ContractsProf Blog

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

A Member of the Law Professor Blogs Network

Tuesday, December 24, 2013

Weekly Top Tens from the Social Science Research Network

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

October 25, 2013 to December 24, 2013

RankDownloadsPaper Title
1 736 The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title 
Adam J. Levitin
Georgetown University - Law Center
2 293 Unsettledness in Delaware Corporate Law: Business Judgment Rule, Corporate Purpose 
Lyman Johnson
Washington and Lee University - School of Law
3 208 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
4 175 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
5 174 The No Reading Problem in Consumer Contract Law 
Ian AyresAlan Schwartz
Yale University - Yale Law School, Yale Law School
6 127 Protecting Consumers from Zombie-Debt Collectors 
Neil L. Sobol
Texas A&M University - School of Law
7 113 The Concept of 'Vindication' in the Law of Torts: Rights, Interests and Damages 
Jason N. E. Varuhas
University of Cambridge - Faculty of Law
8 111 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
9 105 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
10 99 The Contract Management Body of Knowledge: Understanding an Essential Tool for the Acquisition Profession 
Steven L. SchoonerNeal J Couture
George Washington University - Law School, George Washington University - Law School,

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

October 25, 2013 to December 24, 2013

RankDownloadsPaper Title
1 207 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
2 175 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
3 111 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
4 105 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
5 99 The Contract Management Body of Knowledge: Understanding an Essential Tool for the Acquisition Profession 
Steven L. SchoonerNeal J Couture
George Washington University - Law School, George Washington University - Law School
6 70 Renegotiation of Work Contract and Work Agreement of Coal Mining Undertaking in Indonesia: Legal Aspect of Renegotiation vs Pacta Sunt Servanda Principle 
Ahmad Redi
University of Indonesia (UI) - Faculty of Law
7 63 Dissenting Statement Pertaining to the Name of an Individual Debtor on a Financing Statement — Appendix to Report on the Amendments to Article 9 of the Uniform Commercial Code 
Kenneth C. KetteringAmelia H. Boss
Temple University - James E. Beasley School of Law, University of Miami - School of Law
8 59 Formalizing Gratuitous and Contractual Transfers: A Situational Theory 
Adam J. Hirsch
University of San Diego
9 57 Sovereign Pari Passu and the Litigators of the Lost Cause 
Joseph Cotterill
Financial Times
10 55 The Practice of Promise and Contract 
Liam B. Murphy
New York University (NYU) - School of Law

[JT]

December 24, 2013 in Recent Scholarship | Permalink | TrackBack (0)

Wednesday, December 18, 2013

New in Print

Pile of Books
Steven M.  Davidoff & Christina M. Sautter, Lock-up Creep, 38 J. Corp. L. 681 (2013)

Christopher M. Foulds, For Whom Should the Corporation Be Sold? Diversified Investors and Efficient Breach in Omnicare v. NCS, 38 J. Corp. L. 733 (2013) 

Sean J. Griffith, The Omnipresent Specter of Omnicare, 38 J. Corp. L. 753 (2013)

Hon. J. Travis Laster, Omnicare's Silver Lining, 38 J. Corp. L. 795 (2013)

Kate Litvak, Monte Carlo Simulation of Contractual Provisions: An Application to Default Provisions in Venture Capital Limited Partnership Agreements, 98 Cornell L. Rev. 1495 (2013)

Brian J.M. Quinn, Omnicare: Coercion and the New Unocal Standard, 38 J. Corp. L. 835 (2013)

Megan W. Shaner, Revisiting Omnicare: What Does Its Status 10 Years Later Tell Us? 38 J. Corp. L. 865 (2013)

Hon. E. Norman Veasey, Ten Years after Omnicare: The Evolving Market for Deal Protection Devices, 38 J. Corp. L. 891 (2013)

[JT]

December 18, 2013 in Famous Cases, Recent Scholarship | Permalink | TrackBack (0)

Tuesday, December 17, 2013

Weekly Top Tens from the Social Science Research Network

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

October 18, 2013 to December 17, 2013

RankDownloadsPaper Title
1 722 The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title 
Adam J. Levitin
Georgetown University - Law Center
2 286 Unsettledness in Delaware Corporate Law: Business Judgment Rule, Corporate Purpose 
Lyman Johnson
Washington and Lee University - School of Law
3 200 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
4 171 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
5 169 The No Reading Problem in Consumer Contract Law 
Ian AyresAlan Schwartz
Yale University - Yale Law School, Yale Law School
6 114 Protecting Consumers from Zombie-Debt Collectors 
Neil L. Sobol
Texas A&M University - School of Law
7 110 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
8 107 The Concept of 'Vindication' in the Law of Torts: Rights, Interests and Damages 
Jason N. E. Varuhas
University of Cambridge - Faculty of Law
9 99 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
10 98 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law

 

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

October 18, 2013 to December 17, 2013

RankDownloadsPaper Title
1 199 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
2 171 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
3 110 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
4 99 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
5 98 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
6 86 The Contract Management Body of Knowledge: Understanding an Essential Tool for the Acquisition Profession 
Steven L. SchoonerNeal J Couture
George Washington University - Law School, George Washington University - Law School
7 68 Renegotiation of Work Contract and Work Agreement of Coal Mining Undertaking in Indonesia: Legal Aspect of Renegotiation vs Pacta Sunt Servanda Principle 
Ahmad Redi
University of Indonesia (UI) - Faculty of Law
8 62 Dissenting Statement Pertaining to the Name of an Individual Debtor on a Financing Statement — Appendix to Report on the Amendments to Article 9 of the Uniform Commercial Code 
Kenneth C. KetteringAmelia H. Boss
Temple University - James E. Beasley School of Law, University of Miami - School of Law
9 58 Sovereign Immunity and Enforcement of Awards in International Commercial Arbitration 
Faizat Badmus-Busari
Tulane University - Law Schoo
10 58 Formalizing Gratuitous and Contractual Transfers: A Situational Theory 
Adam J. Hirsch
University of San Diego

[JT]

December 17, 2013 in Recent Scholarship | Permalink | TrackBack (0)

Thursday, December 12, 2013

Contracts Research: The Actors and the Audience

Kareem-Abdul-Jabbar_LipofskyI happen to agree with the recent New York Times article on the usefulness of legal research.  As many will recall, the basic idea was that a great deal of what is published is only that -- it exists in print and is largely unread or impractical. Part of the problem is that writing is a bit like hazing. Young people must do it to join the fraternity even if they have little new to say.  Another problem is the actor and audience problem. Law professors appear are both. As writers they are the actors and as readers they are the audience  -- the only audience. So they  play their part and then rush back to the audience to applaud the "acts" of  others. In these instances the work may be so theoretical that it is only of interest to very few, if any,  and perhaps useful to no one at all. This is related to or the same as  the skyhook problem as described by Monroe Freedman. As I understand it,  work that is too theoretical and too burdened by assumptions is comparable to engineers talking about the impossible.  Monroe H. Freedman, A Critique of Philosophizing About Lawyers' Ethics," 25 Geo. J. Legal Ethics 91 (2012).

That was how an Article by Daniel Markovits and Alan Schwartz, "The Myth of the Efficient Breach: New Defenses of the Expectancy Interest," 97 Va. L. Rev. 1939 (2011), struck me.  Why write anything further about the efficient breach?  Of course, as always the joke was on me. I immediately set out to write yet another article about efficient breach which essentially says it does not exist, and Markovits and Schwartz are covering ground that is in large part both old and irrelevant. And with that I became the actor, the audience, and an actor acting out the roles of the actor an audience. I think this means my article, "A Nihilistic View of the Efficient Breach" 2013 Mich St.L. Rev. 167 , was a skyhook for skyhooks. If any of this interest to you and I hope not. Here is the link.

I realized why we do much of our writing. It's fun and we are addicted to ideas. It's a pretty good job! But are we at times too self indulgent?

