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Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Monday, August 18, 2014

Arbitration Agreement Entered into during Pendency of FLSA Claim Ruled Enforceable

Mata_Hari_6The named plaintiffs in Stevenson v. The Great American Dream, Inc. are former employees of Pin Ups Nightclub.  They brought suit claiming entitlement to minimum wage and overtime compensation under the Fair Labor Standards Act (FLSA).  They sought class certification in December 2012, which was granted in August 2013.   Kwanza Edwards attempted to join the class on October 2013.  Unfortunately for her, she had signed an arbitration agreement in February 2013.  On July 15, 2014, the District Court for the Northern District of Georgia granted defendants' motion to compel Edwards to arbitrate her claim.  

On motion for reconsideration, Edwards argued that the arbitration agreement was unconscionable, given that a FLSA action had already been filed, with class certification pending.  The Court found that the timing of the agreement did not affect its substantive terms.  

The Court was unimpressed with Edwards' citations to cases from other Circuits.  Plaintiff does not seem to have cited to Russell v. Citigroup, Inc., about which we previously posted here.  The case is probably distinguishable, but that was a case where the court refused to compel arbitration where a plaintiff signed an arbitration agreement after the class action litigation had already commenced.  The difference is that Russell was himself already a party to a class action when he signed the new arbitration agreement.  Edwards was not yet a party to the FLSA class when she signed her arbitration agreement.

August 18, 2014 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 13, 2014

Tour Riders [File this in: Rock 'n' Roll]

DownloadI love concert tour riders -- those sometimes lengthy contract terms that reveal all of a band's idiosyncratic  backstage requests.  The most famous rider term is, of course, Van Halen's requirement of no brown M&Ms.  And we've  blogged about the explanation for this peculiar request more than once: here and here

WNYC's John Schaefer hosted an extended discussion of tour riders on Soundcheck.  My favorite is Iggy Pop's request: "One monitor man who speaks English and is not afraid of death."  

The Brooklyn band Parquet Courts asked for:

  • 1 bottle of communion grade red wine
  • 1 bottle of white wine that would impress your average non-wine-drinking American
  • 1 bottle of lower-middle shelf whiskey – cheap but still implies rugged masculinity
  • Mixers for aforementioned mid-level whiskey, of slightly higher quality than the whiskey
  • A quantity of “herbal mood enhancer”
  • 1 copy of newspaper with the most interesting headline/front page picture (comic section must feature Curtis)

You can listen to the show here:

August 13, 2014 in Celebrity Contracts, In the News, Music | Permalink | Comments (0) | TrackBack (0)

Researcher Behind Facebook's Emotions Experiment to Help Design Ethical Guidelines

Today's New York Times features an article aptly titled (in the print version) "Under the Microscope."  The article describes researchers' attempts to grapple with the ethical issues relating to projects such as Facebook's experiment on its users, about which we have written previously  here and here.  According to the article, researchers both at universities and at in-house corporate research departments are collaborating on processes to formulate ethical guidelines that will inform future research that makes use of users' information.  

The article states that Facebook has apologized for its emotion experiment, in which it manipulated users' feeds to see if those users' own posts reflected the emotional tone of the posts they were seeing. It's not really clear that Facebook apologized for experimenting on its users.  As quoted on NPR, here is what Facebook's Sheryl Sandberg  said on behalf of the company:

This was part of ongoing research companies do to test different products, and that was what it was; it was poorly communicated . . . . And for that communication we apologize. We never meant to upset you.

As the Washington Post noted, Sandberg did not apologize for the experiement itself.  Seen in its full context, Sandberg's statement is more akin to OKCupid's in-your-face admission that it experiements on its users, about which Nancy Kim posted here.

But the Times article focuses on Cornell University's Jeffrey Hancock, who collaborated with Facebook on the experiment.  He seems to have no regrets.  For Hancock, researchers' ability to data mine is to his field what the microscope was to chemists.  Or, one might think, what the crowbar was to people doing research in the field of breaking and entering.  Hancock is now working with people at Microsoft Research and others to lead discussions to help develop ethical guidelines applicable to such research.

The Times quotes Edith Ramirez, Chair of the Federal Trade Commission on the subject.  She says:

Consumers should be in the driver’s seat when it comes to their data. . . . They don’t want to be left in the dark and they don’t want to be surprised at how it’s used.

By contrast, here is the Times's synopsis of Professor Hancock's views on how the ethical guidelines ought to be developed:

Companies will not willingly participate in anything that limits their ability to innovate quickly, he said, so any process has to be “effective, lightweight, quick and accountable.”

If the companies are subject to regulation before they can experiment on their users, it does not really matter whether or not they willngly participate.  And the applicable standards have already been established under Institutional Review Board (IRB) rules.  Significantly, as reported here in the Washington Post, although Professor Hancock works at Cornell, his participation in the Facebook study was not subject to Cornell's IRB review.  In our previous posts, we have expressed our doubt that the Facebook study could survive IRB review (or that it yielded the information that it was supposedly testing for).  

