ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Saturday, January 23, 2016

Futures Contracts for College Education

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

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

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

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

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

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

Thursday, January 21, 2016

Fired for Posting Critical Comments about Employer on Facebook

On Thursday, the U.S. Circuit Court of Appeals for the D.C. Circuit heard arguments about whether a clothing company illegally fired three retail store employees for their Facebook posts criticizing the employer. The case involves the as-of-yet little developed area of how labor law applies to social media usage as well as other complex issues of contracts and employment law. The case is Design Technology Group v. NLRB, Case Number 20-CA-035511.  The case also demonstrates the issue of poor workplace conditions and how little employees can do under contracts law or other bodies of law against this, which I have blogged about before (most recently here). I am not an employment law expert.  I simply find this case very interesting from the point of view of how social media law is developing in relation to what is, after all, also an employment contract.

In the case, three employees repeatedly brought various safety concerns to the attention of the store manager. Among other things, the employees felt that the area of San Francisco where the store was located was relatively unsafe at certain times of the evening and that, perhaps, store hours could thus be changed to alleviate this problem. Homeless people would also gather in numbers outside the store to watch a burlesque video that the store played on a big TV screen right inside a window, thus potentially also attracting various (other) unsavory characters. Images

Allegedly, the store manager did not respond to these safety concerns and treated the employees in an immature and unprofessional way. The three employees discussed the events not at the water cooler, which is so yesteryear, but on Facebook. These posts included messages such as

  • “It’s pretty obvious that my manager is as immature as a person can be and she proved that this evening even more so. I’m am unbelieveably [sic] stressed out and I can’t believe NO ONE is doing anything about it! The way she treats us in NOT okay but no one cares because everytime [sic] we try to solve conflicts NOTHING GETS DONE!!... “
  • “800 miles away yet she’s still continues to make our lives miserable. phenomenal!”
  • “hey dudes it’s totally cool, tomorrow I’m bringing a California Worker’s Rights book to work. My mom works for a law firm that specializes in labor laws and BOY will you be surprised by all the crap that’s going on that’s in violation 8) see you tomorrow!” Unknown

One of the employees did bring the California worker’s rights book—which covered issues such as benefits, discrimination, the right to organize, safety, health, and sanitation—to work and put it in the break room where other employees looked through it, noticing that they were entitled to water and sufficient heat.

This same employee also (naïvely) sent resumes from the company computer in spite of company rules allowing only sporadic computer access (the store manager had allegedly set a bad example by using the store computer for personal purposes herself). The company discovered this as well as the Facebook posts, and fired the three employees.

The company argues that the workers commented on Facebook only in order to create a pretext for filing a claim with the NLRB. The smoking gun, according to the company, is the following exchange of (select, but most salient) Facebook postings:

  • “OMG the most AMAZING thing just happened!!!! J”
  • “What … did they fire that one mean bitch for you?”
  • “Nooooo they fired me and my assistant manager because “it just wasn’t working out” we both laughed and said see yaaah and hugged each other while giggling ….Muhahahahaha!!! “So they’ve fallen into my crutches [sic].”

The use of the expression “Muhahaha” is, according to the company, the smoking gun indicating the employee’s desire to get fired. It does indeed seem to indicate _some_ reveling in the turn of events, but arguably not a desire to be fired.  The “top definition” of the phrase on the user-created online “Urban Dictionary” is, today, “supost [sic] to be an evil laugh when being typed in a game.” Case briefs list it as “An evil laugh. A laugh one does when they are about to do something evil. Such as when a villain has a plot to take over the world, he does this laugh right before it goes into effect. Also a noise made by people who have just gotten away with an evil deed or crime….” The “evil laughter” entry on Wikipedia describes the phrase Muhahaha as being “commonly used on internet Blogs, Bulletin board systems, and games. There, [it is] generally used when some form of victory is attained, or to indicate superiority over someone else.”

The company appeals a ruling from the National Labor Relations Board (“NRLB”) finding the terminations unlawful because the employees’ discussions of working conditions were protected concerted activities under the National Labor Relations Act. The company claims that the comments were not legally protected because they were part of a scheme to manufacture an unfair labor practice claim.

It will be interesting to see how the Court of Appeals will address the social media aspect of this case. One the one hand, it does seem exceptionally naïve to expect to be able post anything in writing on the internet – Facebook, no less – without it potentially being seen by one’s current or future employer. I’m sorry, but in 2016, that should not come as a surprise to anyone (note that the company also used email monitoring software to discover whether its employees applied for jobs with competitors, which at least one of the employees here did). Note to employees who may not have a home computer or internet access: use a library computer.

On the other hand: does it really matter what employees post to their “friends” about their jobs, absent torts or other clear violations of the law (not alleged here)? Isn’t that to be expected today just as employees previously and still also talk in person about their jobs? Isn’t the only difference in this case that the posts are in writing and thus traceable whereas “old-fashioned” gossip was not? If employees merely state the truths, as seem to have been the case in this instance perhaps apart from the last “Muhahaha” comment, isn’t it overreaching by the employer to actually _fire_ the employees if they, of course, otherwise provided good services? Even if the employees are exaggerating, boasting, or outright lying, should employers be able to fire employees merely because of private comments on Facebook posted to one’s online “friends”?

An alternative idea might be to consider whether the employees were actually on to something that (gasp!) could help improve a poor work situation for the better.

The National Federation of Independent Business’ Small Business Legal enter has filed an amicus brief in support of the company, alleging that the NLRB decision “allow[s] employees regardless of their motive or actual misconduct to become termination-proof simply by making comments relating to their employment online.”

That’s hardly what the employees are arguing here. They do, however, argue a right to discuss their employment situation online without a snooping employer terminating them just for doing so. In this case, the employees had, noticeably, tried to improve highly important workplace issues in a fruitful way. The situation did, however, escalate. In and of itself, however, the “fallen into my clutches” comment, although of admittedly debatable intent, does not seem to indicate that the employees were attempting to manufacture an unfair labor practice claim. The employees seemed to have been primarily concerned with safety issues and working conditions, but were fired in retaliation for their critical online arguments. That, to me, seems like a fair argument.

Stay tuned for the outcome of this case!

January 21, 2016 in Commentary, E-commerce, Famous Cases, Labor Contracts, Science, Web/Tech | Permalink | Comments (0)

Weekly Top Ten SSRN Contracts Downloads (January 21, 2016)

Mighty-no-9-logoPuffery object lesson: The author of the number 9 article on the Contracts & Commercial Law eJournal list tells me on good authority that Apple Pay, Bitcoin, and Consumers: The ABCs of Future Public Payments Law is worth at least twice--possibly even THREE times--the price of the download! How can you resist downloading such a clearly unprecedented value?

Hmmm... that was pretty bad. Maybe we should just get to this week's actual lists.

