March 19, 2013
The Mystery of the Elvis Dumervil Contract Mix-up
Elvis Kool Dumervil, the star defensive end for the Denver Broncos, has been in the news recently based on an alleged mix-up involving a contract renegotiation with the team. I have read multiple reports and still cannot figure out exactly what happened from a contractual formation standpoint. But here's my current understanding and analysis...
Dumervil's contract with the Broncos, like most NFL player contracts, had an "opt out" of sorts for the Broncos. Under the contract, the Broncos could either pay Dumervil $12 million to play next season--and have that entire amount count against the team's salary cap--or cut him ("cut" being the sports term for "fire") and only have a portion of his salary count against the team's cap. Without getting into too much detail, each team has a maximum amount of money it is allowed to pay in player salaries per year, subject to various adjustments. If the Broncos were able to reduce how much Dumervil's salary would count against their team's cap, they conceivably would have been able to spend more money to sign other players and improve their team; hence their interest in keeping the cap number down.
To avoid a bad salary cap consequence and still keep Dumervil, the Broncos sought to renegotiate a middle ground. They offered to keep versus cut Dumervil but for a reduced salary amount of $8 million. According to various reports, that offer was only open until 1pm MDT on Friday, March 15th. The Broncos set that deadline because they faced a deadline of their own set by the NFL. Specifically, the only way the Broncos could avoid the full salary cap hit of $12 million under NFL rules was to cut Dumervil by 2pm MDT (or show that they had re-signed him to a different deal). If they cut him prior to 2pm MDT, they'd only take a $5 million hit; if they cut him anytime after 2pm MDT, they'd take a $12 million hit.
In the early afternoon of March 15th, Dumervil reportedly rejected the Broncos' $8 million offer over the phone (thereby terminating the Broncos' offer, most likely). However, Dumervil later told the Broncos that he had changed his mind. The Broncos then renewed their $8 million offer but specified that Dumervil could accept only by faxing his acceptance to them prior to the NFL's 2pm deadline. When the Broncos did not receive a fax from Dumervil by that time, they cut him. Dumervil's agent has said that the fax was sent to the Broncos at 2:06pm due to some delay in getting a fax from Dumervil.
When the story first broke, some media outlets were reporting that a fax machine malfunction was to blame. Thus, many commentators initially expressed frustration that a bungled or late transmission via fax, a now-outdated device, could have such a significant impact. When I heard those reports, it seemed that the media outlets, like some first-year law students, were overemphasizing the need for a writing and deemphasizing the parties' actual intent. As we teach our students, a signed writing often is not required; contracts are formed all the time without that formality. Subject to the statute of frauds and other exceptions, a contract can be formed without a writing, faxed or otherwise. And, unless the offeror limits the form of acceptance to a signed and faxed writing, the acceptance may be communicated in any reasonable manner. In sum, it is intent of the parties that controls. Thus, if the Broncos really wanted to sign Dumervil to a new $8 million deal (that could be completed within 1 year of its making) based on his verbal agreement, no rule of contract law would have prevented it. In other words, if Dumervil truly had communicated his acceptance to the Broncos, the absence of a faxed signature from Dumervil would not prevent contractual formation unless: (i) the Broncos had stated that acceptance could only be via fax or similar writing; or (ii) the contract was one that could not be performed within a year or otherwise subject to the statute of frauds. We would need more facts to analyze both of those issues.
Of course, another possibility outside of traditional contract law (and the proverbial elephant in the locker room) is that the NFL likely has its own rules regarding contractual formation under its collective bargaining agreement or through some other mechanism. That's the part of the mystery about which I have no information at this point. Some reports seem to indicate that the NFL's rules somehow prevented contractual formation and that the Broncos are seeking a change of heart from the NFL. Perhaps someone more familiar with the NFL's rules can comment on that. In the meantime, I think Bronco fans can stop blaming general contract law and continue blaming the Broncos and the NFL. At least for now.
