ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Thursday, July 26, 2018

Waiver as a shield, not a sword

It's the time of year when I start thinking about the fact that I should be thinking about my fall classes, and right on cue, here's a case out of the Seventh Circuit, Knopick v. Jayco, Inc., No. 17-2285, that's thoughtful about how waiver works and the policy underlying it. (You can listen to the oral argument here.)

The waiver portion of the case (there was also a jurisdictional issue) involved a warranty that stated it did not apply to RVs purchased by LLCs. The RV in question was purchased by an LLC. Therefore, under the unambiguous language of the warranty, the RV was not covered. However, Knopick argued that Jayco waived this exclusionary language of the warranty when it voluntarily performed some repairs to the RV as if the warranty applied. The warranty, though, had an additional clause stating that such "good will" repairs would not alter the exclusionary language of the warranty. 

Even without that language, the court was skeptical that waiver could be used to achieve what Knopick wanted here. The court noted that waiver is ordinarily used as a "shield" to excuse non-performance. It's used so that a party cannot be "lulled" into a belief that its compliance is sufficient to fulfill a contractual obligation only to be surprised by a lawsuit for inadequate compliance later. Knopick, the court said, was trying to use waiver as a "sword." Rather than protecting himself, he wished to use it to compel performance by Jayco. The court, wary of expanding waiver because of how greatly it would damage the predictability of contracts, stated that it was unwilling to use the doctrine of waiver to compel Jayco, as such an action would have the effect of discouraging parties from "good faith" actions such as that undertaken by Jayco for fear of opening themselves up to expanded liability. 

h/t to Timothy Murray of Murray, Hogue & Lannis for passing this one along!

 

July 26, 2018 in Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Thursday, July 5, 2018

Classic Case on Choice of UCC or Common Law

A recent Indiana case demonstrates the continued necessity of distinguishing between the common law and the UCC.  Nothing too new in the case legally as I see it, but it lends itself well to classroom use. Unknown

A medical center entered into two contracts with a medical billing services company for records-management software and related services.  In Indiana and elsewhere, “where a contract involves the purchase of preexisting, standardized software, courts treat it as a contract for the sale of goods governed by the UCC.  However, to determine whether the UCC applies to a mixed contract for both goods and services, Indiana uses the “predominant thrust test.”  Courts ask whether the predominant thrust of the transaction is the performance of services with goods incidentally involved or the sale of goods with services incidentally involved. Id. To determine whether services or goods predominate, the test considers (1) the language of the contract; (2) the circumstances of the parties and the primary reason they entered into the contract; and (3) the relative costs of the goods and services.

In the case, the contractual language was neutral.  Next, the primary reason for executing the agreements was to obtain billing services.  The software was merely a conduit to transfer claims data to the billing services company in order to allow it to perform those services.  The goods – the software – were incidental.  The third and final factor—the relative cost of the goods and services—also pointed toward that conclusion.  As the Indiana Supreme Court has explained, “[i]f the cost of the goods is but a small portion of the overall contract price, such fact would increase the likelihood that the services portion predominates.”  Under the agreement, the medical center paid a one-time licensing fee of $8,000 for software; a one-time training fee of $2,000; and $224.95 each month for services and support for about nine years.  Thus, for the life of the Practice Manager agreement, the services totaled approximately $26,294—more than three times the $8,000 licensing fee for the software.  Under the agreement, the medical center also paid a one-time licensing fee of $23,275 for the software; a one-time training fee of $4,000; and $284 per month for services and support for about six years.  Thus, the services totaled about $24,448—slightly more than the $23,275 software licensing fee. The relative-cost factor reinforces the conclusion that services predominated.  Thus, the ten-year common-law statute of limitations and not the four years under the UCC applied. Unknown-1

Interestingly, the case also shows that because the UCC did not apply, plaintiff’s claim for good faith performance under the UCC dropped out too.  In Indiana, a common-law duty of good faith and fair dealing arises “only in limited circumstances, such as when a fiduciary relationship exists,” which was not the case here.  The parties were thus not under a duty to conduct their business in good faith. Yikes!  This should allow for some good classroom discussions.