Jeff "Jake" Harrison

December 12, 2013 in Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 11, 2013

New in Print

Pile of BooksJennifer Camero, Zombieland: Seeking Refuge from the Statute of Frauds in Contracts for the Sale of Services or Goods, 82 UMKC L. Rev. 1 (2013)

James B. Helmer, Jr., False Claims Act: Incentivizing Integrity for 150 Years for Rogues, Privateers, Parasites and Patriots, 81 U. Cin. L. Rev. 1261 (2013)

Alan S. Kaplinsky & Mark J. Levin, Consumer Financial Services Azrbitration: What Does the Future Hold after Concepcion? 8 J. Bus. & Tech. L. 345 (2013) 

Nicole F. Munro & Peter L. Cockrell, Drafting Arbitration Agreements: A Practitioner's Guide for Consumer Credit Contracts, 8 J. Bus. & Tech. L. 363 (2013)

Alexander A. Reinert & Lumen N. Mulligan, Asking the First Question: Reframing Bivens after Minneci, 90 Wash. U. L. Rev. 1473 (2013)

[JT]

December 11, 2013 in Government Contracting, Recent Scholarship | Permalink | TrackBack (0)

Tuesday, December 10, 2013

Weekly Top Tens from the Social Science Research Network

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

October 11, 2013 to December 10, 2013

RankDownloadsPaper Title
1 669 The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title 
Adam J. Levitin
Georgetown University - Law Center,
2 190 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
3 167 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
4 163 The No Reading Problem in Consumer Contract Law 
Ian AyresAlan Schwartz
Yale University - Yale Law School, Yale Law School
5 112 Protecting Consumers from Zombie-Debt Collectors 
Neil L. Sobol
Texas A&M University - School of Law
6 108 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
7 104 The Concept of 'Vindication' in the Law of Torts: Rights, Interests and Damages 
Jason N. E. Varuhas
University of Cambridge - Faculty of Law
8 97 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
9 97 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
10 81 Le Nouvel Article 3.3.1 Des Principes Unidroit 2010 Sur Le Contrat Violant Une Règle Impérative: Un Regard Critique Du Point De Vue Du Droit International Privé (A Critical Appraisal of Article 3.3.1 of the PICC on Contracts Infringing Mandatory Rules) 
Gilles Cuniberti
University of Luxembourg

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

October 11, 2013 to December 10, 2013

RankDownloadsPaper Title
1 190 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law,
2 167 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law,
3 108 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
4 97 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
5 97 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
6 65 Renegotiation of Work Contract and Work Agreement of Coal Mining Undertaking in Indonesia: Legal Aspect of Renegotiation vs Pacta Sunt Servanda Principle 
Ahmad Redi
University of Indonesia (UI) - Faculty of Law
7 62 Dissenting Statement Pertaining to the Name of an Individual Debtor on a Financing Statement — Appendix to Report on the Amendments to Article 9 of the Uniform Commercial Code 
Kenneth C. KetteringAmelia H. Boss
Temple University - James E. Beasley School of Law, University of Miami - School of Law
8 58 Formalizing Gratuitous and Contractual Transfers: A Situational Theory 
Adam J. Hirsch
University of San Diego
9 55 Sovereign Immunity and Enforcement of Awards in International Commercial Arbitration 
Faizat Badmus-Busari
Tulane University - Law School
Last Revised: October 25, 2013
10 48 An Experimental Test of the Effectiveness of Terms & Conditions 
Zev J. Eigen
Northwestern University School of Law

[JT]

December 10, 2013 in Recent Scholarship | Permalink | TrackBack (0)

Thursday, December 5, 2013

New in Print

Pile of BooksAndreas Abegg, The Legitimacy of the Contracting State, 76 Law & Contemp. Probs. 139 (2013)

Marc Amstutz, Contract Collisions: An Evolutionary Perspective on Contractual Networks, 76 Law & Contemp. Probs. 169 (2013)

Alexis J. Bernstein, Price Realism Analysis in Fixed-Price Contracting: Improving the Evaluation Process, 42 Pub. Cont. L.J. 793 (2013)

Eli Bukspan, Trust and the Triangle Expectation Model in Twenty-First Century Contract Law, 11 DePaul Bus. & Com. L.J. 379 (2013)

Hugh Collins, The Vanishing Freedom to Choose a Contractual Partner, 76 Law & Contemp. Probs. 71 (2013)

Hanoch Dagan, Autonomy, Pluralism, and Contract Law Theory, 76 Law & Contemp. Probs. 19 (2013)

Pasquale Femia, Desire for Text: Bridling the Divisional Strategy of Contract. 76 Law & Contemp. Probs. 151-168 (2013)

Veronica J. Finkelstein, Dollars and Horse Sense: Why Prudent Buyers and Sellers Should Account for Article 2 of the Uniform Commercial Code in Their Equine Sales Contracts, 5 Ky. J. Equine, Agri., & Nat. Resources L. 181 (2012-2013)

Daniel P. Graham, et al., Federal Circuit Year-in-Review 2012: Guarding the Gates of Government Contracts Litigation, 42 Pub. Cont. L.J. 695 (2013)

Thomas Gutmann, Some Preliminary Remarks on a Liberal Theory of Contract, 76 Law & Contemp. Probs. 39 (2013)

Lorenz Kahler, Contract-Management Duties as a New Regulatory Device, 76 Law & Contemp. Probs. 89 (2013)

Bertram Lomfeld, Contract as Deliberation, 76 Law & Contemp. Probs. 1 (2013) 

Michael Ian Morrison, The Acquisition Supply Chain and the Security of Government Information Technology Purchases, 42 Pub. Cont. L.J. 749 (2013)

Douglas R. Richmond, The Consent Judgment Quandary of Insurance Law, 48 Tort Trial & Ins. Prac. L.J. 537 (2013)

Florian Rodl, Contractual Freedom, Contractual Justice, and Contract Law (Theory), 76 Law & Contemp. Probs. 57  (2013) 

Alessandro Somma, Private Law as Biopolitics: Ordoliberalism, Cocial Market Economy, and the Public Dimension of Contract, 76 Law & Contemp. Probs. 105 (2013)

Dan Wielsch, Relational Justice, 76 Law & Contemp. Probs. 191 (2013) 

Peer Zumbansen, Transnational Private Regulatory Governance: Ambiguities of Public Authority and Private Power, 76 Law & Contemp. Probs. 117 (2013)

[JT] 

December 5, 2013 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 4, 2013

Unconscionability Shui

RatUnconscionability and the Contingent Assumptions of Contract Theory, 2013 Mich. St. L. Rev. 211  (2013), by Dr. M. Neil Browne and Lauren Biksacky, argues that basic assumptions of liberal contract theory – for example, that contracts are made by rational and informed parties – don’t hold. Therefore, courts should find more contracts unconscionable.

This short article would be a nice primer for law students on basic liberal contract theory, especially in conjunction with some Judge Posner readings. The authors argue that people often yield to irrational motives. They get in bar fights. They have road rage. They buy books on feng shui. Judge Posner might respond that the human rationality economists speak of is that of pigeons or rats, not angels. Dr. Browne, himself an economist, seems to take exception to that conception of human beings.

The article argues courts can do better than simply making people keep their ratty promises. Courts can allow people to be their best, most-informed selves by invalidating “irrational” promises made under distorting influences like advertising and cognitive biases. Courts can and should step in like adults over wayward children and guide them toward eudaimonia.

Yet the article notes that despite research showing people are often irrational and ill-informed, courts are not finding more contracts unconscionable. Why? The article doesn’t answer, but the reason is probably that to do so seems unworkable. If human irrationality were grounds for invalidating a contract, how many contracts would be secure? The law tends to be a great guardian of the status quo, and apparently some people like books about feng shui.