 

SSRN Top Downloads For SSRN Logo (small)
Contracts & Commercial Law eJournal

Rank Downloads Paper Title
1 432 Simplification of Privacy Disclosures: An Experimental Test
Omri Ben-Shahar and Adam S. Chilton
University of Chicago Law School and University of Chicago - Law School
2 375 Choice of Law in the American Courts in 2015: Twenty-Ninth Annual Survey
Symeon C. Symeonides
Willamette University - College of Law
3 87 The Doctrine of Illegality: A Private Law Hydra
James Goudkamp
University of Oxford - Faculty of Law
4 72 Personal Data Processing for Behavioural Targeting: Which Legal Basis?
Frederik J. Zuiderveen Borgesius
University of Amsterdam - IViR Institute for Information Law (IViR)
5 72 More Behavioral vs. More Economic Approach: Explaining the Behavioral Divide between the US and the EU
Philipp Hacker
Humboldt University of Berlin
6 68 Defences and the Disunity of Unjust Enrichment
Lionel Smith
McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
7 62 Interpreting the Rules of Insurance Contract Interpretation
Mark Geistfeld
New York University School of Law
8 62 The Nature of Vitiating Factors in Contract Law
Mindy Chen-Wishart
University of Oxford – Faculty of Law
9 56 Apple Pay, Bitcoin, and Consumers: The ABCs of Future Public Payments Law
Mark Edwin Burge
Texas A&M University School of Law
10 52 Contracting Out of Fiduciary Duties
Ernest Lim
University of Hong Kong - Faculty of Law

SSRN Top Downloads For SSRN Logo (small)
LSN: Contracts (Topic)

Rank Downloads Paper Title
1 432 Simplification of Privacy Disclosures: An Experimental Test
Omri Ben-Shahar and Adam S. Chilton
University of Chicago Law School and University of Chicago - Law School
2 375 Choice of Law in the American Courts in 2015: Twenty-Ninth Annual Survey
Symeon C. Symeonides
Willamette University - College of Law
3 87 Between Regulatory and Autonomy-Based Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
4 68 Defences and the Disunity of Unjust Enrichment
Lionel Smith
McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
5 62 The Nature of Vitiating Factors in Contract Law
Mindy Chen-Wishart
University of Oxford – Faculty of Law
6 52 Contracting Out of Fiduciary Duties
Ernest Lim
University of Hong Kong - Faculty of Law
7 50 Contract as Procedural Justice
Aditi Bagchi
Fordham University School of Law
8 42 The History of Genres: Reaching for Reality in Law and Literature
Anat Rosenberg
Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law
9 39 Understanding the Law of Contract in Myanmar
Andrew Burrows
University of Oxford - Faculty of Law
10 35 On the Efficiency of the Common Law: An Application to the Recovery of Rewards
Anthony Niblett
University of Toronto - Faculty of Law

January 21, 2016 in Recent Scholarship | Permalink

Wednesday, January 20, 2016

The Enforceability of Liability Releases for Negligence in Colorado

When I was in law school, I remember starting to be really struck by how often I had to sign liability releases: going to play paintball, renting skis, etc. A recent case out of the Tenth Circuit, Espinoza v. Arkansas Valley Adventures, had to deal with just such a release in the context of a tragic whitewater rafting accident. 

The plaintiff's mother drowned when her raft capsized during a rafting trip organized by the defendant. She had signed a contract that released the defendant from liability for negligence. The plaintiff agreed that his mother had signed the release but tried to argue that the release was unenforceable. As a matter of Colorado law, though, he lost. The court found the release enforceable both as a matter of public policy and under the particular circumstances of the mother's signing. 

The court explained that Colorado uses four facts to determine whether a release of liability for negligence is enforceable: 

(1) the existence [or nonexistence] of a duty to the public; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language.

The court concluded that, while other states were free to disagree on this, Colorado had decided that corporations providing recreational activities are allowed to protect themselves from liability for negligence. The court stated that this is a valid policy choice for Colorado to make because it arguably encourages the active, outdoorsy lifestyle that the state of Colorado cherishes and wants to protect and promote. Without such ability to protect themselves, companies might be discouraged from offering recreational activities like horseback riding, snowboarding, or whitewater rafting. And in fact other courts in Colorado had explicitly found that companies offering whitewater rafting trips can protect themselves from liability for negligence using a contractual release. The court stated that the Colorado legislature was free to introduce a statute that would change this legal precedent, but, as it stood, the court was bound to follow the precedent. 

Having decided that the release was not against public policy according to the first two factors of the balancing test, the court then further decided that the plaintiff's mother had fairly entered into the contract with full knowledge of the risks at stake. The court dismissed the plaintiff's expert testimony that the rapids his mother was exposed to were too advanced for a beginner (in contrast to what the defendant had assured her) by pointing to the fact that the defendant had expert testimony that the rapids were suitable for beginners. Finally, the court noted that the release had the typical all-caps language that you see on these sorts of contracts. You know:  "HAZARDOUS AND INVOLVES THE RISK OF PHYSICAL INJURY AND/OR DEATH" and "THIS IS A RELEASE OF LIABILITY & WAIVER OF LEGAL RIGHTS." The truth is, seldom does any consumer seeing that stuff really take it a serious communication of a great risk of death, I think. Especially not when there was some evidence that the consumer has been assured the trip in question was suitable for families with children. Nonetheless, the court found that the language of the release unambiguously informed the plaintiff's mother of the risks of the activity and the fact that she was releasing the defendant from liability should those risks come to pass. 

There was a dissent in this case, however, who agreed that the release wasn't against public policy but disagreed on the conclusion that the contract had been fairly entered into. In the dissent's view, the contradictory testimony about the level of difficulty of the rapids meant that the question should have gone to the jury. 

I don't spend a lot of time in my Contracts class talking in detail about liability releases for negligence, but this case made me think that I should talk about them more, because they really do seem to arise in the context of so many activities. 

January 20, 2016 in Commentary, Recent Cases, Sports, Teaching, Travel, True Contracts | Permalink | Comments (4)

Tuesday, January 19, 2016

Contracts Professors: Prepare to Meet Robolawyer

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

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

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

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

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

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

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

Monday, January 18, 2016

What Happens If Your YouTube Channel Suddenly Disappears?

 Logo YouTube

A recent case out of California, Lewis v. YouTube, continues on my terms and conditions theme from earlier

The plaintiff in this case had a bunch of videos on YouTube. One day, she found that YouTube had deleted them. The videos had had close to 500,000 views at the time YouTube deleted them. The plaintiff claimed that she spent a lot of time and money promoting them but there was no commercial aspect to the videos; she didn't make any money off of them. 

Upon realizing YouTube had deleted her videos, she sent YouTube an e-mail asking what had happened and if her videos could be restored. She received in response what appeared to be a form e-mail informing her that she'd violated YouTube's terms and conditions but not giving any truly specific information. The best that I can discern is that YouTube thought she was a spammer. 

The plaintiff replied to the e-mail from YouTube saying that she had not engaged in any behavior violating the terms and conditions. She received another response from YouTube identical to the first. She filed a formal appeal with YouTube, and received another identical response. 