The case is Pain Center of SE Indiana LLC v. Origin Healthcare Solutions LLC

July 5, 2018 in Contract Profs, Miscellaneous, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Wednesday, July 4, 2018

Pleading breach of contract adequately

Here's a short case out of the District of New Jersey, Hall v. Revolt Media & TV, LLC, Civil Action No. 17-2217 (JMV) (MF), in which the plaintiff failed to adequately plead his breach of contract claim. I'm blogging it because I don't spend a lot of time teaching my students about complaint-drafting; there are always just so many other things I'm quickly trying to discuss. But this case strikes me as a nice straightforward way to talk about it. The claim fails because all of the plaintiff's allegations were about contract negotiations: He contacted the defendant to discuss a contract, he sent the defendant a contract that was never signed, he continued to attempt to contact the defendant to negotiate the contract, etc. The court said there was never an allegation that any contract had actually been finalized. Nor did the complaint contain any details about the terms of the contract, such that the court could not tell what had allegedly been breached. I think this can be used as a way to focus the students on what they do need to be sure to include in breach of contract allegations. 

And being sure to also plead promissory estoppel would be a good idea. The complaint did adequately plead unjust enrichment, so this case can act as a good way to teach the distinctions of that cause of action as well. 

July 4, 2018 in Commentary, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Monday, July 2, 2018

An "exceedingly rare" case where a court discounted testimony, relying in part on the witness's admitted "habit of routinely lying" in the course of business

A recent case out of Michigan, Strategy and Execution Inc. v. LXR Biotech LLC, No. 337105, speaks to the perils of not putting agreements in writing (or doing so and subsequently losing the writing). The parties had a written contract that stated that they would arrive at performance criteria at a later time. But the parties disputed ever entering into a later agreement over the performance criteria. No party produced any written document. LXR's principal testified that the parties reached an oral agreement that he memorialized in writing but the writing was later lost. However, this testimony was not corroborated by any other witness except for one who gave "conflicting testimony" regarding the document. LXR's principal had admitted to "routinely lying" because he apparently thought it to be "good business practice." Furthermore, none of the "voluminous" emails exchanged between the parties ever referenced any agreement on the performance criteria. The court therefore agreed that "this is one of the exceedingly rare cases in which a witness's testimony is insufficient to find a jury question." Despite the testimony, the court was permitted to enter a directed verdict on the breach of contract claim. 

Written contracts are not always required, but this case is an example of why they are often desirable to have, and to keep safe!

(There were other points of appeal in the case relating to other clauses of  the contract and some jury instruction issues.)

July 2, 2018 in Commentary, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Friday, June 29, 2018

If you want something specific, ask for it in your contract

A recent case out of the Second Circuit, Ortho-Clinical Diagnostics Bermuda Co. Ltd. v. FMC, LLC, No. 17-2400-cv (behind paywall), is another case about interpretation of contract terms -- twice over. Because here the parties entered into a contract, fought over breach of that contract, and then entered into a settlement agreement, which they were also fighting over. The moral is that, if you want something specific, you should ask for it rather than relying on unspoken industry practices. 

The initial agreement between the parties was about an IT operating system. Although the system was going to cost $70 million, the contract wasn't very detailed, with no technical specifications or description of building methods. The parties' relationship deteriorated and they eventually entered into a Settlement Agreement to terminate the project. Under these new terms, FCM would be released from its obligation to provide the system to Ortho, while providing assistance while Ortho transitioned to a different contractor. After execution of the Settlement Agreement, Ortho apparently realized that FCM was not as far along as Ortho had thought and had not prepared certain items that Ortho had assumed it had prepared, and so Ortho claimed that as a result the IT system cost more and took longer. 

The court, however, noted that there was nothing in the contract requiring FCM to produce the certain deliverables Ortho had been looking for. Ortho claimed it was "standard practice in the industry," but the court said that wasn't the equivalent of it being a contractual obligation. FCM was contractually required to provide assistance -- no more, no less. There was nothing in the contract about the job having to be at a particular stage of completion, or that any particular deliverables or documentation had to exist. 

The court also pointed out that Ortho had released its claims regarding the original agreement in the Settlement Agreement. Ortho tried to argue that it had released claims but not damages but the court called that "a nonsensical reading." 

June 29, 2018 in Commentary, Law Schools, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

On Ambiguity: 80 Example Exercises from D.C. Toedt

Metal Fan CartoonNothing communicates the meaning and effects of ambiguity like a good example. So how about eighty of them in one place? 

Our friend over at the On Contracts blog, D.C. Toedt (Houston), has generously posted a collection of 80 exercises illustrating textual ambiguity. The sources vary widely, ranging from legal and religious texts to news items, popular culture, and even comic strips. Toedt uses the exercises in his contract-drafting course, challenging students to rewrite to clarify the meaning. The examples would work well in teaching ambiguity and contract interpretation in the 1L doctrinal course, as well.   

And let's face it: In addition to being pedagogically useful, ambiguities can be downright funny. Enjoy the list! 

