ContractsProf Blog

Congratulations to Bobby Chesney!

Word broke last week that Bobby Chesney (right) has been appointed the incoming Dean of UT Austin School of Law.  Dean Chesney is one of the nicest people you will ever meet in the academy.  That is one reason why I have been hesitant to congratulate Dean Chesney on his new position.  But he is currently UT Austin's Associate Dean, so maybe the new position will be somewhat less onerous.  I wish him luck.

Dean Chesney is also a highly capable scholar, with some notable administrative and entrepreneurial skills that will no doubt serve him well in his new capacity.  I met him early in my career as a law professor when I was writing about the state secrets privilege.  He wrote a seminal article on the topic, which guided me into the literature.  My views on the proper scope of the privilege were and continue to be far different from his, but he invited me to participate in a fabulous gathering of academics, JAG officers, and representatives from the International Committee of the Red Cross.  I had the opportunity to participate in a couple of these gatherings, and they proved very valuable as I was able to supplement my public international  courses with the materials participants shared on the law of armed conflict.  That in turn enabled me to develop some courses on the law of armed conflict, including one of my favorite teaching experiences, a two-week study-abroad course on the law of armed conflict in Israel and Palestine.

My real concern upon hearing the news, however, was that Bobby Chesney as Dean Chesney would have even less time than he had a Associate Dean Chesney to record his incomparable National Security Law podcasts with his phenomenal friend, colleague, and sparring partner, Steve Vladeck.  Happy news!  A new episode dropped this week, and the hosts predict that they will have more time to record than they have had during the past academic year.  

This blog is indebted to that podcast for our occasional weekend frivolity feature, so I at least am relieved to know that the original frivolity, as well as very high-level discussions of national security law, will continue to flow.

Heartfelt congratulations all around!

Tuesday Top Ten - Contracts & Commercial Law Downloads for May 17, 2022

What's hot in recent contract and contract-adjacent scholarship as we settle into the summer months? So glad you asked! Check out this week's Tuesday Top Ten:

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 18 Mar 2022 - 17 May 2022

Rank	Paper	Downloads
1.	The Limitations of Privacy Rights Daniel J. Solove George Washington University Law School	1,101
2.	An Overview of Privacy Law in 2022 Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law	483
3.	Where Nonprofits Incorporate and Why It Matters Peter Molk University of Florida Levin College of Law	312
4.	Digital Assets: A Call To Action Johan David Michels, Sharon Hartung and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, affiliation not provided to SSRN and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	299
5.	The Law and Macroeconomics of Custody and Asset Segregation Rules: Defining the Perimeters of Crypto-Banking Hossein Nabilou University of Amsterdam, Amsterdam Law School	218
6.	Liability for Non-Disclosure in Equity Financing Albert H. Choi and Kathryn E. Spier University of Michigan Law School and Harvard University - Law School - Faculty	192
7.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	158
8.	Current Issues in Unjust Enrichment 2022: Failure of Basis, Contractual Rights to Enrichment, Mistake of Law and Limitation Periods Charles Mitchell University College London - Faculty of Laws	153
9.	Towards a Harmonized Theory of the Law Governing the Arbitration Agreement Prof Maxi Scherer and Ole Jensen Queen Mary, University of London, Centre for Commercial Law Studies and Independent	145
10.	Contract Remedies for New Economy Collaborations Alan Schwartz and Simone Sepe Yale Law School and Yale Law School	141

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 18 Mar 2022 - 17 May 2022

Rank	Paper	Downloads
1.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	158
2.	Current Issues in Unjust Enrichment 2022: Failure of Basis, Contractual Rights to Enrichment, Mistake of Law and Limitation Periods Charles Mitchell University College London - Faculty of Laws	153
3.	Towards a Harmonized Theory of the Law Governing the Arbitration Agreement Prof Maxi Scherer and Ole Jensen Queen Mary, University of London, Centre for Commercial Law Studies and Independent	145
4.	Contract Remedies for New Economy Collaborations Alan Schwartz and Simone Sepe Yale Law School and Yale Law School	141
5.	The Maze of Contemporary Contract Theory and a Way Out James Gordley and Hao Jiang Tulane University Law School and Bocconi University - Department of Law	116
6.	The Right to Regulate in International Investment Law (Revisited) Catharine Titi CNRS	96
7.	Rules vs. Standards in Private Ordering Tomer Stein Stetson University College of Law	92
8.	Reconstituting the Code of Capital: Could a Progressive European Code of Private Law Help Us Reduce Inequality and Regain Democratic Control? Martijn W. Hesselink European University Institute	78
9.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	71
10.	B2B Artificial Intelligence Transactions: A Framework for Assessing Commercial Liability Ernest Lim National University of Singapore (NUS) - Faculty of Law	61

 

Introducing: the Ladies Who Law School Podcast (LWLS)

Ever since I listened to the first season of Serial, I have thought it would be great to do a podcast called 1L.  It would track the experience of a group of law students through their first year of law school.  Not Harvard.  Not Yale.  Ordinary law students at an ordinary law school, experiencing what all law students experience, but not stepping into the same river twice.  

The podcast exists!  And it has been shockingly close for the past two years.  Two recent graduates of my law school, the Oklahoma City University School of Law, started podcasting about their experiences in January 2020.  The podcast is called Ladies Who Law School (LWLS), and it is even better than I imagined it would be.  I have yet to meet the two hosts, Samantha Lemke (left) and Haylie Davis (below, right).  I only learned of the podcast at their graduation, but I have started listening, and there is so much of value here!  I am five episodes in, and I want to share some of what I have learned.  I will post occasionally as I come across more content of interest to followers of this blog.   

I want to stress is that this blog is so very useful:

• for students considering law school;
• for students just starting law school;
• for students who are in law school but want to hear from people who are sharing some of their experiences; and
• for law professors, who so rarely get to hear honest conversations about what law school is like for our students

They launched the podcast just after having received their first-year grades.  They relate some experiences that, I have to admit, highlight some problematic features of legal education.  They amaze me with their complete lack of bitterness.  In the first episode, we learn that neither of them had any graded assessments in any of their doctrinal courses before the final exams.  In addition, they report that one of their exams had a skills component that caught them by surprise.  Their take-away: anything covered in the course is fair game for the final.  We as law professors should be grateful for students like Samantha and Haylie who  accept that challenges we throw at them.  

I am not a fan of winner-take-all final exams, especially not in the first semester of law school. That said, I also know that there are a lot of different ways to be an effective law professor.  I just think it is unfortunate if students are only exposed to one approach, and I feel like we let down our first-year students if none of them got any graded, substantive feedback in their first semester of law school until they got their grades back in January.  I commend Haylie and Samantha for the maturity with which they responded to a pedagogical experience that they might have thought less than ideal.

In Episode 2, they come to terms a little bit more with their first-semester grades.  The reality of their grades begins to sink in, and they are a bit more deflated.  Fortunately, they already know what I think I have to tell my students: their law school grades do not define them, and they will find plenty of ways to distinguish themselves and find suitable careers regardless of their class rank.  They also address the stress of cold calling and the Socratic method.  Once again, LWLS demonstrates that my students often understand law school pedagogy better than I give them credit for doing.  They really understand why we teach the way we do, and they buy into it, which really helps them get the most out of their legal education.  They know that the pressure of cold calling keeps them on top of the material, and they know that they have to keep on top of the material, because law school requires that students step up their game compared to their previous educational experiences.  