So that brings us to the lawsuit in question, in which the plaintiff was alleging that YouTube violated the covenant of good faith and fair dealing implicit in its terms and conditions when it deleted her videos unjustifiably and without any notice. 

To be honest, I see the plaintiff's point and I'm kind of on her side. It's frustrating when you have no idea what you've done wrong and you can't get a website to explain anything to you and you just feel kind of powerless. The good news is that at some point she did get YouTube's attention enough that it did restore her videos. I don't know if that happened before or after the lawsuit was filed.

It seems, therefore, like the plaintiff got what she wanted, which was restoration of her videos. The lawsuit appears to have really been about trying to get damages, but the court pointed out that YouTube's terms and conditions (which, let's face it, none of us reads) contained a limitation of liability clause that is valid in California, so the plaintiff couldn't seek any damages. 

I think this is a situation where the court just thought that plaintiff had what she wanted and was just being greedy. I would be curious to see another case challenging the limitation of liability clause where the plaintiff could prove actual damages that might sway a sympathetic judge. But, for now, YouTube's terms and conditions do act to protect YouTube from having to pay out damages. If you find yourself a victim of YouTube's apparently aggressive anti-spamming patrol, you might just have to settle in for a bit of a fight in getting YouTube's attention, without much hope of compensation for any of that time and effort. 

January 18, 2016 in Commentary, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Friday, January 15, 2016

Very, Very Frequent Flyers Do Not Have Separate Contracts with Airlines

If a customer belongs to an airline’s frequent flyer program, but flies so often that one obtains an elevated status under that program, is the customer then also by implication governed by a separate contract with the airline and not just the “basic” version of the frequent flyer rules?

No, according to a Seventh Circuit Court of Appeals opinion in Hammarquist v. United Continental Holdings, Inc. (Nos. 15-1836 and 15-1845).

In the class action lawsuit against beleaguered United Airlines, plaintiffs were members of the airline’s “MileagePlus” program. Condition no. 1 of the program rules stated that the airline had the “right to change the Program Rules, regulations, benefits, conditions of participation or mileage levels … at any time, with or without notice ….” Plaintiffs, who had obtained “Premier” status argued that under the Premier Program, an alternative modification provision prohibited United from changing the benefits that had already been earned, but which could, per airline tradition and the basic program rules, only be enjoyed the following year. The court made short shrift of that: The plaintiffs did not dispute that the parties’ contractual relationship was governed by the Program Rules that, under precedent established in Lagen v. United Continental Holdings, the elevated status of some frequent flyers does not result in a free-standing contracts separate from the underlying frequent flyer program being established. United Airlines had not made any contractual representations that would render it unable to change the benefits under the basic contract.

Plaintiffs also argued that at the most, United Airlines should only be allowed to change the benefits once a year and not, as had apparently been the case, in the
middle of the year. Plaintiffs relied on the airline’s website, which had stated th That changes were possible “from year to year,” but also that “unless otherwise stated,” the basic Program Rules applied to the Premier Program. That, according to the plaintiffs, meant that the airline could not change the benefits “at any time” as had been stated in the frequent flyer rules. The court found that United Airlines had never “stated” that Condition no. 1 did not also apply to its very frequent flyers, and that the airline had never contractually promised that changes could only be implemented only from year to year.

Nice try, but in this case, a contractually fair enough outcome, it seems. United Airlines “cannot be liable for breaching a contract that it did not make.”

January 15, 2016 in Current Affairs, Miscellaneous, Recent Cases, Travel, True Contracts | Permalink | Comments (1)

Thursday, January 14, 2016

Weekly Top Ten SSRN Contracts Downloads (January 14, 2016)

  Top Ten Logo 2

SSRN Top Downloads For
Contracts & Commercial Law eJournal
SSRN Logo (small)

RECENT TOP PAPERS for all papers first announced in the last 60 days
15 Nov 2015 through 14 Jan 2016

Rank Downloads Paper Title
1 356 Simplification of Privacy Disclosures: An Experimental Test
Omri Ben-Shahar and Adam S. Chilton
University of Chicago Law School and University of Chicago - Law School
2 323 Choice of Law in the American Courts in 2015: Twenty-Ninth Annual Survey
Symeon C. Symeonides
Willamette University - College of Law
3 137 The Challenges of Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
4 97 The Relational Economics of Commercial Contract
Chapin Cimino
Drexel University Thomas R. Kline School of Law
5 84 The Doctrine of Illegality: A Private Law Hydra
James Goudkamp
University of Oxford - Faculty of Law
6 68 Personal Data Processing for Behavioural Targeting: Which Legal Basis?
Frederik J. Zuiderveen Borgesius
University of Amsterdam - IViR Institute for Information Law (IViR)
7 60 Defences and the Disunity of Unjust Enrichment
Lionel Smith
McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
8 58 More Behavioral vs. More Economic Approach: Explaining the Behavioral Divide between the US and the EU
Philipp Hacker
Humboldt University of Berlin, Students
9 52 Interpreting the Rules of Insurance Contract Interpretation
Mark Geistfeld
New York University School of Law
10 49 The Nature of Vitiating Factors in Contract Law
Mindy Chen-Wishart
University of Oxford – Faculty of Law

 

SSRN Top Downloads For
LSN: Contracts (Topic)
SSRN Logo (small)

RECENT TOP PAPERS for all papers first announced in the last 60 days
15 Nov 2015 through 14 Jan 2016

Rank Downloads Paper Title
1 356 Simplification of Privacy Disclosures: An Experimental Test
Omri Ben-Shahar and Adam S. Chilton
University of Chicago Law School and University of Chicago - Law School
2 323 Choice of Law in the American Courts in 2015: Twenty-Ninth Annual Survey
Symeon C. Symeonides
Willamette University - College of Law
3 137 The Challenges of Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
4 97 The Relational Economics of Commercial Contract
Chapin Cimino
Drexel University Thomas R. Kline School of Law
5 84 Between Regulatory and Autonomy-Based Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
6 60 Defences and the Disunity of Unjust Enrichment
Lionel Smith
McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
7 49 The Nature of Vitiating Factors in Contract Law
Mindy Chen-Wishart
University of Oxford – Faculty of Law
8 42 The History of Genres: Reaching for Reality in Law and Literature
Anat Rosenberg
Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law
9 42 Contract as Procedural Justice
Aditi Bagchi
Fordham University School of Law
10 38 Contracting Out of Fiduciary Duties
Ernest Lim
University of Hong Kong - Faculty of Law

 

January 14, 2016 in Recent Scholarship | Permalink

Wednesday, January 13, 2016

The Tricky Question of Whether Minds Met

Ourasi

A recent case out of Ohio, Oryann, Ltd. v. SL & MB, LLC, highlights how complicated it can be to determine whether a contract ever existed in the first place. 

This case involved the sale and purchase of a horse farm that was being operated as a horse-boarding business. The parties agreed on a price of $640,000, and in all of their communications back and forth, that price was always stated as being the price for the real estate of the farm. There was no written reference to purchase of the business and its assets until the parties were through with their negotiations and signing the final papers. Those final papers indicated that the buyer was buying real estate for $350,000 and the business for $290,000. The business sale contract referenced "Exhibit A" as listing the assets that were being transferred, but Exhibit A was never completed.  

