ContractsProf Blog

Film Clips: Was it Worth It?

Ann Orkin:  Eight years I went to law school. Three times I took the
bar.  I finally get a a client and my client is a lunatic.

     From: The Gun in Betty Lou’s Handbag (1992)

Consolidating the Boards of Contract Appeals

New legislation will consolidate all of the federal government's various civilian Boards of Contract Appeals, the entities responsible for hearing and resolving disputes under federal contracts, into a single organization.  Last Friday the folks at George Washington's law school hosted a panel discussion (left), led by Stephen Schooner and Christopher Yukins, on what that's going to mean for those who practice before the Boards.  If you missed it, don't worry -- a podcast of the program is available.

[Frank Snyder]

"Guerilla Terms" and Standard Form Contracts

"Guerrilla terms," says Peter Alces (Wm. & Mary), are terms that sophisticated parties sneak into standard form contracts contracts in a way that they are kept hidden from the other party.  These terms, he says, can be inefficient as well as unfair.  The paper is, appropriately enough, called Guerrilla Terms.  Here's the abstract:

Recent contributions to economic theory provide the means to reconcile deontological and consequentialist objectives in the case of standard form consumer contracts. An appreciation of the forces operating on those who draft form agreements demonstrates a type of market failure that calls for the balance struck by contract doctrine's inquiry into the basis of substantial rather than merely ostensible "agreement." That is, contract doctrine, through conceptions of "bargain" and "agreement" may police just those transactional contexts in which the apparent disjunction of efficiency and equity may be most pronounced.

This paper proceeds from four premises: (1) It is irrational to read standard forms, those used in common consumer transactions; (2) The terms form drafters include in those standard forms are functionally equivalent to "add on" product supplements (like the printer cartridge you need for your computer printer, or the telephone charges on your hotel bill); (3) "shrouding," effectively hiding the true and complete cost of a purchase, explains the inefficiency at equilibrium of what I refer to as "guerrilla terms," the terms hidden in the boilerplate because it is not in form drafters' interest to bring them to the attention of less sophisticated consumers; and (4) certainty and predictability in the contract law governing form agreements need only be realized in an actuarial and not in a per-transaction sense. The argument presented here supports each of those assertions and reconciles our attitude toward contract doctrine with the reality of standard form agreements.

My conclusions are reinforced by reference to the law and social psychology literature as it relates to contract. A conception of human agency in terms of situation, context, rather than disposition reveals the mechanism by which guerrilla terms accomplish unfair and inefficient results. "Dispositionism," the idea that human actors are defined by the rational disposition they assume, is chimerical, appealing to our most robust conceptions of "self," but is also ultimately false, or at least profoundly incomplete. Social psychology's revelation of our situationist selves - we are in no small part defined by the circumstances that surround us and our often less than rational responses to them - corrects misapprehensions founded on idealistic and ultimately inaccurate depictions of how we engage contract doctrine. Doctrine does not fail so long as we take it seriously; it is only our propensity to translate the elements of doctrine into terms that we, wrongly, assume are constrained by transactional realities that corrupts contract doctrine. I conclude that there is a role for the courts and the common law to play, that contract doctrine founded on substantial bargain and agreement can and should continue to matter, that only conscientious application of classical contract doctrine can realize the goals of equity and efficiency.

[Frank Snyder]

Changed Circumstances

In the context of insurance contracts, an insurer under common law has a right to consider the contract discharged if “changed circumstances materially alter the insured risk.”  But what does that mean?  Suppose all that’s happened is that events have occurred that make the likelihood of a payout much more likely.  Does that count?  And if it does, does the insurer get to keep the premium?

Those were the issues for the U.K. Commercial Court in last year’s Swiss Reinsurance Co. v. United India Insurance Co.   John Hanson and Emma Sephton of London’s Barlow Lyde & Gilbert run down the answers (maybe; yes) in Material Alteration To The Insured Risk.

[Frank Snyder]

Depeche Mode on Contracts

It is only recently that I joined the modern world and purchased an iPod. 

