ContractsProf Blog

2 New Blogs Join Law Professor Blogs Network

We are pleased to announce the launch of two new blogs as part of our Law Professor Blogs Network:

• Business Law Prof Blog (Dale Oesterle (Ohio State))
• Elder Law Prof (Anne Kimberly Dayton (William Mitchell))

These blogs join our existing blogs:

• AntitrustProf Blog (Shubha Ghosh (SUNY Buffalo))
• ContractsProf Blog (Carol Chomsky (Minnesota) & Frank Snyder (Texas-Wesleyan))
• CrimProf Blog (Jack Chin (Arizona) & Mark Godsey (Cincinnati))
• Health Law Prof Blog (Betsy Malloy (Cincinnati) & Tom Mayo (SMU))
• LaborProf Blog (Rafael Gely (Cincinnati))
• Law Librarian Blog (Joe Hodnicki (Cincinnati))
• Law School Academic Support Blog (Dennis Tonsing (Roger WIlliams) & Ellen Swain (Vermont))
• Media Law Prof Blog (Cristina Corcos (LSU))
• Sentencing Law & Policy Blog (Douglas Berman (Ohio State))
• TaxProf Blog (Paul Caron (Cincinnati))
• Tech Law Prof Blog (Jonathan Ezor (Touro) & Michelle Zakarin (Touro))
• White Collar Crime Prof Blog (Peter Henning (Wayne State) & Ellen Podgor (Georgia State))
• Wills, Trusts & Estates Prof Blog (Gerry Beyer (Texas Tech))

LexisNexis is supporting our effort to expand the network into other areas of law.  Please email us if you would be interested in finding out more about starting a blog as part of our network.

Today in history—May 31

1469: Manuel I, the king who will do as much as anyone for Portuguese commerce, is born at Alcochete.  He’ll commission the trading and exploration voyages of Vasco de Gama, who finds the route to India, and Pedro Cabral, who finds Brazil.

1753: Pierre Victurnien Vergniaud, another one of the French lawyers who will be guillotined by the Revolution they lead, is born at Limôges.

1757: Pennsylvania passes a ban on theatrical performances.  The governor holds the bill up just long enough for Lewis Hallam’s prominent Philadelphia troupe to finish its five-month season.

1775: The Citizens Committee of Charlotte, North Carolina, issues the Mecklenberg Declaration, which disimisses all crown-appointed office-holders from their jobs. Today, of course, they’d be protected by Civil Service laws.

1838: Philosopher Henry Sidgewick is born at Skipton, Yorkshire.

1884: John Henry Kellogg of Battle Creek, Michigan, receives a patent for corn flakes.

1889: A dam owned by the South Fork Fishing & Hunting Club collapses under an unprecedented downpour, and a wall of water 60 feet high and moving at 40 miles an hour rips through Johnstown, Pennsylvania.

1913: The Seventeenth Amendment to the U.S. Constitution is passed, requiring the direct election of U.S. Senators. This explains why the Senate works so much better today than when political hacks like Clay, Webster, and Calhoun were running it.

1930: Clinton Eastwood, Jr., is born at San Francisco, California. He’s won twice as many Best Director awards as Stanley Kubrick, Orson Welles, Alfred Hitchcock, Robert Altman, Ingmar Bergman, Federico Fellini, Francis Ford Coppola, and Martin Scorsese combined.

1977: The 800-mile, $8 billion Trans-Alaska Pipeline is completed, bring oil from Prudhoe Bay to the lower 48 states.

1996: The Age of Aquarius official yields to the Postmodern Era, as Dr. Timothy Leary’s final dementia and planned live Internet suicide is short-circuited when he dies in his sleep.

2004: A computer foul-up causes the Royal Bank of Canada to misplace about 10 million accounts. They are found shortly thereafter.

Every silver lining has a cloud

The legal nightmare that began when Alex Popov caught Barry Bonds's record-setting 73rd home run ball just keeps rolling along.  A California appellate court has frozen Popov's share of the proceeds of the ball's sale, some $225,000, because he ran up legal bills of about twice that amount during the litigation over who owned the ball.