Episode 3 has useful tips about how to apply and prepare for law school. Along the way, once again the LWLS hosts understand things that students need to know: law school is not like college.  It's like a really demanding, full-time job.  Your family and loved-ones need to know that and know that you cannot be available for them as you were before.  "This is something I'm doing for me," they repeat, and I hope their classmates and peers hear it!  Episode 4 addresses the pros and cons of transferring after your first year.  I have never before heard how this calculus looks from the student perspective, other than conversations with individual students contemplating transfer.  Those conversations focus on the individual student's reasons for transferring, which are sui generis.  LWLS provides a macro perspective on transferring that I had never heard before. 

I'll admit that I skipped a lot of Episode 5, which was a Valentine's Day episode dedicated to dating while in law school, but what I heard was pretty enlightening.  I was already married when I went to law school, so dating was not an issue.  But the LWLS hosts have interesting insights and experiences to share.  One is in a long-distance relationship; the other is dating a classmate.  You can imagine the challenges. 

I approached the podcast with some trepidation.  Do I really want to hear law students talking about their experiences?  Do I want to hear commentary on my colleagues' professional performances?  So far, I have been pleasantly surprised.  LWLS refrains from picking the low-hanging fruit.  They are extremely reluctant to say anything negative about the classroom experience.  The farthest they will go is to say something like, "Let's just say, it's not my favorite course."  And as to particular professors, they recognize that an ineffective professor might just be ineffective for you.  They give us the benefit of the doubt, whether or not we deserve it.  

It's not that I don't think the legal academy would benefit from a more jaundiced perspective on our methods.  I'm just glad this podcast is not the vehicle for that.  It nevertheless manages to convey a very clear-eyed, realistic perspective on the life of law students, told as it is experienced, in something approaching real time.  

I recommend this podcast to my colleagues who want to hear what this experience looks like from the other side of the lectern.  I look forward to listening to the remaining episodes, and I will share highlights as I come across them over the summer.

Texas HB 20, Contracts, and the First Amendment (Again)

If you follow this blog closely, thank you!  Also, you may have noticed that I have been gathering cases in which the law of contracts intersects with the First Amendment.  The most recent such post is here (linking to earlier posts in the series).  The other three cases all made it to the Supreme Court.   Today, we visit the Fifth Circuit Court of Appeals.

Let me illustrate the situation with an analogy.  Let's say you open your house to guests so that people can come and talk to one another.  You have great snacks, flattering lighting, and an attractive ambience.  People eagerly sign your user agreement and flock to your house, so you move to a bigger venue.  More people come.  Eventually, you move to an abandoned shopping mall.  People gravitate towards groups with common interests, and they chat.  They move around the mall from venue to venue and engage in conversation.  Great snacks, flattering lighting, attractive ambience. 

Sometimes people come and shout obscenities.  You warn them.  Some spread conspiracy theories, but eventually those people find each other and leave everyone else to enjoy each other's company.  But some of those people won't let it go.  They are hostile to those who don't share their views.  They scream; they make noise.  They question your snackage.  They lobby for less flattering lighting because they're Emo.  They violate the user agreement that the signed.  They threaten to make the space uncomfortable for everyone.  So you warn them, remind them of the user agreement, specifying how they have violated it, but they double down, saying that you are "censoring" them.  After several warnings, you ban them.  They can't come to your space anymore.  

But they argue that you are infringing their First Amendment rights and that you are discriminating against them based on their politics.  There appears to be no empirical basis for such claims.  They are being banned for being obnoxious and for not abiding by the rules that they agreed to when they came to the venue.

They could go elsewhere, but your space is the best space.  The other spaces are filled with obnoxious people.  They only have Bit O'Honey and Circus Peanuts, the lighting is provided by those fluorescent tubes that buzz, and the decor consists of posters from science-fiction/fantasy movies that never got made.  Think Argo.  However, you know who else is obnoxious?  Politicians.  So the politicians pass a law forbidding you from banning obnoxious people from your space. 

You may think I'm oversimplifying a bit.  But if you replace my hypothetical abandoned shopping mall with the Internet, this is the story of Texas HB 20. 

It is styled (rather ponderously) as "AN ACT relating to censorship of or certain other interference with digital expression, including expression on social media platforms [Platforms] or through electronic mail messages."  HB 20 defines Platforms as common carriers if they have over 50 million users per calendar month.   Subchapter B of Section 2 of that Act has some notably broad disclosure requirements.  In short, Platforms (the big ones, not Parlor or Gab) must provide biannual reports to Texas detailing their use policies, their methods for prioritizing content, and any disciplinary actions they have take against user accounts.  But it's just a disclosure requirement.  What could be wrong with that?  Don't ask me.  Ask Eric Goldman (below, left).  In his draft article, The Constitutionality of Mandating Editorial Transparency, Professor Goldman explains why the disclosure mandates that Texas and Florida are seeking to impose on Platforms are every bit as problematic as direct bans on speech.  These are state governments trying to control private websites.

After providing useful background on more mundane disclosure mechanisms and on the breadth of the new Texas and Florida disclosure regimes, Professor Goldman proceeds to make three substantive arguments.  First, mandatory editorial transparency regimes such as these "would be unconstitutional if imposed on traditional publishers, such as print newspapers."  Why? 

"Mandatory editorial transparency restrictions affect the substance of the published content, similar to the effects of outright speech restrictions. This indicates that the laws should be categorized as content-based restrictions and trigger strict scrutiny." 

Second, the same principles should apply to Platforms.  In this part, Professor Goldman responds to five arguments found in an amicus brief filed by Columbia University's Knight First Amendment Institute.  Although the brief opposes the proposed legislation, it argues for according Platforms less constitutional protection than traditional publishers like newspapers.  Third, mandatory editorial transparency regimes facilitate illegal enforcement actions.  He illustrates this part by discussing an attempt by Texas's Attorney General Ken Paxton to retaliate against Twitter for terminating former President Donald Trump's account by opening an investigation and issuing a civil investigation demand, in which Paxton sought disclosures from Twitter similar to those that would become mandatory under HB 20.  

In the final section of Professor Goldman's paper, he introduces alternative mechanisms for regulating Platforms.  These alternatives would be equally effective and would not compromise First Amendment principles.  They involve third-party, non-governmental auditing of the Platforms and the empowerment of independent researchers.

Still not convinced?  Consider this article from Mark Joseph Stern on Slate.  He writes:

The intrusive disclosure requirements are almost comically impractical: They oblige companies to give Texas heaps of information about their algorithms, curation, and search functions, as well as a “biannual transparency report” with information about every single “action” taken against “content.” . . .  Platforms must also establish a complex process of notice and appeal any time it “removes content.”

It would be impossible for any target of H.B. 20 to comply with these standards. Platforms like Facebook use automated editorial tools to remove billions of posts and comments every year. They lack the resources, by orders to magnitude, to review and resolve each appeal, especially not within the 14-day limit that H.B. 20 provides. The only solution would be to stop monitoring content. Yet the law forces companies to assess complaints of “illegal content” within 48 hours, so they cannot adopt a true laissez-faire policy either.