The Times article does not indicate that any of the people involved in devising rules for their own regulation have any expertise in the field of ethics.  Why is letting them come up with their own set of rules in which they will "willingly participate" any better than expecting the wielders of crowbars to design rules for their safe deployment?

August 13, 2014 in Commentary, In the News, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 12, 2014

John Oliver and Sarah Silverman Tackle Payday Loans

On HBO’s Last Week Tonight, John Oliver was joined by Sarah Silverman and they took on the payday loan industry.  Here's the clip (NSFW, especially Sarah Silverman's bit at the end):

From the pseudo PSA at the end of the clip: “Hi, I’m Sarah Silverman. If you’re considering taking out a payday loan, I’d like to tell you about a great alternative.  It’s called ‘anything else.’  The way it works is, instead of taking out a payday loan you literally do anything else.”

[Meredith R. Miller]

August 12, 2014 in Film Clips | Permalink | Comments (0) | TrackBack (0)

Weekly Top Tens from the Social Science Research Network

SSRNSSRN Top Downloads For Contracts & Commercial Law eJournal
RECENT TOP PAPERS

RankDownloadsPaper Title
1 169 Facilitating Mergers and Acquisitions with Earnouts and Purchase Price Adjustments 
Albert H. Choi 
University of Virginia School of Law 
2 166 The Scope and Potential of FTC Data Protection 
Woodrow Hartzog and Daniel J. Solove 
Samford University - Cumberland School of Law and George Washington University Law School 
3 148 Bylaws Mandating Arbitration of Stockholder Disputes? 
Claudia H Allen 
Katten Muchin Rosenman LLP 
4 134 Bankers and Chancellors 
William W. Bratton and Michael L. Wachter 
Institute for Law and Economics, University of Pennsylvania Law School and University of Pennsylvania Law School - Institute for Law and Economics 
5 133 What We Consent to When We Consent to Form Contracts: Market Price 
Kenneth K. Ching 
Regent University - School of Law 
6 106 Governing Law on Forum-Selection Agreements 
Kevin M. Clermont 
Cornell Law School 
7 103 The Rise and Fall of Unconscionability as the 'Law of the Poor' 
Anne Fleming 
Georgetown University Law Center 
8 73 The Construction of Commercial Contracts 
John Carter 
University of Sydney - Faculty of Law 
9 69 Leases and Executory Contracts in Chapter 11 
Kenneth Ayotte 
University of California, Berkeley - School of Law 
10 68 Alternative Entities in Delaware - Reintroduction of Fiduciary Concepts by the Backdoor? 
Douglas M. Branson 
University of Pittsburgh School of Law 

SSRN Top Downloads For LSN: Contracts (Topic) 
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 133 What We Consent to When We Consent to Form Contracts: Market Price 
Kenneth K. Ching 
Regent University - School of Law 
2 103 The Rise and Fall of Unconscionability as the 'Law of the Poor' 
Anne Fleming 
Georgetown University Law Center 
3 73 The Construction of Commercial Contracts 
John Carter 
University of Sydney - Faculty of Law 
4 68 Alternative Entities in Delaware - Reintroduction of Fiduciary Concepts by the Backdoor? 
Douglas M. Branson 
University of Pittsburgh School of Law 
5 64 The Death of Contracts 
Franklin G. Snyder and Ann M. Mirabito 
Texas A&M University School of Law and Baylor University - Hankamer School of Business 
6 59 A Eulogy for the EULA 
Miriam A. Cherry 
Saint Louis University - School of Law 
7 58 Consent and Sensibility: A Review of Margaret Jane Radin's Book, 'Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law' 
Michelle Boardman 
George Mason University School of Law 
8 54 FAA Preemption after Concepcion 
Christopher R. Drahozal 
University of Kansas School of Law 
9 54 Credible Threats 
Saul Levmore and Ariel Porat 
University of Chicago Law School and Tel Aviv University 
10 43 Classical Competition and Freedom of Contract in American Laissez Faire Constitutionalism 
Nicola Giocoli 
University of Pisa 

 

August 12, 2014 in Recent Scholarship | Permalink | TrackBack (0)

Monday, August 11, 2014

Presidential Executive Order Refuses Government Contracts to Companies that Mandate Employee Arbitration

This informative post from Jean Sternlight (via Art Hinshaw) over at ADR Prof Blog:

President Obama today signed a new Fair Pay and Safe Workplaces Executive Order refusing to grant government contracts of over a million dollars to companies who mandate their employees arbitrate disputes involving discrimination, accusations of sexual assault, or harassment.  This new order mirrors protections Congress already provided to employees of Defense Department contractors in 2011 in the so-called “Franken amendment.” The order also requires prospective federal contractors to disclose prior labor law violations and will instruct agencies not to do business with egregious violators.