Popov, expecting the ball to sell for well over $1 million, allegedly refused to enter into a contingent fee agreement with his lawyer, Martin Triano, but wanted to pay by the hour.

Weekly Top 10

The Memorial Day holiday made little difference, as the top five papers stay the same in this week's Top 10.  There are two new entries, and Richard Epstein scores his highest chart position to date.   Following are the top 10 most-downloaded papers from the SSRN Journal of Contract and Commercial Law for the 60 days ended May 29, 2005.

1 (1) Risky Business: Managing Interagency Acquisition, Steven L. Schooner (Geo. Washington)

2 (2) Commentary on the Acquisition Workforce, Steven L. Schooner & Christopher R. Yukins (Geo. Washington)

3 (3) Putting Identity Theft on Ice: Freezing Credit Reports to Prevent Lending to Impostors, Chris Jay Hoofnagle (Electronic Privacy Information Center)

4 (4) There Are No Penalty Default Rules in Contract Law, Eric A. Posner (Chicago)

5 (5) A Normative Theory of Business Bankruptcy, Alan Schwartz (Yale)

6 (7) Pricing Legal Options: A Behavioral Perspective, Oren Bar-Gill (NYU)

7 (9) Free Markets Under Siege, Richard A. Epstein (Chicago)

8 (8) The Role of Groups in Norm Transformation: A Dramatic Sketch, in Three Parts, Robert B. Ahdieh (Emory)

9 (–) The Political Economy of International Sales Law, Clayton P. Gillette (NYU) & Robert E. Scott (Virginia)

10 (–) Contracts, Holdup, and Legal Intervention, Steven Shavell (Harvard)

No, there's no housing bubble

From this week's issue of Fortune, thirty-something investor Debbie Smith, whose entire net worth is tied up in 20 real estate properties, all highly leveraged and with borrowed down payments, on market risk:

"It's a risk, but I really feel like it's a lot less risky than the stock market.  Even if it does crash, it's not like it's worth nothing--like a stock, where the value can go all the way to zero."

Memorial Day salute

Memorial Day at Vicksburg National Cemetary, Mississippi (Courtesy U.S. National Park Service.)

Cases: Breach of warranty for rotten meat

The buyer in a contract dispute has the burden of proof that goods are nonconforming under the U.N. Convention on Contracts for the International Sale of Goods, even where the seller is the plaintiff, according to a new decision from the U.S. Court of Appeals for the Seventh Circuit.

In the case, two wholesalers, one in the U.S. and one in Canada, agreed to a sale of 1,350 boxes (about 20 tons) of pork back ribs, for a total price of $178,200.  Neither Buyer nor Seller ever took possession of the ribs.  Under the deal, Seller's Supplier would turn the goods over to Buyer's Carrier, which would deliver the goods to Buyer's Customer.  When Carrier, acting on behalf of Buyer,  picked up the meat, it signed a bill of lading that said the goods appeared in good or but it did not know what the condition of the goods inside the boxes were.  Later, after Carrier  had delivered the goods to Customer, it was discovered that large amounts of the ribs were "putrid, green [and] slimy."  Ultimately the U.S. Department of Agriculture condemned the whole lot, finding that none of it was salvageable.  Buyer refused to pay Seller, and Seller sued.

Since no one could tell exactly when the meat spoiled, the burden of proof became crucial.  Seller argued that Buyer had the burden of proof because nonconformity is an affirmative defense.  Buyer argued that since delivery of conforming goods was a requirement of Seller's claim, Seller should bear the burden.  The court found no precedents under the CISG on the issue, but given that the relevant provisions (seller's warranty under Art. 35 and risk of loss provisions under Art. 67) are analogous to those in Article 2 of the UCC, it made sense to apply the UCC rule, which puts the burden on the buyer.  Since Buyer could not prove that the goods were nonconforming when delivered, Seller was entitled to the contract price.

Chicago Prime Packers, Inc. v. Northam Food Trading Co., 2005 U.S. App. LEXIS 9355 (7th Cir., May 23, 2005).