[Kenneth Ching]

[Image by Vicky TGAW]

December 4, 2013 in Commentary, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 3, 2013

Weekly Top Tens from the Social Science Research Network

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

October 4, 2013 to December 3, 2013

RankDownloadsPaper Title
1 586 The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title 
Adam J. Levitin
Georgetown University - Law Center
2 185 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
3 161 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
4 146 The No Reading Problem in Consumer Contract Law 
Ian AyresAlan Schwartz
Yale University - Yale Law School, Yale Law School
5 103 The Concept of 'Vindication' in the Law of Torts: Rights, Interests and Damages 
Jason N. E. Varuhas
University of Cambridge - Faculty of Law
6 98 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
7 95 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
8 92 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
9 80 Le Nouvel Article 3.3.1 Des Principes Unidroit 2010 Sur Le Contrat Violant Une Règle Impérative: Un Regard Critique Du Point De Vue Du Droit International Privé (A Critical Appraisal of Article 3.3.1 of the PICC on Contracts Infringing Mandatory Rules) 
Gilles Cuniberti
University of Luxembourg
10 74 Protecting Consumers from Zombie-Debt Collectors 
Neil L. Sobol
Texas A&M University - School of Law

 

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

October 4, 2013 to December 3, 2013

RankDownloadsPaper Title
1 185 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
2 161 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law,
3 98 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
4 95 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
5 92 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
6 64 Renegotiation of Work Contract and Work Agreement of Coal Mining Undertaking in Indonesia: Legal Aspect of Renegotiation vs Pacta Sunt Servanda Principle 
Ahmad Redi
University of Indonesia (UI) - Faculty of Law,
7 60 Dissenting Statement Pertaining to the Name of an Individual Debtor on a Financing Statement — Appendix to Report on the Amendments to Article 9 of the Uniform Commercial Code 
Kenneth C. KetteringAmelia H. Boss
Temple University - James E. Beasley School of Law, University of Miami - School of Law
8 57 Formalizing Gratuitous and Contractual Transfers: A Situational Theory 
Adam J. Hirsch
University of San Diego
9 52 Sovereign Immunity and Enforcement of Awards in International Commercial Arbitration 
Faizat Badmus-Busari
Tulane University - Law School
10 47 An Experimental Test of the Effectiveness of Terms & Conditions 
Zev J. Eigen
Northwestern University School of Law

[JT]

December 3, 2013 in Recent Scholarship | Permalink | TrackBack (0)

Thursday, November 28, 2013

New in Print: Premiere Thanksgivikah Edition

ThanksgivingTheodoros Chiou, On Royalties and Transfers without (Monetary) Consideration -- Looking for the "Magic Formula" for Assessing the Validity of Renumeration Clauses of Copyright Transfers under French Copyright Law. 44 IIC: Int'l Rev. Intell. Prop. & Competition L. 585 (2013)

Wendy Netter Epstein, Contract Theory and the Failures of Public-Private Contracting, 34 Cardozo L. Rev. 2211 (2013)

Louise Longdin & Phen Hoon Lim, Inexhaustible Distribution Rights for Copyright Owners and the  Foreclosure of Secondary Markets for Used Software, 44 IIC: Int'l Rev. Intell. Prop. & Competition L. 541 (2013)

ChanukiahMichael Pressman, The Two-Contract Approach to Liquidated Damages: A New Framework for Exploring the Penalty Clause Debate, 7 Va. L. & Bus. Rev. 651 (2013)

Thomas J. Lilly, Jr. Participation in Litigation as a Waiver of the Contractual Right to Arbitrate: Toward a unified Theory. 92 Neb. L. Rev. 86 (2013)

Andrea M. Matwyshyn, The Law of the Zebra. 28 Berkeley Tech. L.J. 155-225 (2013)

Debra Pogrund Stark, Jessica M. Choplin & Eileen Linnabery, Dysfunctional Contracts and the Laws and Practices that Enable Them: An Empirical Analysis. 46 Ind. L. Rev. 797-847 (2013) [and check out Kenneth Ching's review of this article here]

George G. Triantis, Improving Contract Quality: Modularity, Technology, and Innovation in Contract Design. 18 Stan. J.L. Bus. & Fin. 177 (2013)

William Wood, It Wasn't an Accident: The Tribal Sovereign Immunity Story, 62 Am. U. L. Rev. 1587 (2013)

[JT]

November 28, 2013 in Recent Scholarship | Permalink | TrackBack (0)

Wednesday, November 27, 2013

Dysfunctional Real Estate Contracts

SFKToday’s mini-review is of Dysfunctional Contracts and the Laws and Practices that Enable Them: An Empirical Analysis, 46 Ind. L. Rev. 797 (2013), by Debra Pogrund Stark, Dr. Jessica M. Choplin, and Eileen Linnabery.

Apparently, many real estate contracts limit buyers’ remedies to return of earnest money, and many courts enforce such limitations. The problem is that if a buyer’s only remedy for breach of contract is the return of earnest money, then the seller hasn’t really bound himself to anything. If the seller doesn’t want to perform, all he has to do is return the earnest money. This encourages the kind of strategic behavior that contracts are supposed to prevent. For example, a seller may agree to sell real estate, but if the property's market value increases, the seller can breach the contract, return the earnest money, and sell the property to a second buyer at a higher price. The seller essentially gets to speculate on the buyer's dime.

Further, many buyers don’t understand the meaning of these limitation of remedy clauses, even if they read them. The authors conducted a study which suggests more than a third of people who read a limitation of remedies clause fail to comprehend that their remedies have been limited. The authors use this finding to challenge some courts’ reasoning that buyers knowingly consent to the limitation of their remedies.

The authors offer several reforms, and two are particularly interesting: (1) enacting legislation that prohibits limiting buyers’ remedies to the return of earnest money, and (2) replacing the exacting standards of unconscionability with a "reasonable limitation of remedy” test similar to that used in evaluating liquidated damages.

This article is state-of-the-art in its use of empirical research to aid legal analysis. It not only provides interesting data, but it also marshals that data against flimsy intuitive arguments still common wherever people talk about contracts.

[Kenneth Ching]

[Image by thinkpanama]

November 27, 2013 in Commentary, Contract Profs, Recent Scholarship, True Contracts | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 26, 2013

Weekly Top Tens from the Social Science Research Network

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

September 26, 2013 to November 25, 2013

RankDownloadsPaper Title
1 174 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
2 150 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
3 112 The No Reading Problem in Consumer Contract Law 
Ian AyresAlan Schwartz
Yale University - Yale Law School, Yale Law School
4 103 The Concept of 'Vindication' in the Law of Torts: Rights, Interests and Damages 
Jason N. E. Varuhas
University of Cambridge - Faculty of Law
5 102 Interpretation of Written Contracts in England 
Neil H. Andrews
University of Cambridge - Faculty of Law
6 91 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
7 84 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School, 
Date posted to database: November 5, 2013 
Last Revised: November 19, 2013
8 82 Is There a 'Duty to Read'? 
Charles L. Knapp
University of California - UC Hastings College of the Law
9 77 Le Nouvel Article 3.3.1 Des Principes Unidroit 2010 Sur Le Contrat Violant Une Règle Impérative: Un Regard Critique Du Point De Vue Du Droit International Privé (A Critical Appraisal of Article 3.3.1 of the PICC on Contracts Infringing Mandatory Rules) 
Gilles Cuniberti
University of Luxembourg
10 68 Patent Pledges 
Jorge L. Contreras
American University - Washington College of Law