[Heidi R. Anderson]
March 05, 2013
Magic Johnson's Offer to Tempt LeBron James
LeBron James participated in this year's NBA All-Star game but one former player, Magic Johnson, was not happy. Magic, like many fans, would like to see the league's star players participate in the fun events leading up to the game, such as the slam dunk contest. Apparently, Magic would like that so much that he's willing to offer $1 million to the winner of next year's slam dunk contest if the contest includes LeBron James. He made that offer on ESPN's show, NBA Countdown:
When I first learned of this, I suspected that Magic's statement was an offer to James himself. However, in the video, Magic appears to say that the money would go to the winner of the contest, LeBron or not (OK, sure, the winner likely would be LeBron but you never know--underdogs can win, too).
Jalen Rose, Magic's co-host of the show NBA Countdown, stated that another player, Blake Griffin, would have to participate, too. Magic's verbal agreement with Rose seems to indicate a modified offer--one in which the $1 million payout is now conditioned on the participation of James and Griffin. From the video, it also appears that Magic is bargaining for performance versus promise but I'm not 100% sure.
For professors looking for a modern-day reward-style offer, this could serve as a less political alternative to the recent reward-style offers by Donald Trump and Bill Maher, about which we previously blogged.
[Heidi R. Anderson]
January 17, 2013
Using The Blind Side as a Visual Aid for the Parol Evidence Rule
I start the second semester of Contracts with the Parol Evidence Rule. I think it's a complex but manageable topic that engages my no-longer-terrified "seasoned" students at the beginning of the semester. Some students, however, struggle to understand exactly what the effect of the rule is, especially after I tell them that it's not really a rule of evidence. Then, after we cover the exceptions, they're even more confused. So, for the visual thinkers in the class, I show this clip:
For the students not familiar with football, I explain that the player featured in the video, Michael Oher, is an offensive lineman at the heart of the book and movie, The Blind Side. His primary job is to protect the quarterback. More specifically, Oher's job is to protect the quarterback's "blind side"--the side the QB can't see when looking downfield to pass (for right-handed quarterbacks, the left tackle protects the blind side; for lefty QBs, it's the right tackle's job).
Then, I say, "Michael Oher is the Parol Evidence Rule. The defenders rushing in are parol (or extrinsic) evidence. Defensive linemen are prior written agreements. Linebackers are contemporaneous statements. The safety is fraud in the inducement. The quarterback is the judge. Most of the time, Michael Oher (a.k.a., the Parol Evidence Rule) is keeping the extrinsic evidence away from the quarterback/judge. The QB/Judge knows the evidence is there but it does not reach him or affect his decision. That said, Michael Oher is not perfect. Neither is the parol evidence rule. Sometimes, a safety gets through, and for good reason."
And so on. The analogy breaks down in various places but still seems to work for some students. Thus, I thought I'd share it on the blog. I hope some of you find it useful.
[Heidi R. Anderson]
December 17, 2012
World's #1 Golfer Sued for Breach of Endorsement Contract
As reported here in the Telegraph, Rory McIlroy (pictured), this year's world #1 golfer, is not Tiger Woods. In addition, it appears that Mr. McIlroy has been endorsing Oakley sportswar until recently and now wants to jump ship and join team Nike. Oakley is claiming a right of first refusal and claims that it offered to match Nike's offer to Mr. McIlroy. He apparently spurned that offer and so is, according to Oakley, in breach of contract.
Oakley is claiming that it is irreparably harmed by the breach and seeks to enjoin Mr. McIlroy from enjoying the benefits of his $200 million Nike agreement. In the alternative, Oakley is seeking unspecified damages.
Reading between the lines, there do appear to be issues that are of some interest. Usually a right of first refusal requires the holder of the right to match the competing offer. But ESPN.com suggests that Oakley was only offering McIlroy $60 million to continue endorsing its products. Perhaps that amount is equal to the portion of McIlroy's Nike deal that relates to Nike apparel. In addition, ESPN reports on an e-mail sent by Oakley to McIlroy's agent back in September when contract negotiations were breaking down. The e-mail read, "Understood. We are out of the mix. No contract for 2013."
McIlroy will argue that the e-mail suggests that Oakley waived its option to renew its agreement with McIlroy. Oakley contends that, notwithstanding the September e-mail, negotiations resumed and Oakley claims to have matched Nike's offer.