June 29, 2018 in Teaching, Weblogs | Permalink

Wednesday, June 27, 2018

Your contract should say what you want; fancier terms are not always a good thing

A recent case out of the Southern District of New York, Treasure Chest Themed Value Mail, Inc. v. David Morris International, Inc., 17 Civ. 1 (NRB), deals with a digital marketing contract, presenting a variety of straightforward interpretation questions that could be helpful for basic examples for some things to look out for in contract drafting. 

The parties entered into a contract in which Treasure Chest was required to provide "greater than 300,000 follow up weekly digital impressions." The first dispute was over whether "digital impressions" was too ambiguous to be enforced. The court, however, easily defined "digital impression" with reference to investopedia.com. The court distinguished "digital impression" from "email," saying if the parties had meant "email" they would have used the word "email." A lesson in just using what you wish to say if that's indeed what you want; fancier terms are not always necessary and might just leave some room open for arguments about ambiguity and interpretation. 

There was also a dispute over whether it was ambiguous that compensation was "up to" a certain amount. But the court disagreed, saying it was clear that this simply meant the contract would not exceed a certain amount. 

Therefore, the court found there was a valid contract, that Treasure Chest fulfilled all of its obligations under the contract, and David Morris did not, so Treasure Chest was entitled to damages. Treasure Chest also sought attorneys' fees, but the court found that the contract was not clear enough to justify attorneys' fees. The contract said that "costs necessary to collect" past due balances could be awarded, but the court said that did not satisfy the "high standard" for collection of attorneys' fees via contract. Again, if attorneys' fees are what you want, attorneys' fees are probably what you should say. 

June 27, 2018 in Commentary, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Friday, June 15, 2018

It's True: People Really Are Getting Dumber and Dumber

New scientific studies have proven what we might all have been jokingly saying, but which apparently is true: the world population is increasing, but IQ levels are decreasing.   The reason?  Nurture, not nature. 

The studies claim that after 1975, IQ levels started to drop because of, it is thought, "environmental factors."  These could include pollution, changes in the education system and media environment, nutrition, reading less, and being online more.   Yikes.

"It's not that dumb people are having more kids than smart people, to put it crudely. It's something to do with the environment, because we're seeing the same differences within families," said one of the co-authors and lead researchers on the project.

For us, this is not good news for obvious reasons.  But are we, in fact, a contributing cause?  I know that some of my students, for example, do not enjoy and sometimes simply will not read long homework assignments, don't read privately, and indeed spend large amounts of time online.  I'm sure your students are not very unlike mine in that respect.  Other studies that I don't have handy here also demonstrate that our students have difficulty reading longer texts simply because they are not used to reading anything much longer than blog posts, twitter feeds, and maybe the occasional article here and there, but certainly not books.  

Read the entire findings.  References to "changes in the education system" and "decreasing access to education" are disturbing.

 

 

June 15, 2018 in Commentary, Contract Profs, In the News, Law Schools, Miscellaneous, Science, Teaching | Permalink | Comments (1)

Monday, June 11, 2018

Saving illusory promises with implied covenants of good faith and fair dealing

If you teach Lady Duff-Gordon, as I teach Lady Duff-Gordon, you know that it's a fun case that lets you talk about a frankly pretty incredible life. But it's also an older case, so here's a more recent case out of New York using the implied covenant of good faith and fair dealing to potentially save an allegedly illusory promise, Ely v. Phase One Networks, Inc., 2667/2017 (behind paywall). 

The plaintiff is a composer. The defendant is a company that produces music albums. The parties entered into recording and co-publishing agreements. The plaintiff sought a declaratory judgment that the contracts are unenforceable because they are illusory and unconscionable and moved for summary judgment. The court found that factual disputes existed as to both the unconscionability and illusory allegations. The analysis on unconscionability was very brief, but the court did provide a slightly deeper analysis on the illusory promise front. Although the recording contract provided that the recordings were "subject to the defendant's approval in its sole judgment," the court noted that the covenant of good faith and fair dealing "implicit in all contracts" meant that "the defendant could not unreasonably withhold approval." 

June 11, 2018 in Commentary, Famous Cases, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Wednesday, May 30, 2018

Professor's retaliation claims mostly survive motion to dismiss

A professor at Columbia sued the university, alleging various contract-based claims. In a recent decision, Joshi v. The Trustees of Columbia University in the City of New York, 17-cv-4112 (JGK), the Southern District of New York permitted the claims to survive the university's motion to dismiss. 