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

September 26, 2013 to November 25, 2013

RankDownloadsPaper Title
1 174 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law,
Last Revised: October 28, 2013
2 150 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
3 101 Interpretation of Written Contracts in England 
Neil H. Andrews
University of Cambridge - Faculty of Law
4 91 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
5 84 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
6 82 Is There a 'Duty to Read'? 
Charles L. Knapp
University of California - UC Hastings College of the Law, 
Date posted to database: September 26, 2013 
Last Revised: September 26, 2013
7 60 Dissenting Statement Pertaining to the Name of an Individual Debtor on a Financing Statement — Appendix to Report on the Amendments to Article 9 of the Uniform Commercial Code 
Kenneth C. KetteringAmelia H. Boss
Temple University - James E. Beasley School of Law, University of Miami - School of Law
8 60 Renegotiation of Work Contract and Work Agreement of Coal Mining Undertaking in Indonesia: Legal Aspect of Renegotiation vs Pacta Sunt Servanda Principle 
Ahmad Redi
University of Indonesia (UI) - Faculty of Law
9 58 Deutsche Bank and the Use of Promises in Islamic Finance Contracts 
Jon M. TrubyKarim Ginena
Hamad Bin Khalifa University, Qatar University - College of Law
10 53 Horizontal Application of the Charter of Fundamental Rights 
Dorota Leczykiewicz
University of Oxford - Faculty of Law

[JT]

November 26, 2013 in Recent Scholarship | Permalink | TrackBack (0)

Friday, November 22, 2013

Wrap Contracts Symposium, Part VII: Theresa Amato

This is the seventh in a series of posts on Nancy Kim's Wrap Contracts: Foundations and Ramifications (Oxford UP 2013). 

Amato

Our seventh guest blogger, Theresa Amato, is the executive director Citizen Works which she started with Ralph Nader in 2001. After earning her degrees from Harvard University and the New York University School of Law, where she was a Root-Tilden Scholar, Amato clerked in the Southern District of New York for the Honorable Robert W. Sweet. She was a consultant to the Lawyers Committee for Human Rights (Human Rights First) and wrote an influential human rights report on child canecutters in Haiti and the Dominican Republic. She then became the youngest litigator at Public Citizen Litigation Group, where she was the Director of the Freedom of Information Clearinghouse in Washington D.C.  In 1993, Amato founded the nationally-recognized, Illinois-based Citizen Advocacy Center and served as its executive director for eight years. She currently serves as its Board President.  Most recently, she has launched Fair Contracts.org to reform the fine print in standard form contracts.  In 2009, The New Press (New York) published her book, Grand Illusion: The Myth of Voter Choice in a Two-Party Tyranny.  She also appears prominently in the Sundance-selected and Academy Awards short-listed documentary “An Unreasonable Man.”  

Nancy Kim

“Yes,” writes Professor Nancy S. Kim. “As strange as it may seem, under contract law you can legally bind yourself without knowing it.”

Contract law experts nod in accord, some in resignation or with ennui.  Non-lawyers are instead completely shocked when I describe this reality.   They have no idea that by visiting a website, sending an email, tweeting or posting, or any of these now common, everyday acts that they are giving consent to use those services and are therefore binding themselves to the various “terms of use” – even if they may have only “constructive” and not actual notice of them. 

In her valuable book, Wrap Contracts, Foundations and Ramifications, Professor Kim does a service to all by explaining how courts enforce these online contracts “where consumers have no intent of entering into a contract.”  She points out that “[t]he requirement of manifestation of consent seems to be subsumed in wrap contract cases with the issue of notice.”  As a result, “the nondrafting party does not actually need to either receive notice or understand or intend the meaning attributed by the courts to a particular action.”

Court decisions to date have favored corporate vendors over consumers whose actual online navigating experience using these products and services covered by “wrap contracts” is given insufficient acknowledgement.  No consumer wants to fill out an online form only to be then told to click somewhere else to find buried terms of use, thereby putting at risk the time they have spent entering data to confirm the transaction.    Nonetheless, as Kim concludes:

courts have constructed consent in an entirely unreasonable fashion by twisting doctrinal rules, conjuring up notice, inferring action from inaction, and blithely ignoring the central role of intent in contracts.  They engage in this hocus pocus in order to enforce transactions that they believe provide a net benefit to society.

These “wrap contracts” consumers often unknowingly “agree” to may be buried in the hyperlinks and are not merely proprietary instructions for how to use the product or service.  As Professor Kim explains,   consumers are not only under affirmative obligations in these “wrap contracts,” they may be subject to a smorgasbord of rights-reducing language.   Exclusive jurisdiction, forced arbitration, waived class actions, and the vendor’s one-way reserved rights to change the terms whenever it wants to are aggressive consumer rights reducers, often eviscerating decades of public policy and legal decisions that have afforded consumers their rights.  In some cases, consumers are agreeing to muzzle themselves from complaining about the product or service.  Fine print contracts may not only strip mine the legal rights of consumers, but they can also take or “steal” their property and privacy. 

Wrap ContractsThank you, Professor Kim for spelling it out for all to read.  Not only do consumers not need a pen to sign on a dotted line, or in some cases even a button to click that one “agrees” to terms certainly not read, but “wrap contracts” take it even further.  Consumers don’t even need to know they are agreeing, much less to what set of terms.  Nonetheless, “wrap contracts,” now often “multi-wrap contracts,” as Professor Kim notes, “by their form, permit companies to impose more objectionable terms than paper contracts of adhesion.”

When people begin to understand how their rights are treated in the “wrap contract” rabbit hole, this offends sensibilities.  For those not attuned to the “degradation of consent,” so aptly explained in Professor Margaret Jane Radin’s book Boilerplate, The Fine Print, Vanishing Rights, and The Rule of Law, this sort of contract peonage is not only unwelcome, it runs counter to everything the non-drafting parties think of as fair play. 

Professor Kim’s use of the term “crook provisions” should not be understated and aligns with popular sentiment when consumers are fully informed of this state of affairs.  Companies now grant themselves the right to “appropriate” -- once known otherwise as “stealing” or, charitably, “taking”-- from consumers for no payment.  They then turn around and make a profit on what heretofore we would have considered the possessions of the consumer, e.g. their content, images, personal information and shopping habits. 

As Professor Kim explains:  “a crook provision anticipates no such offensive action by the consumer and has no direct relationship with the product or services offered by the company.  It is simply an attempt to sneak an entitlement from the user without payment, either in terms of money or goodwill.”     Indeed.

So where is the counteraction to this outright mugging of consumer rights and property?  The ubiquity of these contracts has masked the reality of their potential to do serious harm to consumers such that consumers are not even aware of the magnitude of the problem.   

Kim notes that “What we call something matters.” I agree, and after reading her parade of horrible online scenarios in Chapter 10, “Contracts in Wonderland,” and just how far afield these “wrap contracts” are from the fundamental principles of contract law, I started thinking of new labels for these “wrap contracts” and their innocuous, almost blasé sounding, “terms of use.”  

For lack of a better term at the moment, I think we should nonetheless stop calling them “contracts” and start treating them as the equivalent of “online asbestos.”  Like asbestos in its heyday, manufacturers and service providers use “wrap contracts” everywhere.  They have properties that facilitate commerce but that does not mean that they are not toxic and dangerous for those exposed to them. 

Moreover, like asbestos, some of the dangers will not necessarily emerge for decades when content thieves and data aggregators use consumer information to the detriment of the consumers.  Perhaps due attention will be paid when the content providers, i.e. the consumers/users, begin to realize they cannot expunge those posts from their teens or more uncensored moments that now prevent them from getting hired or getting credit.   Or perhaps regulators will begin to pay sufficient attention to the one-sided misappropriations when serious amounts of data are compromised by those with criminal intent (already it is happening) and with frequency for millions of users.

The question is, how long will it take for U.S.  regulation and the courts to catch up to the need to ban or strictly limit the use of these offensive sword and crook provisions? For asbestos it took at least half a century, while manufacturers whined the whole way about regulation even as they knew for decades of its dangers much as “wrap contract” apologists do now.  No, these “contracts” may not kill you, but they can make your life miserable and we would all breathe better if consumers were treated more fairly. 