But disclosure mandates are not the only mechanism that HB 20 provides. Subchapter D of Section 2 empowers Texas's Attorney General to enjoin any measures that a Platform undertakes to enforce its own disciplinary rules in a manner inconsistent with HB 20.  The Platform would bear the costs incurred by the AG in any enforcement proceeding.  

Neither Professor Goldman nor Mark Joseph Stern address this, but I also wonder about the intellectual property ramifications of laws like HB 20.  The laws require the Platforms to disclose information about the algorithms they use to rank content.  That strikes me as a demand to surrender proprietary information that goes to the heart of what makes these Platforms successful.

Section 6 imposes fines on the Platforms of $25,000 for each day that the Platforms "unlawfully impede" a message.  Section 7 creates a private right of action against "censorship" by Platforms.  Aware that people who inhabit the virtual space that the Platforms create agree to terms and conditions, Section 7 specifically nullifies contractual protections that the Platforms create: 

A waiver or purported waiver of the protections provided by this chapter is void as unlawful and against public policy, and a court or arbitrator may not enforce or give effect to the waiver. . . .

The waiver prohibition described by Subsection (a) is a public-policy limitation on contractual and other waivers of the highest importance and interest to this state, and this state is exercising and enforcing this limitation to the full extent permitted by the United States Constitution and Texas Constitution.

Thus the state tramples private legislation.

Any Platform that engages in "censorship" in violation of Section 7 can be subject to contempt charges.  A user may bring such an action and a court can impose contempt fines even if the law has been enjoined by another court.  

A user may bring an action under this section regardless of whether another court has enjoined the attorney general from enforcing this chapter or declared any provision of this chapter unconstitutional unless that court decision is binding on the court in which the action is brought.

Nonmutual issue preclusion and nonmutual claim preclusion are not defenses to an action brought under this section.

Judge Pitman (right) of the District Court for the Western District of Texas enjoined the enforcement of HB 20 in a 30-page opinion.  Among other things, as Professor Goldman notes, Judge Pitman rejected arguments proffered by the Knight First Amendment Institute and others who argued that Platforms deserve lesser constitutional protections than traditional publishers.  Predicting the result on the merits, Judge Pitman found that: (1) Platforms exercise editorial discretion protected by the First Amendment; (2) HB 20 compels Platforms to disseminate objectionable content and impermissibly restricts their editorial discretion; (3) HB 20’s disclosure and operational requirements burden Platforms’ editorial discretion; (4) HB 20 discriminates based on content and speaker; (5) HB 20 is unconstitutionally vague; (6) Texas has alleged no interest in regulation sufficient to enable HB 20 to overcome intermediate or strict scrutiny; (7) HB 20 is so constitutionally unsound that its severability provisions cannot save it; and (8) the irreparable harm Platforms would suffer under HB 20 outweighs any harm to the state.

Last week, the Fifth Circuit lifted that injunction, in a 2-1 panel decision without opinion.   An opinion is to follow.  According to Vox, the decisions consists of one sentence: “IT IS ORDERED that the appellant’s opposed motion to stay preliminary injunction pending appeal is GRANTED.”  

The great thing about courts of law is that they provide reasoning for their decisions.  Unless and until the Fifth Circuit addresses the eight reasons given by the District Court for enjoining HB 20, the Fifth Circuit is not acting as a court of law in this case.  It is hard to imagine what the written version of this opinion will look like.  In order to overturn the injunction, the Fifth Circuit has to find that Texas has a strong likelihood of prevailing on the merits and that it will suffer irreparable injury if HB 20 is enjoined.  Under current law, neither of those things seems to be true.  SCOTUS might come along and change such matters, but the Fifth Circuit is supposed to rule based on lex lata, not lex ferenda.

Lindenwood University Pays $1.65 Million to Settle COVID-based Claims

It's been a few months since we had anything new to report on the cases brought by students claiming that their universities breached a contract or were unjustly enriched when they went online in Spring 2020.  

This week, the St. Louis Post Dispatch reports that a federal district court has approved a $1.65 million  settlement between Lindenwood University and a class of students who claim that they received a "subpar" online education when the campus closed due to COVID.  The Post Dispatch reports that each student will receive $185, and the attorneys will receive $55o,000.  The suit originally sought $5 million.  A court dismissed a similar suit brought against Washington University.  

H/T John Wladis and the Mother Ship.

This American Life's The Reluctant Explorer (of NFT's and the Human Psyche)

This American Life (TAL) is to podcasts what the U.S. Constitution is to modern constitutions.  It's the mother of invention.  Actually, that comparison is a little unfair to TAL.  TAL is still fresh and new.  Perhaps that's because its James Madison is Ira Glass (whose high school senior picture is shown below right because that's the only public domain picture I could find, and it's pretty funny).   Ira is still in charge, and he makes sure every episode is consistent with the shows original premise.  

So what group is better situated than TAL to tell the story of one of the earliest NFT's? 

Episode 769, The Reluctant Explorer, features Ken, who created a website called PixelMap.  People could go on PixelMap, buy one or more of the 4000 16 x 16 tiles, and decorate them.  Twenty or thirty people did so, and then, after a few years, Ken shut down PixelMap and moved on to another project, like his 3D printer that he used to create  . . .  a better 3D printer.  

Along comes a mysterious stranger named Adam who persuades Ken to revive the site and to sell the tiles, which are actually some of the oldest NFTs in existence.  There are NFT enthusiasts, who call themselves "Apes" for reasons that are  perhaps obvious if you have dipped a toe in the NFT world, who will pay a lot of money for vintage (circa 2015) NFTs.  

The tiles are a huge hit.  Adam persuaded Ken to drop the price of each tile, but they very quickly began selling for prices in excess of their original price, which was 2 Ethereum, then worth about $6000.  Originally Adam told Ken he could make perhaps $100,000.  In the end, Ken made several million, and he held onto 900 tiles.  He sent Adam a $500,000 tip.

Enter human nature, illustrated below:

Ken had been living his life, working for Amazon, making little inventions for his own enjoyment.  He was, to use the Capuchin monkey analogy, happily eating his cucumbers.  Now, two days after he first interacted with Adam, he became a millionaire.  He immediately became obsessed with the idea that Adam was eating grapes and he was still eating cucumbers.  Why had Adam convinced him to lower the price of his tiles?  Who was behind the bot that had bought 1000 tiles?  Was Adam engaged in a massive pump and dump operation?

Listen to the episode to get all the answers.  In the end, NFT traders are not as evil as Ken originally thinks.  Indeed, Ken goes from thinking NFTs are evil to devoting all of his time to trading in them.  Ken has quit his job, but now he works harder than ever on PixelMap.  As this exchange with TAL's host Ira Glass illustrates, NFTs have not only brought Ken fabulous wealth; they have also given him something priceless: self-knowledge:

Ira Glass

I feel like you're in this weird situation where most of your working life, you were actually doing things and developing code for big companies, Amazon and Snapchat, and people would use the code, like, it would do stuff all over the world. And then this thing that you build that's completely useless--

Ken Erwin

I hate you. I'm just playing

Ira Glass

--that doesn't contribute to society really--

Ken Erwin

No, what you don't realize is I have been contributing to pointless causes my entire career. So when I worked at Salesforce, it was to help make sure that on Black Friday, you get spam emails from like, Best Buy and every other company. And that's like--

Ira Glass

So are you saying this idea of before you were a productive, contributing member of society is ridiculous[]?