So far I’ve been enjoying owning it, as it makes the car rides out to Long Island more bearable.

I’ve just finished the project of getting my CDs transferred into iTunes, and have been using the “shuffle” feature, which digs up the oddest juxtaposition of songs.  Sometimes you even forget that you owned a song, and then rediscover it suddenly.

Such was the case in the car today, when the song “Everything Counts” by Depeche Mode randomly came up on shuffle.  I’m dating myself a bit like this, but I used to listen to this particular CD a lot at the end of high school.  I was glad to encounter it again, as some of the synth pop from the 80s has held up, really remarkably well, considering that it's, er, synth pop.

Anyway, here are the lyrics, which I assume to be songwriter Martin Gore’s take on the recording industry:

The handshake
Seals the contract
From the contract
There’s no turning back
The turning point
Of a career
A career of being insincere
The holiday
Was fun packed
The contract
Still intact

The grabbing hands
Grab all they can
All for themselves
After all

It’s a competitive world
Everything counts in large amounts

The graph
On the wall
Tells the story
Of it all
Picture it now
See just how
The lies and deceit
Gained a little more power
Confidence
Taken in
By a sun tan
And a grin

The grabbing hands
Grab all they can
All for themselves
After all

It’s a competitive world
Everything counts in large amounts

The grabbing hands
Grab all they can
Everything counts in large amounts

[Miriam Cherry]

Blogs and Scholarship

Do blogs by law professors count as "scholarship"?  Some argue that they should, even though my dean counts it as "service."  (At my law school, "service" need not actually result in any benefit to anyone, which is why faculty committee work also counts.)

But whether or not they're "scholarship," blogs are certainly getting cited.  Ohio State law student Ian Best (top left) on his blog 3L Epiphany, is compiling a list.  He's found some 70 blogs that have been cited, many repeatedly.  Douglas Berman's Sentencing Law & Policy blog -- part of our Law Professor Blogs Network -- has been cited 60 times in law journals, the most of any blog.  You can see Best's list here.

ContractsProf is tied for the nineteenth most-cited blog ("We're top twenty!"), with a total of, well, two citations.  One of them was by Bob Hillman, who in a recent Michigan Law Review article quoted an "Anonymous" comment on this blog.  If you'd asked, Bob, I could have told you who the "Anonymous" was, and got my name in the Michigan Law Review again.  My dean likes that.

Also on Best's site are interviews with two judge who have cited blogs in judicial opinions.  Particularly interesting are the comments of U.S. District Judge Richard Kopf, who notes that blogs allow academics doing cutting-edge work to make their stuff accessible to judges and practitioners at a practical leve. 

[Frank Snyder]

"Nonprofit" is a Tax Designation, Not a Business Plan

A good many people in legal education are up in arms about the growth of for-profit law schools.  The fear (whether justified or not) is that the quest for profits will work to the disadvantage of students.

Yet, as the National Law Journal points out in an interesting article, the nonprofit law schools are using a variety of the same management techniques that their for-profit cousins.  The reason?  Pressure from the U.S. News rankings, says the Journal.  (Images: For-profit Florida Coastal law school's new 220,000 square-foot lakeside facility.)

[Frank Snyder]

Weekly Top 10

Two new papers and one returnee join this week's Top Ten.  Following are the ten most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the sixty days ending April 23, 2006.  (Last week's rank in parentheses.)

1 (1) Emerging Policy and Practice Issues (2005), Steven L. Schooner & Christopher R. Yukins (Geo. Washington).

2 (2) Contract Law Theory, Brian Bix (Minnesota).

3 (3) The Best Puffery Article Ever, David A. Hoffman (Temple).

4 (5) Contract Formation Issues in Employment Arbitration, Richard A. Bales (Northern Kentucky).

5 (-) Corporation and Contract, Henry Hansmann (Yale).

6 (8) The Employment Due Process Protocol at Ten: Twenty Unresolved Issues, and a Focus on Conflicts of Interest, Richard A. Bales (Northern Kentucky).

7 (9) Modularity in Contracts: Boilerplate and Information Flow, Henry E. Smith (Yale).