A disagreement arose between the parties, and the trial court found that there was never any meeting of the minds with respect to the sale of the business and it was illusory because it didn't have enough specificity to show that anyone was bound to do anything due to the fact that there was never any enumeration of the assets to be transferred (given the blank Exhibit A). While the trial court enforced the real estate contract in the amount of $350,000, it threw the business sale contract out as unenforceable. 

The appellate court, however, disagreed with the trial court's conclusion. To the appellate court, it was obvious from the language of the contracts and the behavior of the parties that there was a meeting of the minds with respect to the sale of the business and that the parties were bound by the contract. The appellate court noted that the two contracts were intended to be read as one entire deal, not two separate deals the way the trial court was reading it. The appellate court thought that if the parties intended to be bound by the real estate contract (as the trial court had found), then it had to follow that they intended to be bound by the business sale contract as well, as the contracts' language expressly referenced each other and the fact that they were one deal. And, as the appellate court noted, the trial court's ruling on the contracts meant that the trial court was ignoring was ignoring the fact that, at all times, the amount of money the parties were discussing was $640,000. It didn't make sense to then pretend that the parties had only intended to pay half of that. 

The appellate court was untroubled by the blank Exhibit A. The business sale contract's language explicitly stated that "all" of the business would be transferred; the purchasing party took possession and ran the business for over a year without complaining about a lack of specificity in the contract because of the missing Exhibit A; and the evidence showed that the parties did indeed transfer over their business assets. The appellate court thought it was therefore clear from the parties' behavior that they understood what the business sale contract achieved, even without the Exhibit A. 

So, where the trial court had seen questionable conduct, the appellate court found an enforceable contract. 

The key to the trial court's ruling might actually be in the parties' testimony as to why they ended up executing two separate contracts: They wished to lessen the amount of real estate tax paid in the transaction. I think the trial court thought that the parties clearly thought the real estate was worth $640,000, didn't want to pay the taxes owed on that, and so pretended the real estate was only worth $350,000 in order to avoid those taxes. In fact, it appears from the parties' testimony that that's exactly what they did. I think the trial court disapproved of that and that its ruling probably reflects its unwillingness to endorse the parties' behavior. 

January 13, 2016 in Commentary, Recent Cases, True Contracts | Permalink | Comments (0)

Monday, January 11, 2016

Beware Insurance Policy Exclusions: Liquid Nitrogen Cocktails and Precious Metal Air Conditioning Units Edition

A pair of cases, Evanston Ins. Co. v. Haven South Beach, out of the Southern District of Florida, and Celebration Church v. United National Insurance Co., out of the Eastern District of Louisiana, reminds us that insurance policies can be tricky things. 

In Evanston, Barbara Kaufman went to the Ninth Annual Taste of the Garden at the Miami Beach Botanical Garden. Haven South Beach, one of the vendors there, sold her a drink containing liquid nitrogen. Mrs. Kaufman became ill after consuming the drink and sued Haven. Haven, in turn, tried to involve Evanston under its insurance policy. However, the insurance policy contained a clause stating that it didn't apply to situations involving the "dispersal" of "pollutants." So the debate, of course, was over whether the presence of the liquid nitrogen in the drink, added to give the drink a "smoking" appearance, was the introduction of a pollutant that disqualified the insurance policy from applying. The policy described a "pollutant" as, among other things, an "irritant," and the court concluded that the liquid nitrogen was an irritant, as a dangerous and hazardous chemical likely to cause at least some irritation. Therefore, its dispersal into the drink was a circumstance that excluded Mrs. Kaufman's injury from insurance coverage under the policy. 

In Celebration Church, the insurance policy in question excluded coverage for theft of precious metals. Celebration Church had a number of rooftop air conditioning units whose condensers were stolen. The condensers each contained coils made of one of the precious metals excluded from the insurance policy. Therefore, the insurance company refused to pay out under the policy. The court found the insurance company was justified in its reading of the contract. Although the theft of the air conditioning units extended to thievery beyond just a "precious metal," the court concluded that the only common sense reading of the clause was that the insurance policy did not apply to any damage caused by a theft of precious metals, and the court further concluded that the theft of the air conditioning condensers was to obtain the precious metal inside, so their entire theft was excluded. 

The lesson is clear: Those insurance policy exclusions can really come back to haunt you. 

(Also, avoid liquid nitrogen in your cocktails, I think.)

January 11, 2016 in Food and Drink, Recent Cases, Religion, True Contracts | Permalink | Comments (0)

Thursday, January 7, 2016

Weekly Top Ten SSRN Contracts Downloads (January 7, 2016)

Top-10-New-Years-2016

SSRN Top Downloads For
Contracts & Commercial Law eJournal SSRN Logo (small)

RECENT TOP PAPERS for all papers first announced in the last 60 days (8 Nov 2015 through 7 Jan 2016 )

Rank Downloads Paper Title
1 166 Legal Transplants in the Law of the Deal: M&A Agreements in India
Afra Afsharipour
University of California, Davis - School of Law
2 135 The Challenges of Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
3 95 The Relational Economics of Commercial Contract
Chapin Cimino
Drexel University Thomas R. Kline School of Law
4 89 What If Fiduciary Obligations Are Like Contractual Ones?
Gregory Klass
Georgetown University Law Center
5 83 The Doctrine of Illegality: A Private Law Hydra
James Goudkamp
University of Oxford - Faculty of Law
6 81 The Consumer Rights Directive, Consumer Sales and English Law – The Fear of Coherence?
Christian Twigg-Flesner
University of Hull
7 81 Lender Discrimination, Black Churches, and Bankruptcy
Pamela Foohey
Indiana University Maurer School of Law
8 65 Personal Data Processing for Behavioural Targeting: Which Legal Basis?
Frederik J. Zuiderveen Borgesius
University of Amsterdam - IViR Institute for Information Law (IViR)
9 60 An Assessment of the Consumer Review Freedom Act of 2015
Eric Goldman
Santa Clara University - School of Law
10 59 The Digital Shareholder
Andrew A. Schwartz
University of Colorado Law School


SSRN Top Downloads For
LSN: Contracts (Topic)
SSRN Logo (small)

RECENT TOP PAPERS for all papers first announced in the last 60 days (8 Nov 2015 through 7 Jan 2016)

Rank Downloads Paper Title
1 135 The Challenges of Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
2 95 The Relational Economics of Commercial Contract
Chapin Cimino
Drexel University Thomas R. Kline School of Law
3 89 What If Fiduciary Obligations Are Like Contractual Ones?
Gregory Klass
Georgetown University Law Center
4 83 Between Regulatory and Autonomy-Based Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
5 81 The Consumer Rights Directive, Consumer Sales and English Law – The Fear of Coherence?
Christian Twigg-Flesner
University of Hull 
6 60 An Assessment of the Consumer Review Freedom Act of 2015
Eric Goldman
Santa Clara University - School of Law
7 54 Defences and the Disunity of Unjust Enrichment
Lionel Smith
McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law
8 44 Does 'European Regulatory Contract Law' Enhance Citizens' Rights? An Analysis of Consumer and Services Law from Theory to Practice
Federico Della Negra
European University Institute, Students
9 42 The History of Genres: Reaching for Reality in Law and Literature
Anat Rosenberg
Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law
10 38 Does the Codification of Consumer Law Improve the Ability of Consumers to Enforce Their Rights? – A UK-Perspective
Christian Twigg-Flesner
University of Hull

January 7, 2016 in Recent Scholarship | Permalink

Tenured Political Science Professor Fired for Statements about God

Recently, Stacey blogged here about whether tenure is a contract. Yesterday, the news broke that a tenured associate political science professor at Wheaton College, a private Christian university, may soon get to test that theory.