Ken Erwin

I'm saying I was never a productive member.

My wife once opened a fortune cookie, and the message read, "One day you will realize how futile your life has been."  That insight seemed unearned coming from a cookie.  But Ken seems to have gained a real perspective on his own life.  Upside, he got to say "I hate you" to Ira Glass.  Who does that?  What's next on your bucket list, Ken?  Saying "I hate you" to Dolly Parton?

Ken now views the world of NFTs as a casino in which everybody knows that there are no rules and so it's a level play field.  Ken estimates that 99% of NFTs are worthless junk.  Even NFT enthusiasts basically concur, with estimates of the junk NFT percentage ranging from 90-99+%.  Interest in NFTs can explode and then dissipate.  Few retain any value, but so long as everybody knows the rules, what's the harm?  So says Ken, who didn't know the rules when he started. 

There's a new Ken born every minute, and so NFT trading will continue.  

Teaching Assistants: Victor Goldberg on the Bid Cases

This is the eleventh in a series of posts on Victor Goldberg's work.  Today's post is about Chapter 15 of his book, Rethinking Contract Law and Contract Design (RCL), and this will be the last post about that book.  The book includes a conclusion, but I will hold off on commenting on Professor Goldberg's conclusions until I am ready to draw some of my own, following blog posts on his Rethinking the Law of Contract Damages.  Stay tuned.  Links to related posts follow this one.

The bid cases are made for teaching.  First we have the opinion of Learned Hand (below, left) in James Baird v. Gimbel Brothers from 1933.  A generation later, Justice Roger Traynor (below, right) authored the opinion in Drennan v. Star Paving.  The facts are close-enough to identical.  A sub-contractor (sub) makes an error in placing its bid.  The general contractor (GC) uses the bid and wins the contract.  The sub then attempts to pull out.  Judge Hand allowed the withdrawal of the bid.  If the GC wants an option, it can make that a condition of putting in a bid.  Justice Traynor went the other way, noting the GC's reliance on the sub's bid.  The Restatement (s. 87(2)) follows Drennan.  

Professor Goldberg makes a number of points, showcasing his knowledge of the bid context and highlighting once again the ability of the parties to allocate risks in a manner that makes sense without the assistance of courts.  First, cases like James Baird and Drennan arise only the context of public contracts, which have sealed bidding procedures. Second, there is rarely a need for courts to decide a public bid case, because the rules are laid out in statutes or ordinances.  Moreover, Drennan just creates a default rule around which the parties can and do contract.  We don't need the common law to fill in gaps (RCL, 232-34).  Third, in the private context, the Drennan rule does not apply, and it need not apply.  Parties engage in the very practices that legislators worry about (bid shopping, bid chopping, bid peddling and chiseling), but things work out all right (RCL 234-38).  Disputes between GCs and subs on projects for private owners are rarely litigated, but it seems like the GCs haggle with both owners and subs throughout the process (RCL, 245-47). 

But even courts that follow Drennan do not always find in favor of the GCs.  Sometimes they favor the sub because the sub's bid specifically provided for revocability or called itself an "estimate," not a bid (RCL 239-40).  Other courts find for subs because: (1) the sub's mistake was too obvious to induce reliance; (2) the GC proposed new terms to the sub after its bid was accepted ; or (3) the GC bid shopped. Justice Traynor addressed the first issue directly in his  Drennan opinion and left the determination of whether there was a mistake to the court's discretion.  The second issue seems the trickiest, because there are always details to work out in a post-bid contract.  Two questions arise with respect to bid shopping: was big shopping a common practice and did this particular GC bid shop?  If the answer to either question is yes, it ought to rebut the presumption that GC's rely on bids and that subs therefore must be bound by them (RCL 240-45).  In any case, Drennan is a default rule, and as such, it seems to serve its purposes, with the sub on occasion contracting around it by specifying that their bids are revocable (RCL, 245).

Professor Goldberg views the bid cases as "much ado about (almost) nothing" (RCL, 225), and his review of the case law (RCL, 247-55) bears that out.  Drennan's default rule is "often trumped by pro-subcontractor statutes or by extra-contractual mechanisms" (RCL, 255).  Moreover, Drennan has rarely been extended to apply outside of the GC/sub bid context (RCL, 257-60).  R.2d § 87(2) rarely gets mentioned in the case law.  That section of the Restatement accounts for, on average, one legal victory every nine years, at least in reported cases.  R.2d § 90 seems to be up to the task, for courts that want to enforce offers based on reliance (RCL, 260-63).

So why do we continue to teach Drennan, James Baird, and R.2d §87(2)?  Professor Goldberg has no answer, beyond the obvious attraction of a direct standoff between two giants of 20th-century jurisprudence (RCL, 263).  The danger is that, without the regulatory and law-in-action context that Professor Goldberg provides, students could emerge with a mistaken impression of the role of reliance in commercial contracts, and they also might not develop the habit of thinking about ways in which statutes and contract design can determine the applicable rules. To the contracts prof seeking to address those pedagogical pitfalls, Professor Goldberg's work serves as a valuable teaching assistant.

A post on Chapter 14 (preliminary agreements) is here

A post on Chapters 12 and 13 (excuse doctrine) is here.

A post on Chapter 11 (an Auseinandersetzung with Mel Eisenberg) is here.

A post on Chapters 8-10 (consequential damages) is here.

A post on Chapter 7 (liquidated damages) is here.

A post on Chapters 5 & 6 (speculative damages) is here.

A post on Chapter 4 (lost-volume damages) is here.

A post on Chapter 3 (timing for assessing damages) is here.

A post on Chapter 2 (the flexibility/reliance trade-off) is here.

The introductory post is here.

Tuesday Top Ten - Contracts & Commercial Law Downloads for May 10, 2022

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 11 Mar 2022 - 10 May 2022

Rank	Paper	Downloads
1.	The Limitations of Privacy Rights Daniel J. Solove George Washington University Law School	1,056
2.	An Overview of Privacy Law in 2022 Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law	462
3.	Where Nonprofits Incorporate and Why It Matters Peter Molk University of Florida Levin College of Law	301
4.	Digital Assets: A Call To Action Johan David Michels, Sharon Hartung and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, affiliation not provided to SSRN and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	293
5.	The Law and Macroeconomics of Custody and Asset Segregation Rules: Defining the Perimeters of Crypto-Banking Hossein Nabilou University of Amsterdam, Amsterdam Law School	215
6.	Liability for Non-Disclosure in Equity Financing Albert H. Choi and Kathryn E. Spier University of Michigan Law School and Harvard University - Law School - Faculty	176
7.	Rational Contract Design Naveen Thomas New York University School of Law	165
8.	Current Issues in Unjust Enrichment 2022: Failure of Basis, Contractual Rights to Enrichment, Mistake of Law and Limitation Periods Charles Mitchell University College London - Faculty of Laws	143
9.	Contract Remedies for New Economy Collaborations Alan Schwartz and Simone Sepe Yale Law School and Yale Law School	141
10.	Towards a Harmonized Theory of the Law Governing the Arbitration Agreement Prof Maxi Scherer and Ole Jensen Queen Mary, University of London, Centre for Commercial Law Studies and Independent	14