Though “online asbestos” may sound hyperbolic in academic circles, there needs to be a massive push back on behalf of consumers – for the nomenclature does matter.  “Terms of use” and “wrap contracts” sound far too innocuous when we know that people do not realize they are being exposed to, and through buried notices alone “agreeing” to, the dangerous loss of their rights and the theft of their property.   To get organized, as we at Fair Contracts educate about and encourage, the tide will not turn until people are fully aware of what happens when they alight on a website.  Ubiquity, harmonization of users, inertia, facility, consumer biases, are all operating to the detriment of consumers and to the advantage of corporate profit seekers.

Professor Kim’s doctrinal adjustments (“a duty to draft reasonably; replacing blanket assents with specific assent; considering contract function when apply existing doctrinal rules, and reinvigorating unconscionability”) are a very solid start, though they are only a beginning.  In some cases, such as replacing blanket assent with specific assents, the proposed remedy may only devolve into the Pavlovian clicking response now exercised by consumers with routine oblivion to the consequences, believing they have little choice if they want the product or service behind the click.  

Courts should be helping consumers enforce their intent, not creating doctrinal chaos as Kim writes by reciting, “law that originates from the paper-based contracting world to this brave new digitally based world when they might be better off acknowledging the difference that contract form and function make to the reasonable expectations of the parties.”  The courts have instead largely given corporations a judicial pass thus far and Professor Kim’s rebalancing of burdens (from the nondrafting party to the drafting party) is the least that they could begin to impose to adjust the invocation of the judicial force of the state.

I think we should be asking for much more on behalf of consumers and could take cues from other countries with more advanced notions of consumer protection and data privacy.  Not only should legislators, regulators and courts protect consumers from exposure to online asbestos by outright banning, or at minimum reforming, many of these harmful provisions, but corporations who have taken rights from consumers should also be required to begin remediation efforts – immediately.  These corporations can start by returning the misappropriated property and other stolen goods to their rightful owners.      

[Posted, on Theresa Amato's behalf, by JT]

 

November 22, 2013 in Books, Commentary, Recent Scholarship, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Thursday, November 21, 2013

Wrap Contracts Symposium, Part VI: Eric Zacks on Deciphering the Function of Form in Wrap Contracts

This is the sixth in a series of posts on Nancy Kim's Wrap Contracts: Foundations and Ramifications (Oxford UP 2013).   Our sixth guest blogger, Eric Zacks, is an Assistant Professor of Law at Wayne State University Law School. 

Deciphering the Function of Form in Wrap Contracts 

Zacks-webForm and function collide again and again in Professor Kim’s engaging Wrap Contracts. As Kim explains, the wrap contract’s form is deeply connected to its function, and her description and devastating critique of these varying forms illuminate the complexities of how we interact with, and are affected by, such contracts. She argues that the form ought to reflect the function of the wrap contract so that users better understand the nature of the contract. In this comment, I seek to address the ways form may already reflect function, albeit not in the manner that Kim necessarily would prefer.

As in industries utilizing paper consumer contracts, competition among businesses that employ wrap contracts demands that they develop a nuanced understanding of how the non-drafting parties and judges interact with contracts. For example, we should not be surprised by contracts that induce deference to the contract as written from the non-drafting parties. To that end, the prevalence of particular wrap contract features, such as the use of multiple hyperlinks to obtain the text of a license or lengthy and complex terms, are unsurprising because they make it more unlikely that non-drafters will try to (or actually) understand the content of the contract. Similarly, delivering the product prior to, or simultaneously with, the “execution” of the contract through the use of shrinkwrap or delaying the opportunity to review contract terms until the website user has sunk time and energy into filling out an order form, deter contract term detection or review and reflect drafters’ sophisticated understanding of individual decision-making processes.

Wrap contracts presumably also could be designed to make the adjudicator comfortable with enforcing the contract as written against the non-drafting party. The “click-through” on a website is a powerful device because it lends itself nicely to a particular counterfactual analysis that “but for” the click, the customer would not have been bound. Because the customer did click, adjudicators typically conclude that she should be held responsible for the terms of the contract. Importantly, this adjudicative response is triggered even though, as Kim notes, “adherents to these contracts to these contracts are typically oblivious to what they have done,” suggesting that the click triggers a psychological response similar to contracts with a more passive means of acceptance (such as simple disclosure of terms).  

Kim’s metaphors of the shield, sword, and crook to explain the different functions of the wrap contracts (Chapter 5) also are helpful because they can help identify the underlying motivation for certain provisions. By understanding whether the primary function of the contract is to protect the drafting party (the “shield”), obtain better transaction terms (the “shield”), or seek benefits beyond the scope of the transaction (the “crook”), we may then speculate as to which form of a wrap contract makes sense from the drafter’s perspective.

Wrap Contracts

If, however, the goal is to prevent the use of the software in a particular manner, then the form of contract as it appears to the adjudicator may be more important than a contract form that deters returns. Accordingly, the contract form may emphasize notice of the terms, if not outright acceptance. I suspect that a “click-through” box may help in this regard, although the blatancy of wrongful or inappropriate use, particularly of free software, may not require an additional volitional act on the part of the user (such as explicit assent to the contract) to convince an adjudicator to enforce the contract as written. The courts, as noted in Kim’s book, typically find notice of non-negotiated terms to be sufficient when such wrongful use has occurred.

Lastly, if the goal is to use the contract as a crook, then a contract that requires a more active acceptance of the contract terms (such as clicking “I agree”) may be preferable from the drafter’s perspective. By being able to point to the specific act of the click and a “better” assent, a drafting party may be better able to extract property rights unrelated to the transaction under adjudicative scrutiny.  The extraction of the property rights by the drafting party may appear wrongful to the adjudicator, but counterfactual analysis surrounding the “explicit” assent to the contract may point to a different result.

With respect to the metaphors described above, I do question whether the distinction between shield and sword holds up sufficiently in many cases. License agreements containing shields and license agreements containing swords essentially provide the user with a restricted license, and the difference between the two types is a bit unclear. For example, Kim describes the restrictions on copying and transferring software discussed in ProCD, Inc. v. Zeidenberg as a shield and the restriction on reverse engineering discussed in Davidson & Associates v. Jung as a sword. As each can be described as a shield protecting the licensor from unfair or undesired business practices or a sword preventing the licensee from exercising certain rights, it may be simpler to divide the world of wrap contract provisions into defensive (those that manage business risks related to the license or transaction) and offensive (those that extract rights unrelated to the license or transaction). In any event, the specific categorization does not undercut Kim’s more significant conclusion that the use of shield and sword provisions has enabled the use of crook provisions.

It also would be interesting to know whether these different contract goals and functions do, as an empirical matter, affect the form chosen by the drafting party as described above.  Of course, the judicial slide towards “notice that terms exist” as “consent” noted in Wrap Contracts could somewhat obviate the need for such planning, and the multiple goals of the drafting party also are not necessarily mutually exclusive. Wrap Contracts provides us with a welcome exploration into the connection between form and function in these ubiquitous contracts and suggests how understanding this connection can help us address problematic contracting practices in this still-developing context.  

[Posted, on Eric Zacks' behalf, by JT]

November 21, 2013 in Books, Commentary, Recent Scholarship, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Wrap Contracts Symposium, Part V: Michael Rustad on Reforming Wrap Contracts

This is the fifth in a series of posts on Nancy Kim's Wrap Contracts: Foundations and Ramifications (Oxford UP 2013).   Our fifth guest blogger, Michael Rustad, is the Thomas F. Lambert, Jr. Professor of Law and Co-Director of the Intellectual Property Law Concentration at Suffolk University Law School. 

