ContractsProf Blog

AALS Contracts Section Annual Meeting Program

Speaking of next week's AALS annual meeting, please plan to attend the Contracts Section's annual meeting program, Navigating Lombard Street in a Fog: Seeking (or Ignoring) Landmarks of Intent and Context, next Thursday, January 6th, from 2:00 to 5:00 p.m., in the Divisadero Room, Second Floor Level, Parc 55 Wyndham San Francisco Union Square.

The program will consist of two roundtables, during and after which we hope to elicit audience comments and questions.  A brief business meeting will follow the program's conclusion.

Intent to Contract and to be Bound by Specific Terms

Thomas W. Joo (UC-Davis), Moderator

Gregory M. Klass (Georgetown), Intent to Contract in Theory and Practice

Qi (George) Zhou (Sheffield), The Use of Implied Intention in English Contract Law

Tal Kastner (J.D., Yale; Ph.D. candidate (English), Princeton), The Persisting Ideal of Agreement in an Age of Boilerplate

Nancy S. Kim (California Western, visiting at Ohio State), Three Faces of Intent in Contract Formation

Jarrod Wong (U. of Pacific/McGeorge), Class Arbitration Waivers: A Case Study of Constructive Intent and the Limits of a Consent-Based Theory of Contract Law

 

Intended Meaning (and Effect) of "Agreed" Terms

Keith A. Rowley (UNLV), Moderator

Peter Linzer (Houston), The Problem with Plain Meaning and the Distinction Between Actual Intent in Contract Interpretation and Originalism in Constitutional Interpretation

Steven J. Burton (Iowa), Context, Plain Meaning, and the Objective Theory of Contract Interpretation

Adam B. Badawi (Washington U.), Interpretive Preferences and the Limits of the New Formalism

Michelle E. Boardman (George Mason), Insuring Understanding: The Tested Language Defense

 

[KAR]

DeBeers UK Ltd. v. Atos Origins IT Services UK Ltd

We love websites that provide links to actual legal decisions.  As Leopold von Ranke put it, you need to consult original sources in order to reconstruct events wie es eigentlich gewesen, and that is our aspiration here.  So, we tip our collective hat to Information Age.com for providing this full account with a link to the full opinion in the DeBeers case against Atos Origin.

The case involved an integration project that Atos Origin undertook for DeBeers.  The purpose of the project was to integrate DeBeers' supply chain systems in Botswana.  After numerous delays and mutual recriminations, the project fell apart in 2008.  DeBeers had stopped payment in March in order to express its dissatisfaction with the delays and with the  quality of the work done.  Atos Origin threatened to stop work in May unless the agreement could be renegotiated.  Atos Origin made good on its threat in June.  Both parties claimed that the other repudiated the contract.  The opinion runs to 382 numbered paragraphs and contains lots of juicy details about a relationship broken beyond repair.  I will cut to the chase.

Although Justice Edwards-Stuart of the UK's Technology and Construction Court in the High Court of Justice found that DeBeers was partially responsible for the project delays that precipitated the breach, he still found Atos liable to the tune of nearly £1 million for breach of contract.  Atos Origin stopped working on the project, on the ground that the project had changed fundamentally from its original scope.  The court found the breach to be willful and deliberate but did not award DeBeers the full £8.3 million in damages it sought because its actions caused losses to Atos Origin.  

DeBeers is now going to have to complete the project on its own.  

[JT]

Lady Duff Deschanel?

Thanks to the New York Daily News and eonline.com, we are well-informed regarding Zooey Deschanel v. Steve Madden, Ltd., a case in which the actress and singer (pictured, left) is claiming that various entities and individuals associated with the famous shoe designer (represented at right by a Beijing store) owe her $2 million for a breach of contract.  The complaint, linked to above, is mercifully short.  The basics are as follows:

According to Ms. Deschanel, in August 2010, her agent at Creative Artists Agency  entered into an oral agreement with the defendants, collectively called "Steve Madden," whose terms provided that Ms. Deschanel would be paid a $2 million fee, plus various royalties in excess of the up-front fee, in exchange for the exclusive right to use Ms. Deschanel's name and image in connection with certain shoes and accessories.  Ms. Deschanel further alleges that defendants sought to amend the contract to adjust the up-front fee downwards to $1.5 million, allegedly on the ground that a retailer was not supporting the agreement.  Ms. Deschanel claims that she agreed to the new terms and fully performed by allowing her name and image to be used by defendants and by not allowing her name and image to be used by anyone else.