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 11 Mar 2022 - 10 May 2022

Rank	Paper	Downloads
1.	Rational Contract Design Naveen Thomas New York University School of Law	165
2.	Current Issues in Unjust Enrichment 2022: Failure of Basis, Contractual Rights to Enrichment, Mistake of Law and Limitation Periods Charles Mitchell University College London - Faculty of Laws	143
3.	Contract Remedies for New Economy Collaborations Alan Schwartz and Simone Sepe Yale Law School and Yale Law School	141
4.	Towards a Harmonized Theory of the Law Governing the Arbitration Agreement Prof Maxi Scherer and Ole Jensen Queen Mary, University of London, Centre for Commercial Law Studies and Independent	141
5.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	133
6.	The Maze of Contemporary Contract Theory and a Way Out James Gordley and Hao Jiang Tulane University Law School and Bocconi University - Department of Law	108
7.	Rules vs. Standards in Private Ordering Tomer Stein Stetson University College of Law	90
8.	The Right to Regulate in International Investment Law (Revisited) Catharine Titi CNRS	79
9.	Reconstituting the Code of Capital: Could a Progressive European Code of Private Law Help Us Reduce Inequality and Regain Democratic Control? Martijn W. Hesselink European University Institute	77
10.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	65

 

TurboTax Agrees to $141 Million Settlement

In contracts-adjacent news, TurboTax's parent company, Intuit, has agreed to a $141 million settlement with attorneys general from all 50 states, plus DC.  The settlement arises out of TurboTax's practice, documented in a series of reports from Pro Publica, which detailed a long-term company practice of attracting people to use Turbo Tax's products by signaling that the service would be provided for free.  TurboTax would then charge taxpayers if the company determined that they did not meet its criteria for access to the free software.  The company would charge taxpayers who were eligible for free tax assistance through federal programs.

As Pro Publica details here, taxpayers who qualified for free income tax assistance but paid TurboTax will receive refunds from the company of $30/year for 2016-2018.  While Pro Publica contends that TurboTax's misconduct goes back well before 2016, some state statutes of limitations would have precluded further recovery.  Intuit admits no wrongdoing and stands by its marketing.  The company is estimated to have netted $3 billion in the 2016-18 time period.

Pro Publica also reports that Intuit has entered into settlement agreements to resolve the majority of 150,000 separate arbitrations initiated by individual consumers.  A Federal Trade Commission investigation alleging unfair trade practices is ongoing.  It is hard to tell what overall impact this settlement will have on the company, but as its stock price has declined 40% in the last six months, it seems like at least a few clouds remain on the horizon.

Teaching Assistants: Victor Goldberg on the Type II Preliminary Agreement

Now that the semester is behind me (but for the grading), I can take up where I left off.  This is the tenth in a series of posts on Victor Goldberg's work.  Today's post is about Chapter 14 of his book, Rethinking Contract Law and Contract Design (RCL).  Links to related posts follow this one.

In TIAA v. Tribune Co.,670 F. Supp. 491 (S.D.N.Y. 1987), Judge Leval divided the world of preliminary agreements into three categories.  Type I agreements are enforceable, with the final, executed agreement considered a mere formality.  In Type II agreements, the terms are mostly set, and the parties have a duty to negotiate in good faith.  Type III agreements have too many open terms to be enforceable (RCL, 207).  But how does a court go about determining what type of preliminary agreement it is dealing with?  Brown v. Cara, 420 F.3d 148 (2d Cir. 2005) offered Professor Goldberg an opportunity to demonstrate the difficulties in the task.  

The case involved a joint venture through which Brown would develop property owned by Cara.  Brown had to first secure a zoning variance and then the parties would jointly manage the property and split the profits.  By the time negotiations broke down, Brown alleged that he was out $750,000 and that the rezoning had increased the value of the property from $3 million to $18 million (RCL, 210-11).  

The documents relating to this transaction were complex.  The draft operating agreement stretched to 70 pages, and the parties differed on how close they were to final agreement.  Cara pointed out that Brown's attorneys noted "five significant open business points," but Brown himself claimed that the parties were at the  final "wordsmithing stage"  (RCL, 213).  The trial court sided with Cara, dismissing Brown's contractual claims but allowing a claim for unjust enrichment to survive (RCL, 214-15).  Cara then proceeded to build the J Condominium, a luxury residential building in Brooklyn's
awesome Dumbo district, pictured at right (RCL 215-16).

The Second Circuit reversed, finding that the parties had entered into a Type II preliminary agreement, and remanded for further fact-finding necessary to decide whether Cara had breached his duties under a Type II agreement.  The court identified five factors and found that all weighed in favor of finding that the parties had a duty to negotiate in good faith.  Those factors are:

1. whether the language reveals an intent to be bound;
2. the context of the negotiations;
3. the existence of open terms;
4. partial performance; and 
5. whether custom required that such agreements be put in final form.

The court was of the view that, given all of the contingencies and complexities, the parties could not have put their deal in final form.  Professor Goldberg's point is that they could have done so (RCL, 216-17).  In prior cases considering Type II agreements, very few terms had been left open; here multiple terms were left open, but the Second Circuit treated that as a factor in favor of finding a Type II agreement, perhaps because of the parties' decision to first pursue the necessary zoning change and worry about other aspects of the transaction later (RCL 217-18).  But even if this was a Type II agreement, did Cara breach the duty of good faith by breaking off negotiations after one year?  If so, New York law preferred reliance damages as the remedy, while Brown really wanted expectation.  Expectation damages arising from the breach of a contract that was never finalized would be very difficult to calculate (RCL 218-19).

Professor Goldberg analyzes the case from his perspective of the operative trade-offs between reliance and flexibility.  Both parties are heading down a path together.  Both see potential profits and potential pitfalls ahead.  Both seek safe exits and promising alternatives for themselves while also watching the other for signs that they might be abandoned with no clear path forward.  The solution, according to Professor Goldberg was "a mechanism for pricing Cara's option to unbundle;" that is, for seeking a different partner to construct or manage the project (RCL, 220).  Professor Goldberg provides a range of options: Cara could have terminated Brown for cause, subject to a duty to reimburse Brown's reliance expenses; the parties could have agreed in phases, with Brown deriving an advantage over its competitors with each phase of the process because of reimbursement costs Cara would incur; Cara could have agreed to pay a "success fee" to Brown at any point in the process if Cara decided to go it alone; or the parties could have entered into a buy/sell agreement (RCL, 220-21).

Ironically, while other jurisdictions have followed Judge Leval's tripartite approach to preliminary agreement, New York has not done so.  The Second Circuit applied a non-existent New York standard.  Moreover, if Cara acted in good faith in terminating the Type II agreement, Brown should have lost not only its contracts claims but also its unjust enrichment claims.  After all, Brown could have protected itself contractually, but it didn't (RCL 222-23).