So, there will be unwonted excitement on the golf tour next year as viewers tune in to see what McIlroy is wearing.
September 14, 2012
Is Boyz II Men v. Aaron Rodgers the New Lucy v. Zehmer?
Last night, the Green Bay Packers redeemed themselves against the Chicago Bears after a disappointing Week 1 loss to the San Francisco 49ers. However, the Packers' quarterback, Aaron Rodgers, still has not redeemed himself after allegedly backing out on a bet with Nathan Morris of the R&B group, Boyz II Men. The terms of their original deal reportedly were as follows: (i) Boyz II Men agreed to perform the national anthem before the Packers' week 1 game with the 49ers at Lambeau Field; and (ii) in exchange, Aaron Rodgers agreed to wear a 49ers jersey but only if the Packers lost to the 49ers. (Even though Boyz II Men were part of the "East Coast Family" of the 1990s, they're apparently fans of a West Coast NFL team, the San Francisco 49ers. But I digress.) Sounds like a pretty straightforward promise to perform in exchange for a promise to perform subject to a condition precedent, right? Well, Boyz II Men performed, and the 49ers won, but... Aaron Rodgers has not worn the 49ers jersey. Cue the Twittersphere and TMZ. Rodgers, like Zehmer, claims that his jersey-wearing promise was a joke. In this interview clip, Rodgers says, "It was a [unintelligible] joke between friends" that's been "blown out of proportion." Morris claims it was a serious deal, tweeting after the game that he "was pressing the jersey now." However, Boyz II Men also suggested they will give Aaron Rodgers more time to perform. If not, anyone want to represent them against Rodgers? Or is this the End of the Road for this matter?
[Heidi R. Anderson]
September 05, 2012
Money Well Spent on “America’s Favorite Pastime”
As reported here by mlb.com, ESPN and Major League Baseball (MLB) have entered into an eight-year, $5.6 billion agreement, which includes TV and radio rights to MLB programming both in the U.S. and internationally, keeps baseball on the network through 2021 and includes a record-setting increase in annual rights fees (doubled to $700 million from $360 million annually).
And there was much rejoicing.
ESPN's president said, “Baseball remains the national pastime," but the truth is, baseball has long been eclipsed by other sports and then by video games based on other sports and then by video games about killing people, and then by video games about killing zombies. Meanwhile, there was recently talk of MLB becoming a wholly-owned subsidiary of Justin Bieber, Inc. Commissioner Bud Selig commented that "today is a very historic day for baseball." Taken in the context of a sport that is so hung up on statistics that every day is considered "historic" (Wow, Lou, that's the first time that a rookie switch-hitter has struck out looking from both sides of the plate in the same inning -- what a historic day!), Selig's comments seems to be downplaying the deal.
According to the New York Times, ESPN's rival networks, Fox, TBS, NBC and CBS, are still contenders in the baseball airing arena, as ESPN did not manage to grab the division series or league championship series games. There's still some history out there to be made.
[JT and Christina Phillips]
August 02, 2012
Discussion of Consideration over at Concurring Opinions
Over at Concurring Opinions, David Hoffman has called our attention to a "bizarre" consideration issue at the Olympics. Professor Hoffman liniks to this story in The USA Today, according to which the performers at the Olympics halftime show -- whoops, make that opening ceremonies -- including Paul McCartney, donated their time. According to The USA Today, the performers received a mere one pound for their performances, and that one pound was paid in order to make the performers' agreements with the Olympics binding.
Professor Hoffman comments as follows:
If true, I take it that British law takes the position that nominal consideration can bind obligees, but that “false” nominal consideration can’t. Thus, the organizers had to both promise to pay McCartney a pound and actually pay it before the ex-Beatle was bound to perform.
To my mind, this is the least good resolution of the consideration problem possible. Look: either consideration should mean something – bargained for exchange motivating actual counter-promising – or parties should be free to dispose of the requirement of consideration entirely. In the United States, only Pennsylvania has taken that sensible latter position. The rest generally tend to require actual bargained for exchange, excepting only charitable subscriptions, which the Olympics are not. The Brits, who handed us this mess in the first instance, have apparently now embraced the unfortunate, mumbo-jumbo, hybrid, which reduces the sensible formality of consideration to a bit of a magical contract theatre. Does anyone think that that pound of consideration actually motivated McCartney’s promise to perform?