The university argued that various employment policies did not constitute binding contracts between the parties. However, the court disagreed. The university had in place a Reservation of Rights that stated the employment handbook should not be treated as a contract. But there were factual disputes as to whether this Reservation of Rights applied to the other employment policies at issue, which did not seem to be found in the employment handbook. The parties disputed how clearly the Reservation of Rights was incorporated into the policies, and whether the Reservation of Rights was conspicuous. Therefore, the court allowed the breach of contract claim to survive the motion to dismiss (it also found that there were factual disputes about whether the university's actions were a breach of the policy). 

The court also allowed the plaintiff's claim of breach of the covenant of good faith and fair dealing to survive, because it was about different conduct than the breach of contract claim (regarding the university's failure to investigate and stop the retaliation at issue, rather than the retaliation itself). 

And the plaintiff's promissory estoppel claim also survived. The university argued that promissory estoppel claims do not apply to employment relationships, but the court disagreed and refused to dismiss the claim based on that alone, stating that the plaintiff was not seeking reinstatement of employment. The plaintiff's allegations, taken in the light most favorable to them, adequately pleaded promissory estoppel, so the court allowed the claim to survive. 

The court did, however, dismiss the plaintiff's claim for fraud in the inducement, finding that the plaintiff had not adequately pleaded that the university acted with an intent to deceive. 

May 30, 2018 in Labor Contracts, Recent Cases, Teaching, True Contracts | Permalink | Comments (1)

Thursday, November 30, 2017

Here's an Example of an Illegal Contract

I always struggle to think of examples of illegal contracts other than contracts to kill people, which makes for a dramatic class discussion but I fear might cause the students to write off illegal contracts as a subject better suited for Breaking Bad or something. So I was delighted to come across this recent case out of Michigan, M-D Investments Land Management, LLC v. 5 Lakes Adjusting, LLC, No. 336394 (behind paywall), dealing with an illegal contract. 

While the contract is found illegal in this case, the facts are not glamorous. The plaintiff hired the defendant to adjust its fire insurance claim and signed a contract for the services. Later, the plaintiff filed this action seeking a declaration that the contract between the parties was illegal as against public policy, and therefore voidable at the plaintiff's option. The issue was that the contract had not been approved by the Department of Insurance and Financial Services ("DIFS") as required by Michigan statute. 

The trial court found the contract in violation of the statute and thus voidable, and this appellate court agreed. The statute required the adjuster to seek approval from DIFS of its contract, and the defendant's failure to do so, no matter the reason, made the contract at least voidable at the plaintiff's option (which the plaintiff had chosen to exercise), if not void altogether. 

The defendant argued that it has since obtained DIFS approval of its contract. However, it was undisputed that it did not have this approval for the entire time the contract with the plaintiff was in effect. Thus, the contract could not be saved by after-the-fact approval.  

November 30, 2017 in Commentary, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Friday, September 8, 2017

Conversations left open-ended don't rise to the level of an offer

In my head it's still the beginning of the school year, even though at my school we just finished our third week of classes already. This means that, because we only have a one-semester Contracts course, I'm just finishing up contract formation and moving on, and this case is kind of a nice little reminder review about the principles surrounding offers.

The case out of New Jersey, Kristine Deer, Inc. v. Booth, No. C-29-16 (behind paywall), involved a luxury active wear company, K-DEER, for which the defendant, Booth, worked. Booth had several conversations over the course of her employment with K-DEER's sole shareholder, Kristine Deer, about Booth receiving possible equity interest in the company. However, every one of those conversations was fairly vague. Deer seemed to always finish the conversations with some kind of demurral: that she had to "think about" it more, or that she wasn't "ready to have the conversation." Eventually, Booth resigned with an e-mail that read "If you are not willing to pursue an active dialog about ownership I am not interested in working at K-DEER." 

The parties are now involved in litigation, which included, among other things, Booth's counterclaim for breach of contract. She alleged that "Deer led [her] to believe she was a partner and had a right to equity in K-DEER," because she "did not explicitly deny her requests for equity" and called her a "partner" at times. However, the court quoted at length from Booth's deposition, where she admitted that Deer did not offer her any equity and that, in fact, her unwillingness to do so was why she resigned. Under these circumstances, it was impossible to find an offer from Deer to Booth. There was no expression of commitment on Deer's part. In fact, all of Deer's statements seemed to evince the opposite. So the court found no contract existed between the parties. 

As I am teaching my students to do now, the court then moved on, examining Booth's claim for quantum meruit. However, Booth never alleged that she wasn't adequately compensated, just that she would have left K-DEER earlier had she realized Deer wasn't going to give her equity. That did not justify quantum meruit. The court found that Booth had been compensated for all the work she had performed, so there was no unjust enrichment on K-DEER's part.