And so Professor Goldberg concludes, it is best for the parties to work out a binding contractual agreement, weighing reliance and flexibility interests and pricing the option for exit.  That way, the parties can decide for themself the price at which a party can bail on a joint product, rather than leaving that determination to a court (RCL 223-24).

A post on Chapters 12 and 13 (excuse doctrine) is here.

A post on Chapter 11 (an Auseinandersetzung with Mel Eisenberg) is here.

A post on Chapters 8-10 (consequential damages) is here.

A post on Chapter 7 (liquidated damages) is here.

A post on Chapters 5 & 6 (speculative damages) is here.

A post on Chapter 4 (lost-volume damages) is here.

A post on Chapter 3 (timing for assessing damages) is here.

A post on Chapter 2 (the flexibility/reliance trade-off) is here.

The introductory post is here.

New Scholarship on Contract in Crisis

Temple Law School's Professor Jonathan Lipson and Interim Dean Rachel Rebouché organized a conference last year addressing the various ways in which contracts law has responded to the pandemic.  It was a deep dive into waters that we merely tested in our online symposium from 2020.

The published version is now out in Law and Contemporary Problems.  You can read all of the contributions here.

Countdown: A Horror Film About Terms of Service

A student told me about Countdown, so I had to watch it.  I'm not gonna lie.  It's terrible.  But it's also kitschy fun if you like the genre and are obsessed with terms of service.  

The premise is simple.  And yes, ***SPOILER ALERT***: I am going to reveal some plot details!  If you are so addicted to schlocky horror films that you can't bear to miss this one, even though, I assure you, it is after-school-special-style bad, read no further

A bunch of young people discover an app that predicts when you will die.  They all download it for yucks.  First mistake.  None of them bothers to read the terms of service.  Second mistake.  One learns that she will die in a matter of hours.  So she loses the contest.  Drink up, girl!  As the time of her projected death nears, she decides not to let her chivalrous but drunk boyfriend drive her home.  Third mistake.

If only she had read the terms of service!  Then she would know that trying to evade your appointment with death unleashes a creepy demon who then hunts you down and kills you.  That right, if you don't die, you DIE!  And the demon isn't nice about it either.  It subjects you to a series of jump scares before finally killing you (mostly offscreen, because this movie is PG-13).  The young people attempt various schemes to escape their fates.  They delete the app; they buy new phones; they enlist a priest, but this is not The Exorcist. 

In the end good triumphs over evil.  Or does it . . . ?  Countdown 2.0 makes an eery appearance on the hero's phone.   This could be the best horror sequel since The Crows Have Eyes 3: The Crowening.

I wish I could say that Countdown is a thoughtful rumination on our times, like Don't Look Up or Bridgerton.  But no.  If you want serious reflection on living in the age of Terms of Service, I recommend South Park's Humancentipad episode.

H/t: OCU 2l, Jordan Kimball.

The Supreme Court Does Care About Contracts! Well, Sometimes . . .

I have posted about a series of First Amendment cases that implicated contractual obligations in which the U.S. Supreme Court paid little or no attention to those contractual obligations.  Here is the most recent, and links to two other blog posts are imbedded there.  Last week, the Court issued its decision in Cummings v. Premier Rehab Keller, P.L.L.C., in which no contracts rights were directly implicated.  Nonetheless contracts law played a leading role in the opinion of Chief Justice Roberts (right), who wrote for the majority, as it did in Justice Breyer's opinion on behalf of the three dissenting Justices.

Cummings, who is deaf and legally blind, sought physical therapy at Premier Rehab Keller (PRK).  Cummings requested an American Sign Language interpreter, which PRK refused to provide.  Cummings then got her therapy elsewhere and sued PRK for discrimination based on a disability in violation of the Rehabilitation Act of 1973.   The issue was whether Cummings could recover damages for emotional distress. 

The Chief Justice begins his opinion by noting that, when Congress enacts legislation pursuant to the spending power, it gives rise to something "much in the nature of a contract: in return for federal funds, the [recipients] agree to comply with federally imposed conditions.”  From this language, the Chief Justice reasons, following some prior case law, that recipients of federal funding are on notice that they might be liable for breaches, but that liability should be limited to the relief a plaintiff might recover in a claim for breach of contract.  In a prior case, the court concluded that punitive damages were not available; here, Chief Justice Roberts held, damages for emotional distress are not recoverable under Spending Clause anti-discrimination statutes.

The majority was unpersuaded by Cummings' argument, echoed in Justice Breyer's dissent, that the common law of contracts damages does allow for an award of emotional distress damages in cases of especially egregious breaches likely to give rise to such harms (citing R.2d § 353).  The test, says the majority, is whether such damages are available "generally" under contracts law, not whether they are available in special circumstances.  Moreover, Chief Justice Roberts notes, R.2d § 353 has not been adopted in the majority of U.S. jurisdictions.

The Chief thinks it unfair to expose recipients of federal funding to risks of liability to which they did not knowingly consent. 

The approach offered by Cummings, by contrast, pushes the notion of “offer and acceptance,” [citation omitted] past its breaking point. It is one thing to say that funding recipients will know the basic, general rules. It is quite another to assume that they will know the contours of every contract doctrine, no matter how idiosyncratic or exceptional. Yet that is the sort of “clear notice” that Cummings necessarily suggests funding recipients would have regarding the availability of emotional distress damages when “engaged in the process of deciding whether” to accept federal funds.  [citation omitted]. Such a diluted conception of knowledge has no place in our Spending Clause jurisprudence. 

That may be so as a matter of Spending Clause jurisprudence.  I do not think it is an accurate representation of contracts law, which is filled with traps for the unwary.  The Court, especially in the context of its robust enforcement of mandatory arbitration and class action waivers, has been very happy to push notions of "offer and acceptance" well past the point where ordinary consumers can be realistically described as having taken on contractual obligations knowingly.  

Justices Kavanaugh (left) and Gorsuch concurred, rejected the contracts law analogy.  Rather, they reiterated the Court's long-standing suspicion of implied causes of action.  They would have preferred to decide this case on the basis of the Court's hesitancy to recognize new implied causes of action and to restrict the remedies for those implied causes of action already recognized to those that Congress specifically contemplated.  And perhaps their approach represents a doctrinally more satisfying way to reach the same result.  The analogy to contracts law seems to me quite strained, and little would be lost if the Court were to abandon it.  The Court's reluctance to recognize implied causes of action and to fashion remedies for unlawful conduct will have to be a subject for another day -- or a different blog.