In October 2010, defendants allegedly breached and repudiated the amended agreement.  Ms. Deschanel seeks to recover the original $2 million fee or in the alternative $1.5 million plus interest.  

[JT]

Weekly Top Ten from the Social Science Research Network

Very exciting news this week in the top ten for followers of the blog because our own Meredith Miller is topping the Law & Society Contracts list.  Way to rack up the downloads, Meredith!

RECENT HITS (for all papers announced in the last 60 days) TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 
October 28, 2010 to December 27, 2010

Rank	Downloads	Paper Title
1	198	Party Autonomy in Rome I and IΙ from a Comparative Perspective  Symeon C. Symeonides,  Willamette University - College of Law,  Date posted to database: October 25, 2010  Last Revised: October 26, 2010
2	197	Choice of Forum Provisions in Intra-Corporate Litigation: Mandatory and Elective Approaches (The 2010 Pileggi Lecture)  Joseph Grundfest,  Stanford University Law School,  Date posted to database: October 11, 2010  Last Revised: October 27, 2010
3	194	Suing the Government as a 'Joint Employer' - Evolving Pathologies of the Blended Workforce  Steven L. Schooner, Collin D. Swan,  George Washington University - Law School, George Washington University - Law School,  Date posted to database: October 21, 2010  Last Revised: November 16, 2010
4	193	The Gold Clause Cases and Constitutional Necessity  Gerard N. Magliocca,  Indiana University School of Law - Indianapolis,  Date posted to database: November 17, 2010  Last Revised: November 21, 2010
5	154	Divided Loyalties: The Attorney’s Role in Bankruptcy Reaffirmations  Gregory M. Duhl,  William Mitchell College of Law,  Date posted to database: November 17, 2010  Last Revised: November 17, 2010
6	146	The Regulation of Surrogate Motherhood in Greece  Aristides N. Hatzis,  University of Athens - Department of Philosophy & History of Science,  Date posted to database: October 10, 2010  Last Revised: October 10, 2010
7	142	Access or Expectation: The Test for Fiduciary Accountability  Robert Flannigan,  University of Saskatchewan,  Date posted to database: October 29, 2010  Last Revised: December 17, 2010
8	134	When Do Fiduciary Duties Arise?  James J. Edelman,  University of Oxford - Faculty of Law,  Date posted to database: October 26, 2010  Last Revised: November 13, 2010
9	120	Contract, Uncertainty and Innovation  Ronald J. Gilson, Charles F. Sabel, Robert E. Scott,  Stanford Law School, Columbia University - Law School, Columbia University - Law School,  Date posted to database: November 20, 2010  Last Revised: December 3, 2010
10	96	Structure and Reform of Corporate Governance in the United Kingdom in Relation to the Shareholder Versus the Stakeholder Theory  Rohit Arora,  Unaffiliated Authors - affiliation not provided to SSRN,  Date posted to database: September 29, 2010  Last Revised: September 29, 2010

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic) 
October 28, 2010 to December 27, 2010