September 8, 2017 in Labor Contracts, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (2)

Friday, August 18, 2017

Brian O'Conan Hypo

Having disappeared for a couple of weeks into frantic preparation for the new semester, I thought I would re-emerge by sharing a hypo that I do with my students on the first day of class, based on Conan O'Brien's contract dispute with NBC from a few years ago. The hypo goes something like this: 

Brian O’Conan is a comedic host who has helmed a show on CBN, Later at Night, for sixteen years. Later at Night airs at 12:30, and Brian has always wanted to “move up” in the world of late night hosts to host a show at the earlier time of 11:30. Five years ago, in order to keep Brian at the network, CBN promised to give Brian hosting duties for its legendary 11:30 show, Somewhat Late at Night, as soon as Len Jayo’s current contract was up. Somewhat Late at Night is a flagship show that has aired in its time slot on CBN for 43 years; prior to that, it started at 11:15 for 14 years. For its entire 57-year existence, Somewhat Late at Night has begun directly after the late local news.

Brian and CBN enter into a contract with the following terms:

  • Brian is guaranteed that he will be the host of Somewhat Late at Night.
  • Both Brian and CBN promise to act in good faith in executing the contract.
  • Both parties will mitigate any damages caused by a breach of contract, but CBN agrees that it will pay Brian $40 million if it breaches the contract.
  • Brian is prohibited from being a late-night host on any other network in the event of a breach of the contract.

As promised by the contract, Brian becomes host of Somewhat Late at Night. After a strong start, Brian’s ratings trail off. Six months into Brian’s stint as host, CBN makes a public announcement that Somewhat Late at Night will be moved to start at midnight. It will use the 11:30 time slot for a new late-night show with old Somewhat Late at Night host Len Jayo.

Brian, learning all of this for the first time from the public announcement, tells CBN it has breached the contract, demands payment of $40 million, and also opens discussions with a competing network, Wolf, to host a new late night show at 11:30.

***

I like this hypo because, even though it was several years ago now, most students recognize the real-life situation this problem was based on and so feel somewhat engaged with it. In addition, even though I have taught them literally nothing about contract law at this point, I think they gain a lot of confidence from being able to examine the problem and come up with ideas for how the analysis should begin. I usually split them up and assign them a side to represent and have them make arguments on their client's behalf, and then allow them time for rebuttal. Along with discussing the contract's terms around the show itself, the students get into discussions about good faith, mitigation of damages, and just basic fairness. When we're done with the discussion, I then ask them how they felt about the side they had been assigned to, and if any of them had wished they'd had the other side. I think it is a good basic introduction to the task of being lawyers that I find relaxes them a little on the first day: If they can already talk about this problem on the first day, imagine how much better they'll be once they know some law!

If you're starting school years like I am, good luck!

August 18, 2017 in Celebrity Contracts, Commentary, Current Affairs, In the News, Law Schools, Teaching, Television, True Contracts | Permalink | Comments (2)

Friday, July 28, 2017

Why Pyeatte v. Pyeatte May Be the Best Teaching Tool in Contracts Law

Our friend and esteemed colleague, Professor Charles Calleros, has kindly sent the following as a guest contribution to the ContractsProf Blog.  Enjoy!

Recently Val Ricks has collected a number of essays from colleagues on best and worst cases for the development or application of contract law.  In addition to participating in that project, Charles Calleros invites faculty to upload and post links to essays about their favorite cases as teaching tools (regardless whether the cases advance the law in an important way). He starts the ball rolling with this Introduction to his essay on "Why Pyeatte v. Pyeatte Might be the Best Teaching Tool in the Contracts Casebook":

Pyeatte v. Pyeatte, a 1983 decision of the Arizona Court of Appeals, did not break new ground in the field of contracts. Nonetheless, I assert that it is one of the best pedagogic tools in the Contracts casebook, for several reasons:

  •  *          The facts are sure to grab the attention of first-semester law students: A law grad reneges on a promise to support his ex-wife through graduate school after she supported him through law school during their marriage;

*          This 1980’s opinion is written in modern plain English, allowing students to focus on substance, while also learning a few necessary legal terms of art.

*          After their immersion in a cold and rather unforgiving bath of consideration and mutual assent, students can finally warm up to a tool for addressing injustice: quasi-contract;

*          The opinion’s presentation of background information on quasi-contract provides an opportunity to discuss the difference between an express contract, an implied-in-fact contract, and an implied-in-law contract; 

*          Although the wife’s act of supporting her husband through law school seems to beg for reciprocation or restitution, students must confront judicial reticence to render an accounting for benefits conferred between partners in a marriage, exposing students to overlap between contract law and domestic relations law;

*          The appellate ruling of indefiniteness of the husband’s promise – presented in a later chapter in my casebook, but looming vaguely in the background of the discussion of quasi-contract – invites critique and perhaps even speculation that the appellate panel felt comfortable denying enforcement of the promise precisely because it knew it could grant restitution under quasi-contract; and

*          The court’s admonition that expectation interest forms a ceiling for the calculation of restitution reveals a fascinating conundrum that brings us back to the court’s ruling on indefiniteness. . . .