While the executive order is limited in its scope (only protects employees who work for companies with large government contracts and only applies to arbitration of certain kid of claims), it is a step toward the Arbitration Fairness Act, which would prohibit mandatory arbitration more braodly.  More here.  

August 11, 2014 in In the News, Legislation, Weblogs | Permalink | Comments (0) | TrackBack (0)

Northwestern Law’s Zev J. Eigen’s New Drafting Exercise

EigenNorthwestern University Law School’s Zev J. Eigen (pictured), visiting at NYU School of Law this fall, has developed a new online contract drafting practicum for first year students. 

Here are the basics:

The practicum is designed to give students a taste for real world contract drafting on behalf of clients. Students are randomly assigned to one of two roles --either representing an employer or a recently hired employee. They negotiate and memorialize the terms of employment their respective clients have already agreed upon. Students will be assigned counterparts within their classes and will negotiate the terms of the contracts through an online portal.

The practicum is set up so that all of the logistical work is done by the software and Professor Eigen. For instance, the software will pair students and email them information about their counterparts. Instructions, participants’ confidential role information, and general instructions will be available through the portal. After student pairs upload their contracts, the software will analyze their work product. Students and professors will receive analytical results in case you wish to spend class time discussing their performance. That is, there is very little work for you if you wish to run it, and you can use almost no class time on it if you wish. Professor Eigen provides a “Professor’s Guide” offering more information including some suggested class discussion points.

There is also an interesting technology-related component of the practicum. If you contact Professor Eigen directly, he will provide more detailed information about it to you.

Instructors who would like to know more about this practicum, and are considering using it in their classrooms this fall should contact Professor Eigen directly: z-eigen@northwestern.edu

August 11, 2014 in Contract Profs, Teaching | Permalink | Comments (0) | TrackBack (0)

Thursday, August 7, 2014

The Remedies Question Again

Netherlands91s-1968o
When I was a student my contracts teacher was Richard Fielding. He was as Socratic as he could be. I thing the first day he walked in and said: "Mr Harrison, What is my name." Ok, well not that Socratic but very talented and I loved it.  He used Kessler and Gilmore and I found the book dense but more interesting than virtually any of the books around today.

Now, however, as teachers and realists, contracts teachers are faced with two questions at the beginning of each semester: 1) When and how much to cover remedies? and 2) in a 4 credit course what gets left out?  (Part of this post is inspired by a recent inquiry over on the contracts listserv about the history of teaching remedies first.)  I'd really like some comments on these questions since I and trying to get it "right" at least one time before I finish with contracts.

My personal history has gone from starting with about a month of remedies at the  outset (in a two semester course) to a one week introduction to remedies at the beginning with a return later on. I do this so that when I get to consideration the students have an understanding of the remedial implications of a contract, liability based on promisory estoppel, and whether there is any way to recover if neither  of those apply.  If any readers do not do this, I'd really be interested in how they treat contractual as opposed to PE remedies.  

On leaving things out, I typically do not teach Statute of Frauds, although I alert them to its existence, because I figure any decent bar review lecture will cover it when they need it. And, like so many others, assignment and delegation and third party beneficiaries also get the heave ho. I am very keen on including the UCC  but not even close to replacing a sales course. 

So what is the thinking on these two questions. I am preparing my syllabus in the next week and could use some new thinking.

 

August 7, 2014 | Permalink | Comments (0) | TrackBack (0)

Supremes Settle Their Breach of Contract Action

Oblique_facade_3,_US_Supreme_CourtIt is not often that the Supreme Court of the United States entertains a contract issue (which is, coincidentally, one of the main reasons it is such a delight to teach contract law).  The Supreme Court did, however, recently settle a contract dispute of its own.

According to reporting by Tony Mauro at the National Law Journal:

The curious case of the trapezoidal windows at the U.S. Supreme Court is closed.

Documents filed recently in lower courts indicate that a contentious seven-year dispute over mistakes and delays in the renovation project at the high court has been settled.

“Everybody was worn out by the litigation,” Herman Braude of the Braude Law Group said this week. Braude represented Grunley Construction Company, the main contractor for the modernization project on the nearly 80-year-old building. “All good things have to come to an end,” he said.

The most contested feature of the litigation was the belated discovery by contractors that more than 150 large windows, many of which look out from justices’ chambers, were trapezoidal—not strictly rectangular. The building's persnickety architect, Cass Gilbert, designed them that way so they would appear rectangular from below, both inside and outside the building.

But Grunley and its window subcontractor failed to measure all four sides of the windows before starting to manufacture blast-proof replacements, so some of them had to be scrapped.