Rank	Downloads	Paper Title
1	89	Strategic Default: The Popularization of a Debate Among Contract Scholars  Meredith R. Miller,  Touro College - Jacob D. Fuchsberg Law Center,  Date posted to database: October 3, 2010  Last Revised: November 17, 2010
2	87	The English vs. The American Rule on Attorneys Fees: An Empirical Study of Attorney Fee Clauses in Publicly-Held Companies’ Contracts  Theodore Eisenberg, Geoffrey P. Miller,  Cornell University - School of Law, New York University (NYU) - School of Law,  Date posted to database: November 11, 2010  Last Revised: November 15, 2010
3	62	Origin Myths, Contracts, and the Hunt for Pari Passu  Mark C. Weidemaier, Robert E. Scott, G. Mitu Gulati,  University of North Carolina (UNC) at Chapel Hill - School of Law, Columbia University - Law School, Duke University - School of Law,  Date posted to database: July 17, 2010  Last Revised: November 10, 2010
4	53	An Optional Instrument on EU Contract Law: Could it Increase Legal Certainty and Foster Cross-Border Trade?  Martijn W. Hesselink,  University of Amsterdam - Centre for the Study of European Contract Law (CSECL),  Date posted to database: October 23, 2010  Last Revised: December 15, 2010
5	43	An Optional Contract Law for Europe? (Rote Karte oder grünes Licht für den Blue Button) (German)  Walter Doralt,  Max Planck Institute for Comparative and International Private Law,  Date posted to database: November 11, 2010  Last Revised: November 11, 2010
6	38	Rudolf Von Jhering’s Influence on Karl Llewellyn  Robert Whitman, Julie E. Wynns,  University of Connecticut School of Law, Unaffiliated Authors - affiliation not provided to SSRN,  Date posted to database: October 1, 2010  Last Revised: October 1, 2010
7	35	The Double Soul of Promissory Estoppel - A Comparative View  Paolo Pardolesi,  Università degli Studi di Bari - Faculty of Law,  Date posted to database: November 5, 2010  Last Revised: December 8, 2010
8	35	How Organisational and Structural Weaknesses Impacted the Harmonisation Process and What it Implies for European Private Law (Strukturelle Schwächen in der Europäisierung des Privatrechts – Eine Prozessanalyse der jüngeren Entwicklungen) (German)  Walter Doralt,  Max Planck Institute for Comparative and International Private Law,  Date posted to database: November 11, 2010  Last Revised: November 11, 2010
9	23	Arbitration's Suspect Status  Hiro N. Aragaki,  Fordham University - Fordham University Schools of Business,  Date posted to database: November 29, 2010  Last Revised: December 2, 2010
10	20	Autonomy and Paternalism from a Common Law Perspective: Setting Aside Disadvantageous Transactions  Stephen Michael Waddams,  University of Toronto - Faculty of Law,  Date posted to database: October 25, 2010  Last Revised: October 25, 2010

[JT]

Production Company Behind "Black Swan" Sues Former Chief

As reported in the New York Daily News here, Overnight LLC, the production company behind "Black Swan," the latest film about psychotic ballet dancers, is suing Aaron Kaufman, its former chief executive.  Overnight alleges that Kaufman bailed out on the film, stole a top director and left Overnight "saddled with debt."  At the heart of the suit, apparently, is a conflict between Kaufman and Overnight's current head, Rick Schwartz, who, while listed as an executive producer of the film, will not be eligible for an Academy Award.  Overnight is seeking $10 million in a breach of contract claim, alleging lost revenues, lost opportunities, and reputational harms, inter alia.  The Daily News says the allegations of the law suit are as complex as the plot of the film, so I'm assuming they go something like this:

*Warning: Spoiler Alert* Do not read on if you think your enjoyment of this kind of movie turns on not knowing the plot in advance:

Continue reading

Merry Christmas!

 

Best holiday wishes from Bangkok!

FGS

Merger Clause Defeats Breach of Contract Action in Wisconsin

Kudos to the State Bar of Wisconsin for some excellent legal reporting.  Joe Forward, a legal writer for the Bar, has posted a thorough case summary  of a recent contracts dispute, Town Bank v. City Real Estate Development LLC, 2010 WI 134 (Dec. 14, 2010).  The case involved a renegotiated loan agreement between the Bank and the LLC.  Originally, the Bank had signed a commitment letter which obligated it to advance $9 million towards a condominium development, subject to certain financing conditions, which the LLC apparently failed to satisfy.

The parties later entered into a "term credit agreement," under which the Bank loaned only $2.5 million and encouraged the LLC to seek alternative financing for the rest.  The Bank later sought a declaratory judgment that no additional financing was required, and the LLC counterclaimed, seeking the additional $6.5 million.  A jury awarded the LLC $600,000, but the appeals court reversed.

The Wisconsin Supreme Court, by a 5-2 margin, upheld the appeals court.  The decision turned on the Majority's finding that the term credit agreement was unambiguous and contained a merger clause that precluded the LLC from introducing evidence of the Bank's prior commitments to provide additional financing.  Two dissenting justices would have allowed consideration of the earlier commitment letter.  The dissenting justices were concerned that the ruling might create uncertainty in contractual relationships since a merger provision in one agreement between the parties could have unforeseen ramifications for earlier agreements between the parties.  Cleverly mining an amicus brief by the Wisconsin Bankers Association for arguments that cut against the Association's interest in the case, the dissenting justices viewed the commitment letter as a stand-alone agreement that must be subjected to separate interpretation from that of the term credit agreement.  