You can find the whole essay here.

July 28, 2017 in Commentary, Contract Profs, Famous Cases, Law Schools, Miscellaneous, Recent Scholarship, Teaching, True Contracts | Permalink | Comments (2)

Monday, July 17, 2017

Conditions Precedent, Specific Performance, and Unclean Hands, All in One Case!

A recent case out of Texas, Carnegie Homes & Construction, LLC v. Sahin, No. 01-16-00733-CV, brings up no fewer than three golden discussion topics of contracts law courses: conditions precedent, specific performance, and unclean hands. 

The dispute is actually a pretty run-of-the-mill disagreement over a real estate purchase. It just happens to contain a lot of arguments. 

First, Carnegie Homes, the buyer, attempted to argue that a number of conditions precedent had never been fulfilled, and therefore none of its obligations to buy the property had been triggered. The contract in question did read it "shall only be effective upon performance of the conditions set forth in Section E of this agreement." But despite calling the contents of Section E "conditions," the court read them and found them to be covenants, not conditions, dictating when and how much Carnegie Homes would pay and how much their respective obligations would be. Rather than conditions, Section E contained mutual promises, and indeed, Section E was called "Terms" instead of conditions. Therefore, the reference to conditions was a mistaken one. 

Second, specific performance was deemed to be the proper remedy, because the contract was for the sale of a unique property. Carnegie Homes tried to argue that specific performance was not usually made available to the seller of a piece of property, only to the buyer of that property. However, the court said that specific performance was not so limited and that sellers have the right to seek and be rewarded specific performance just as much as buyers. 

Finally, Carnegie Homes tried to argue that unclean hands prevented the seller, Sahin, from receiving relief. The conduct Carnegie Homes complained of concerned Sahin's service of a supplemental petition that alleged Carnegie Homes committed fraud. Sahin served the petition but never filed it. Carnegie Homes, however, was required to disclose it in a loan application, which allegedly caused it to be refused financing, leading to Carnegie Homes's difficulty in fulfilling its obligation to buy the property. The court, however, found that the disclosure to one lender did not block Carnegie Homes from performing the rest of its obligations, and did not act as unclean hands on Sahin's part. The contract did not require Sahin to help Carnegie Homes obtain financing, nor did it condition Carnegie Homes's obligation to pay on the receipt of financing. Therefore, Carnegie Homes was not excused from its obligations and Sahin was entitled to relief. 

July 17, 2017 in Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Monday, July 10, 2017

Jeff Lipshaw on Robot Lawyers and Legal Education

Over at the hallowed mothership of the Law Professor Blogs Network, TaxProf Blog, Jeff Lipshaw (Suffolk) has written a thought-provoking post entitled "Robot Lawyers, 'Skills Training' and Legal Education." Here are two of the key closing paragraphs:

Jeff LipshawAs a long, long, long time practitioner and generalist, I continue to be amused (or something like that) by the buckets of legal education (the rooms of the Mystery House).  For example, it took returning to academia to find out that "commercial law" (i.e. the UCC) is a different area than "corporate law."  Within business law, there are corporate camps and "uncorporate" camps, with the latter seemingly most interested in demonstrating why the area in which they happen to write and teach is normatively superior to the other (my friend and co-author, the late Larry Ribstein, being a prime example of the latter).  

In the long, long term, I think the crunchable middle will be both doctrine, as traditionally taught, and what today pass for "skills."  Both, to a large extent, have the potential of being robotic.  The long game is in doing and teaching what robots really can't do, or in managing the robots.  I'll put aside both trial and appellate litigation and focus on everything else lawyers do. In the interim, I'd do away with a lot of classes that are merely more yammering away at segments of doctrine by way of litigated cases, reverse the classroom, and make classes ones in which you merely bring doctrine to the party along with all the other theories.  (In my own area, I'd do away with the traditional business law courses, and combine with the business school to teach "Law & Finance of Business Entities" with J.D. and M.B.A. students intermingled.)

The whole post is well worth a read and is available in its natural habitat here.