Grunley claimed it was not obliged to make the measurements, asserting that the government had “superior knowledge” of the odd shape of the windows that it should have shared with contractors. The company asked for an extra $757,657 to compensate for the extra costs of fabricating the unconventional windows.

But the federal Contract Appeals Board in 2012 rejected Grunley’s claim, stating: “We find inexcusable the firms’ failure to measure a necessary component of the windows prior to installation.”

Grunley appealed to the U.S. Court of Appeals for the Federal Circuit and placed other contract disputes before that court and the U.S. Court of Federal Claims. Both sides eventually agreed to settlement negotiations.

In February, both parties reported to the federal circuit that “the parties are now in the final process of closing out the underlying construction contract and settling various requests for equitable adjustment.” They also told the federal circuit that “the settlement discussion are at a very high level between the parties … and are being primarily led by the principals of each party, not the litigation counsel.”

Subsequent orders by both courts have dismissed the litigation, but no details of the settlement are available on the docket of either court.

Attempts to obtain details of the settlement have been unsuccessful so far. The Architect of the Capitol—the congressional agency that has jurisdiction over the Supreme Court building and was the defendant in the litigation—did not respond to a request for comment. The U.S. Department of Justice’s civil division, which handled the litigation for the architect's office, did not respond as of press time, and neither did anyone from the Supreme Court.

Braude, Grunley's attorney, was reluctant to give details. “The dollar figure doesn’t matter,” he said. But when pressed, Braude said his client “got some” of the $15 million in extra compensation it was seeking from the government, beyond its original $75 million contract for the work.

“Everybody agreed to an adjusted contract price that recognizes the budget limitations of the government,” Braude said, adding that the settlement was “satisfactory to all parties. Nobody was jumping for joy, but everybody was a little happy.” Braude also said the Supreme Court signed off on the settlement.

John Horan of McKenna Long & Aldridge, an expert on government contract disputes, said there is no general rule about the confidentiality of settlements, and sometimes “the government doesn’t go out of its way to make settlements public.” But a document spelling out terms of the agreement is sometimes made part of the public record or can be obtained through the Freedom of Information Act, he said. The Supreme Court and the Architect of the Capitol, an arm of Congress, are exempt from the FOIA.

The modernization project at the Supreme Court broke ground in 2003 and the target completion date was 2008, though some follow-up work is still underway. The court's aging infrastructure—including one of the oldest Carrier air-conditioners in existence—was the trigger for the project, which has cost an estimated $122 million overall.

More here.  Great basis for an exam hypo.  And, wow! -- to be the attorney that sues the Supreme Court!

August 7, 2014 in Government Contracting, In the News, Labor Contracts | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 6, 2014

Student Contracts not Contract Students

                                                                                                 Fightin'_Mad_(1921)_-_1

I am not sure this is a contracts issue but having taught contracts for 30+ years, I tend to see all things in contract terms. And, after recently reading about the student who sued his teacher for some sort of mix up in the syllabus, I am not  sure that is wrong.

Here is the problem: Suppose a student lands on academic probation after the first year during which he is assigned to one slate of teachers. The school has a curve but no requirements with respect to distributions. Some teachers give lots of As and Cs or Ds. Others give scores of Bs and no As or Ds. The student placed  on probation gets a couple of professors who give Ds. It is pretty clear that had he been assigned to another section, in which the lowest grade given is a C, there would be no probation.

Aside from any administrative law types of issues, is there a contracts issue with respect to some kind of implied term in the contract between the school and the students. Perhaps I am getting ahead of myself. What is the nature of the contract between students and their schools? Does that contract have any terms that govern grading aside from what might be found in a student handbook?

By the way, on a different topic and if anyone is interested (hopefully not), I posted the draft of my article Copyright as Contract on ssrn.  

August 6, 2014 | Permalink | Comments (0) | TrackBack (0)

Online Contracts Here and Now

Here is my interview  with  Jeremy Hobson of NPR's Here and Now on the subject of online contracts. 

August 6, 2014 in Commentary, Current Affairs, In the News, Miscellaneous, Web/Tech | Permalink | Comments (0) | TrackBack (0)

New on SSRN from Robin Kar

Robin Kar (pictured) has just posted an ambitious piece, Contract as Empowerment: A New Theory of Contract on SSRN.  The submission is still under review right now, so you can be among the first to download it!  Here is the abstract:

KarModern contract theory is in a quandary. As Alan Schwartz and Robert E. Scott have observed: “Contract law has neither a complete descriptive theory, explaining what the law is, nor a complete normative theory, explaining what the law should be.” This article aims to cure these deficiencies with a novel theory, “Contract as Empowerment”.