This might be a nice teaching case for those interested in looking for recent takes on the parol evidence rule.

[JT]

6th International Conference on Contracts

Stetson University College of Law and Texas Wesleyan School of Law are co-sponsoring the 6th Annual International Conference on Contracts, February 18 and 19, 2011, at Stetson’s beautiful campus in Gulfport, Fla. Similar to previous contracts conferences held at UNLV, McGeorge, South Texas, Texas Wesleyan, and Gloucester, England, this conference is designed to offer scholars and teachers at all experience levels an opportunity to present and discuss recently-published papers, forthcoming papers, works-in-progress, and pedagogical innovations, and to network with colleagues from the U.S and around the globe.

The conference hotel will be the Tradewinds Resort in nearby St. Pete Beach. Need we say more?  Well, in case we do need to say more, we'll say this: Stewart Macauley will give the keynote address.  

You can register for the conference here.

[JT}

Paris Hilton Sued for Breach of Contract

I know.  It is hardly news that Paris Hilton (PH) is being sued for breach on contract.  I mean, haven't we already run the same headline here, here, and here.  But this is a new case, and the more pictures we have of PH on the blog, the more visitors we get, so for those of you who are looking for real news about contracts law, you'll have to skip on to one of our non-fluffy posts.  And for those of you genuinely interested in PH, shame on you!

In this case, according to the Courthouse New Service, Le Bonitas of Bologna claims that it paid PH a nearly 100,000 Euro advance in return for the right to use PH's name and image on its clothing.  Under the terms of the agreement, Le Bonitas was to submit each article of clothing to PH Enterprises for approval within 10 days.  No response after 10 days was to be construed as disapproval.  But PH was allegedly too busy to respond to Le Bonitas's requests in a timely manner.  Perhaps they should have followed Dwight Schrute's example and treated silence as acceptance. Perhaps PH would have been too busy to follow up and sue if Le Bonitas had breached the terms of the licensing agreement.

The company is seeking $200,000 in damages for breach of contract.  

 [JT]

 

Weekly Top Ten from the Social Science Research Network

No really hot scholarship --based on downloads, anyway -- this week.  Contracts scholars, this is your chance to break into the big time.

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 
October 21, 2010 to December 20, 2010

Rank	Downloads	Paper Title
1	193	Choice of Forum Provisions in Intra-Corporate Litigation: Mandatory and Elective Approaches (The 2010 Pileggi Lecture)  Joseph Grundfest,  Stanford University Law School,  Date posted to database: October 11, 2010  Last Revised: October 27, 2010
2	192	Party Autonomy in Rome I and IΙ from a Comparative Perspective  Symeon C. Symeonides,  Willamette University - College of Law,  Date posted to database: October 25, 2010  Last Revised: October 26, 2010
3	192	The Gold Clause Cases and Constitutional Necessity  Gerard N. Magliocca,  Indiana University School of Law - Indianapolis,  Date posted to database: November 17, 2010  Last Revised: November 21, 2010
4	191	Suing the Government as a 'Joint Employer' - Evolving Pathologies of the Blended Workforce  Steven L. Schooner, Collin D. Swan,  George Washington University - Law School, George Washington University - Law School,  Date posted to database: October 21, 2010  Last Revised: November 16, 2010
5	151	Divided Loyalties: The Attorney’s Role in Bankruptcy Reaffirmations  Gregory M. Duhl,  William Mitchell College of Law,  Date posted to database: November 17, 2010  Last Revised: November 17, 2010
6	140	The Regulation of Surrogate Motherhood in Greece  Aristides N. Hatzis,  University of Athens - Department of Philosophy & History of Science,  Date posted to database: October 10, 2010  Last Revised: October 10, 2010
7	137	Access or Expectation: The Test for Fiduciary Accountability  Robert Flannigan,  University of Saskatchewan,  Date posted to database: October 29, 2010  Last Revised: December 17, 2010
8	127	When Do Fiduciary Duties Arise?  James J. Edelman,  University of Oxford - Faculty of Law,  Date posted to database: October 26, 2010  Last Revised: November 13, 2010
9	104	Contract, Uncertainty and Innovation  Ronald J. Gilson, Charles F. Sabel, Robert E. Scott,  Stanford Law School, Columbia University - Law School, Columbia University - Law School,  Date posted to database: November 20, 2010  Last Revised: December 3, 2010
10	91	Structure and Reform of Corporate Governance in the United Kingdom in Relation to the Shareholder Versus the Stakeholder Theory  Rohit Arora,  Unaffiliated Authors - affiliation not provided to SSRN,  Date posted to database: September 29, 2010  Last Revised: September 29, 2010