8 (-) Constructing a Bid Protest Process: Choices Every Procurement Challenge System Must Make, Daniel I.. Gordon (GAO).

9 (10) Creative Commons: A Skeptical View of a Worthy Pursuit, Niva Elkin-Koren (Haifa).

10 (-) Legal Default Rules: The Case of Wrongful Discharge Laws, W. Bentley MacLeod (Columbia-Economics) & Voraprapa Nakavachara (Southern Cal-Economics).

[Frank Snyder]

Let’s Barter

This CBS News story truly captures the concept of efficient exchange.  Kyle MacDonald decided to start with a paper clip, in the hopes that he could eventually trade his way up to his ultimate goal – owning a house: 

He advertised it in the barter section of Craigslist.org, the Web site teeming with city-specific listings for everything from job openings to apartment rentals. At first, MacDonald said merely that he wanted something bigger or better for his red paper clip. No mention of a house — he feared seeming flaky.

While he was visiting his hometown of Vancouver, BC, two women gave him a fish-shaped pen for the paper clip.

Later that day, MacDonald headed to Seattle to catch a ballgame and a flight home. Before the airport, though, he stopped to see Annie Robbins, an artist who had just stumbled upon the Craigslist barter section. She admired its anticonsumerist vibe, she said, so she answered MacDonald's posting “on a lark.”

MacDonald left her home the proud owner of a small ceramic doorknob with a smiley face, made by the son of an artist Robbins knows.

Next up was Shawn Sparks, who was packing up to move from Amherst, Mass., to Alexandria, Va. Sparks, 35, is a huge fan of Craigslist barters, having acquired his 1993 Chevy Blazer in a trade for a used laptop.

Sparks offered MacDonald a Coleman camping stove. Sparks had two, and didn't want to lug both on his move. And he needed a new knob for his espresso machine.

Done. The men celebrated with a barbecue at Sparks' house.

After the stove, things began to snowball: MacDonald traded for a generator, then a party and a trip, a van, a performance by a rock band, and eventually into a year’s free rent.  Along the way, the quest has garnered publicity (which, in my estimation, probably facilitated some of the trades). 

Hat-tip: Daniel Tannenbaum

[Miriam A. Cherry]

Davis Honored at WFU

Wake Forest contracts prof Tim Davis has been selected by the law school's third-year class to win its Excellence in Teaching Award this year.  Davis, who joined the Wake faculty in 1998, won two prior teaching awards during a nine-year stint at SMU.  He's the author or editor of four books on sports law and on and race, including The Business of Sports Agents (University of Pennsylvania Press 2003) (with Shropshire).

[Frank Snyder]

Texas Bar to Honor Hadley Issue

The Texas Bar Foundation will award its Law Review Article of the Year award to the Texas Wesleyan Law Review for its Symposium issue, on Hadley v. Baxendale  The issue features a range of contract-related scholarship from some 25 international scholars.  It's an unusual move for the Foundation, which usually singles out a single piece for the honor.

The Law Review has some additional copies of the issue available.  If you teach law, you can get a free copy by e-mailing them or by writing to:   Texas Wesleyan Law Review 1515 Commerce Street Fort Worth, TX 76102.  You'll have to mention this Blog and your academic affiliation for a free copy.  You can also purchase copies at the ridiculously low regular price.

[Frank Snyder]

Contingent Contracts and Worker Happiness

Is contractual job protection important to worker happiness?  Not as much as you'd think, according to Dutch economist Marloes de Graaf-Zul.  In The Anatomy of Job Satisfaction and the Role of Contingent Employment Contracts, she looks at the data and finds that the type of contract, whether fixed or contingent, plays a surprisingly small role in how happy workers are in their jobs.  Here's the abstract:

In this paper I analyze job satisfaction using fixed effect analysis and a multiple equation model.  Overall job satisfaction is analyzed as an aggregate of satisfaction with several job aspects. I find that overall job satisfaction is mainly determined by satisfaction with job content. All aspect satisfactions are subsequently explained from observed characteristics, with special focus on contingent employment contracts. Satisfaction with job security is the aspect satisfaction with the strongest relation to type of contract.  Since this is also the aspect that receives least weight in overall job satisfaction this has little impact on workers' total happiness. More influential is the low satisfaction with job content due to agency work. Overall, temporary agency work leads to the lowest job satisfaction. On-call work and fixed-term work arrangements do not differ from regular work in overall job satisfaction they provide, even though they do lead to higher or lower satisfaction with some aspects of the job.

