enters into any contract subject to conditions or stipulations, the minor cannot take the benefit of the contract without the burden of the conditions or stipulations.” 5 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 9:14 (4th ed. 1993 & Supp. 2011) (collecting cases). California law is in accord with “the equitable principle that minors, if they would disaffirm a contract, must disaffirm the entire contract, not just the irksome portions.” Holland v. Universal Underwriters Ins. Co., 75 Cal. Rptr. 669, 672 (Cal. Ct. App. 1969). “[N]o person, whether minor or adult, can be permitted to adopt that part of an entire transaction which is beneficial, and reject its burdens. This commanding principle of justice is so well established, that it has become one of the maxims of the law . . . . [Minors] must either accept or repudiate the entire contract,” and “they cannot retain [the contract’s] fruits and at the same time deny its obligations.” Peers v. McLaughlin, 26 P. 119, 120 (Cal. 1891). “A party cannot apply to his own use that part of the transaction which may bring to him a benefit, and repudiate the other, which may not be to his interest to fulfill.” Id.
The court then held that the clause was valid and ordered the transfer of the case.
The lesson: a minor cannot accept the benefits of a contract and then seek to void it in an attempt to escape the consequences of clauses that minor does not like (especially when they “like” on Facebook).
E.K.D. v. Facebook, Inc., No. 11-461-GPM (S.D. of Ill. March 8, 2012) (Murphy, J.)
[Meredith R. Miller]
Thursday, March 15, 2012
We learned yesterday from the University of Wisconsin Law School website that Professor Emeritus John Kidwell died last week. Here is the text from the Wisconsin website.
The University of Wisconsin Law School is deeply saddened by the loss of Professor Emeritus John Kidwell, who passed away in Madison last week.
Professor Kidwell was born in Denver, Colorado and grew up in Custer, South Dakota. After high school he attended the South Dakota School of Mines and Technology for two years, contemplating a degree in physics, but changed plans when, in his own words ". . . I encountered The Calculus, and The Calculus won." He transferred to the University of Iowa and majored in English, receiving his B.A. from the University of Iowa in 1967 (With Distinction, Honors Program, Phi Beta Kappa). He then attended Harvard Law School and received his J.D. in 1970 (cum laude). He took a job as an associate with the Denver, Colorado law firm of Dawson, Nagel, Sherman & Howard.
Professor Kidwell joined the University of Wisconsin Law Faculty in 1972 as an assistant professor, and except for a year as a Fellow in Law and Humanities at Harvard University in 1976-77, was here continuously. He served as Associate Dean for Academic Affairs from 2002-2005 before retiring from the full-time faculty in June 2005.
Professor Kidwell regularly taught courses dealing with the law of contracts, remedies, copyrights, and trademarks. He was the recipient of the Emil H. Steiger award for teaching excellence, and had been chosen Teacher of the Year by the Wisconsin Law Alumni Association. He was a co-author of Wisconsin Law School’s
signature “Contracts: Law in Action,” a casebook published by Lexis/Nexis, as well as a co-author of "Property: Cases and Materials," published by Aspen. Among his many service activities, he served as a member, and ultimately Chair, of the Wisconsin Board of Bar Examiners. He was a member of the Testing Policy Committee of the National Conference of Bar Examiners, and continued working on bar examination issues for that body up until the very last weeks before his death.
John Kidwell leaves behind his wife and son, Jean and Ben Kidwell. A man of broad and eclectic interests, he characterized his interests and activities as “reading, listening to music, idle conversation and the game of poker.”
Tuesday, March 13, 2012
The newly formed LSU Journal of Energy Law and Resources at the Louisiana State University Paul M. Hebert Law Center invites submissions of scholarly articles and proposals for articles for publication in its inaugural issues, slated for publication in the Fall of 2012 and the Spring of 2013. The LSU Journal of Energy Law and Resources is a student-edited journal devoted to the promotion of legal scholarship in energy law. The Journal is committed to publishing a variety of energy law topics, including articles focusing on energy law contracts and transactions.
Submissions: For publication in our Fall 2012 issue, please submit a completed paper, along with a cover letter and CV, to email@example.com by April 15, 2012. All completed papers submitted after April 15th will be considered for the Spring 2013 issue and should be submitted no later than October 15, 2012. If you wish to submit a proposal for a paper, please submit your proposal of no more than 500 words briefly describing the issue along with a CV by attachment to firstname.lastname@example.org. Proposals for papers will be considered on a rolling basis, but will not be considered for the Fall 2012 issue.