Interesting comments follow, including those of Patrick O'Donnell, to whom we tip our virtual hats for having directed us to the Concurring Opinions post.
Unfortuantely, we have at present nothing substantive to add to the learned discussion of at Concurring Opinions. However, we would like to observe that perhaps Sir Paul is happy to work for nominal consideration given that just a few weeks ago, as reported by the BBC, concert organizers pulled the plug on him and Bruce Springsteen because they performed past a curfew in Hyde Park.
Band member and erstwhile proprieter of "Da Bing," Steven Van Zandt, tweeted rhetorically "When did England become a police state?"
July 04, 2012
I Choose Not to Run!
For those of you who do not follow track and field sports or the Olympics, there was an interesting development in the women's 100 meter final at the U.S. Olympic trials. There was a tie for third. It's actually kind of a nice story. Allyson Felix and Jeneba Tarmoh share a coach and train together. They are friends. Even a photo finish could not determine who came in third.
Unfortunately, a lot rides on the difference between third and fourth. A country can send no more than three competitors for each event. So, nothing's worse than fourth. Both runners have contracts with Nike and those contracts, according to the New York Times, likely include significant bonuses if the runners make it to the Olympics. The situation is apparently unprecedented. There is no official tie-breaking mechanism, and for a time it seemed that the two women would run against one another to determine who goes to London.
But Tarmoh is now re-enacting a Seinfeld episode (see the animated version below), although nobody is claiming she got a head start. Earlier this week, as reported in the New York Times, she announced in an e-mail that she would not run and was conceding her place on the U.S. 100 meter team to Felix.
Tarmoh was initially declared the third place finisher, but that finding was quickly reversed. According to the Times, Tarmoh is refusing to run again because she believes she already won the race, although she did not make use of the available protest mechanisms. Her high school track coach explains that Tarmoh is mentally and physically exhausted due to the stress brought on by the tie. Tarmoh will likely be a part of the U.S. 100 meter relay team, so she should still get a chance to run at the Olympics.
Meanwhile, the sprinters in the Tour de France went at it for the fourth consecutive day. Today's sprint finish was won by Andre Greipel after the favored Mark Cavendish took a nasty spill in the build-up to the sprint finish. Cavendish won the intermediate sprint during the nearly 160 kilometer stage. Despite getting knocked off his bike at speeds likely in excess of 35 mph, I suspect Mark Cavendish will be in the hunt for a stage win tomorrow. He's also supposed to ride for his country in the Olympics about two weeks after completing the 2000-mile, three-week Tour de France.
June 18, 2012
Terrell Owens' Threatens to Sue His Former Indoor Football League Team
According to this article on tmz.com, Terrell Owens (pictured) has given the Indoor Football League Allen Wranglers an ultimatum—issue a public apology and pay him the $160,000 that he claims they owe him (for four games) plus his 50% share of merchandise, tickest and concessions from his time with the team.
The team claimed that Owens was cut on May 29, 2012 for not intending to play in two upcoming road games with playoff implications and for missing a team event at a local children’s hospital. He is asking the Allen Wranglers for a public retraction of the statement that he intentionally missed the visit. As reported by Yahoo!sports, Owens claims his contract stated he did not have to play in away games and that the team privately acknowledged that an Allen Wranglers publicist gave him the wrong date concerning the hospital visit.
TMZ.com had earlier reported that Owens was not only cut, he was evicted from the house provided for him by the team, was ordered to turn over the keys to the 2012 Jeep Chrokee that the team had loaned him, and he was given $50 in payment for his stake in the team. According to TMZ.com's latest report on the subject, the Allen Wranglers are standing firm, reportedly telling Owens, "You ain't getting a penny."
[JT and Christina Phillips]
April 26, 2012
Query: Why Is a Unilateral Contract to Seriously Injure Someone Not a Crime?