Tuesday Top Ten - Contracts & Commercial Law Downloads for May 3, 2022

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 04 Mar 2022 - 03 May 2022

Rank	Paper	Downloads
1.	The Limitations of Privacy Rights Daniel J. Solove George Washington University Law School	1,010
2.	Breached! Why Data Security Law Fails and How to Improve It (Chapter 1) Daniel J. Solove and Woodrow Hartzog George Washington University Law School and Northeastern University School of Law and Khoury College of Computer Sciences	550
3.	An Overview of Privacy Law in 2022 Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law	437
4.	Digital Assets: A Call To Action Johan David Michels, Sharon Hartung and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, affiliation not provided to SSRN and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	286
5.	Where Nonprofits Incorporate and Why It Matters Peter Molk University of Florida Levin College of Law	240
6.	The Law and Macroeconomics of Custody and Asset Segregation Rules: Defining the Perimeters of Crypto-Banking Hossein Nabilou University of Amsterdam, Amsterdam Law School	212
7.	Rational Contract Design Naveen Thomas New York University School of Law	158
8.	How to Interpret a Vending Machine: Smart Contracts and Contract Law Gregory Klass Georgetown University Law Center	155
9.	Liability for Non-Disclosure in Equity Financing Albert H. Choi and Kathryn E. Spier University of Michigan Law School and Harvard University - Law School - Faculty	140
10.	Contract Remedies for New Economy Collaborations Alan Schwartz and Simone Sepe Yale Law School and Yale Law School	137

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 04 Mar 2022 - 03 May 2022

Rank	Paper	Downloads
1.	Rational Contract Design Naveen Thomas New York University School of Law	158
2.	How to Interpret a Vending Machine: Smart Contracts and Contract Law Gregory Klass Georgetown University Law Center	155
3.	Contract Remedies for New Economy Collaborations Alan Schwartz and Simone Sepe Yale Law School and Yale Law School	137
4.	Towards a Harmonized Theory of the Law Governing the Arbitration Agreement Prof Maxi Scherer and Ole Jensen Queen Mary, University of London, Centre for Commercial Law Studies and Independent	135
5.	Current Issues in Unjust Enrichment 2022: Failure of Basis, Contractual Rights to Enrichment, Mistake of Law and Limitation Periods Charles Mitchell University College London - Faculty of Laws	130
6.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	115
7.	The Maze of Contemporary Contract Theory and a Way Out James Gordley and Hao Jiang Tulane University Law School and Bocconi University - Department of Law	101
8.	Rules vs. Standards in Private Ordering Tomer Stein Stetson University College of Law	87
9.	Reconstituting the Code of Capital: Could a Progressive European Code of Private Law Help Us Reduce Inequality and Regain Democratic Control? Martijn W. Hesselink European University Institute	70
10.	The Right to Regulate in International Investment Law (Revisited) Catharine Titi CNRS	68

Exam Day in Oklahoma

It is raining on the day my contracts students have to take their exam.  But in Oklahoma, we don't have weather; we have WEATHER!!!

I'm not kidding.  When they warn us of hail, the options are marble, golfball, tennis ball, and softball-sized, and when you ask people about it, everyone has a story about getting beaned by such projectiles.  Also, some building near the state capitol is on fire, and thick black smoke was wafting across the highway on my way in to school today.  Memories of Don DeLillo's airborne toxic event.

And so, I was concerned when there was a warning sign on my door.  Had my office flooded?  Had the ceiling collapsed?  Was there some infestation of marine creatures feasting on my law books?  

No, it was just my contracts students, showing me that their puckish wit is undiminished after a weekend of studying.  Also, I may have spun out one or two too many hypotheticals based on the facts of Syester v. Banta.

SCOTUS Justices Bound by the Law of Contracts, Says Stephen L. Carter

Writing over at Bloomberg, ContractsProf Stephen L. Carter (right) argues that Justice Breyer cannot un-resign now that Justice Ketanji Brown Jackson (both below, left) has been confirmed.   The issue arises because of Justice Breyer's somewhat unusual decision to announce his retirement during the Supreme Court's term while stating that he would remain on the Court until a successor could be confirmed.  We all assume that Justice Breyer will step down once the Court completes its work in June.  But what if Justice Breyer says, "JK!"?

Professor Carter maintains that, as a matter of contracts law, it is now too late for Justice Breyer to change his mind.  He reviews some possible precedents for the current situation, but they are inconclusive, as constitutional history often is.  Along comes contracts law to the rescue.

A resignation is an offer to modify a contract of employment by terminating employment.  Once that offer is accepted, like any other contractual offer, it cannot be retracted.  The near-unanimous rule is that once a replacement has been named, the resigning employee cannot retract, and this is equally true in a case such as Justice Breyer's where the employee names some future date of resignation.

As a matter of constitutional law, federal judges cannot be removed, except by impeachment.  Nonetheless, Professor Carter maintains, a voluntary resignation is binding for a judge or justice, just as it would be for any other government employee.  This rule just makes sense, as there have been substantial costs incurred in reliance on the promise.

I'm not sure whether I find this argument convincing, even though I agree with Professor Carter that this is the way things should work.  I also agree with his assessment that the issue is unlikely to arise because Justice Breyer will undoubtedly step aside as he promised.  It would be nice to put the question to the test and have it resolved as Professor Carter suggests, if only so that I could immediately Tweet at Eric Segall, "See, the Supreme Court is a court, and it is bound by legal rules; specifically, the law of contracts!"

[Allegedly] Corrupt Government Contracts in Oklahoma

As reported here on nondoc.com, Oklahoma's Department of Tourism and Recreation has cancelled its contract with Swadley’s Foggy Bottom Kitchen, which provides food service in Oklahoma state parks “due to suspected fraudulent activity and questionable business practices.”  More specifically, in its termination letter, the Department noted that Swadley's seemed to be engaged in "highly questionable billing, invoicing, and record keeping practices."

Swadley's insists that it has done nothing wrong and that it has cooperated with state employees all along . Swadley's cause was not furthered when a 2018 video surfaced in which Swadley's founder Brent Swadley states, “I bootlegged barbecue. I wouldn’t be where I’m at today if I followed by the rules and satisfied all the permits and all the legalities and stuff out there. Sometimes you’ve just got to go out there and do it and don’t worry about it.”

Swadley's won the contract to provide food services in Oklahoma's state parks after a bid procedure in which it was the only bidder, and the reporting suggests that the terms of the contract changed significantly in Swadley's favor after it was awarded the contract.  Swadley's was allegedly paid $17 million in management fees and renovation costs, and there are suggestions that the  Department had not engaged in adequate oversight.  Swadley's was paid $1.3 million in management fees alone, a marked increase from the $0 paid to previous operators.  

In the meanwhile, the state is scrambling to provide food service and catering in its state parks.  You do not want to be around a hungry Oklahoman who can't find a barbecue joint.

Fictosexualism and Contracts

The New York Times had some fascinating reporting this weekend about "fictosexuals" in Japan.  There are people who fall in love with and even "marry" fictional characters.  I am adopting this term "fictosexual" because, according to The Times, this is how this group of people refers to themselves.  I'm not sure the term is really right.  That is, I do not know whether the relationships formed with fictional characters are about sex.  I think they are more likely about love.  Animeophiles?

The story focused on, Akihiko Kondo, a 38-year-old man who staged a marriage with Hatsune Miku (featured in the image at right), a "turquoise-haired, computer-synthesized pop singer," whose image has adorned tricked-out motorcycles and race cars.  The Times story features Mr. Kondo in multiple pictures with a life-sized doll of Hatsune Miku, as well as his apartment, in which he keeps a collection of Hatsune Miku dolls and plush toys. 

Mr. Kondo credits his love for this fictional character with pulling him out of a depression induced by bullying that he experienced at work in 2008.  He makes a strong case for the advantages of fictional beloveds: "She’s always there for him, she’ll never betray him, and he’ll never have to see her get ill or die."  