Shortly after the San Bernadino, California, shooting massacre, Professor Larycia Hawkins stated on her Facebook account (which listed her profession and employer) that she “stand[s] in religious solidarity with Muslims because they, like me, a Christian, are people of the book. And as Pope Francis stated last week, we worship the same God." She elaborated that “we are formed of the same primordial clay, descendants of the same cradle of humankind--a cave in Sterkfontein, South Africa that I had the privilege to descend into to plumb the depths of our common humanity in 2014.” She also wore a hijab in “embodied solidarity” with Muslim women.

The response by the College is, for now, the equivalent of “You’re fired.” The College placed Professor Hawkins on administrative leave in December "to explore significant questions regarding the theological implications of her recent public statements, including but not limited to those indicating the relationship of Christianity to Islam."  Further, "Wheaton College faculty and staff make a commitment to accept and model our institution's faith foundations with integrity, compassion and theological clarity. As they participate in various causes, it is essential that faculty and staff engage in and speak about public issues in ways that faithfully represent the college's evangelical Statement of Faith." According to Wheaton College President Ryken, however, the College also “support[s] the protection of all Americans including the right to the free exercise of religion, as guaranteed by the Constitution of the United States." Professor Hawkins’ legal team is, according to televised news statements on 1/6, exploring the possibility of a lawsuit should the professor’s preferred solution – mediation and an amicable solution – turn out to be impossible.

This case raises serious questions about the academic freedom of tenured professors – even untenured ones - with which we as law professors are also very familiar. This is perhaps even more so in the cases of private colleges. It seems to me that with a message along the lines of what even Pope Francis uttered along with a reasoned (meta)physical explanation of her views and the College’s self-professed acceptance of freedom of religion, Professor Hawkins did not act in a way that should, under notions of academic freedom, get her fired. If we as law professors do not agree with or wish to challenge certain traditional or even untraditional legal views, are we not allowed to do so because the institutions we work for or the majority of our colleagues hold another view? One would hope so. Most of us can probably agree that academic freedom is exactly all about being able to, within reason at least, provoke deeper thought in relation to what we teach. Note that Dr. Hawkins did not teach religious studies, but political science. With the current embittered debate about Muslims and terrorism around the world, Dr. Hawkins arguably raised some interesting points even if one does not agree with her statements from a Christian point of view.

Stay tuned for more news on this case!

January 7, 2016 in Commentary, Current Affairs, Famous Cases, In the News, Law Schools, Religion, Teaching, True Contracts | Permalink | Comments (0)

Wednesday, January 6, 2016

What the Terms and Conditions Don't Cover

Instagram

Photo Source: Instagram user @doedeere

Everyone's been talking about it: successful appropriation artist Richard Prince selling other people's Instagram photos. It's sparked--as he doubtless intended it to--an enormous debate about what is art and what is authorship. 

And it made me think of the periodic kerfuffles I've noticed on social media sites about the copyright clauses in the terms and conditions of the sites. I'm sure you've seen it go around on Facebook, the quasi-legal notice with the weird citations that purports to prevent Facebook from owning your content. On Tumblr--the site that apparently inspired Richard Prince's exhibit--there are occasional panics every time Tumblr modifies its terms of service at all.

And, whenever I read the terms causing the hysteria, I've always struck by the fact that what the terms and conditions of sites like Facebook and Tumblr are really doing are allowing the sites to exist at all. You grant Facebook and Tumblr non-exclusive licenses to use your content for the purposes of their sites' functioning, basically. You still own your content, but they ask you to give them the ability to do stuff with it without worrying about a fair use analysis or something of that sort. This is especially vital on Tumblr, which operates almost entirely on a concept called "reblogging." As the Tumblr terms try to make clear, you give them a license for reblogging to happen. Without that, life on Tumblr would be even more legally murky than it already is. 

Richard Prince's recent exhibition, however, importantly reiterates that it isn't necessarily the terms and conditions you need to worry about. Or, rather, that's not all you need to worry about, because you should definitely be worrying about those, too. But, when you make your IP publicly available, on Facebook or Instagram or Tumblr or, say, this blog, you're running the risk that someone's going to take it and make "art" of it. And that has nothing to do with the terms and conditions. People have asked Instagram about Richard Prince's art exhibit, and Instagram has rightly pointed out that Instagram runs Instagram; Instagram doesn't run the whole world. Copyright infringement taking place off of Instagram isn't Instagram's domain. 

There's a lot about the legalese of our everyday lives that is misunderstood. And with good reason, because I've made a career out of copyright law and mostly what I've learned is how much about it is unclear. As has been discussed before, most of us don't even read the terms and conditions of the sites we use, anyway. And very few of us think about possible copyright infringement as we're posting a link to Facebook or reblogging a post on Tumblr or reposting a photo on Instagram or retweeting on Twitter. Because of that, I think, most of us don't even think about the fact that that's some of the stuff that the websites' terms and conditions are worrying about. They are literally trying to find a way to allow us to continue all of the questionable copyright infringement that our use of the sites depends upon. 

Copyright law, like so much of our lives, is increasingly defined by contracts like these, and it's almost made us forget that the contracts don't cover every use of our content. The Richard Prince story has been a potent reminder of that. People have seemed to instinctively think that the Instagram terms and conditions must have something to do with this, forgetting that this is existing in the part of our lives unbordered by explicit contract terms. 

None of which answers the real question of the hour in the Richard Prince discussion, though: If it's not governed by the contract, are the enlarged Instagram photos protected by fair use? But I think asking that question obscures the question I'd rather ask: Are selfies art? Should selfies receive the same level of intellectual debate as Richard Prince's exhibit of them? Because isn't there something troubling about the fact that selfies are frequently dismissed as silly when presented as the creation of younger females, but those very same selfies are considered art worth $90,000 if a man's name is put on them? 

January 6, 2016 | Permalink | Comments (0)

Monday, January 4, 2016

Apple, Publishers, E-book Price Fixing -- and Effective Assignments of Claims

Apple Headquarters Sign ByDay

The antitrust ruling finding Apple engaged in anticompetitive behavior with regard to the e-book industry has resulted in a number of follow-up suits by parties allegedly harmed by Apple and its co-conspirator publishers' price-fixing scheme. Now, one of the first cases to be filed has reached the end of its line, derailed by the lack of an assignment clause with sufficiently explicit wording.  