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic) 
October 21, 2010 to December 20, 2010

Rank	Downloads	Paper Title
1	88	Strategic Default: The Popularization of a Debate Among Contract Scholars  Meredith R. Miller,  Touro College - Jacob D. Fuchsberg Law Center,  Date posted to database: October 3, 2010  Last Revised: November 17, 2010
2	86	The English vs. The American Rule on Attorneys Fees: An Empirical Study of Attorney Fee Clauses in Publicly-Held Companies’ Contracts  Theodore Eisenberg, Geoffrey P. Miller,  Cornell University - School of Law, New York University (NYU) - School of Law,  Date posted to database: November 11, 2010  Last Revised: November 15, 2010
3	60	Origin Myths, Contracts, and the Hunt for Pari Passu  Mark C. Weidemaier, Robert E. Scott, G. Mitu Gulati,  University of North Carolina (UNC) at Chapel Hill - School of Law, Columbia University - Law School, Duke University - School of Law,  Date posted to database: July 17, 2010  Last Revised: November 10, 2010
4	50	An Optional Instrument on EU Contract Law: Could it Increase Legal Certainty and Foster Cross-Border Trade?  Martijn W. Hesselink,  University of Amsterdam - Centre for the Study of European Contract Law (CSECL),  Date posted to database: October 23, 2010  Last Revised: December 15, 2010
5	41	An Optional Contract Law for Europe? (Rote Karte oder grünes Licht für den Blue Button) (German)  Walter Doralt,  Max Planck Institute for Comparative and International Private Law,  Date posted to database: November 11, 2010  Last Revised: November 11, 2010
6	36	Rudolf Von Jhering’s Influence on Karl Llewellyn  Robert Whitman, Julie E. Wynns,  University of Connecticut School of Law, Unaffiliated Authors - affiliation not provided to SSRN,  Date posted to database: October 1, 2010  Last Revised: October 1, 2010
7	32	The Double Soul of Promissory Estoppel - A Comparative View  Paolo Pardolesi,  Università degli Studi di Bari - Faculty of Law,  Date posted to database: November 5, 2010  Last Revised: December 8, 2010
8	31	How Organisational and Structural Weaknesses Impacted the Harmonisation Process and What it Implies for European Private Law (Strukturelle Schwächen in der Europäisierung des Privatrechts – Eine Prozessanalyse der jüngeren Entwicklungen) (German)  Walter Doralt,  Max Planck Institute for Comparative and International Private Law,  Date posted to database: November 11, 2010  Last Revised: November 11, 2010
9	21	Arbitration's Suspect Status  Hiro N. Aragaki,  Fordham University - Fordham University Schools of Business,  Date posted to database: November 29, 2010  Last Revised: December 2, 2010
10	19	Autonomy and Paternalism from a Common Law Perspective: Setting Aside Disadvantageous Transactions  Stephen Michael Waddams,  University of Toronto - Faculty of Law,  Date posted to database: October 25, 2010  Last Revised: October 25, 2010

[JT]

Adobe Alleges Breach of a Non-Compete Agreement

As reported in the Deseret News, Adobe Systems is suing c Joshua James, the co-founder of Omniture, a company that Adobe bought in 2009.  James received $80 million in the transaction, and he was also paid handsomely to stay on as an Adobe executive in charge of the Omniture division.  When he left Adobe, he received another substantial one-time payment, but now Adobe claims that he has violated the terms of the agreement he entered into with Adobe at that time.  In a suit filed on December 10th, Adobe alleges that James bought Corda Technologies and now serves as that company's CEO.  Adobe alleges that Corda competes with Adobe and thus that James's purchase of and executive status in Corda violates his non-compete agreement.  In addition, Adobe alleges that James attempted to recruit at least one key employee from Adobe, also in violation of the agreement.  