Sorry, this story is a bit stale, but we've been occupied with the semester. Last month, the New York Times reported that the head coach for the New Orleans Saints, Sean Payton (pictured) would be suspended without pay for one year "for his role in a bounty program that promised money to players if they injured opponents and knocked them out of games."
Upon learning this news, the Saints' quarterback, Drew Brees tweeted as follows: “I am speechless. Sean Payton is a great man, coach, and mentor. The best there is. I need to hear an explanation for this punishment.”
Well, we are not likely the source that Drew Brees looks to for explanations of such things, but is it not obvious that we are talking about serious crime here and is it not equally obvious that, if the bounty program is as described above, the appropriate penalty is not a one-year suspension for Coach Payton but a criminal investigation that could lead to significant jail time and a lifetime ban from the sport for Payton and all other members of the staff or the team who conspired to commit these crimes? We are talking about offering players money for attempting to intentionally injure other players. How is that not simply felonious conduct? And it's not as if the perpetrators in this case can claim, as Michael Vick more plausibly could do, that their criminal conduct is the product of some sub-culture in which outrageous, inhumane behavior is considered normal. Payton and his staff are NFL insiders who rub shoulders with the very people who are disciplining them for their conduct.
If the suspension is upheld, Payton will be deprived of $7 million in salary. Perhaps the Saints can contribute that money to a fund for NFL players and their families who are suffering from the long-term effects of the brain injuries they suffered while playing.
March 26, 2012
Coaching Contracts in Texas
The Austin American Statesman recently ran a report on the contracts the University of Texas enters into with the coaches of the school's sports teams. The report is unusual in breaking down the incentives paid to coaches. For example, the report notes that Texas's men's basketball coach earned a $125,000 bonus because the team won a spot in the NCAA tournament, despite the fact that the team lost its first game in that tournament. The bonus comes on top of a $3.48 million contract. The women's team also made the tournament and also lost in the first round. Its placement earned the team's coach $10,000 on top of her annual contract of $1.09 million.
UT's senior associate athletic director noted that all coaches' salaries, including bonuses, are paid out of athletic department revenues. He stresses that "no taxpayerr money of other university funding" is used for such purposes. If one is inclined in such a direction, one might object that regardless of the source, the expenditure of that kind of money on sports -- the very fact that the University of Texas feels the need to have a senior associate athletic director -- makes one wonder about the priorities of our educational institutions and allocation of resources.
February 24, 2012
Did Fabio Capello Breach His Contract by Criticizing the Football Association?
According to The Guardian, Fabio Capello (pictured), manager of England’s national football team could be in breach of contract after publicly challenging the Football Association’s (FA) decision to strip John Terry, England’s national football team captain, of his captaincy. The Guardian reports that the FA made this decision after John Terry allegedly racially abused English footballer, Anton Ferdinand. Capello was upset that this decision was taken without consulting him. Capello said that he felt “undermined by the FA decision to notify him after the decision had been made.
Capello also objects to the substance of the decision, finding it premature. Preferring civil justice to sports justice, Capello believes that Terry should remain captain until the courts decide whether he committed the crime.
While the details of Capello’s contract are unknown, People Management reports the contract likely gives the FA final say regarding squad selection, but does that also relate to choosing the team captain? People Management also suspects that the contract contains some sort of gag provision and notes that in the UK, senior executive contracts often contain a provision preventing the employee from bringing the company into disrepute or making a public statement that is in direct conflict with a statement made by the employer. If Capello’s contract contained this provision, he may be in breach for making his views, opposing the FA’s decision, public. Whether such a remedy entitles the FA to treat Capello’s conduct as a repudiation of the agreement or can serve as grounds for dismissal will turn on the precise contractual language.
As the Guardian reports here, Capello resigned as Manager on February 8th, and the parties agreed to a £1.5 million settlement. Capello's annucal salary was £6 million. A confidentiality agreement means we will never get to explore the issues of breach in more detail.
[JT & Janelle Thompson]
February 23, 2012
Law and Social Norms: The Jumbotron Kiss
It is common at sporting events to have a segment during time-outs at which the camera focuses on couples (always heterosexual, natch) and, as the crowd looks at their images on the Jumbotron, the couples almost invariably kiss. This practice is known as the Kiss-Cam.