In the Southern District of New York, DNAML Pty, Ltd. v. Apple Inc., 13cv6516 (DLC) (behind a paywall), the plaintiff's claims were rooted in antitrust, but it was ultimately contract law that decided the case. The problem arose because the DNAML who sued Apple and the publishers here is actually "new" DNAML. "New" DNAML is not the same entity that was damaged by the anticompetitive conduct here; that was "old" DNAML.  

In 2010, "old" DNAML entered into the agency agreement with the publisher Hachette that gave rise to the cause of action here. That agency agreement, according to the allegations, was disastrous for "old" DNAML, as the anticompetitive measures adopted by Apple and the publishers did their job and eliminated "old" DNAML's ability to effectively compete by requiring that Hachette strictly control all e-book pricing. Consequently deprived of distinguishing itself from all of the other sellers of e-books in any way, "old" DNAML got out of the e-book business a few months after signing the agreement, in September 2010. 

Over a year later, on December 23, 2011, "old" DNAML executed a contract under which it transferred all of its assets to "new" DNAML. Under the agreement, "new" DNAML purchased the "Business and Assets" of "old" DNAML. "Business" was defined as "the business carried on" by "old" DNAML, "being the business of owning and operating eBook technologies, including the sale of eBooks." "Assets" was defined as "all of the assets" owned by "old" DNAML and "used in connection" with its business, "including its cash, the Book Debts, the DNAML UK Shares, the Business Agreements, Leasehold Property interest, Equipment, Intellectual Property, and the Goodwill." After the execution of the agreement, "old" DNAML allegedly still existed but had no active business. 

In July 2013, Apple was found liable for antitrust violations in the e-book market. In September 2013, DNAML filed this lawsuit. Apple and the publishers argued that summary judgment should be entered in their favor because "new" DNAML lacked the standing to pursue the antitrust claims, which were inflicted upon "old" DNAML. The court agreed. 

"New" DNAML agreed that it could not sue Apple and the publishers absent an assignment of the antitrust claims from "old" DNAML. The court found that the antitrust claims could have been assigned, but that the agreement here failed to do so: 

To effect a transfer of the right to bring an antitrust claim, the transferee must expressly assign the right to bring that cause of action, either by making specific reference to the antitrust claim or by making an unambiguous assignment of causes of action in a manner that would clearly encompass the antitrust claim.

No such express assignment existed here, either of antitrust claims or of claims in general. The definitions of "Business" and "Assets" did not include claims. A transfer merely of assets is not sufficient to act as an assignment of antitrust claims.

"New" DNAML tried to argue that the purchase of "old" DNAML's "Business" "unambiguous[ly]" included an assignment of the antitrust claims because of the reference to "old" DNAML's sale of e-books. "New" DNAML argued that should be read to include any claims arising out of that business. But the court stated that was not the express assignment of claims that the law requires. 

"New" DNAML also tried to introduce extrinsic evidence to support its argument that the agreement was intended to include antitrust claims, but the court, having found the agreement unambiguous on its face, refused to use extrinsic evidence to alter its interpretation.

As a result, "new" DNAML never acquired "old" DNAML's standing to bring the suit, and the court dismissed DNAML's claims with prejudice.  

The moral of the story: Mention "claims" explicitly in your asset purchase agreements.  

January 4, 2016 in Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Sunday, January 3, 2016

Legal Rights to Give up Your Travel Tickets

Exactly one year ago, I blogged here about United Airlines and Orbitz suing a 22-year old creator of a website that lets travelers find the cheapest airfare possible between two desired cities. Travelers would buy tickets to a cheaper end destination, but get off at stopover point to which a ticket would have been more expensive. For example, if you want to travel from New York to Chicago, it may be cheaper to buy one-way airfare all the way to San Francisco, not check any luggage, and simply get off in Chicago.

The problem with that, according to the airline industry: that is “unfair competition” and “deceptive behavior.” (Yes, the _airline industry_ truly alleged that.) Additionally, the plaintiffs claimed that the website promoted “strictly prohibited” travel; a breach of contracts cause of action under the airlines’ contract of carriage.

It seems that the United Airlines attorneys may not have remembered their 1L Contracts course well enough, for a contracts cause of action must, of course, be between the parties themselves or intended third party beneficiaries. The website in question was simply a third party with only incidental effects and benefits under the circumstances. Without more, such a party cannot be sued under contract law. (This may also be a free speech issue.)

Orbitz has since settled the suit.  Recently, a federal lawsuit was dismissed for lack of personal jurisdiction over the now 23-year old website inventor. United Airlines has not indicated whether it plans further legal action.  

Along these lines, cruise ship passengers are similarly not allowed to get off a cruise ship in a domestic port if embarking in another domestic port unless the cruise ship is built in the United States and owned by U.S. citizens. This is because the Passenger Vessel Services Act of 1866 – enacted to support American shipping – requires passengers sailing exclusively between U.S. ports to travel in ships built in this country and owned by American owners. Thus, cruise ships traveling from, for example, San Diego to Alaska and back will often stop in Canada in order not to break the law. But if the vessel also stops in, for example, San Francisco and you want to get off, you will be subject to a $300 fine which, under cruise ship contracts of carriages, will be passed on to the passenger. See 19 CFR 4.80A and a government handbook here.

Convoluted, right? Indeed. Necessary? In this day and age: not in my opinion. As I wrote in my initial blogs on the issue, if one has a contract for a given product or service, pays it in full, and does not do anything that will harm the seller’s business situation, there should be no contractual or regulatory prohibitions against simply deciding not to actually consume the product or use the service one has bought. Again: if you buy a loaf of bread, there is also nothing that says that you actually have to eat it. You don’t have to sit and watch all sorts of TV channels simply because you bought the channel line-up. In my opinion, United Airlines and Orbitz were trying to hinder healthy competition and understandable consumer conduct. What is still rather incomprehensible to me in this context is why in the world airlines would have anything against passengers getting off at a midway point. It’s less work for them to perform and it gives them a chance to, if they allowed the conduct openly, resell the same seat twice. A win-win-win situation, it seems, for the original passenger, the airline, and the passenger that might want to buy the second leg at a potentially later point in time at whatever price then would be applicable. The same goes for the typically unaffordable “change fees” applied by most airlines: if they charged less (a change can very easily be done by travelers on a website with no airline interaction) and the consumer was willing to pay the then-applicable rate for the new date (prices typically go up, not down, as the departure dates approach), the airlines might actually benefit from being able to sell the given-up seat. Of course, they don’t see it that way… yet.

In many ways, traveling in this country seems to be going full circle in that it is becoming an expensive luxury. Thankfully, new low-cost airlines also appear on the market to provide much needed competition in this close-knit industry that, in the United States, seems to be able to carefully skirt around anti-trust rules without too many legal allegations of wrongdoing. (See here for allegations against United, American, Delta and Southwest Airlines for controlling capacity in order to keep airline prices up).

