ContractsProf Blog

Today in History: Drennan v. Star Paving

On this date, December 31, 1958, the California Supreme Court rewrote every construction contract in the state when it issued Drennan v. Star Paving, 333 P.2d 757 (Cal. 1958).

In the case, contractor Drennan called Star Paving to get a quote to build the Monte Vista Elementary School in Lancaster, California (left).  Star did not say that its bid was irrevocable, and Drennan did not pay for an option.  After Drennan used Star's bid in his contract proposal, but before Drennan accepted the bid, Star notified him that its bid was mistaken and that it was withdrawn.

Justice Traynor, for the court, held that a subcontractor's bid on a construction job could not be revoked once the contractor had relied on it, even if it had not been accepted and even if no consideration had been paid for keeping the bid open.  (Photo: AALSContracts.com)

[Frank Snyder]

Today in History: DC Gets the UCC

On this date, December 30, 1963, the Uniform Commercial Code goes into effect in the District of Columbia.

It wasn't in effect a year and a half earlier, on April 17, 1962, when Ora Lee Williams, a mother on relief, bought a $514.95 stereo (about $3,000 today) from the Walker-Thomas Furniture Co. of Washington, D.C. (left).  But Circuit Judge J. Skelly Wright (right) applied it anyway to find that the plaintiff stated a claim for unconsionability in the casebook staple, Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D.C. Cir. 1965).  (Photos: AALSContracts.com).

[Frank Snyder]

Led Zeppelin on Marketing

7-Eleven
music by Jimmy Page & Robert Plant
lyrics by Mark Davis and Rob "Iceman" Izenberg

There's a lady who goes
To the store that won't close,
And she's shopping at 7-Eleven.

Down the aisle there she sees
Ding Dongs, beer, and Friskies
and a Snickers really satisfies her!

Oooh oooh oooh
Oooooooh, make my Slurpee!

Today in History: R.I.P. Seth Wyman

On this date, December 29, 1827, Col. Seth Wyman, the defendant in Mills v. Wyman, dies at Shrewsbury, Massachusetts.  His second-oldest older son Seth, Jr. (1787-1865), will inherit most of the property and administer the old man's estate.  A picture of Seth, Jr., is here.  The classic story of the case is told by Geoffrey Watson here.

[Frank Snyder]

Signalling Electronically

Written contracts have developed a form of signalling and processes in order to ensure contract formation. Oral contracts have their form too. Now, we have electronic contracts. How should be deal with signalling in these cases?

Moringiello, Juliet, "Signals, Assent and Internet Contracting" . Rutgers Law Review, Vol. 57, p. 1307, 2005 http://ssrn.com/abstract=859485

Part of the abstract states:

While the Internet is new, the challenges presented by Internet contracts are not. Traditional contract rules, based on the paradigm of two individuals meeting face-to-face to negotiate written terms, have been modified over the years to accommodate diverse methods of communicating contract terms. These modifications have been fashioned to account for the different signals sent to offerees by new methods of contracting.

Today's courts, however, virtually ignore the fact that the common law of contracts has developed rules that account for the different signals sent by contract terms that are delivered in novel ways. This article argues that courts must consider the cautionary function that the paper contract form has traditionally served and account for the different signals sent by electronic contracts. To support this argument, the article reviews the electronic contracting case law and compares it to older cases addressing the issue of assent when contract terms are delivered by novel methods. The paper then discusses the factual differences between paper and electronic contracts, drawing on computer science and marketing scholarship examining the ways that individuals perceive electronic communications. The paper concludes by suggesting approaches to the assent issue that take these different perceptions into account.

[Stephen Safranek]

AALS: What I Really Hate About Commercial Law

The AALS Contracts Section's program is, as we've mentioned before, scheduled for Saturday, January 7, 2006.  But there's a great warm-up planned for Friday, when our sister Section on Commercial and Related Consumer Law presents Commercial Calamities.  An A-list of commercial law scholars -- most of them also active Contracts Section members -- will present the Dark Side of Commercial Law.