Reforming Wrap Contracts

MrustadIn her insightful new book, Nancy Kim contends that “wrap contracts” take the form of a traditional contract but constitute a “coercive contracting environment.” (Nancy S. Kim, Wrap Contracts: Foundations and Ramifications 1-3 (Oxford University Press, 2013)). Professor Kim contends that the problem with “wrap contracts” is “their aggressive terms.” (Id. at 4.)  My Suffolk University Law School research team, focusing on contracting practices in social media websites, found strong empirical support for Professor Kim’s argument that wrap contracts are overly aggressive and in need of law reform.  My own empirical work with a team at Suffolk University Law School has uncovered a growing number of social networking sites incorporating mandatory arbitration and anti-class action waivers. (Michael L. Rustad, Richard Buckingham, Diane  D’Angelo, and Kathryn Durlacher, An Empirical Study of Predispute Mandatory Arbitration Clauses in Social Media Terms of Service Agreements, 34 University of Arkansas Law Review 1 (2012) (Symposium Issue on ADR in Cyberspace)). 

By incorporating predispute mandatory arbitration clauses into their terms of service, a growing number of social networking sites (SNSs) are divesting consumers of their rights to civil recourse against providers who violate their privacy, commit torts, or infringe their intellectual property rights. SNS users around the world are required to agree to predispute mandatory arbitration as a condition of joining social networking communities. Consumers who enter into “clickwrap” or “browsewrap” terms of service agreements waive their right to a jury trial, discovery, and appeal, without reasonable notice that they are waiving these important rights. American consumers might be surprised that they have agreed to litigate in Mumbai, Hong Kong, or the People’s Republic of China when they clicked agreement to SNS terms of use.  These mandatory arbitration agreements incorporated in terms of use are essentially an anti-remedy because the cost of arbitration will usually exceed the amount at stake.  Requiring consumers to arbitrate in a far-off forum functions is an absolute immunity from liability because the cost and inconvenience of pursuing arbitration will far exceed the damages that could be recovered if they prevail.

Wrap ContractsThe most pernicious of the waivers are those against joining class actions. In our study of predispute mandatory arbitration agreements in social media wrap contracts, we found eleven of the thirty-seven arbitration clauses preclude consumers from initiating or joining class actions. Class action waivers have the practical effect of denying justice to a large number of consumers by divesting them of the right to join with other aggrieved social media users to pursue relief under state consumer law.  Many of the first generation lawsuits against SNSs were class actions or collective proceedings because the damages for any one individual user were too small to make the lawsuit cost-justified. Immunity breeds irresponsibility in the information-age economy, where an increasing number of companies are divesting consumers of any civil recourse by including class action waivers in their terms of service.

The creators of SNS and other wrap contracts are overly aggressive about including anti-class action waivers, in large part, because the U.S. Supreme Court routinely upholds predispute mandatory arbitration clauses and anti-class action waivers.  In a 5-4 decision, AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), the U.S. Supreme Court held that the Federal Arbitration Act preempted California’s use of state unconscionability law to render class action waivers unenforceable.   Let’s be clear about what Concepcion means for ordinary consumers.  With these rulings, the Court is padlocking the courthouse door to elderly nursing home patients harmed by neglectful caretakers.  Keep in mind that the typical nursing home resident or his caretaker has probably not even read the arbitration clause buried on page 20 or deeper into an admissions contract.  What this means is that if your Mother or Grandmother suffers septic shock from decubitus ulcers caused by neglect, her estate will have no recovery because no lawyer in her right mind will take a case where mandatory arbitration and its running partner, class action waivers are in play.  Trial lawyers do not take nursing home cases to arbitration because of the perception that arbitrators will give lower awards for non-economic damages and almost never award punitive damages.  In my informal survey of attorneys specializing in nursing home neglect, I have been unable to find a single case where a trial lawyer represented a nursing home patient in arbitration.       The Court’s decisions are, in effect, a federal takeover of arbitration, preventing the states and private plaintiffs from challenging one-sided and oppressive consumer arbitration clauses on grounds of unconscionability.  When wrap contracts couple mandatory arbitration clauses with class-action waivers they essentially create a liability-free zone in cyberspace.  Class action waivers preclude Internet users from filing a class action or even joining an existing one. This de facto immunity shields social networking sites from class actions for violations of privacy, contract, tort, or intellectual property rights that would otherwise be recognized in federal and state courts.

Social networking sites that combine mandatory arbitration with anti-class action waivers ensure that these powerful entities will not be accountable for failing to secure and safeguard their users' sensitive personally identifiable information. Social media sites can use the names, likenesses, and personal information of their users with impunity. Consumer class actions are often the only practical alternative in securing legal representation under the contingency fee system in cases where actual compensatory damages are small or nominal. Class actions enable litigants with slight monetary damages claims to combine actions in a representative action.  Without class actions, social networking sites are effectively immunized from the judicial process and may continue unfair practices with impunity.

Professor Nancy Kim’s suggested law reform to police overly aggressive terms in webwraps would be to tip the doctrine of unconscionability on its head.  Her proposed reform for webwraps would presume that these standard forms are unconscionable, except if validated by legislative decree or if there were meaningful alternatives in the marketplace. (Id. at 248).  However, even a revivified unconscionability doctrine will be preempted by the U.S. Supreme Court’s current reading of the Federal Arbitration Act. (“FAA”).  Congress must act to prohibit predispute mandatory arbitration and class action waivers in all types of wrap contracts.  In the end, U.S. companies would benefit from mandatory terms constraining or cabining wrap contracts. 

The golden age of the broad enforcement of U.S. style wrap contracts will end soon because of the increasingly flattened world where U.S. companies license content to European consumers. In Germany, consumers associations have successfully challenged the terms of CompuServe, AOL, and Microsoft: the first was subject to a default judgment; the other two agreed to a binding cease-and-desist declaration. All three American companies have entered into settlements in which they agreed to change their marketing practices. When it comes to consumer rights for wrap contracts, the U.S. is like Mars—and Europe is like Venus.  Europe rejects freedom of contract in consumer transactions, recognizing that this is a legal fiction in non-negotiated standard form contracts. The European Commission takes the position that, even if a consumer assents to an abusive term, it is unenforceable as a matter of law, and European consumers, unlike their American counterparts, cannot be hauled into distant forums and be divested of mandatory consumer protection.  Professor Kim has done a superb job in identifying the problem with wrap contracts, but her solution falls short of addressing problems such as predispute mandatory arbitration and anti-class action waivers.

[Posted, on Michael Rustad's behalf, by JT]

November 21, 2013 in Books, Commentary, Recent Scholarship, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 20, 2013

New in Print

Tuesday, November 19, 2013

Weekly Top Tens from the Social Science Research Network

MeredithWe are delighted to see our very own Meredith Miller in the Top Ten.  Congratulations, Meredith!

SSRNRECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 

September 20, 2013 to November 19, 2013

RankDownloadsPaper Title
1 151 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
2 143 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
3 100 Interpretation of Written Contracts in England 
Neil H. Andrews
University of Cambridge - Faculty of Law
4 96 The No Reading Problem in Consumer Contract Law 
Ian AyresAlan Schwartz
Yale University - Yale Law School, Yale Law School
5 94 The Concept of 'Vindication' in the Law of Torts: Rights, Interests and Damages 
Jason N. E. Varuhas
University of Cambridge - Faculty of Law
6 84 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
7 81 Is There a 'Duty to Read'? 
Charles L. Knapp
University of California - UC Hastings College of the Law
8 77 Le Nouvel Article 3.3.1 Des Principes Unidroit 2010 Sur Le Contrat Violant Une Règle Impérative: Un Regard Critique Du Point De Vue Du Droit International Privé (A Critical Appraisal of Article 3.3.1 of the PICC on Contracts Infringing Mandatory Rules) 
Gilles Cuniberti
University of Luxembourg
9 75 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law Schoo
10 64 Corporate Codes of Conduct and Working Conditions in the Global Supply Chain: Accountability Through Transparency in Private Ordering 
Meredith R. Miller
Touro College - Jacob D. Fuchsberg Law Cente