Happy New Year and safe travels!

January 3, 2016 in Commentary, Current Affairs, E-commerce, Famous Cases, In the News, Legislation, Recent Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0)

Thursday, December 31, 2015

Weekly Top Ten SSRN Contracts Downloads (December 31, 2015)

Top-ten-new-years-resolutions


SSRN Top Downloads For
Contracts & Commercial Law eJournal
SSRN Logo (small)

RECENT TOP PAPERS for all papers first announced in the last 60 days
1 Nov 2015 through 31 Dec 2015

Rank Downloads Paper Title
1 161 Legal Transplants in the Law of the Deal: M&A Agreements in India
Afra Afsharipour
University of California, Davis - School of Law
2 153 Presumed Undue Influence: The False Partition from Fiduciary Accountability
Robert Flannigan
University of Saskatchewan
3 129 The Challenges of Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
4 95 Dodging Windfalls: Damages Based on Market Price, Actual Loss, and Appropriate Awards
John Y. Gotanda
Villanova University School of Law
5 92 The Relational Economics of Commercial Contract
Chapin Cimino
Drexel University Thomas R. Kline School of Law
6 83 What If Fiduciary Obligations Are Like Contractual Ones?
Gregory Klass
Georgetown University Law Center
7 75 The Consumer Rights Directive, Consumer Sales and English Law – The Fear of Coherence?
Christian Twigg-Flesner
University of Hull
8 75 The Doctrine of Illegality: A Private Law Hydra
James Goudkamp
University of Oxford - Faculty of Law
9 71 Lender Discrimination, Black Churches, and Bankruptcy
Pamela Foohey
Indiana University Maurer School of Law
10 70 The Private Order of Innovation Networks
Matthew Jennejohn
Brigham Young University - J. Reuben Clark Law School

 

SSRN Top Downloads For
LSN: Contracts (Topic)
SSRN Logo (small)

RECENT TOP PAPERS for all papers first announced in the last 60 days 
1 Nov 2015 through 31 Dec 2015

Rank Downloads Paper Title
1 129 The Challenges of Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
2 95 Dodging Windfalls: Damages Based on Market Price, Actual Loss, and Appropriate Awards
John Y. Gotanda
Villanova University School of Law
3 92 The Relational Economics of Commercial Contract
Chapin Cimino
Drexel University Thomas R. Kline School of Law
4 83 What If Fiduciary Obligations Are Like Contractual Ones?
Gregory Klass
Georgetown University Law Center
5 81 Between Regulatory and Autonomy-Based Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
6 75 The Consumer Rights Directive, Consumer Sales and English Law – The Fear of Coherence?
Christian Twigg-Flesner
University of Hull
7 70 The Private Order of Innovation Networks
Matthew Jennejohn
Brigham Young University - J. Reuben Clark Law School 
8 59 An Assessment of the Consumer Review Freedom Act of 2015
Eric Goldman
Santa Clara University - School of Law
9 43 The Myths We Built Around EU Consumer Law
Tamas Dezso Ziegler
Institute for Legal Studies, CSS Hungarian Academy of Sciences
10 43 Does 'European Regulatory Contract Law' Enhance Citizens' Rights? An Analysis of Consumer and Services Law from Theory to Practice
Federico Della Negra
European University Institute, Students

December 31, 2015 in Recent Scholarship | Permalink

Wednesday, December 30, 2015

Is Tenure a Contract?

Budapesti Corvinus Egyetem - 2014.06.12 (20)Here's one for all the professors out there: Smith v. Board of Supervisors for the University of Louisiana System, Civil Action Case No. 13-5505 Section: "G" (3), out of the Eastern District of Louisiana.

Steven Smith was a tenured professor at the University of New Orleans ("UNO"). Smith alleged a series of disagreements / misunderstandings that eventually led to Smith being committed to teaching the spring 2012 semester at both UNO and a Brazilian university, the Federal University of Bahia ("UFBA"). Smith attempted to resolve the conflict by pushing his start date at UFBA to the last two weeks of his semester at UNO. He had his students at UNO use the final two weeks to work on final projects, which would be submitted to him electronically while he was in Brazil at UFBA. Smith alleged that there was further miscommunication between him and UNO administration about Smith's schedule and whether or not it was acceptable. As a result, Smith stated that he was threatened numerous times with termination. Eventually, he was encouraged to resign and did so.

Smith sued asserting several causes of action, including breach of contract. The Board responded by arguing that Smith and the Board never entered into a contract at all.

Smith first pointed to the faculty handbook and UNO bylaws as the contract between himself and the Board. However, the faculty handbook explicitly stated that it "should not be construed as a formal contractual agreement between the University and its faculty." The court therefore found that the handbook did not constitute a contract.

That was not the end of Smith's contract claims, however, and that's where the tenure issue comes in. Smith argued that his tenure provided him with "a contractual right to continued employment." To support his argument, Smith pointed to the definition of "tenure" in Black's Law Dictionary as well as a number of statements made to Smith when he was granted tenure. The Board made no argument in opposition, leading the court to conclude that, "[a]lthough there was no specific written tenure contract, the parties appear to agree that Smith's achieving tenure meant that he was no longer an at-will employee." Accordingly, the court found that tenure was a contract between Smith and the Board. Whether or not this contract had been breached was a genuine issue of material fact precluding summary judgment.

December 30, 2015 in Labor Contracts, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Monday, December 28, 2015

Everyday Ambiguity

Anzeigetafeln.MUCT1

I always tell my students that no one sets out to enter into an ambiguous contract. Everyone thinks their contract is crystal-clear. Everyone thinks they've examined the problem from every angle and have exactly what they want.

Everyone is often wrong. And I include myself in that "everyone."

I was thinking of this while flying recently. As usual, the flight was overbooked and the airline was throwing cash around looking for volunteers to take a different flight. I've never done this before, but my travel plans were decently flexible, and when the price got to be high enough, I figured I'd give it a go. I had the following conversation with the airline employee.

Me: If I give up my seat, when would I get out of here?

Her: We can book you on an itinerary that would get you in 30 minutes later than you would have. In fact, I can confirm you for that flight right now.

Me: I'm confirmed for that flight?

Her: Yes.

So I gave up my seat and walked down to the gate of the new flight I had been "confirmed" on. And here is where the ambiguity arose: When I heard and repeated back "confirmed," I thought that meant I had a seat on that flight. However, when the airline said the word "confirmed," what it meant was that they had confirmed me on a list of people who desire to take that flight. Basically, I was confirmed on the standby list. Which wasn't at all what I wanted. Long story short: I got in 19 hours after I was supposed to, not 30 minutes. And the whole time I was kicking myself, because I teach contracts law! I should be alert to the possibility of ambiguity! During that conversation, I should have asked for an actual seat assignment. Or even used the words "I have a seat on that flight." But I didn't. I understood "confirmed" to be referring to a completely different concept, and then I re-used the airline's word, with a completely different understanding in mind. (I like to think we never understood each other and so there was never a meeting of the minds but that was cold comfort while I was sitting around O'Hare for many hours.)