[Frank Snyder]

Structured Settlements and Secured Transactions

Does the Uniform Commercial Code apply to structured settlements of tort cases?  No, you're likely to react, but it's a closer question than it seems.

Closer, but not close enough, according to a decision last year by the U.S. Court of Appeals for the Ninth Circuit.  The case, reported by Mike C. Buckley of Reed Smith’s Oakland office in Ninth Circuit Holds UCC Does Not Apply to Structured Settlement of Tort Claim, involved a consumer who assigned her tort settlement interest to a third party, gave it a security interest (properly filed), went bankrupt, and reneged on the deal.

[Frank Snyder]

Happy Anniversary to the Big Kahuna

We missed this one (since I was catching rays at the beach at the time) but belated congratulations to our colleage Paul Caron, the Grey Eminence of the Law Professors Blog Network, on the second anniversary of his marvelous TaxProf Blog.

Caron launched the project April 15, 2004, and has since had over 1.5 million visitors, or around 9,000 a day.  Who says tax is dull?

[Frank Snyder]

Today in History: Crunden-Martin Asks for a Quote

On this date, April 20, 1895, the Crunden-Martin Wooden Ware Co. of St. Louis, Missouri (left), sends the following message to to the Fairmount Glass Works of Fairmount, Indiana:

Gentlemen:
Please advise us the lowest price you can make us on our order for ten car loads of Mason green jars, complete, with caps, packed one dozen in case, either delivered here, or f. o. b. cars your place, as you prefer. State terms and cash discount.
Very truly,
Crunden-Martin W. W. Co.

Fairmount's reply, couched as a price quote, will nevertheless be found by the Kentucky Court of Appeals (how did Kentucky get involved in this?) to be an offer.  The case of Crunden-Martin Wooden Ware Co. v. Fairmount Glass Works is a casebook staple.  The Crunden-Martin facility is a proposed National Historic Site -- you can see lots of pictures here.  The "F" in a hexagon (above, right) was the Fairmount trademark.  You can click on "continue reading" for the text of the decision.

[Frank Snyder]

Continue reading

LOC Rules in China

The People's Republic of China has new rules governing letters of credit this year.  Wen Qin of Beijing’s Union Law has a rundown of the new system in New Rules for Resolving Letters of Credit Disputes in China.

[Frank Snyder]

Teaching Consumer Law

Interested in teaching consumer law?  Or at least raising more consumer law issues in your standard commercial courses?  If so, you'll want to think about attending the University of Houston Law Center conference, Teaching Consumer Law: The Past, Present, and Future of Consumer Law, which is slated for Friday and Saturday, May 19-20, 2006.  The presenters included a blend of academics and practicing attorneys, and should provide a lot of useful information.  Special added attraction at slight additional cost:  Texas Rangers v. Houston Astros at Enron Field Minute Maid Park.

[Frank Snyder]

Emory Launches Transactional Certificate

The law school at Emory University is launching a new Transactional Law certificate program, designed to "give Emory Law students the opportunity to focus a part of their training on the representation of business and commercial clients."

The program will require a core of corporate and tax courses, supplemented by a range of business law electives and externships, and will incorporate practitioners in its simulation classes.

[Frank Snyder]

Construction Liability Disclaimer Upheld

A recent British case involving a contractual warranty in a construction case presented a knotty question of interpretation.  In the case, Contractor had a contract with Developer, who in turn had a contract with Tenant.  The Contractor-Developer contract provided:

The Contractor shall owe no duties or have any liability under this deed which are greater or of longer duration in that which it owes to the Developer under the Building Contract.