James denies all wrongdoing, claiming that he has been very careful to abide by the terms of his agreement with Adobe and that he has never attempted to lure employees away from Adobe.  "In fact," he claims, "I have convinced dozens of unhappy Adobe people to stay."  I love that line, because you know someone is really your friend and has your best interests at heart when they tell you to keep the job that is making you miserable.  James also claims that Corda does not compete with Adobe.  Rather, Adobe buys Corda's products.  James chalks it all up to a personal vendetta against him.  But James apparently also filed a suit against Adobe alleging that it was trying to interfere with his work at Corda.  

I would be cautious about suing the company that owns Photoshop.  They can really do a number on you.

[JT]

 

The (fairly) short goodbye . . . .

 
Well, not "goodbye," exactly, but after six years I'm stepping aside as the point dog on the ContractsProf sled.  Our esteemed limerickist (if that's a word), longtime contributor, and all-around good guy Jeremy Telman (Valparaiso) is taking over.

I've enjoyed helping to build the blog, and I expect to still frequently appear as a contributor, but I'm working on another web project that's going to be taking too much time to keep posting as often here.  (Details will follow in a month or two.)  But we have a bevy of new contributors who will be bringing a host of new perspectives, and I'm sure you'll enjoy their work.  Since I'm on vacation with the family (above, me with the boys cruising on the river in Tokyo) I'll let Jeremy introduce them in the near future.  You'll be happy to know that Meredith, Miriam, and Keith will be sticking around.

Thanks to all our regular readers and our visitors who've made this so much fun, and to LPBN Czars Paul Caron and Joe Hodnicki who invited me to do this.  Have a very Merry Christmas and a Happy New Year!

FGS

It Looks Like Santa Might Have Some Labor & Contract Issues

People for the Ethical Treatment of Elves? That's a claus I can support:

Enjoy!

[Meredith R. Miller]

When Silence Is Acceptance

An interesting bargain from our friends at "The Office":

 

And then the question is whether Dwight's later conduct would constitute a breach:

[JT]

 

Promises, Promises - Registration is Open

Jeffrey Lipshaw has assembled an impressive roster of speaker for the March 25 symposium at Suffolk: "Contract as Promise at 30: The Future of Contract Theory."  He provides this synopsis of the program:

In 1981, Professor Charles Fried published a book on contract theory entitled Contract as Promise. For almost thirty years, the book has been the seminal work on the moral or deontological justification for the state's enforcement of private promises. No scholarly discussion of the field can be complete without addressing its claims, whether one agrees or not with its original and provocative stand. Suffolk University Law School will mark the thirtieth anniversary of the book's publication with a day-long symposium. Distinguished contract theorists will offer papers and commentary, followed by reflections from Professor Fried. Participants presently scheduled include the Honorable Richard Posner, Randy Barnett, Barbara Fried, T.M. Scanlon, Jean Braucher, Richard Craswell, Jody Kraus, Carol Sanger, Carol Chomsky, Avery Katz, Henry Smith, Lisa Bernstein, Seana Shiffrin, Daniel Markovits, Juliet Kostritsky, John C.P. Goldberg, Rachel Arnow-Richman, Curtis Bridgeman, Nathan Oman, Roy Kreitner, Gregory Klass, and Robert Scott. This is an opportune moment to step back, review the alternative approaches to contract theory that have developed since 1981, and to offer views about future doctrinal or inter-disciplinary developments, whether based in moral philosophy, welfare economics, sociology, or other disciplines. The papers and proceedings will be published in a forthcoming issue of the Suffolk Law Review.

Register here.  There is no charge for attendance, but they do request that you register.

[Meredith R. Miller]

 

Duty to Read: Howard Stern on How to Impress Your Wife

The big entertainment news last week: shock jock Howard Stern's announcement of a new 5-year contract with satellite radio company Sirius XM.  The terms of the deal were not disclosed, but the previous 5-year deal paid Stern $100 million a year in cash and stock.

What was the most shocking part of Stern's announcement?  He actually took the time to read for the contract for himself, thinking it might impress his wife.  The WSJ online reported:

The announcement was made live on the air by Mr. Stern during his Thursday-morning show, with his usual flair for putting his neuroses on display.