Contract as Empowerment is a deontological (duty-based) theory, rooted in a special strand of social contract theory known as “contractualism”. The theory nevertheless differs from more familiar deontological theories, which are typically rooted in moral intuitions about promising, autonomy or reliance. Because of its foundation in social contract theory, contract as empowerment can absorb a number of important economic and psychological insights, which have traditionally given efficiency theories explanatory advantages over traditional deontological theories. But contract as empowerment can absorb these insights without subjecting them to thoroughgoing economic interpretation. It can thereby produce a more robust, unified and normatively satisfying account of many core areas of doctrine. Among other things, contract as empowerment offers a more compelling account of the consideration doctrine than exists in the current literature; a better account of the expectation damages remedy (both descriptively and morally); and a special way of understanding the appropriate role of certain doctrines like unconscionability, which regulate private market activity by making the scope or content of contractual obligations depend on facts other than contracting parties’ subjective wills. 

This last fact provides a major point of contrast with most existing theories of contract. One of the most striking features of the way that standard debates between deontological and consequentialist theories have been framed in this area of the law is that general theories on both sides typically share a key implication. They imply that legal doctrines that invite courts to police bargains for fairness reflect alien intrusions into the basic subject matter of contract. Contract as empowerment suggests that this framing has been distorting our understanding of contracts (and hence modern markets) for some time now. It offers an alternative framework, which understands both private market empowerment and some market regulations as direct expressions of the same fundamental principles. Because this framework is principled, it can help depoliticize a range of currently heated debates about the appropriate scope and role of market regulation. This framework can be applied to many different forms of market exchange—from those in consumer goods to labor, finance, credit, mortgages and many others.

This article is the first in a two part series. Contract as Empowerment introduces and develops the theory of contract as empowerment. Contract as Empowerment II applies the theory to a range of doctrinal problems and argues that contract as empowerment offers the best general interpretation of contract law.

Professor Kar promises that a follow-up article is coming soon.  Stay tuned.

August 6, 2014 in Contract Profs, Recent Scholarship | Permalink | TrackBack (0)

Tuesday, August 5, 2014

What Constitutes "Good Faith" Negotiation of a Foreclosure Action?

Ah, “good faith” – the jello mold of contract law.  What is “good faith”?  What does it mean to negotiate in “good faith”?   If a statute does not provide a definition, do common law notions of good faith apply?  In New York, a panel of the Appellate Division (Second Department) had occasion to define the parameters of “good faith” for purposes of the statutory requirements in mortgage foreclosure actions.

In 2009, in response to the foreclosure crisis, New York’s Civil Practice Law and Rules (“CPLR”) § 3408 was amended to require mandatory settlement conferences in mortgage foreclosure actions involving any home loan in which the defendant was residing in the property.  The statute further requires that both plaintiff and defendant negotiate in "good faith" to resolve the action, including, if possible, a loan modification.  The statute does not define “good faith.”

Plaintiff (bank) argued on appeal that “a party to a mortgage foreclosure action can only be found to have violated the good-faith requirement of CPLR 3408(f) when that party has engaged in egregious conduct such as would be necessary to support a finding of ‘bad faith’ under the common law.”  Of course, plaintiff maintained that it did not engage in any egregious conduct such as gross negligence or intentional misconduct and, therefore, it satisfied the good faith requirement of CPLR 3408(f).

The court rejected plaintiff's contention that a lack of good faith pursuant to CPLR 3408(f) requires a showing of gross disregard of, or conscious or knowing indifference to, another's rights.  Instead, the court held that a failure to negotiate in “good faith” under CPLR 3408(f) is determined “by considering whether the totality of the circumstances demonstrates that the party's conduct did not constitute a meaningful effort at reaching a resolution.”

The court reasoned that this definition aligned with the purpose of the good faith requirement, which is “to ensure that both plaintiff and defendant are prepared to participate in a meaningful effort at the settlement conference to reach resolution."

The court elaborated on what constitutes a failure to act in good faith:

Where a plaintiff fails to expeditiously review submitted financial information, sends inconsistent and contradictory communications, and denies requests for a loan modification without adequate grounds, or, conversely, where a defendant fails to provide requested financial information or provides incomplete or misleading financial information, such conduct could constitute the failure to negotiate in good faith to reach a mutually agreeable resolution.

Applying the standard to this case, the court held that:

Any one of the plaintiff's various delays and miscommunications, considered in isolation, does not rise to the level of a lack of good faith. Viewing the plaintiff's conduct in totality, however, we conclude that its conduct evinces a disregard for the settlement negotiation process that delayed and prevented any possible resolution of the action and, among other consequences, substantially increased the balance owed by [defendant] on the subject loan. Although the plaintiff may ultimately be correct that [defendant] is not entitled to a . . . modification, the plaintiff's conduct during the settlement negotiation process makes it impossible to discern such a fact, as the plaintiff created an atmosphere of disorder and confusion that rendered it impossible for [defendant] or the Supreme Court to rely upon the veracity of the grounds for the plaintiff's repeated denials of [defendant’s] application.