Call for papers: Yale Law Journal

It has nothing to do with contract law, but open calls for papers from the Yale Law Journal are unusual enough that we thought we'd pass it along for those of you who also are forced to dabble in constitutional law. 

The proposed symposium is The Most Dangerous Branch?  Mayors, Governors, Presidents and the Rule of Law: A Symposium on Executive Power.  The Call for Papers is here.  Oddly enough, there's no submission date specified, but the editors plan to select the papers in the "summer of 2005," so haste is probably a good idea.

Today in history—May 30

1416: Alarmed by revolutionary currents in Bohemia stirred up by Jan Hus, the Imperial Government burns his friend Jerome of Prague at the stake for heresy.

1539: A mercantile colonization mission under Hernando de Soto lands in what is now Bradenton, Florida.  De Soto is looking for gold, but finds swamp and mosquitoes, it being still 400 years before people start liking beautiful beaches.

1806: At Nashville, Tennessee, lawyer Andrew Jackson fights a duel with Charles Dickinson.  When the handkerchief is dropped, Dickinson fires first, hitting Jackson in the chest and breaking two ribs; he must stand there, 24 feet away, while the wounded Jackson takes slow, careful aim and drops him dead.

1854: Shepherded by Senator Stephen Douglas, the disastrous Kansas-Nebraska Act, which abrogates both the Missouri Compromise and the Compromise of 1850, passes the U.S. Congress.

1778: François-Marie Arouet, who wrote under the name "Voltaire," dies at Paris.  He's one of those writers everyone has heard of but hardly anyone has got around to reading.

1865: U.S. Supreme Court Justice John Catron, another Nashville lawyer, dies in Washington, D.C.  Congress abolishes his seat, leaving only nine on the Court.

1899: Film exec Irving Grant Thalberg, later known as the "Boy Wonder" when he takes over Universal's production at age 21, is born at New York City.

1902: Actor Lincoln Theodore Monroe Andrew Perry is born at Key West, Florida.  He'll become the first black actor to become a millionaire, in his character as "Stepin Fetchit."

1911: Eighty thousand spectators gather for the initial Indianapolis 500 motor race.  Ray Harroun, in a Mamson Wasp fitted with the newfangled "rear-view mirror" takes the checkered flag.

1935: With no designated hitter rule in place to keep his career going, Babe Ruth plays his final baseball game, for the Boston Braves.

1967: Twenty years too early to enjoy the later fad of local self-determination, the Republic of Biafra declares itself independent from Nigeria.  A million Biafrans will be killed, with U.N. approval, before it is stamped out.

Cases: Nice try, no cigar

Prisoners in the Ohio penal system have a "custodial" relationship with their prison, not a "contractual" one, according to a new decision by the Ohio Court of Appeals.

Inmate Daryl Dorsey, who'd made complaints about his current cellmate, found himself transferred to a smoking cell.  He sued the prison for breach of contract.  No dice, said the court.  In addition to the fact that he'd already made the claim and had it knocked out, he had no contract with the prison, and therefore there was nothing to be breached.

Dorsey v. Grafton Correctional Institution, 2005 Ohio App. LEXIS 2319 (Ohio Ct. App., May 19, 2005).

ABA BusLaw session set for Windy City

The ABA's Business Law Section will be holding its Annual Meeting in Chicago, August 5-9.  The brochure for the event is now available here.

Trademarks and the constitution

We don't know much about about intellectual property law, but we wonder how Lisa Ramsey's bosses at the University of San Diego School of Law feel about her new paper, Descriptive Trademarks and the First Amendment.  In it, she argues that descriptive trademarks should not be federally protected; that only marks that are fanciful, arbitrary, or suggestive pass muster under the constitution.

What's interesting is that "University of San Diego School of Law" seems to be a quintessential descriptive trademark.

Today in history—May 29

1453: The last remnant of the Roman Empire is extinguished as Constantinople falls to the Muslims.  Every Christian church in the city is either destroyed or turned into a mosque except St. Irene, which becomes an Ottoman arsenal.