For women who become fictosexual, there are numerous appeals.  There is a community of people who love particular characters, and according to Agnès Giard, a researcher at the University of Paris Nanterre, quoted in the Times article, fictional marriages can be an empowering "way to challenge gender, matrimonial and social norms.”

Contracts make all such things possible.  In Tokyo, two districts have developed that cater to the needs of the fictosexual community.  As The Times explains

Fans can buy love letters from their crushes, reproductions of their clothes and even scents meant to evoke their presence. Hotels offer special packages, featuring spa treatments and elaborate meals, for people celebrating their favorite character’s birthday. And on social media, people post photos, art and mash notes promoting their “oshi” — a term widely used by Japanese fans to describe the objects of their affection.

In short, this is a specialized, but highly-developed market.  It illustrates a feature of contracts that attracts and repels.  Contracts law, outside of the illegality and the more nebulous realm of public policy, does not judge.  The common law of contracts eschews punitive damages because, as Judge Posner admonishes in trochaic pentameter, "Let Us Never Blame a Contract Breaker."  If people want to maximize their happiness, contracts law comes along and says, "How can I be of service?"  

Mr. Kondo invited friends and co-workers to his wedding ceremony.  All declined to attend, but 39 people, "largely strangers and online friends" showed up.  Some object that, under the Japanese constitution, marriage requires the consent of both parties, and a fictional character cannot give consent.  Mr. Kondo takes this objection seriously enough that he posted a video of his marriage proposal on Twitter.   I don't speak or read Japanese, but the Twitter translation and her body language suggest that she is content.  

While the humans who fall in love with fictional characters develop genuine emotional attachments, the Times article does not explore the one-sidedness of the relationship, aside from a passing statement of one fictosexual man, who misses "being touched."  I wonder what thoughts would come to mind if one presented fictosexuals with Auden's The More Loving One, in which he ruminates on his one-sided love of the starry heavens.  They might find that they agree with Auden's argument that on earth,

. . . indifference is the least
We have to dread from man or beast. 

And conclude that

If equal affection cannot be,
Let the more loving one be me.

The wonderful thing about the poem, and why I replay it endlessly in my head, is its undecideability.  Auden opens up a universe of thought and resolves nothing.  In that space, one can think about the possibilities and limitations of fictosexual love.

Tuesday Top Ten - Contracts & Commercial Law Downloads for April 26, 2022

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 25 Feb 2022 - 26 Apr 2022

Rank	Paper	Downloads
1.	The Limitations of Privacy Rights Daniel J. Solove George Washington University Law School	936
2.	Breached! Why Data Security Law Fails and How to Improve It (Chapter 1) Daniel J. Solove and Woodrow Hartzog George Washington University Law School and Northeastern University School of Law and Khoury College of Computer Sciences	524
3.	Probabilistic Settlement Finality in Proof-of-Work Blockchains: Legal Considerations Hossein Nabilou University of Amsterdam, Amsterdam Law School	460
4.	Christianity and Equity Samuel L. Bray and Paul B. Miller Notre Dame Law School and Notre Dame Law School	422
5.	An Overview of Privacy Law in 2022 Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law	377
6.	Digital Assets: A Call To Action Johan David Michels, Sharon Hartung and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, affiliation not provided to SSRN and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	284
7.	Nonparty Interests in Contract Law Omri Ben-Shahar, David A. Hoffman and Cathy Hwang University of Chicago Law School, University of Pennsylvania Carey Law School and University of Virginia School of Law	237
8.	Where Nonprofits Incorporate and Why It Matters Peter Molk University of Florida Levin College of Law	227
9.	The Law and Macroeconomics of Custody and Asset Segregation Rules: Defining the Perimeters of Crypto-Banking Hossein Nabilou University of Amsterdam, Amsterdam Law School	206
10.	Rational Contract Design Naveen Thomas New York University School of Law	150

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 25 Feb 2022 - 26 Apr 2022

Rank	Paper	Downloads
1.	Probabilistic Settlement Finality in Proof-of-Work Blockchains: Legal Considerations Hossein Nabilou University of Amsterdam, Amsterdam Law School	460
2.	Nonparty Interests in Contract Law Omri Ben-Shahar, David A. Hoffman and Cathy Hwang University of Chicago Law School, University of Pennsylvania Carey Law School and University of Virginia School of Law	237
3.	Rational Contract Design Naveen Thomas New York University School of Law	150
4.	How to Interpret a Vending Machine: Smart Contracts and Contract Law Gregory Klass Georgetown University Law Center	143
5.	Towards a Harmonized Theory of the Law Governing the Arbitration Agreement Prof Maxi Scherer and Ole Jensen Queen Mary, University of London, Centre for Commercial Law Studies and Independent	129
6.	Current Issues in Unjust Enrichment 2022: Failure of Basis, Contractual Rights to Enrichment, Mistake of Law and Limitation Periods Charles Mitchell University College London - Faculty of Laws	127
7.	Contract Remedies for New Economy Collaborations Alan Schwartz and Simone Sepe Yale Law School and Yale Law School	119
8.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	103
9.	The Maze of Contemporary Contract Theory and a Way Out James Gordley and Hao Jiang Tulane University Law School and Bocconi University - Department of Law	97
10.	Rules vs. Standards in Private Ordering Tomer Stein Stetson University College of Law	84

 

Mo' Surrogacy Contracts, Mo' Problems

We have written periodically about surrogacy contracts, most recently here.  The potential problems that can arise in such contracts are innumerable, and as the regulations vary state-by-state, and as many surrogacy relationships cross state and even national lines, the potential problems multiply.

The latest issue that has grabbed attention is that of a pro-life surrogate, Melissa Cook, who was bearing three embryos when the man who was to serve as father to the children told her that he was out of money and that she should abort one.  As The Altantic reported back in 2016, Ms. Cook wanted to carry all three fetuses to term, adopt the third child, and collect her surrogacy fee.  She filed suit, alleging that California's surrogacy laws violate the U.S. Constitution's Equal Protection and Due Process clauses.  

Six years later, all legal avenues exhausted, Ms. Cook is still "consumed by anxiety" about the boys, according to The Economist.  She believes that the surrogacy broker who arranged the contract might have been unscrupulous in not properly vetting the father before allowing the agreement to be executed.   But as Katie O'Reilly pointed out in The Atlantic six years ago, citing CUNY's Elizabeth Reis, "There’s no way to legislate people’s emotional responses."  Among other things, the law can't account for how all the people involved will feel about "reductions," the practice of aborting a fetus when a surrogate becomes pregnant with twins, triplets, or more, in the interest of enhancing the likelihood that the fetuses will survive to delivery in good health.  This is a major issue because, as The Economist reports, "more than half the babies born in America to gestational surrogates are twins or triplets" 

As states struggle to regulate the surrogacy market, couples seeking surrogate mothers look abroad.  Some poorer states (Cambodia, India, Thailand) now prohibit surrogacy contracts.  Pre-war Ukraine was a surrogacy haven, with 2000-2500 children born there through surrogacy annually, according to The Guardian.  As we learned from Jeff Goldblum, "Life finds a way," especially if contracts are available to help facilitate mutually beneficial transactions.

H/T Michael Gibson