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  

September 20, 2013 to November 19, 2013

RankDownloadsPaper Title
1 151 Unconscionability in American Contract Law: A Twenty-First Century Survey 
Charles L. Knapp
University of California - UC Hastings College of the Law
2 143 Contract Law and Theory -- Three Views of the Cathedral 
Eyal Zamir
Hebrew University of Jerusalem - Faculty of Law
3 100 Interpretation of Written Contracts in England 
Neil H. Andrews
University of Cambridge - Faculty of Law
4 84 Contract and Property Law: Distinct, but not Separate 
Sjef van Erp
Maastricht European Private Law Institute, University of Maastricht - Faculty of Law
5 81 Is There a 'Duty to Read'? 
Charles L. Knapp
University of California - UC Hastings College of the Law
6 75 Boilerplate: A Threat to the Rule of Law? 
Margaret Jane Radin
University of Michigan Law School
7 60 Dissenting Statement Pertaining to the Name of an Individual Debtor on a Financing Statement — Appendix to Report on the Amendments to Article 9 of the Uniform Commercial Code 
Kenneth C. KetteringAmelia H. Boss
Temple University - James E. Beasley School of Law, University of Miami - School of Law
8 60 Renegotiation of Work Contract and Work Agreement of Coal Mining Undertaking in Indonesia: Legal Aspect of Renegotiation vs Pacta Sunt Servanda Principle 
Ahmad Redi
University of Indonesia (UI) - Faculty of Law
9 51 Formalizing Gratuitous and Contractual Transfers: A Situational Theory 
Adam J. Hirsch
University of San Diego
10 49 Social Media and the Rise in Consumer Bargaining Power 
Wayne Barnes
Texas A&M University (TAMU) - School of Law

[JT]

November 19, 2013 in Recent Scholarship | Permalink | TrackBack (0)

Wrap Contracts Symposium, Part IV: Juliet Moringiello on “Wrap” Terminology: Needlessly Confusing or Useful Analytical Tool?

This is the fourth in a series of posts on Nancy Kim's Wrap Contracts: Foundations and Ramifications (Oxford UP 2013).   Our fourth guest blogger, Juliet Moringiello, is a Professor at Widener University School of Law, where she regularly teaches Property, Sales, Secured Transactions, and Bankruptcy, and has taught seminars on Cities in Crisis and Electronic Commerce. From 2004 – 2010, she was the co-author, with William L. Reynolds, of the annual survey of electronic contracting law published in The Business Lawyer.

Morigiello“Wrap” Terminology: Needlessly Confusing or Useful Analytical Tool?

Yes, we said it. As Prof. Nancy Kim notes in her terrific new book Wrap Contracts: Foundations and Ramifications, my co-author Bill Reynolds and I have argued that the use of the terms “clickwrap” and “browsewrap” to describe electronically-presented contract terms might be needlessly confusing, and that the terms themselves may even be irrelevant. Yet Nancy, whose work I admire tremendously, has not only embraced this wrap terminology, but has written an entire book about how wrap contracts are materially different from their paper standard-form predecessors. And I enthusiastically agreed to participate in this symposium so that I can sing the praises of this book and encourage ContractsProf readers to go right over to the Oxford University Press web site and buy the book. What gives?

Emerging business practices have long challenged contract doctrine. Contract rules that assumed two parties with equal bargaining power sitting down to hammer out a deal have evolved, both through statutory and case law, to adapt to a world in which parties transact by the use of non-negotiated standard-form terms. Are non-negotiated standard-form terms that are delivered electronically so different from their paper predecessors that they require a new set of rules? Nancy makes a convincing argument that they are, and her (spoiler alert!) ultimate prescriptions include the imposition of a duty to draft reasonably, a rejection of the doctrine of blanket assent in favor of a specific assent requirement, and a redefinition of the doctrine of unconscionability. Although she recognizes that contract doctrine continuously evolves to account for new business practices, Nancy convincingly argues that it is not evolving appropriately in the mass-market electronic contracting realm.

Why should the law treat electronically-presented standard-form contract terms differently from how it treats the same terms presented on paper? The main contribution of this book is its argument that form (and thus “wrap” form) matters tremendously. One of the reasons that Nancy offers to support her position is that the electronic form has altered the substance of standard-form contracts. Freed from the spatial constraints imposed by the paper form, purveyors of electronic terms can offer many more terms in a form contract than could their paper-world predecessors. As a result, consumers are being presented with voluminous and complex terms governing, among other things, data collection and property rights. As a result, according to Nancy, wrap contracts “by their form, permit companies to impose more objectionable terms than paper contracts of adhesion.” Wrap Contracts is filled with specific examples of such terms.

Wrap ContractsAlthough my co-author and I have argued in the past that courts are slowly getting electronic contracts right, most of the electronic contracting cases that result in published opinions involve challenges to choice of forum clauses. We read almost all of those opinions from 2004 through 2010, when we wrote the annual surveys of electronic contracting law for The Business Lawyer.The opinions never get to the substantive guts of the electronic standard terms; they can’t, because often their punch line is “you agreed to arbitration, so arbitration is where you are going to resolve these issues.” When one compares an electronic choice of law clause to the same clause on paper, it looks like an apples-to-apples comparison. The main difference appears to be the way the terms were transmitted, not the substance, so courts tend to analyze only whether the electronic terms are reasonably communicated to the non-drafting party. So long as the non-drafting party can access the terms via an arguably conspicuous link, the courts hold that there is sufficient notice and therefore assent. This judicial conflation of notice and assent is not unique to electronic contracting law, but Nancy argues that its application is inappropriate to wrap contracts because often individuals do not have any idea that they are entering into legally-binding agreements.

Although Nancy cites to studies that support her contention that many computer users do not know that their actions will result in legally-binding agreements, here is one area in which I find the “wrap” umbrella unhelpful. Today’s 25-year-old is probably more accustomed to clicking to agree than to signing to agree. On the other hand, few people other than those reading this post may know that the “Terms of Use” link on the bottom of a web page purports to give notice of contract terms. Therefore, the two “wrap” terms, clickwrap and browsewrap, describe two forms that send very different signals.

That said, one of Nancy’s most convincing contributions in Wrap Contracts is her discussion of how notice in the electronic context is not the same as notice in the paper world. Again, form matters. Whether terms are presented in clickwrap, browsewrap, or multiwrap form, the notice that contract terms are available often appears on a different web page from the terms themselves. As a result, she argues, even the most conspicuous “Terms of Use” hyperlink is not the same as its paper counterpart, because the latter includes a conspicuous notice of contract terms on the same sheet of paper as the terms themselves. And perhaps here is where Nancy, Bill and I don’t really disagree. Bill and I don’t like the terms clickwrap and browsewrap because pure clickwrap, which requires an affirmative act to accept terms, is very different from browsewrap, which does not. We think that courts that focus on that distinction produce questionable results. Bill and I recognize, as does Nancy, that many online contracts today are really a combination of clickwrap and browsewrap, or “multiwrap” (unlike us, she was clever enough to use the term). Nancy, on the other hand, uses the term “wrap” as convenient shorthand for the diverse electronic presentations that allow online vendors of goods, services, and computer programs to present many more, and therefore more onerous, terms, than their tangible world predecessors. Form matters, and the electronic “wrap” form is physically different from the paper form in ways that stretch the boundaries of traditional contract doctrine. Her engaging explanation of these modern contract forms illustrates that perhaps, courts are not getting electronic contracts right and that they need to be nudged to do more. Wrap Contracts can provide that nudge.