Contractor’s work was apparently not very good, and Tenant had to do some remedial work.  Developer went bust and owed Contractor more than the amount of the remedial work.  Could Tenant recover from Contractor?

No, said the court.  The point of the clause was to limit Contractor’s liability to the amount of its obligations to the amount it was to get from Developer.  Since it had a set-off against Developer for all claims, it couldn’t be liable to Tenant.

Jeremy Glover of London’s Fenwick Elliott LLP runs down the facts in Will a Warranty Always Enable an Employer to Pursue a Claim Against the Contractor if the Developer Becomes Insolvent?

[Frank Snyder]

AALS K CFP

Those interested in the role of contract law in private ordering -- whether for or against -- should consider submitting proposals for the Annual Program of the AALS Section on Contracts.  This year's topic, says Chair Jean Braucher (Arizona) is New Frontiers in Private Ordering.  Papers selected will be published in the Arizona Law Review.  Here's the Call for Papers:

The Section on Contracts of the Association of American Law Schools is seeking two presenters for its annual meeting program on the topic, New Frontiers in Private Ordering.  The program, to be held on January 5, 2007, in San Francisco, will explore ways in which contracts, real or metaphorical, are being used to deal with problems that public law might tackle but is not addressing very effectively.  A "new frontier" in private ordering can involve, among other possibilities, an unusual purpose of contracting or an unusual subject matter of the contract.  Both celebratory and critical perspectives are welcome.  Papers could do one or more of the following:  describe an interesting example, develop a theoretical perspective, and consider strengths and weaknesses of using private rather than public ordering to address a social problem.

Two presentations will be made by invited speakers, and two presentations will be by scholars selected through this call for papers.  The Arizona Law Review has agreed to publish these four papers and is interested in publishing several additional papers in the issue on this topic.  The AALS annual meeting program will only allow time for four presentations but additional papers to be published will be announced at the program and abstracts will be made available.

  One of the two invited papers is a co-authored spin-off from a book by Professors Ian Ayres (Yale) and Jennifer Brown (Quinnipiac, right), Straightforward:  How to Mobilize Heterosexual Support for Gay Rights (Princeton University Press 2005), which suggests ways for people to "contract" around homophobia by, for example, buying products with the "fair employment mark" indicating that the seller does not discriminate on the basis of sexual orientation.  The new paper will discuss how an employer who adopts the mark can restrict, better quantify, and better control litigation risk than under existing nondiscrimination policies. The other invited paper is by Professor Michele Goodwin (DePaul) and is a spin-off from her book Black Markets:  The Supply and Demand of Body Parts (Cambridge University Press 2006), which is on trade in human organs and raises race and class issues concerning this trade.  Her new paper will focus on the promise of negotiated sales of body parts as a means to better serve the interests of both sellers and buyers.  Drawing on the example of negotiation in the reproductive realm, the paper will develop the argument that selective private ordering in intimate spaces can better serve the poor and racial minorities than public ordering.

A selection committee, in consultation with the editors of the Arizona Law Review, will choose two additional papers for presentation.  The committee members are Professor Jean Braucher (Arizona), chair of the Section on Contracts, and Professors Martha Ertman (Utah) and Robert Hillman (Cornell), members of the section Executive Committee.  The deadline for submissions is Sept. 1, 2006, but the committee encourages earlier submissions and will read papers as they are submitted.  Please send an abstract and a draft paper as electronic attachments to Jean Braucher.  Questions also can be directed to that address.  Selections will be made before Oct. 1, 2006, in time for inclusion of the names of those selected in the AALS annual meeting program.  Panelists will be expected to circulate near-final draft papers among themselves by December 15.  The deadline for manuscripts will be March 15, 2007, with publication in the fall 2007 issue of the Arizona Law Review.  The length of pieces should be no more than 30 printed ages (40 to 45 double-spaced manuscript pages). Papers can be co-authored; if selected, co-authors will have to allot their program time among themselves.  AALS will not provide funds for speakers' travel expenses or meeting registration; annual meeting speakers typically obtain funding from their home institutions.

[Frank Snyder]