Can you nail that to the wall: what's a meaningful effort? 

U.S. Bank National Assoc v. Sarmiento, 11124/09 (N.Y. App. Div. 2d Dep't Aug 5. 2014). 

August 5, 2014 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Weekly Top Tens from the Social Science Research Network

SSRNSSRN Top Downloads For Contracts & Commercial Law eJournal
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 271 The Privatization of Compliance 
Scott Killingsworth 
Bryan Cave LLP 
2 194 A Psychological Account of Consent to Fine Print 
Tess Wilkinson‐Ryan 
University of Pennsylvania Law School 
3 163 The Scope and Potential of FTC Data Protection 
Woodrow Hartzog and Daniel J. Solove 
Samford University - Cumberland School of Law and George Washington University Law School 
4 159 Facilitating Mergers and Acquisitions with Earnouts and Purchase Price Adjustments 
Albert H. Choi 
University of Virginia School of Law 
5 141 Bylaws Mandating Arbitration of Stockholder Disputes? 
Claudia H Allen 
Katten Muchin Rosenman LLP
6 134 Bankers and Chancellors 
William W. Bratton and Michael L. Wachter 
Institute for Law and Economics, University of Pennsylvania Law School and University of Pennsylvania Law School - Institute for Law and Economics 
7 100 Governing Law on Forum-Selection Agreements 
Kevin M. Clermont 
Cornell Law School 
8 99 What We Consent to When We Consent to Form Contracts: Market Price 
Kenneth K. Ching 
Regent University - School of Law 
9 67 Alternative Entities in Delaware -- Reintroduction of Fiduciary Concepts by the Backdoor? 
Douglas M. Branson 
University of Pittsburgh School of Law 
10 67 The Construction of Commercial Contracts 
John Carter 
University of Sydney - Faculty of Law 

SSRN Top Downloads For LSN: Contracts (Topic)
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 194 A Psychological Account of Consent to Fine Print 
Tess Wilkinson‐Ryan 
University of Pennsylvania Law School 
2 99 What We Consent to When We Consent to Form Contracts: Market Price 
Kenneth K. Ching 
Regent University - School of Law 
3 67 Alternative Entities in Delaware -- Reintroduction of Fiduciary Concepts by the Backdoor? 
Douglas M. Branson 
University of Pittsburgh School of Law
4 67 The Construction of Commercial Contracts 
John Carter 
University of Sydney - Faculty of Law 
5 61 Of Priors and of Disconnects 
Margaret Jane Radin 
University of Michigan Law School 
6 60 Good Faith and Fair Dealing as an Underenforced Legal Norm 
Paul MacMahon 
London School of Economics - Law Department 
7 57 A Eulogy for the EULA 
Miriam A. Cherry 
Saint Louis University - School of Law 
8 54 Consent and Sensibility: A Review of Margaret Jane Radin's Book, 'Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law' 
Michelle Boardman 
George Mason University School of Law 
9 51 FAA Preemption after Concepcion 
Christopher R. Drahozal 
University of Kansas School of Law 
10 47 The Death of Contracts 
Franklin G. Snyder and Ann M. Mirabito 
Texas A&M University School of Law and Baylor University - Hankamer School of Business 

 

August 5, 2014 in Recent Scholarship | Permalink | TrackBack (0)

Monday, August 4, 2014

Central States Law School Association Annual Conference

Registration is now open for the Central States Law Schools Association 2014 Scholarship Conference, which will be held on Friday, October 10 and Saturday, October 11 at the Louisiana State University Law Center in Baton Rouge, Louisiana. We invite law faculty from across the country to submit proposals to present papers or works in progress.

Lsu law
CSLSA is an organization of law schools dedicated to providing a forum for conversation and collaboration among law school academics. The CSLSA Annual Conference is an opportunity for legal scholars, especially more junior scholars, to present working papers or finished articles on any law-related topic in a relaxed and supportive setting where junior and senior scholars from various disciplines are available to comment. More mature scholars have an opportunity to test new ideas in a less formal setting than is generally available for their work. Scholars from member and nonmember schools are invited to attend. 

Please click here to register. The deadline for registration is September 1, 2014.  

August 4, 2014 in Conferences | Permalink | TrackBack (0)

Eighth Circuit Shuts Down the Real Napster CEO

Christopher Gorog was the CEO of Roxio, Inc., which acquired Napster in 2002.  He thereby become the CEO of Napster, which was acquired by Best Buy in 2009.  Gorog entered into an Employment Agreement with Best Buy, which provided that he would stay on as a Napster employee, with Napster now a wholly-owned Best Buy subsidiary.  The Employment Agreement included a $3 milllion performance award to which Gorog would be entitled based on his and the company's performance on four target dates if he were still employed by Napster.  