This week's installment of This American Life includes a short introductory segment in which tv producer Bill Langworthy recounts how he was induced by the Kiss-Cam to kiss his ex-girlfriend's best friend, a woman whom, according to Bill, he would not otherwise kiss for any amount of money.
This American Life's host, Ira Glass, points out that Bill "did not have to kiss her; there would be no penalty; there was no contract; no money had changed hands. . . . " Bill explains that he felt that, with everyone watching, and with a producer looking at him, expecting him to act, he felt compelled to kiss his ex-girlfriend's best friend. This is a nice little gloss on the view that we often comply with our obligations (or even our perceived obligations) whether or not we are legally obligated to do so for reasons apart from contractual obligation. And so, a surprisingly high percentage of commercial obligations -- even among sophisticated parties who could lawyer the relationship to death if they so choose -- arise informally.
But we offer a different perspective on what is going on here. Bill explains that he attended the ball game with two friends, a married couple. Someone who coordinates the Kiss-Cam segment came around and asked the married couple if they would mind kissing for the Jumbotron. They agreed. This was already a revelation, since the parties often look as though they are taken by surprise when the Kiss-Cam seizes upon them. Who knew it was all a set-up? In any case, according to Bill, a few beer runs later, the parties had switched seats, so when the Kiss-Cam alighted, it hit him and his ex-girlfriend's best friend, instead of their married neighbors.
Since Bill is himself a producer, it seems reasonable to assume that he understood how things like the Kiss-Cam operate. Having identified its prey, the Kiss-Cam was going to focus on a particular seat, rather than on, for example, the tall guy wearing a baseball cap and the home team's jersey., since that latter description lacks specificity in the context of a sporting event.
Come on Bill, maybe you really wanted to kiss her and were just waiting for the Jumbotron to permit you to break the taboo?
February 17, 2012
Will M.I.A.'s Next Hit Appear on an SSRN Top Ten List?
In a little-noticed incident, since most people were watching Downton Abbey that night, a British rapper, M.I.A. (pictured left) performing during this year’s NFL Super Bowl halftime show, looked into the camera, uttered an expletive, and flipped the bird to millions of viewers around the world. As a result, in addition to millions of people knowing of her existence, she may be in breach of contract with the NFL.
As reported by Yahoo.com Sports, NFL spokesman, Greg Aiello, maintains that when the league hires the entertainment for the show, the artists are required to sign an agreement containing safeguards concerning artists’ conduct. TMZ.com reports that the agreement between M.I.A. and the NFL contained a clause indemnifying the NFL against any fines that may be imposed by the Federal Communications Commission (FCC) as a result of her behavior during the halftime show. TMZ also reported that the NFL agreed to indemnify NBC against any such fines, because the NFL is responsible for the halftime show’s content. M.I.A. thus may be contractually obligated to pay any fines that the FCC chooses to impose on NBC and the NFL. The news reports do not make clear what other remedies the NFL might have against M.I.A., since the indemnification clause would seem to cover any harms the NFL could suffer as a result of M.I.A.’s conduct.
The FCC sets out the relevant regulatory scheme as follows:
Obscene material is not protected by the First Amendment and cannot be broadcast at any time. To be obscene, the material must have all of the following three characteristics:
- an average person, applying contemporary community standards, must find that the material, as a whole, appeals to the prurient interest;
- the material must depict or describe, in a patently offensive way, sexual conduct specifically defined by applicable law; and
- the material, taken as a whole, must lack serious literary, artistic, political, or scientific value.
Indecent material is protected by the First Amendment, so its broadcast cannot constitutionally be prohibited at all times. However, the courts have upheld Congress' prohibition of the broadcast of indecent material during times of the day in which there is a reasonable risk that children may be in the audience, which the Commission has determined to be between the hours of 6 a.m. and 10 p.m. Indecent programming is defined as “language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities.” Broadcasts that fall within this definition and are aired between 6 a.m. and 10 p.m. may be subject to enforcement action by the FCC.