I decided to use the entire situation as a real-life lesson: The ambiguity entered because I did nothing but repeat their words back to them. I should have, instead, repeated back to them what I understood their words to mean. I tell my students all the time: Say what you mean in your contracts; don't beat around the bush. But it's so easy to flub that in the heat of the contract-making moment. It's so easy to think that, actually, you are saying what you mean.

Which is why we have contracts cases.

December 28, 2015 in Travel, True Contracts | Permalink | Comments (0)

Thursday, December 24, 2015

Weekly Top Ten SSRN Contracts Downloads (December 24, 2015)

  HolidayTop10

SSRN Top Downloads For SSRN Logo (small)
Contracts & Commercial Law eJournal

Rank Downloads Paper Title
1 157 Legal Transplants in the Law of the Deal: M&A Agreements in India
Afra Afsharipour
University of California, Davis - School of Law
2 152 Presumed Undue Influence: The False Partition from Fiduciary Accountability
Robert Flannigan
University of Saskatchewan
3 129 The Challenges of Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
4 91 The Relational Economics of Commercial Contract
Chapin Cimino
Drexel University Thomas R. Kline School of Law
5 86 Dodging Windfalls: Damages Based on Market Price, Actual Loss, and Appropriate Awards
John Y. Gotanda
Villanova University School of Law
6 83 What If Fiduciary Obligations Are Like Contractual Ones?
Gregory Klass
Georgetown University Law Center
7 74 The Consumer Rights Directive, Consumer Sales and English Law – The Fear of Coherence?
Christian Twigg-Flesner
University of Hull
8 74 The Doctrine of Illegality: A Private Law Hydra
James Goudkamp
University of Oxford - Faculty of Law
9 70 A Case for Interfering with Freedom of Contract? An Empirically-Informed Study of Bans on Assignment
Hugh Beale, Louise Gullifer and Sarah Paterson
Warwick School of Law, University of Oxford - Faculty of Law and London School of Economics & Political Science (LSE)
10 69 The Private Order of Innovation Networks
Matthew Jennejohn
Brigham Young University - J. Reuben Clark Law School

SSRN Top Downloads For SSRN Logo (small)
LSN: Contracts (Topic)

Rank Downloads Paper Title
1 129 The Challenges of Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
2 91 The Relational Economics of Commercial Contract
Chapin Cimino
Drexel University Thomas R. Kline School of Law
3 86 Dodging Windfalls: Damages Based on Market Price, Actual Loss, and Appropriate Awards
John Y. Gotanda
Villanova University School of Law
4 83 What If Fiduciary Obligations Are Like Contractual Ones?
Gregory Klass
Georgetown University Law Center
5 79 Between Regulatory and Autonomy-Based Private Law
Hanoch Dagan
Tel Aviv University - Buchmann Faculty of Law
6 74 The Consumer Rights Directive, Consumer Sales and English Law – The Fear of Coherence?
Christian Twigg-Flesner
University of Hull
7 70 A Case for Interfering with Freedom of Contract? An Empirically-Informed Study of Bans on Assignment
Hugh Beale, Louise Gullifer and Sarah Paterson
Warwick School of Law, University of Oxford - Faculty of Law and London School of Economics & Political Science (LSE)
8 69 The Private Order of Innovation Networks
Matthew Jennejohn
Brigham Young University - J. Reuben Clark Law School
9 59 An Assessment of the Consumer Review Freedom Act of 2015
Eric Goldman
Santa Clara University - School of Law
10 43 The Myths We Built Around EU Consumer Law
Tamas Dezso Ziegler
Institute for Legal Studies, CSS Hungarian Academy of Sciences

December 24, 2015 in Recent Scholarship | Permalink

Wednesday, December 23, 2015

Parking Sagas, Part II

I'm probably going to develop a personal expertise in the limited field of Parking Sagas; be forewarned. 

24 Hour Fitness Super-Sport, San Mateo

This case, Gietzen v. Goveia, B255925, out of the Second Appellate District of the Court of Appeal of California, concerned a shopping center that leased spaces to several businesses. One of these businesses was a restaurant called Yolanda's and another of these businesses was a gym called 24 Hour Fitness. When Gietzen, the owner of Yolanda's, entered into negotiations with the developers of the shopping center, he asked who the other tenants of the shopping center were going to be. Apparently, Amy Williams, one of the developers' agents, told him that the anchor tenant was likely to be a marine hardware company. In fact, negotiations with the hardware company eventually fell through and the anchor tenant ended up being 24 Hour Fitness. 

Apparently, in California at least, it is fairly well known among real estate-related business people that gyms can "cause major parking congestion problems." Here is where I betray that I do not belong to a gym, so I have no first-hand experience of this. But apparently very many people are much more dedicated to working out than I realized, because the gym in this case ended up utilizing around 95% of the available parking spaces. Williams had apparently known this was likely to happen based on previous similar experiences with gyms in shopping centers she'd helped develop, and Gietzen also said that he knew gyms caused such issues and would never have leased space in the shopping center if he'd known a gym was going to be an anchor tenant. 

Amid evidence that potential Yolanda's patrons were actually eating at other restaurants because they didn't want to deal with the lack of parking at the Yolanda's shopping center, Gietzen complained, as did other tenants having similar problems. Eventually, several solutions were attempted, but the parking lot still remained almost entirely full of gym patrons to the detriment of the other tenants. So, eventually, Gietzen sued, alleging, among other things, breach of contract and breach of the covenant of good faith and fair dealing. 

The relevant clause of the contract was Article 9.1: "The Common Area shall be available for the nonexclusive use of Tenant during the full term of this Lease or any extension of the term hereof . . . ." The Common Area included the parking lot. The court interpreted that clause to mean that the common area had to actually be available for the tenant to use; the availability could not be hypothetical. Because 95% of the common area was being monopolized by the anchor tenant gym, the court found that Gietzen had been denied use of the common area in breach of the contract. The shopping center developers tried to argue that this interpretation implied that gyms can never be allowed to be shopping center tenants because of their propensity to take up so many parking spaces at all times. The court found, however, that no such implication was required. 

As far as the breach of covenant of good faith and fair dealing, the shopping center developers pointed to a clause in the lease that said no covenants were implied. But the court said that good faith is required of all contracts, and that courts would not allow a contract to permit a party to act in bad faith based on a statement as vague as the one this contract contained: "The good faith of the parties is essential to all contracts. No agreement, no matter how finely crafted, will protect a party if the other party is not acting in good faith. If indeed [the developer] is contending that the lease allows it to act in bad faith, it must point to a clause more specific than a general clause against implied covenants."

Mainly I felt like I had to share this case so that I can spread around my guilt over not being one of those many people parked at the gym. 

December 23, 2015 in Commentary, Recent Cases, True Contracts | Permalink | Comments (2)