Friday, February 24, 2012
The Telegraph reports here that JK Rowling has settled a dispute with her former literary agent, Christopher Little. Little was the agent who pulled Rowling's manuscript for the first Harry Potter book out of the slush pile. Much to Little's surprise, Rowling decided to join a former agent of Little's, Neil Blair, at Blair's new agency. It seems like there's loads of contract law issues here - Little undoubtedly had an exclusive agreement with Rowling to represent her, Blair may have had a non-compete with Little. Did Little's agency agreement contain the exclusive right to represent Rowling with respect, not just to her published works and associated film rights, but "new media" such as Rowling's Pottermore website (which she and Blair were working on while both were with Little)? Did the work done by Rowling and Blair on Pottermore violate their agreements with Little? Unfortunately for us contracts profs, the terms of the agreements are all confidential....
This situation brings up an issue that I've always wondered about with respect to exclusive agency agreements -contract law seems to me somewhat one-sided, in favor of agents, when it comes to exclusive agency contracts. Wood v. Lucy, Lady Duff Gordon held that an exclusive agency agreement that did not specify performance targets did not lack consideration because it was implied that an exclusive agent would exercise reasonable efforts to perform, otherwise the agent wouldn't get paid. But I think it's not uncommon for agents representing uknown writers, actors and singers, to spend their time on their established clients and only use minimal efforts to promote their new, lesser known, clients. Clients typically terminate the agency after the period of exclusivity in that situation, but under the rationale in the Lady Duff Gordon case, couldn't the clients sue for "breach" of the duty to use reasonable efforts? I would think the answer is yes. The bigger hurdle would be damages, which would be hard to calculate with any certainty for a new, unproven artist. There's also the bargaining power issue. There's typically a lack of bargaining power between a new client and an agent (we're not talking here about Rowling the rich and famous author, but Rowling the unpublished struggling single mom on government benefits). Theoretically, a client could terminate an agency agreement during the period of exclusivity if the agent is not exercising reasonable efforts - but a client would only do that if she had another agent or was able to sell her [insert creative work here] on her own. In that case, the terminated agent would likely sue the client for a share of any royalties, claiming that the client did not give the agent adequate time to perform under the agency agreement.
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.
Monday, December 12, 2011
A recent letter to the NYT's consumer advocate, the "Haggler," (aka David Segal, who some of us law profs may not love so much anymore since his recent swipe at legal scholarship...) raised some interesting contracts issues. A reader complained that in early September he bought two round trip tickets from San Francisco to Palau for $510 on Korean Air for a trip in February. In the interim, he booked hotels, bought an underwater camera and made plans. Sixty-four days later, he received an email from Korean Air stating that the posted fare was "erroneous" and that his tickets were cancelled. They offered a refund for "travel-related" expenses, including the tickets, and a $200 Korean Air voucher. The reader stated that with the voucher, his new fare would be $360/ticket higher than the fare he had originally booked.
So, what's the price of an average airline ticket to Palau from S.F. in early February? I checked and it's anywhere from $1600 to $2500 for coach. But before you say unilateral mistake -- for didn't the reader check other airlines and know that the quoted rate was so much lower? - I say, Hold on. I realize this is not the first time an airline, or any company, has posted an erroneous fare. The Haggler discussed another incident involving British Airways that arose in 2009 where the company posted fares from U.S. to India for $40. In that case, British Airways covered travel-related costs and gave out $300 vouchers. (One of the issues in an exam I wrote several years ago was inspired by this situation).
But the British Airways case was different from the Korean Air case in several ways. The British Airways fare was so low that I think the purchasers "knew or should have known" about the mistake. The Korean Air price was also low, but given the deals to be found on the Internet and that the tickets were booked so far in advance, it is not evident that the purchaser "should have known" that the fare was a mistake. It's a great deal, but not clearly a mistake. Furthermore, the wrong price was listed for only a few minutes on the British Airways site, whereas the erroneous fare was posted on the Korean Air website for several days ("at least four"). Would it be "unconscionable" to force Korean Air to honor the fare? Maybe. Under Donovan v. RRL Corp., the standard of"unconscionability" for unilateral mistake purposes is lower than required when it's a standalone defense.
There's another issue that was raised in the Haggler column as a potential problem for the purchasers, the "contract of carriage." I checked on the Korean Air website and found the document - all 44 pages of it. It's accessible as a link on the bottom of the Korean Air website, of course. I took a brief glance at the document (necessarily brief b/c of the length). There were some references to Korean Air's ability to cancel for broad and vaguely defined reasons, but I would not have interpreted these as permitting cancellation for posting an erroneous fee - these seemed more appropriately interpreted as allowing cancellation for equipment failure or scheduling or weather complications.
I may have missed it, but I didn't see a provision allowing Korean Air to cancel for posting an erroneous fare after it has confirmed the reservation. To interpret the existing cancellation clauses to mean Korean Air can cancel at will would create mutuality issues. Korean Air would not want to make this argument for while such an interpretation would disadvantage the purchasers in this particular case, it could also mean that the contracts it enters with its other customers are void (and customers could cancel at the last minute).
Another provision I didn't see and just might have missed (although I doubt it) was a choice of law provision with respect to contract claims.