Three papers are particularly interesting to Contracts folks.  Victor Goldberg (Columbia) will tee off on Wood v. Lucy, Lady Duff Gordon. and its unfortunate effect on UCC 2-306.  Bob Hillman (Cornell) will take a 9-iron and work over UCC 2-209 (the one on modification, rescission, and waiver), an "example of both substantive chaos and drafting disaster."  Bob Scott (Virginia) will take on that casebook staple, Hoffman v. Red Owl.  Also on tap are Amy Boss (Temple) and Jim White (Michigan).  Larry Garvin (Ohio State) will moderate.  Here's the official description.

Despite, or perhaps because of, the brilliance of its framers and the interests of its users, commercial law has at least its share of errors, omissions, archaisms, peculiarities, and downright stupidities. Our session is devoted to airing our favorite annoyances about commercial law, ranging from problems with specific provisions to problems with structure and form. Our aim here is not to be particularly constructive but rather to be interestingly critical, though in the course of criticism doubtless some hints toward improvement will emerge.

Today’s panelists are drawn from a larger group whose accumulated grievances will be collected in a symposium to be published in the Ohio State Law Journal. Each participant will present a pet peeve, with plenty of time for Section members to add their own (or, at whatever peril, to defend a cherished doctrine or structure against the attacks of others).

The session is scheduled for 1:30 to 3:15.  The Section business meeting will take place at the conclusion.

[Frank Snyder]

Regulating E-Commerce

The conventional thinking about electronic commerce is that it's impossible for individual U.S. states to regulate it efficiently, and that a federal system (or some sort of uniform law) is needed.

Well, Larry Ribstein (Illinois) and Bruce Kobayashi (Geo. Mason) are not exactly conventional thinkers.  Here's a blast from the past, their Emory Law Journal piece, State Regulation of Electronic Commerce.  Here's the abstract:

There is a widespread belief that regulation of electronic commerce by individual states is unworkable because firms doing global business on the Internet easily can evade state regulation or, conversely, because firms are subject to excessive regulation due to states' overlapping jurisdiction. Instead, it is believed that electronic commerce is best regulated at the federal or even global level, and that any state regulation should be pursuant to uniform laws. This article challenges this conventional wisdom. It shows that regulation of electronic commerce by individual states has several advantages over federal or uniform state laws and that the problems of state regulation have been exaggerated.

First, state regulation provides variety, evolution and competition that is especially well suited to the dynamic nature of electronic commerce. Second, courts can minimize jurisdictional overlaps by enforcing choice-of-law and choice-of-forum contracts. Third, markets alleviate concerns that enforcing contractual choice would lead to a race-to-the-bottom in state Internet regulation. Any remaining problems with state regulation should be analyzed in comparison with those that would result under federal or uniform state law.

[Frank Snyder]

Yep, We've Got a Good Deal

Our colleague Paul Caron over at TaxProf Blog has the details of a new U.S. government survey of what professors do all day long.  Not surprisingly, they teach, research, and do "other" stuff.  There's no separate breakouts for law schools, but the average teaching load at a U.S. law school (6 hours a semester) compares pretty well to all the disciplines listed.

The average professor teaching at a doctoral public university spends 10 hours a week in the classroom and writes 5 articles, 1 review, and half a book every year.  No wonder the Ph.D.s are looking for jobs here.

[Frank Snyder]

Non-Contract Tools and IT Contracting

There are methods for for contracting parties engaged in complex tasks to ensure performance that don't involve putting terms in the contract.  They may rely on reputation, for example, or they might use pre-contract quality certification of vendors.  Francis R. Xavier of the Department of Economics at Hyderabad University takes a look at this in Determinants of Inter Firm Contractual Relations: A Case of Indian Software Industry.  Here's the abstract:

We analyze the impediments to inter-firm contractual relations, existing formal and informal ways of getting around them, especially the role of reputation and trust in mitigating the conflict of interest between the firms.  We study it in the context of Indian IT industry. Contract design is specified as a function of reputation (age, repeated contracts and quality certification), asset specificity, complexity and uncertainty.  We test the likelihood of observing Time & Material contract, a better propertied contract in the face of uncertainty. Empirical evidence confirms the propositions posited. Reputed firms tend to get highly complicated and uncertain projects. Asset specific investments do not seem to have any implication on contract type and complexity. The results broadly hint that the firms reckon more on creating an understanding through formal quality certifications to solve pre-contractual adverse selection problems and repeated contracting to solve the problems of behavioral uncertainties rather than relying on the court.