July 10, 2017 in Law Schools, Teaching, Web/Tech | Permalink

Teaching Spotlight: "Picturing Corporate Practice" (Jay A. Mitchell - Stanford)

Spotlight2From time to time on ContractsProf Blog, we like to highlight innovative or interesting teaching materials that will be of interest to our readers. Jay A. Mitchell is the Director of the Organizations and Transactions Clinic at Stanford Law School and is the author of Picturing Corporate Practice (West Academic). In the current push for pedagogy and materials to create law graduates who are more "practice ready," Professor Mitchell's text stands out with its approachable and innovative design choices for engaging students. I asked the Picturing Corporate Practice author if he would tell us more about his book in a guest blog post.

Without further ado, let me turn this post over to Professor Mitchell:

----------------------------------------------

Picturing Corporate Practice is a blend of text and visuals intended to introduce students to corporate and transactional work.

The book includes a brief overview of corporate practice and chapters focused on advice development, transaction planning and management, contracts and other legal documents, board meetings, litigation (from a corporate perspective), SEC filings, corporate pro bono, and client service.

Jay-a-mitchell-3-400x400The fun part here is that I collaborated with a graphic designer on the thing. We used a landscape format, paid close attention to layout and typography, built in lots of white space, included 50+ diagrams, timelines, and other graphics, and used a conversational writing style throughout. I’m a big believer in the value of design and typography for legal work-products, course materials, and other information products --   the book reflects that belief.

And I tried to draw on my experience not only from the Stanford Law School clinic but also as a former senior lawyer at a big company (and thus client) and law firm partner, and on the input of the five former students who read the entire manuscript.

Several notes about goals and themes:

  • Orientation. Most importantly: I wanted simply to orient folks to the work. Corporate is unfamiliar to most students. I tried to provide some broader ways of thinking about the practice and what we do as corporate lawyers -- build things, design processes, produce products that people use, manage projects, engage in a craft. I think those frameworks can help students start to get their head around the job.

 

  • Documents. The book gives considerable attention to contracts and other legal documents, the core products of the trade. It discusses reading, a fundamental lawyer activity that in my view doesn't receive the attention it deserves. It identifies document characteristics -- business focus, variety, functionality, visibility, longevity, etc. -- and how law is “underneath” and reflected in our documents. There’s coverage of practical tasks like document planning, working with forms, and proofreading. The idea was not only to demystify but also cultivate an appreciation for the many dimensions and implications of legal documents, and for what it takes to do them well.

 

  • Getting Started on a Problem. The book provides tangible suggestions for getting started on a project or document. Students and new lawyers often don’t know how to get going on assessing a business situation, or dealing with a big contract -- I see that in the clinic all the time. So the book includes ideas about how to get traction, how to start getting a grip on a problem, and emphasizes the relevance of common sense and commercial sensibility.

 

  • Visual Thinking. I wanted to make the case for one of those practical suggestions: drawing pictures to facilitate thinking and collaboration. Drawing is an unusually effective tool for thinking, and something that we don’t talk about much in law school. The book includes a brief general discussion, grounded in research from psychology, cognitive science, engineering, and other disciplines, and then lots of ideas and examples across the practice.

 

  • How Things Work. The book includes how-things-work information and vocabulary. Like, what’s a closing? How do covenants and conditions work together? What do board resolutions do? How does an IPO work? What’s a T&R schedule? When the partner says “we need to make conforming changes,” what does she mean? What’s an officers’ certificate? These are questions folks may be reluctant to ask, and stuff that people in firms rarely explain.

 

  • Habits of Mind. The book emphasizes the central importance of ways of working and professional disciplines: organization, attention to detail, project management, diligence, stamina, responsiveness, service orientation…. all things especially important early in one’s career, and generally not big topics of emphasis in school.

 

  •  Fun. I try to be direct but encouraging, and to suggest the intellectual and professional enjoyment in the job -- which can be easy to lose sight of in the grind of law school and especially law firm life.

We use this book as a text in my clinic, and it could be used in other transactional skills courses as well; the chapters on deal work and board meetings are relevant to, say, an M&A course. I think the book could be used in 1L lawyering skills and legal writing classes and in contracts and contract drafting courses, with the two chapters about documents being of particular relevance. I’d also love to see visual methods be introduced in lawyering skills or comparable 1L courses -- it’s really useful in this line of work. 

Outside of skills and contracts-oriented classes, I can imagine that corporations instructors might find useful the chapter about board meetings. Evidence instructors who want to add a touch of corporate to the curriculum could use the chapter about litigation, which centers on record building and attorney-client privilege in the transactional setting. Public interest and pro bono instructors might find the pro bono chapter useful in briefing students about nonprofit organizations. And the increasing number of lawyers and others interested in legal design might find both the visual methods discussion and the book design itself of interest.

So, the book is a little different, both for the transactional skills space and for the legal education genre generally. I hope folks find it helpful.