Profane material also is protected by the First Amendment, so its broadcast cannot be outlawed entirely. The Commission has defined such program matter to include language that is both “so grossly offensive to members of the public who actually hear it as to amount to a nuisance” and is sexual or excretory in nature or derived from such terms. Such material may be the subject of possible Commission enforcement action if it is broadcast within the same time period applicable to indecent programming: between 6 a.m. and 10 p.m.
So, FCC fines may result if the FCC determines that M.I.A.'s conduct was either obscene, indecent or profane, as the halftime show aired before 10 PM.
[JT and Christina Phillips]
December 05, 2011
More fallout from the nasty McCourt divorce
Frank McCourt may be in the process of suing his former lawyers, Bingham McCutchen, LLP, according to this article in the Wall Street Journal. As you've probably heard, Frank McCourt had a nasty divorce from his wife, Jamie, not too long ago - although it seems like this morning. I tried not to pay too much attention to it (not easy to do when you live in SoCal) until I realized that a major issue in the divorce concerned the marital agreement between the couple which would determine who owned the Dodgers. Apparently there was some confusion about attachments to the original marital agreement, with only some naming Frank McCourt as the sole owner. A drafting error - or was it? Jamie McCourt's attorneys argued that the various copies indicated there was no meeting of the minds. The judge agreed and threw out the agreement. Frank McCourt wasn't happy about that and has filed claims against Bingham that could be worth "hundreds of millions of dollars."
December 01, 2011
All I Want for Christmas Is a Chinese Opt-Out Clause
When NBA owners and players tentatively agreed to end the lockout and begin the NBA season on Christmas Day, their agreement resolved many contractual issues, such as the maximum number of years permitted in a player's contract. One issue left unresolved involves the fate of three players who played for the NBA's Denver Nuggets last year--Kenyon Martin, J.R. Smith, and Wilson Chandler (Martin and Chandler pictured here). The three Nuggets signed contracts to play for teams in the Chinese Basketball Association. Unlike the international contracts signed by dozens of other NBA players, the Nuggets' contracts reportedly contained no "opt-out" clause that would permit the players to return to the NBA if and when the lockout ended. Some commentators initally suggested that the players could return to the NBA anyway. After all, there is no specific performance available for breach of contract. The problem with that approach, however, is that the NBA, as a member of the International Basketball Federation, requires its teams to recognize international contracts. This relationship presumably would bar any NBA team from contracting with the three former Nuggets due to their Chinese contracts. All three players reportedly have been doing quite well on the court (averaging 15, 22 and 32 points per game, respectively) and even enjoy some decent off-court perks, such as a driver and personal chef. Although they likely won't make it home for Christmas, all three players' contracts end in March, well before the NBA playoffs.
[Heidi R. Anderson, h/t SB Nation and WSJ Online]
September 16, 2011
Josh Hamilton's Grand Slam as a Fun Pre-Midterm Review
Texas Rangers outfielder Josh Hamilton previously has earned media attention in some rather depressing ways, including via his own battle with drug addiction and his attempt to throw a ball to a fan that led to the fan's death. This time, he is in the news for something that makes others--including Contracts professors--very happy. A Texas flooring retailer recently ran a promotion promising a refund on their flooring purchase if Hamilton hit a grand slam during September. And he did! Click here for the story, the actual ad "as seen on TV," and some written commentary. I think the clip serves as a fun way to review some contracts issues just prior to midterms. My students saw partial parallels to Lefkowitz, Leonard, and even Carbolic Smoke Ball and I'm sure there are others. Go Rangers!
[HR Anderson w/ hat tip to student Matthew Lynn]
August 22, 2011
Local News: Fight Over A School Board's Decision to Buy a Scoreboard
This is the sort of mess that local governments deal with all the time, but this one hits home for those of us in the Valparaiso Community School District. As reported in the Northwest Indiana Times, the Valparaiso Community School Board held a special meeting on August 4th to approve a contract to erect a $250,000 scoreboard at the high school in time for the start of the football season. As public expenditures go, this one seems a no-brainer, as the Board apparently believed on August 4th that it could cover the cost of the new scoreboard with advertising revenues within five years.