1660: Charles II becomes King of England, ending the English experiment with a republican government.

1677: The Treaty of Middle Plantation is signed, which provides that the Powhatan Indians in Virginia will be subjects of the King of England, but stipulates that no Englishman may settle within three miles of a Powhatan village.

1736: Lawyer and land speculator Patrick Henry is born at Hanover County, Virginia.  One of his ventures, as President of the Virginia Yazoo Co., will ultimately lead to an important Supreme Court Contract Clause case, Fletcher v. Peck.

1790: Rhode Island becomes the last of the original 13 colonies to accept the new U.S. Constitution.

1848: Wisconsin is admitted to the Union as the 30th state.

1864: His Imperial Highness Ferdinand Maximilian Joseph, Archduke of Austria, Prince of Hungary and Bohemia, reluctantly lands at Veracruz to take the throne of the new Mexican Empire.  The empire will last only three years.

1866: Ex-lawyer Winfield Scott dies at West Point, New York.  His campaign during the Mexican War is still probably the greatest military achievement in U.S. history.

1874: Poet, essayist, apologist, public debater, and detective writer Gilbert Keith Chesterton is born at London.  "No sceptical philosopher," he will note, "can ask any questions that may not equally be asked by a tired child on a hot afternoon."

1886: The first ad for the new, non-alcoholic Coca-Cola appears in the Atlanta Journal.

1914: Everyone remembers the RMS Titanic, but hardly anyone recalls the Canadian Pacific's liner RMS Empress of Ireland, which two years later sinks in the Gulf of St. Lawrence, twenty miles from land, killing 1,014 of the 1,433 people aboard.

Surprise: Sexy + easy = popular

Our colleague Paul Caron over at TaxProf Blog reports on a study that teaching evaluations by students are correlated to the teacher's sexiness and how easy the course is.  This is bad news, even though we kind of expected it.

If you're curious about your "hotness" quotient, and that of your colleagues, you can find out here.

Cases: E-mail to employees doesn't create contract term

Ross Runkel's excellent employment blog LawMemo.com is reporting on an interesting contract formation case which raises the question whether an employer can create a contractual duty to arbitrate by sending a general e-mail to all employees announcing its new policy.

In the case, Campbell v. General Dynamics Government Systems Corp. (1st Cir. May 23, 2005), the court held that the employer failed to do so because the e-mail was not sufficiently clear to put employees on notice, but indicated that there's no reason why a better-drafted e-mail wouldn't have worked.  Runkel, an emeritus professor at Willamette, has some commentary here.  More commentary is on Michael Fox's blog Jottings By An Employer's Lawyer here.

Coudert eyes suit against Orrick

Few organizations like paying legal fees less than big law firms, so you don't often see legal leviathans go toe-to-toe over disputes.  But there's a potential blockbuster brewing as Coudert Brothers, one of the firms that invented international practice, is hopping mad over the defections of all its London and Moscow partners to Orrick, Herrington & Sutcliffe, a firm with whom it had been in merger negotiations.  Coudert is apparently investigating legal action against Orrick and the recently departed.

Today in history—May 28

1524: Ottoman Sultan Selim II is born at Constantinople.  He'll become known as Selim the Sot for his drinking, and will conquer Cyprus, massacring tens of thousands of unarmed people, to secure a supply of his favorite vintage.

1757: Forty Virginia militiamen surprise and defeat a small French detachment at Jumonville Glen, in what is now Fayette County, Pennsylvania.  The small skirmish ignites what will become the Seven Years' War (in America, the French and Indian War), and make the 22-year-old American commander, Major George Washington, famous.

1759: William Pitt is born at at Hayes, Kent, the son of Prime Minister William Pitt.  Pitt the Younger, a Lincoln's Inn barrister, will become the youngest and one of the longest-serving prime ministers in British history.

1897: Pearl B. Wait, a carpenter and cough medicine maker in LeRoy, New York, creates a new dessert that his wife names "Jell-O."  It flops, and he sells the company for $450 to a neighbor who has more marketing skill.