----------------------------------------------

More information on Picturing Corporate Practice is available here. Thanks to Jay Mitchell for providing this guest post.

Do you have any innovative contracts, commercial, or transactional teaching materials that would be of interest to our readers that we could highlight on ContractsProf Blog? If so, drop me (Mark Burge) an email with the information, and you might be our next featured guest post.

July 10, 2017 in Teaching | Permalink

Tuesday, May 2, 2017

Some Fun with Offers!

Here's some fun with offers from Kirin Produce Co. v. Lun Fat Produce, Inc., Docket Number 1684 CV 03338-BLS2, a recent case out of Massachusetts. 

The dispute revolved around whether any of Kirin's actions constituted an offer that Lun Fat could accept form a binding contract. Over about a month's time, Kirin sent to Lun Fat a series of spreadsheets proposing terms under which it would be willing to buy Lun Fat's assets. However, each of these spreadsheets was labeled in several places that they were "subject . . . to change," including "Change by both Seller & Buyer." Under these circumstances, Kirin failed to manifest any present intention to be bound and so none of those spreadsheets constituted an offer. 

Lun Fat eventually responded to one of Kirin's spreadsheets with an email proposing a series of new terms, but the court found nothing in the email stated that this was a counteroffer and that Lun Fat was willing to sell if Kirin accepted those terms. At any rate, Kirin did not accept the terms but rather proposed new terms in response. The court construed that response as a rejection of any offer by Lun Fat and a counteroffer by Kirin. 

Later, Lun Fat called Kirin on the phone and orally offered to sell Lun Fat's assets on the terms that had been in Lun Fat's e-mail. Even if Kirin had accepted that oral offer, though, it was ineffective because this was a deal for land and thus subject to the statute of frauds. 

Therefore, there was never any contract between the parties. 

May 2, 2017 in Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Monday, April 24, 2017

Scholarship Spotlight: "What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes" (Jeffrey Harrison - Florida)

How far does the teaching of contract doctrine take students beyond their initial intuitive view of the applicable legal rules? Jeffrey Lynch Harrison of the University of Florida - Levin College of Law recently posted "What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes," an article that should be of interest to anyone teaching the first-year Contracts course. Here is the abstract:

Jeffrey Harrison (Florida(Abstract

Are legal rules intuitive or, at least, consistent with common sense? In this study, 260 law students at five law schools who had not taken contract law, were presented with eight questions based on specific contracts cases or common contracts issues. They were asked what they felt was the fair or right answer to each question and to formulate the rule they would apply. The purposes of the study were to 1) determine whether contract law is what the untrained person believes it is or should be and 2) experiment with a strategy of pretesting to determine what topics within any course deserve special attention during a semester.

Outside of its classroom implications, Harrison's article also provides some interesting fodder on the issue of the extent to which legal rules in general are--or must be--dependent on given zones of societal norms. "What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes" is available for SSRN download here.

 

April 24, 2017 in Recent Scholarship, Teaching | Permalink | Comments (0)

Monday, April 3, 2017

University Decisions on Disciplinary Procedures Receive Deference; Cannot Be Arbitrary, Capricious, or in Bad Faith

A recent case out of the District of Nevada, Janati v. University of Nevada, Las Vegas School of Dental Medicine, Case No. 2:15-cv-01367-APG-CWH (behind paywall), discusses the leeway universities have in enforcing the policies in their student manuals. The student was suspended from UNLV Dental School for plagiarism, and, in addition to raising constitutional due process and First Amendment issues, she contended that UNLV breached its Student Policy Manual and as such was in breach of contract. UNLV agreed that the Student Policy Manual constituted a binding contract between the school and the student but contended that its decisions on disciplinary procedures under the manual were entitled to "significant deference." 

The court agreed. The standard for determining if the university had violated its disciplinary procedure was "arbitrary, capricious, or bad faith," "without any discernable rational basis." The university's actions did not rise to that level in this case. The complaint concerning the student's Honor Code violations was required by the manual to "include specifics" of the conduct at issue, including any witnesses to the conduct. The complaint against the student here neglected to name two of the faculty members involved and left off the names of some of the witnesses, but the student admitted that she knew who everyone involved with the complaint was, even prior to its filing. There was also some confusion about whether the university failed to solicit information from one of the witnesses during the first Honor Council proceeding, but all of the parties agreed that, to the extent that witness was overlooked, he did provide information during the second proceeding the parties held. 

The court found that none of those rose to the high bar of violation of the disciplinary procedures and therefore the student could not sustain a breach of contract claim. 

April 3, 2017 in Current Affairs, In the News, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)