[Posted, on Juliet Moringiello's behalf, by JT]

November 19, 2013 in Books, Commentary, Recent Scholarship, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Wrap Contracts Symposium, Part III: Woodrow Hartzog, Wrap Contracts as Mediators of Social Interaction

This is the third in a series of posts on Nancy Kim's Wrap Contracts: Foundations and Ramifications (Oxford UP 2013).   Our third guest blogger is Woodrow Hartzog, an Assistant Professor at Samford University’s Cumberland School of Law and Affiliate Scholar at the Center for Internet and Society at Stanford Law School.

WhartzogWrap Contracts as Mediators of Social Interaction

Professor Kim’s book is an extremely valuable addition to the literature. Kim adeptly distinguishes wrap contracts from traditional contracts. Perhaps more importantly, Kim distinguishes wraps from boilerplate paper contracts. In this review I will argue that Kim’s case for wrap exceptionalism could be taken even further for parties in highly interactive relationships, such as the relationship between social media and their users.  

One of Kim’s most valuable contributions is her explication of how the form of wrap contracts accounts for their proliferation, content, and problematic legal treatment. The absence of any meaningful physical restraints on wrap contracts, like the available area on paper for text and the ceremony required to actually sign paper contracts, has resulted in a difference in kind from other contracts, not just a difference in magnitude.

Kim also focuses on the problematic content of wrap contracts. Kim’s thesis is that the form of wraps makes reading them so burdensome that problematic content is inevitable. Drafters can insert terms that are unfavorable to the adherent because they know that adherents will not read them. Kim develops a helpful taxonomy of shield, sword, and crook terms. These categories can be roughly described as limitations on liability for offered services (shield terms), terminations of rights held by the other party (sword terms), and appropriation of benefits unrelated to the consideration that is the subject of the transaction (crook terms).  

I agree with Kim’s observations that both the form and content of wrap contracts make them substantially different than paper contracts, including paper boilerplate. But Kim may have left out an important variable in her case that wraps deserve exceptional legal treatment. Kim could better highlight the importance of the service being offered by the drafter of the wrap contract and the form that service takes. Many of the examples used by Kim involve standard commercial transactions such as Amazon or iTunes. But commercial websites are unlike other websites, notably the social web. Social media offer tools for social interaction and self-expression, which, until the Internet, have been largely boilerplate-free activities.

Wrap ContractsSocial media wrap contracts differ from their commercial website counterparts in at least two important ways: 1) Social media are much more interactive than traditional websites. This interactivity is an opportunity for websites to obtain specific assent to terms; and 2) many social media wrap contracts include social behavior restrictions, such as community guidelines. These restrictions simultaneously cost and benefit adherents precisely because they are universally applied and non-negotiable.

Greater Interactivity Can Lead to Specific Assent

All websites are becoming more interactive, but few more so than social media. Users can utilize privacy settings, tag others, and click and drag in ways that communicate preferences to websites like never before. These user expressions and the design that enables them are ideal opportunities for meaningful assent. In many ways, website design can communicate messages to users more effectively than boilerplate ever could. For example, privacy settings often make it clear that “only friends” or authorized “followers” will have access to your information. If a website’s data access and use policy is also part of the wrap contract, should the settings or the wrap govern who can access user info?

Kim proposes that “drafting parties should receive specific assent to obtain rights belonging to the nondrafting party that are not directly created from the drafting party’s license or promise. In other words, sword and crook provisions…require specific assent but shield provisions do not.” (195) Assuming binding privacy policies generally operate to effectuate consent to a website’s collection and use of the adherent’s data, privacy settings would seem to be an effective way to obtain specific assent under Kim’s proposal.

Community Guidelines Benefit Contract Adherents Yet Also Leave Them in a Bind

Social media often require many commitments from their users. For example, Facebook requires its users to promise not to “provide any false personal information on Facebook,” “bully, intimidate, or harass any user” or “do anything unlawful, misleading, malicious, or discriminatory.” These kinds of terms make it virtually impossible to interact online without fear of breaching the required contract. Users can either hardly use the website or roll the dice and hope they don’t get caught.

Social media often require commitments in the form of “community guidelines” that are sometimes incorporated into the terms of use. For example, Facebook, Twitter, and Flikr all have community guidelines that are ostensibly provided to keep the online community civil and protect other users. Many of these rules are quite broad and vague. Professor Kim vividly illustrates the fallout from violations of broadly drafted terms when discussing Young v. Facebook, a dispute over the termination of a user’s Facebook account for violation of Facebook’s policies.

Yet there is a dichotomy that makes these terms difficult to categorize. They are a cost to the user who must refrain from certain kind of otherwise permissible conduct, yet they are also a benefit to that same user because every other user also promised to refrain from the same antisocial or illegal behavior. Here, the uniform and non-negotiable nature of wraps is precisely what makes them attractive to users. These terms can be used to combat scourges like hate speech and revenge porn.

While Kim recognized that wrap contracts are beneficial because they facilitate mass transactions and minimize risk for drafters, she overlooked the benefits that wrap contracts can have when terms set rules for how Internet users interact with each other.

Given that social behavior restrictions simultaneously cost and benefit the adherent, it is unclear if Kim would subject these terms to additional scrutiny as “sword” or “crook” terms.

These observations are meant to support Kim’s proposals, not counter them. Kim rightly criticizes the current legal approach to wrap contracts. Her solutions wisely harness the elasticity of existing contract doctrine to right the ship. Social media vividly illustrate the problematic proliferation of wraps in unprecedented areas. Yet they also represent opportunities to effectuate Kim’s proposed solutions. 

[Posted, on Woodrow Hartzog's behalf, by JT]

November 19, 2013 in Books, Commentary, Recent Scholarship, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Monday, November 18, 2013

Contract as Shank

A contract is like a screwdriver. Prison shanks small

A screwdriver can be used for turning screws and opening cans of paint. Or it can be used as a dagger in mortal prison combat. Likewise, a contract can “facilitate an efficient private ordering of society,” but it can also be “a means of social dominance and oppression.” Law professors should be quicker to tell new students about the shank-side of contracts.

That’s the gist of Teaching Contract Law: Introducing Students to a Critical Perspective Through Indentured Servitude and Sharecropper Contracts, 66 SMU L. Rev. 341 (2013), by Dr. Gregory Scott Crespi.

Crespi provides a sample lecture in which he tells of homeless English people becoming indentured servants and former slaves becoming sharecroppers. In both cases, contracts were used to bind people to functional slavery.

Crespi gives this lecture around the third class of the semester. He believes that informing students of such abusive contracts early in their legal educations allows them to bring a critical perspective to subsequent doctrinal studies and to consider the law’s context and unintended social consequences.

Dr. Crespi has done us several services by publishing this piece: (1) he has given us a brilliant lecture to use if we don’t feel like doing our own critical research; (2) he has kept it short, six printed pages, excluding footnotes; and (3) he has told us some important stories about abusive contracts.

But I wonder if Crespi’s approach is like teaching students to play tennis without a net? Does the first-semester 1L understand the intended consequences of the law well enough to opine on the unintended consequences? Students arrive at law school fluent in cynicism, but they have difficulty describing the relationship between well-established doctrines and the common good. So perhaps students should be encouraged to develop a critical perspective later, rather than sooner.

Using Crespi’s screwdriver analogy, imagine a master carpenter saying to his new apprentice, “The first thing about a screwdriver is that it turns screws. The second thing is that it can open a can of paint. The third thing is that it can be sharpened into a dagger and used to kill a man.” It’s a fascinating narrative, but is it apt for the apprentice? I’m inclined to think students need to know doctrine before they can criticize it and that giving new students the critical perspective too early might cause them to develop a distorted view of Contracts and the world.

Query the right view of Contracts and the world. If the professor think it’s more shanks than screwdrivers, perhaps the critical lesson should come early. I probably won’t be giving that lesson until at least class number four.

[Kenneth Ching]

[Image by Xeni Jardin]

 

November 18, 2013 in Commentary, Contract Profs, Law Schools, Recent Scholarship | Permalink | TrackBack (0)