1928: Chrysler Corp. acquires with Dodge Brothers, Inc., in a deal worth $170 million.

1929: Warner Brothers debuts first all-color talking picture at the Winter Garden Theatre in New York City:  On With the Show, starring Ethel Waters, Joe E. Brown, and Arthur Lake.

1930: The Chrysler Building opens in New York City.  Architecture critics hate it and the owner refuses to pay the architect, claiming no contract was ever signed.  The architect, William van Alen, eventually gets his money but his career is ruined.

1936: Twenty-four year-old Alan Mathison Turing submits for publication his On computable numbers, with an application to the Entscheidungsproblem, the paper that is the foundation of modern computer science.

1944: Rudolph William Louis Giuliani III (NYU Law 1968) is born at Brooklyn, New York.

1947: Actress and director Sondra Locke, whose chief starring role for contracts profs is in Locke v. Warner Brothers, is born at Shelbyville, Tennessee.

1957: National League owners vote to allow the Brooklyn Dodgers and New York Giants to move to Los Angeles and San Francisco, respectively.

1998: NASA releases the photograph of TMR-1C, which they think might be the first planet ever discovered outside the Solar System.  Or else a background star, they're not sure.

Analyzing remedies

There's been a lot of law-and-economics exploration of contract remedies, but relatively little of it focuses on one aspect of the situation: the fact that remedies are cumulative and the party has a choice of which one to follow.

That's the thesis of Northwestern's Ronen Avraham (Law) and Zhiyong Liu (Management), in a new paper, Incomplete Contracts with Asymmetric Information: Exclusive v. Optional Remedies.  Click on "continue reading" for the abstract.

Continue reading

Great art isn't exactly priceless

One of the last wholly unregulated big-money areas of business is the art trade, where the norms range from simple collusion, insider trading, and deliberate misrepresentations to fake invoices.  And it's not just the sellers who're in the game.  The Art Newspaper offers a fascinating take on the art market, and notes that contract and fraud disputes are strongly on the increase.

Today in history—May 27

1703: Tsar Peter I founds the city of St. Petersburg at the mouth of the Neva on the Baltic Sea, to provide Russia with a "window on Europe."

1738: Nathanial Gorham is born at Charleston, Massachusetts.   He'll become one of America's great real estate speculators, buying (with his colleague Oliver Phelps) all of New York State west of Seneca Lake, about 6 million acres, for $1 million—provided he can extinguish existing Indian titles.

1794: Cornelius Vanderbilt, who will quit school at age 11 to begin working as a deck hand on ferry boats, is born at Staten Island, New York.  He'll buy his first boat at age 16.

1836: Jay Gould is born at Roxbury, New York.  His first job will be as bookkeeper to a blacksmith in exchange for board; but with a mixture of good management and criminal activity he'll end up by owning or controlling one-ninth of the railroad track in the U.S., the Western Union Company, and the New York Elevated Railway.

1923: Future Viacom conglomerate builder Sumner Murray Rothstein (Harvard Law 1947) is born at Boston, Massachusetts; he'll later change the surname to "Redstone."

1924: Jules Stein founds the Music Corporation of America as a booking agency.  As MCA it will be a major music producer from the 1960s to the 1990s.

1927: Faced with sagging sales, Ford Motor Co. stops production on the old Model T, relatively unchanged since 1908, and begins re-tooling its plant to make the Model A.

1933: The Century of Progress Exposition opens in Chicago, Illinois.

1935: The U.S. Supreme Court unanimously decides  A.L.A. Schechter Poultry Corp. v. United States, holding that the President cannot constitutionally create wage- and price-fixing industrial regulations.

1937: After four years of construction and only 11 deaths, the $27 million Golden Gate Bridge opens, connecting San Francisco with Marin County, California.

1963: Columbia Records releases "one of the most important recordings of the 20th century," The Freewheelin' Bob Dylan.  It's the first to feature primarily his own compositions, including "Blowin' in the Wind," Don't Think Twice, It's All Right," and "A Hard Rain's A-Gonna Fall."