Contracts Subject of Transactional Panel

There are some things of interest to Contracts profs (besides our own annual session) at the AALS Annual Meeting, slated for January 3-7, 2006, at the Marriott Wardman Park in D.C.  On Wednesday, January 4, there's a program on transational law.  Breakout panels include two sessions on Contracts -- Aribtation, Comparative Concepts (Remedies).  Speakers will include Janet Levit (Tulsa), Hannah L. Buxbaum (Indiana-Bloomington). William S. Dodge (Cal-Hastings), Ruth E. Gordon (Villanova), Andrea K. Bjorklund (Cal-Davis), David V. Snyder (Tulane), and Kellye Y. Testy (Seattle).

[Frank Snyder]

Only the Best for Sinatra

The late Frank Sinatra had a reputation as a man who liked his food and his liquor.  But his tastes were good, not trendy.  For example, his touring performance contract specified that his own dressing room be fitted out with Jack Daniel's, Chivas Regal, Absolut or Stolichnaya Vodka, Courvoisier, Beefeater Gin, Nova Scotia salmon, jumbo shrimp, and unfiltered Camel cigarettes -- but also with egg salad sandwiches, Campbell's Chicken & Rice Soup (three cans), and cherry Life Savers.

[Frank Snyder]

Contracts, Sexuality and the (Un?)Ambiguous Principles of Divine Revelation

A lesbian teenager in Georgia was expelled from her private, Christian high school for kissing another girl at a sleepover party. Now the teenager and her father have sued the high school claiming breach of contract. (There appears to be a trend of breach of contract claims against Christian high schools in similar fact patterns; a high school student in Florida brought a similar case , though the press accounts began with tales of a breach of contract suit and more recently seem to have refocused on infliction of emotional distress).

In the Georgia case, the (then) ninth-grader alleges that the school expelled her for having an “inappropriate relationship” in violation of the school’s standard of conduct on “sexual immorality.” From press accounts, it appears that the teenager’s legal theory is that the school breached the contract of enrollment, and the “sexual immorality” clause in the code of conduct is too vague to be enforced. The terms “inappropriate relationship” and “sexual immorality” apparently are not expressly defined in the code of conduct. The teenager’s lawyer stated:

Right now, the code doesn't tell you anything about what sexual immorality is, aside from a few vague Biblical references. . . .What [the teenager] did is not expressly forbidden in Scripture and a legal contract cannot be based upon vague principles of divine revelation.

This potentially thrusts into the judicial sphere the dubious task of interpreting whether “sexual immorality” unambiguously includes a same-sex kiss.  Now, there's a thought to ponder over the holidays.

[Meredith R. Miller]

A Grinchly Contest for the Title of Uncivilest

Dahlia Litwick at Slate seeks stories about attorneys' most evil "pre-holiday shenanigans" -- a contest to determine the meanest thing done to an opponent right before the holidays.  Here's her explanation:

So, here's a class they don't teach in law school: screwing over your opponent just in time for the holidays. They probably should. For anyone with even a lick of evil in their soul and a filament of creativity in their brain, the law offers a whole host of opportunities for wrecking the lives of others.

Consider the perfectly timed restraining order, or the spontaneous motion for an order to show cause—or in fact anything that could bury the other side in research and paperwork the day before Christmas. Think about the possibilities for 11^th-hour changes in the visitation schedule for the children—requiring canceled plane tickets and Christmas Eve court appearances. Or the last-minute effort to have a local crèche or tree deemed unconstitutional.