At the end of 2009, Gorog resigned.  In 2011, Best Buy sold Napster to Rhapsody, an Internet Music Service.  Gorog signed a Separation Agreement which provided that Gorog’s employment would be terminated without cause and that Gorog would not release any claims to a performance award.  Gorog sued claiming that he was entitled to performance awards despite his resignation.  The District Court found that Gorog's best arguments rose under Section 2.4(b) of the relevant Award Agreement:

(b) If, prior to the end of the Performance Period, your
employment is terminated by Napster without Cause or you
terminate your employment with Napster for Good Reason,
the Performance Period will continue and you will be
entitled to receive a Performance Award equal to a pro-rata
portion, based on the number of Whole Months you served
during the Performance Period, of the Performance Award
that otherwise would have been earned in accordance with
the Performance Criteria Schedule . . . . 

The Distirct Court dismissed Gorog's claims finding that he did not meet the performance criteria under the section. 

In appealing to the Eighth Circuit in Gorog v. Best Buy, Inc.Gorog relied on Section 2.4(c) of the Award Agreement which he claimed was not mutually exclusive with Section 2.4(b).  Section 2.4(c) provides that 

If, prior to the Performance Target Date, majority
ownership of Napster (or any successor entity) is sold by
Best Buy or spun-off to its shareholders, or if the venture
ceases operations (the “Event”), you shall be entitled to
receive a Performance Award equal to 100% of the
Performance Award Target Value, regardless of whether
the Performance Criteria have been met. . . .

Gorog claimed that the fact that he was no longer employed at Napster was irrelevant to the question of his entitlement to a performance award, as that award was triggered by the sale of Napster.  

The Eighth Circuit sided with Best Buy, which argued that the two provisions are indeed mutually exclusive.  Read in context, the Court noted, each section of Section 2.4 relates to conditions of Gorog's termination that would entitle him to a performance award.  The Court also found no way to reconcile Gorog's claim that the provisions of Section 2.4 were not mutually exclusive with other terms in his agreement with Best Buy.

Once again, life fails to imitate art (if the amusing heist movie The Italian Job is art):

August 4, 2014 in Film Clips, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Friday, August 1, 2014

Did Leonard Offer Too Much Money to Pepsi for the Harrier?

HarrierxvReaders of this blog should already be familiar with the famous Harrier jet case in which plaintiff John Leonard attempted to treat a Pepsi commercial as an offer for the sale of a Harrier jet in exchange for 7 million Pepsi points or the equivalent in cash, which came to about $700,000.  In Leonard v. Pepsico. (edited version available here), Judge Kimba Wood ruled in Pepsico's favor, finding that the commercial that Leonard mistook for an offer was actually a joke.  

We have learned via the Contracts Prof listserv that a Harrier Jet was recently sold at auction for  £ 105,800 -- that is under $200,000.  In this case, the auctioneer specified that the jet was being sold "for display purposes only and is not currently airworthy."  It doesn't even come with any weapons systems.  Bummer.  Still, although the Pepsi commercial suggests an operational Harrier (there is no indication of weapons capabilities), Leonard's offer of $700,000 actually turns out to be way too high for a non-functional jet.  So, if instead of showing a kid landing a jet outside of his school, the commercial had shown the same kid impressing his friends with the grounded jet in his backyard, Judge Wood would have had a harder time construing the ad as a joke.  

Since the notice of the jet for auction claims that this is the first time a Harrier has been sold at auction, Pepsico would  have had a hard time getting its hands on a jet.  Tthat would not have bothered Mr. Leonard, who more likely was interested in the difference in value between a functioning Harrier and the $700,000 he offered.  However, if the court were able to discover the actual value of a non-operational jet, it would have awarded Mr. Leonard no damages for the breach.

Hat tip to Eric Goldman and Gary Neustadter.

August 1, 2014 in Commentary, Famous Cases, In the News | Permalink | Comments (0) | TrackBack (0)

Thursday, July 31, 2014

Will Blockchains End the Need for Specific Performance? [File this in: The Future]

FutureAn article by Andrew Hinkes at Inside Counsel begins:

Imagine a world where specific performance of contracts is no longer a cause of action because the contracts themselves automatically execute the agreement of the parties. Or where escrow agents are replaced by rule- and software-driven technology. Imagine instantaneous recording of property records, easements and deeds. Imagine a world where an auto owner who is late on his payment will be locked out of his car. While these scenarios may seem to come from a futuristic fantasy world, innovations offered by the Bitcoin 2.0 generation of technology may create a world where these seeming marvels are an every-day occurrence, and technology renders some contract causes of action obsolete.