Some Valparaisans were outraged, however, by the lack of public discussion and by the deficient notice prior to the special meeting held on August 4th. At a subsequent Board meeting on August 16th, public outrage was exacerbated by the revelation that the school had in fact secured only $54,000 in advertising revenues and there are divergent accounts of what information about advertising commitments was supplied to the Board at the time it approved the contract.
But here's where it gets interesting. The Board defended its hasty action on the ground that the $250,000 contract had already been entered into by unnamed "individuals who thought they had the authority" to enter into such a contract. This revelation by the Board was met with a smattering of laughter at the public meeting. Why were the outraged Valparaisans laughing? Because they know that, under agency law, thinking you have the authority to enter into a $250,000 contract is not the same thing as having such authority. And if residents find it laughable that some employee of the high school would claim to have such authority, the other party to the contract knew or should have known that such contracts require Board approval to be binding. In short, there was no need for the Board to rush to approve the contract, because the contract was never binding in the first place.
In addition, there is the separate, disputed issue of whether such a contract must be awarded only after a solicitation of competitive bids, which did not occur in this case.
Whether or not the contract was enforceable at the time it was signed, the Board has now adopted it, so it has become binding. That does not mean that it could not be challenged of course. Angry Valparaisans could run to court and seek to enjoin any further measures to install the new scoreboard. But doing so would cost taxpayers more money, and so citizens who would like to hold the allegdly unaccountable Board to account while also preventing improper expenditures of public funds are faced with a Hobson's choice.
July 22, 2011
Designer Leaves NASCAR for Formula One, Brings Contract Dispute Along for the Ride
Michael Waltrip of NASCAR fame (fame earned both as a driver and now as a team owner) has filed a complaint against auto designer Mike Coughlan. The suit claims that Coughlan breached the contract by leaving his position with Waltrip's race team prior to the end of his employment contract term. And, to make it worse, Coughlan reportedly left Waltrip's team to design cars for the Formula One team, Williams. Given NASCAR’s reported inferiority complex with respect to the older and allegedly more complex F1 racing (i.e., a kind of racing that requires one to do more than just turn left), this departure "across the pond" was especially vexing to Waltrip. The particular contractual terms cited include a “loyalty clause” and the duty of good faith and fair dealing. If the contractual fight takes any dramatic turns, perhaps Sascha Baron-Cohen will reprise his role as a Formula One turned NASCAR driver in the movie version of this dispute.
June 15, 2011
Madden Coder Sues Electronic Arts for Breach of Contract
Developer Robin Antonick, the man who originally coded the John Madden (pictured at left) football game for Sega Genesis, has brought a suit against Electronic Arts (EA) claiming a breach of contract stemming from EA's failure to pay royalties for use of his work. According to Gamasutra, Antonick alleges that "all subsequent versions of the series are derivative works based on technologies he developed, specifically his football player behavior AI, the pseudo 'three-dimensional projection' of the field, the original game's instant replay feature, and the concept of a 'positional camera.'" In the suit, Antonick seeks payment for the use of these innovations.
According to this lengthy report in Bright Side of News, under the original contract, which has been amended since its creation in 1986, Antonick was entitled to royalties of 15% on all sales and 5% for derivative works. Since Madden football was started it has brought EA approximately $4 billion in profits. Antonick alleges that his work was used by EA in their other games including their NHL game. Antonick is seeking the past royalties plus interest.
Gamasutra reports that earlier this month, EA filed a motion to dismiss, claiming that no breach of contract has occurred because the features at issue are non-copyrightable and thus not covered by the contract. In addition, EA claims that the statute of limitations has already run. In addition, in response to Antonick's original demand for royalties, EA provided Antonick with the source code for its version of the game to prove that his code was not used. EA also has submitted five declarations saying the new version of the game was developed without using any of Antonick’s work.
Gamasutra concludes that, "[i]n order for Antonick to have a case, he will have to convince the court that his work amounted to original expression, rather than computer algorithms, which would make it copyright-protectable work."
[JT and Jared Vasiliauskas]