Sure, we'd all like to pretend this stuff doesn't happen. Until they get a few drinks in us and we start to brag about all the vile and devious tricks we've pulled to wreck the other side's holidays. And for any lawyer reading this column who is shocked, shocked to learn that some attorneys deliberately file motions and pleadings in order to trash the Christmas season for others, well, just go back to saving the Mediterranean Monk Seal or whatever it is you do.

So, send in your submissions before it is too late: [email protected].

[Meredith R. Miller]

No Immigrants Need Apply

The job of a spotlight operator is to, well, operate a spotlight.  And spotlights are apparently extremely important to singer Stevie "Fleetwood Mac" Nicks.  Since they must be able to take direction very well, Nicks prefers that only those born in English-speaking households be hired to do spot work on her gigs.  Her performance contract prohibits the use of spotlight operators to whom English is a second language.  (Image: Press Kit Photo, Wikipedia)

[Frank Snyder]

Doing Business in Turkey

Lawyer Hakan Hanli of Istanbul's Pekin & Pekin is offering a four-part series, A Guide to Doing Business in Turkiye: "Removing Obstacles to Growth & Creating Jobs."  You can read the four parts here:

 
Part I
Part II
Part III
Part IV

Disgorgement as a Contract Remedy

The concept of efficient breach suggests that where one party can reap large gains by breaching the contract while causing relatively little loss to the other party the law ought to encourage breaches.  There's a net gain even when the breaching party fully reimburses the other party for its loss.

But might the non-breaching party in such situations be entitled to more than its mere expectation damages?  Mathias M. Siems of Cambridge's Centre for Business Research thinks so.  In Disgorgement of Profits for Breach of Contract - A Comparative Analysis, forthcoming in the Edinburgh Law Review, he looks at disgorgement as an alternative remedy.  Here's the abstract:

This article considers whether a contract-breaker is obliged not only to pay compensatory damages but also to disgorge to the innocent party the profits obtained from breach of contract. After an introduction to the topic, the approach of the courts in Common Law jurisdictions will be outlined. The main focus will be on English Law and the decision of the House of Lords in Attorney General v Blake, although judgments from other countries will also be mentioned. Thereafter the focus will be upon Germany as an example of a Civil Law jurisdiction. The German law of contract, negotiorum gestio and unjustified enrichment will be examined as to their ability to award disgorgement. The mixed legal systems of Israel, Louisiana and Scotland will also be studied. The similarities and differences between the different legal systems will then be compared and interpreted. In particular, the article will consider common starting points, exceptions and new legal concepts, as well as differences in judicial decision-making and in the freedom to draft contractual terms. Finally, it will be contended that disgorgement of the benefits resulting from a breach of contract should in principle be awarded. Moreover, this should not be restricted to certain cases. It is necessary only that the gains should be attributable to breach of contract.

[Frank Snyder]

Weekly Top Ten

Better late than never -- here's this week's top ten most-downloaded papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending December 19, 2005.  (Last week's ranking in parentheses; t = tie.)

1 (1) Taking Information Seriously: Misrepresentation and Nondisclosure in Contract Law and Elsewhere, Richard Craswell (Stanford).

2 (2) Contracting in the Shadow of the Law, Nicola Gennaioli (IIES-Stockholm).

3 (3) Rethinking Spyware: Questioning the Propriety of Contractual Consent to Online Surveillance, Wayne Barnes (Texas Wesleyan).

4 (4) In Memoriam, John Cibinic, Jr., Ralph C. Nash (Geo. Washington) et al.

5 (5) One-Sided Contracts in Competitive Consumer Markets, Lucian Arye Bebchuk (Harvard) & Richard A. Posner (Chicago).

6 (6) From St. Ives to Cyberspace: The Modern Distortion of the Medieval 'Law Merchant,' Stephen E. Sachs (Yale-Student).

7 (10) How Law Affects Lending, Rainer F.H. Haselmann (Leipzig-Business), Katharina Pistor (Columbia), & Vikrant Vig (Columbia-Business).

8 (8) An Embedded Options Theory of Indefinite Contracts, George S. Geis (Alabama).