How could that be?  Hinkes explains:

Bitcoin and other virtual currencies are powered by blockchain technology, which maintains and verifies all transactions in that virtual currency through a massive, publically available ledger. The transparency created by the blockchain eliminates the need for trusted third parties, like credit card processors or banks, to take part in these transactions. Because anyone can see the transactions, virtual currency cannot be transferred to more than one party, or “double spent,” which is a key feature that preserves the integrity of the blockchain system. This same blockchain technology can be purposed to facilitate, verify and enforce the terms of agreements automatically without the need for human interaction using what are termed “smart contracts.”

The blockchain, of course, cannot physically enforce a contract, or actually compel a person or entity to do anything. Instead, the blockchain can be used to enforce certain pre-determined rules that can move an asset from person to person by agreement. Ownership of goods could be associated with a specialized coin, which can be transferred between parties along with payment in a virtual currency system, or in a specialized implementation of blockchain technology.

Hinkes provides an example of how the technology can ensure performance:

Examining a simple real estate transaction can demonstrate how smart contracts could drastically alter the way business is conducted. Presently, Party A and Party B would enter into a contract that requires Party A to pay $200,000.00 to Party B in exchange for Party B agreeing to convey title to Party B’s condominium unit to Party A upon receipt of payment. If Party A pays the money, but Party B later refuses to convey title, Party A is required to hire an attorney to seek specific performance of that contract, or to obtain damages. The determination of the outcome will be made by a third party- a judge, jury, or arbitrator.

Using a smart contract, however, avoids the potential for one party to perform while the other refuses or fails to perform. Using a smart contract, Party A and Party B can agree to the same transaction, but structure it differently. In this scenario, Party A will agree to pay $200,000.00 worth of virtual currency to Party B, and Party B will agree to transmit the title to the condominium in a specialized type of coin on the blockchain. When Party A transfers the virtual currency to Party B, this action serves as the triggering event for Party B, which then automatically sends the specialized coin which signifies the title to the condominium at issue to Party A. The transfer is then complete, and Party A’s ownership of the condominium is verifiable through a publically available record on the blockchain.

"Simply Incredible":
Old-computer-ad-7-500x680
 
Well worth a read in its entirety.  Technology is posed to change contract performance in some pretty significant ways, ways that make what we've been doing for years look like a Tandy 2000.
 

July 31, 2014 in Commentary, E-commerce, In the News | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 30, 2014

New in Print

Pile of BooksDavid Crump, Should the Commercial Landlord Have a Duty to Mitigate Damages after the Tenant Abandons? A Legal and Economic Analysis, 49 Wake Forest L. Rev. 187 (2014)

Robert W. Emerson, Franchise Contract Interpretation: A Two-Standard Approach, 2013 Mich. St. L. Rev. 641

Kish Vinayagamoorthy, Apologies in the Marketplace, 33 Pace L. Rev. 1081 (2013)

Eric Zacks, Shame, Regret, and Contract Design, 97 Marq. L. Rev. 695 (2014)

July 30, 2014 in Recent Scholarship | Permalink | TrackBack (0)

Valparaiso University Law School Is Hiring!

Valpo LawFULL TIME, TENURE TRACK

VALPARAISO UNIVERSITY LAW SCHOOL (VULS) is seeking to fill a full-time, tenure track position with someone interested in teaching contracts and business courses.  Applications from entry level and experienced teachers are welcome.  Valparaiso University is located in Valparaiso, Indiana, a small college town near the southern shore of Lake Michigan that is approximately fifty miles from downtown Chicago.  The town has excellent schools and affordable housing.  VULS is an equal opportunity employer with a diverse student body; 47% of the members of the class entering in August 2013 are underrepresented minorities.  Please contact Professor Ivan E. Bodensteiner, Chair of the Appointments Committee, at Valparaiso University Law School, 656 Greenwich Street, Valparaiso, Indiana, 46383; e-mail:facultyrecruitment@valpolaw.net

Heritage

 


Valpo SealFULL TIME, TENURE TRACK, DIRECTOR OF EXTERNSHIPS
 

VALPARAISO UNIVERSITY LAW SCHOOL (VULS) is seeking a full-time Director of its externship program.  This is a new, tenure track position.  Applicants should have practice experience, and teaching experience is preferred.  VULS intends to expand its externship program as part of its increasing emphasis on practical learning.  Valparaiso University is located in Valparaiso, Indiana, a small college town near the southern shore of Lake Michigan that is approximately fifty miles from downtown Chicago.  The town has excellent schools and affordable housing.  VULS is an equal opportunity employer with a diverse student body; 47% of the members of the class entering in August 2013 are underrepresented minorities.  Please contact Professor Ivan E. Bodensteiner, Chair of the Appointments Committee, at Valparaiso University Law School, 656 Greenwich Street, Valparaiso, Indiana, 46383; e-mail:facultyrecruitment@valpolaw.net

July 30, 2014 in Help Wanted | Permalink | Comments (0) | TrackBack (0)