He claimed that the new contract was the first such document he had ever personally read—and that he did it ostentatiously in front of his wife, hoping to make a positive impression on her. After the radio host complained that his gambit was unsuccessful, his wife, Beth Ostrosky, called in and told him she hadn't realized she was supposed to be impressed.

That's a new spin on the duty to read.

[Meredith R. Miller]

 

A Smurfy Story About Ipad App Contract Formation and Capacity

From Yahoo! news:

"The Smurfs' Village," a game for the iPhone and other Apple gadgets, was released a month ago and quickly became the highest-grossing application in the iTunes store. Yet it's free to download.

So where does the money come from? Kelly Rummelhart of Gridley, Calif., has part of the answer. Her 4-year-old son was using her iPad to play the game and racked up $66.88 in charges on her credit card without knowing what he was doing.

Rummelhart had no idea that it was possible to buy things — buy them with real money — inside the game. In this case, her son bought one bushel and 11 buckets of "Smurfberries," tokens that speed up gameplay.

"Really, my biggest concern was them scratching the screen. Never in my wildest dreams did I think they would be charging things on it," the 36-year-old mother said.

She counts herself lucky that her son didn't start tapping on another purchase button, like the "wheelbarrow" of Smurfberries for $59.99.

Rummelhart joins a number of parents who have been horrified by purchases of Smurfberries and other virtual items in top App Storegames. The 17 highest-rated comments on "The Smurfs' Village" in the App Store all complain about the high cost of the Smurfberries, and two commenters call it a "scam."

Apple introduced "in-app purchases" last year, letting developers use the iTunes billing system to sell items and add-ons in their games and applications.

This year, developers have started to use the system in earnest as the main revenue stream for many games. Of the 10 highest-grossing apps in the App Store, six are games that are free to download but allow in-app purchases. Four of those are easy, child-friendly games. Two of them, "Tap Zoo" and "Bakery Story," have buttons for in-app purchases of $100 in just two taps.

Capcom Entertainment Inc., the publisher of "The Smurfs' Village," says inadvertent purchases by children are "lamentable." When it realized what was happening, it added a warning about the option of in-app purchases to the game's description in the App Store, and it's updating the game to include warnings inside it as well. The game has retreated to being the fourth-highest-grossing app in the App Store.

The warnings may alert parents, but it's doubtful that they'd deter children who can't read and don't understand money. Also, the option to buy $59.99 worth of Smurfberries at a time remains. Capcom spokesman Michael Larson says "Smurfs" is no different from other games in this regard, and the bulk purchasing option is useful to adult "power players."

It's quite likely that most of the money pulled in by these games comes from addicted adults who want to quickly build their Smurf villages, bakeries, zoos and zombie farms. But there's a loophole in the in-app purchase process that children stick their fingers through.

Usually, the purchases require the owner of the device to enter his or her iTunes password. But there is no password challenge if the owner has entered the password in the last 15 minutes for any reason. That means that if a user enters the password for a purchase or a free app upgrade, then hands the phone or iPad over to a kid, the child will not be stopped by a password prompt.

Capcom and other game publishers have no control over the 15-minute password-free period, which is set by Apple.

Apple defends its system. Spokeswoman Trudy Muller says the password system is adequate and points out that parents can restrict in-app purchases. The parents contacted for the story received refunds from Apple after complaining, and praised the company's responsiveness.

However, there's reason to believe that the password timeout doesn't always work.

Andrew Butterworth of Brooklin, Ontario, was well aware of how in-app purchases work and of the password-free period. He was careful to let at least 15 minutes pass after a password entry before letting his 5-year-old son play with his iPod Touch. That didn't help, once he'd loaded "The Smurfs' Village."

"He came to me all proud and said he'd figured out a way to get all these Smurfberries," Butterworth says. "And as soon as I saw the Smurfberries, I knew that he'd purchased them using my credit card. I was amazed that he'd figured out a way to do it, because I was sure that he would have needed my password."

He had last entered his password on the iPod four or five hours earlier, he said. His son's shopping spree cost $140.

Chris Gropp, another Canadian, said he had not entered his iTunes password the same day his son bought $67 in Smurfberries, apparently without being asked for the password.

TeamLava LLC, the publisher of "Bakery Story" and "Farm Story," says the games follow all of Apple's rules and restrictions. In either game, it's possible to buy $99.99 worth of "gems" in one go.