9-t (-) Reason, Self-Deception and Rational Frogs: Reconciling Comprehension and Responsibility in Law and Business Ethics, Jeffrey M. Lipshaw (Indiana-Indianapolis).

9-t (10) The Strategy of Boilerplate, Robert B. Ahdieh (Emory).

[Frank Snyder]

Yanks Buy Damon

Speaking of contracts, the New York Yankees have landed leadoff hitter Johnny Damon (batting, at left) from their arch-rival Boston Red Sox, offering the 32-year-old center fielder a four-year deal at $13 million a year.  Damon had an on-base percentage of .366 and a slugging percentage of .439, along with 18 stolen bases.  Yankee fans are ecstatic and Bosox fans are in despair.  (Image: Wikipedia GNU License)

Interestingly, the Los Angeles Dodgers signed center fielder and leadoff hitter Kenny Lofton from Philadelphia to a one-year deal at about $4 million.  Lofton's on-base percentage last year was .392, with a slugging percentage of .420 and 20 stolen bases.  Dodger fans are yawning.  Go figure.

[Frank Snyder]

Constitutional Contract Law

Although we spend most of our time wondering what the common law says about contracts, another aspect of contract law is ruled by Article I, Section 10 of the Constitution, "No state shall ... pass any ...Law impairing the Obligation of Contracts."

James Ely of Vanderbilt has this to say in his abstract about an upcoming article:

"This essay examines the origins and early construction of the contract clause of the Constitution. It points out that the contract clause must be understood in the context of the troubled economic circumstances of post-Revolutionary America. The clause, which was little debated at the Philadelphia convention, can be traced to language in the Northwest Ordinance of 1787. This paper focuses on the contested issue of whether the framers intended the clause to cover only contracts between private parties or to extend to public contracts between states and individuals. As asserted by the Progressive historians, it has long been the dominant position among scholars that Chief Justice John Marshall expanded the meaning of the contract clause when he ruled that the provision governed private contracts. This paper disputes that conventional wisdom and argues that the clause could fairly be construed to safeguard both public and private contracts from state abridgement. It gives attention to discussion at the state ratifying conventions as well as to the views of prominent members of the constitutional convention. The paper also considers pre-Marshall court cases that examined the meaning of the contract clause and the famous 1796 opinion letter by Alexander Hamilton. Although recognizing that it is difficult to establish a collective state of mind concerning the scope of the ban against contractual impairments, the paper concludes that there was ample support for the views later endorsed by the Marshall Court concerning the reach of this provision."

Ely, James W., "Origins and Development of the Contract Clause" (November 1, 2005). Vanderbilt Public Law Research Paper No. 05-36 http://ssrn.com/abstract=839904

[Stephen Safranek]

Today in History: Lucy and Zehmer Get Drunk

On this date, December 20, 1952, two men were sitting and drinking at a table in A. H. Zehmer's Ye Olde Virginnie Restaurant, Garage & Service Station on U.S. Highway 1 in McKenney, Virginia.  The contract that resulted from that drunken evening would go down in history as Lucy v. Zehmer.

McKenney (pop. c. 400) lies in Dinwiddie County, about 25 miles southeast of Petersburg.  A. H. Zehmer was a prominent local resident.  The site of the restaurant/service station is now Ye Olde Virginnie Home for Adults, a 36-unit assisted living facility, at 20918 Boydton Plank Rd. (U.S. Route 1) in McKenney, on the corner of what is now Zehmer Ave.  Map is here.

It probably didn't help Zehmer's cause that he'd been an alternate delegate to the Republican National Convention in 1948, the year the Dixiecrat revolution in the Democratic party came uncomfortably close to giving Virginia to Tom Dewey.  The opinion in the case was written by Archibald Chapman Buchanan, whose second most-famous opinion upheld the Virginia miscegenation law as a reasonable means of avoiding "corruption of blood."  Also on the panel was Kennon Caithness Whittle, a former President of the Virginia Bar who, as a trial judge, supervised trial of the Martinsville Seven, in which seven young black men were convicted and executed for the rape of a white woman.

[Frank Snyder]