The game publishers and Apple point out that device owners can turn off the option to conduct in-app purchases by going to the Settings app, then hitting the General button, then the Restrictions option. The parents contacted for the story had done so after being alerted to the purchases through their iTunes billing statements.

Apple takes requests for refunds through the computer version of the iTunes program. In the "Store" menu, chose "View my account," then click "Purchase History," then "Report a Problem." Then click on the problem purchase.

Butterworth was pleased with the refund, but still thinks "Smurfs" is a "scam."

"They make it a ridiculously difficult game to play, and you can skip all the difficult parts by spending money," he said. "I believe that they know exactly what's going on."

[Meredith R. Miller - h/t Celeste Pagano]

Today in History -- December 10

1041 – Byzantine Empress Zoe, who had previously assassinated her husband Romanus III in his bath, puts her adopted son on the Imperial throne as Michael V. When he tries to have her banished, she will have him deposed, arrested, blinded, castrated, and confined to a monastery for the remainder of his life

1541 – Thomas Culpeper and Francis Dereham are executed for having affairs with Henry VIII’s fifth wife, Catherine Howard (left). It’s hard to imagine just how stupid you’d have to be to have an affair with Henry VIII’s wife.

1816 – The United States Senate creates the Committee on Finance as a standing committee. It’s good to know that they keep a close eye on the federal budget.

1817 – Mississippi joins the Union as the 20th U.S. state. What is its official state beverage?

1920 – Automobile pioneer Horace Elgin Dodge, Sr., one of the plaintiffs in the classic corporate law case of Dodge v. Ford Motor Company, 204 Mich. 459, 170 N.W. 668. (1919), dies of pneumonia at the age of 52.

1927 – Announcer George Hay, hosting The National Life & Accident Co’s radio program National Barn Dance on WSM in Nashville, describes the show for the first time as "the Grand Ole Opry."

1935 – Halfback Jay Berwanger of the University of Chicago wins the first Heisman Trophy. Although he will be the first pick in the NFL draft, he will pass up pro football to found a company that makes extruded plastic parts.

1948 – The UN General Assembly, representing all the nations of the world adopts the Universal Declaration of Human Rights, effectively putting an end to human rights abuses around the globe..

FGS

(Mississippi’s official state beverage is Milk)

Government contracts, then and now

As noted in Today in HIstory, this is the birthday of Eli Whitney, who not only invented the cotton gin but perfected the method of mass production of muskets with interchangeable parts.  Wikipedia has an image of one of Whitney's first contracts with the U.S. government:

Government contracts have become substantially longer over the years. 

FGS

Today in History -- December 8

65 B.C. – Future poet Quintus Horatius "Horace" Flaccus is born, the son of a freed slave at Venusia in southern Italy. Few poetic phrases will ever become as overworked as his "carpe diem."

1660 – Margaret Hughes becomes the first professional actress in English history, appearing as Desdemona in Shakespeare's Othello. She will also become the mistress of Prince Rupert, the "German prince" of Paradine v. Jane.  (Right: Margaret Hughes with an early wardrobe malfunction.)

1765 – Eli Whitney is born at Westborough, Massachusetts. His nvention of the cotton gin will make untold millions for Southern planters and Northern mill owners, he will lose nearly all his money in litigation and die broke.

1869 – Thirty-seven year-old Ecuadoran seamstress Narcisa de Jesús Martillo y Morán dies of a fever in Lima, Peru,  In 2008 she will be canonized by Pope Benedict XVI.

1954 – Future Yale Law School dean and State Department lawyer Harold Hongju Koh is born at Boston.

1980 – Former Beatle John Lennon is shot and killed outside his home in the exclusive and fabulously expensive Dakota apartment building in New York City, where 5-bedroom apartments can today be had for as little as $19.5 million.

1991 – Meeting in the ancient Belavezhskaya Forest, leaders of Russia, Belarus, and Ukraine sign the agreement dissolving the Soviet Union and creating the new Commonwealth of Independent States.

1993 – President Bill Clinton signs the North American Free Trade Agreement. Critics claim that at least 1 million U.S. jobs have subsequently fled to Mexico, while at least 6 million Mexican workers have fled to the United States.

2004 – Meeting at Cuzco in Peru, delegations from 12 nations create the Union of South American Nations, one of the goals of which is creation of a free trade zone in South America.

FGS