ContractsProf Blog

A New Reward-Style Offer from a Hong Kong Father

A student in my Contracts class shared this story with me regarding a recent offer to enter into a unilateral contract.  Cecil Chao Sze-tsung, a wealthy Hong Kong-based property developer, has offered a $65 million "reward" to the man who first woos his daughter into a heterosexual marriage and away from her current lesbian partner.  

Mr. Chao described his plan to the BBC as follows (he even uses the word "inducement!"):  "It is an inducement to attract someone who has the talent but not the capital to start his own business.  I don't mind whether he is rich or poor. The important thing is that he is generous and kind-hearted."  He further described his daughter, Gigi, as "a very good woman with both talents and looks" who "is devoted to her parents, is generous and does volunteer work."

In an interview with the BBC (scroll down and click play--the file would not embed), Ms. Chao confirmed that her father is indeed "serious" (there goes the Lucy v. Zehmer argument) and that she views his reward offer as an "expression of fatherly love" from the man she talks to "on a daily basis."  Ms. Chao admits that potential suitors face an uphill battle given that she already has committed herself to her longtime partner, Sean Eav.  However, because she is not legally "married," she would not rule out someone successfully accepting her father's offer.  Specifically, when asked by the BBC reporter, "Are you saying it's a waste of time?," she said, "No" and that it would be "inappropriate for me to outright contradict [my father]."  

So, from a ContractsProf perspective, it appears that there is a definite offer that can be accepted by only a single person and only via performance.  What is unclear to me, however, is whether the mere act of marriage from any male is actually what Mr. Chao seeks. In her BBC interview, Ms. Chao says that she does not know whether her father has received any offers but confirms that she has received many offers made directly to her.  So, if a man were to convince Ms. Chao to marry him, and they were to get married, it's not clear (at least not to Gigi Chao) that he would get his $65 million without first convincing Mr. Chao that he's worthy.  Absent clear, unequivocal commitment from Mr. Chao, there may not be a definite offer after all.

[Heidi R. Anderson, hat tip to student Ly Tran]

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At Last, the Conference Announcement We've All Been Awaiting!

EIGHTH ANNUAL INTERNATIONAL
CONFERENCE ON CONTRACTS
Texas Wesleyan School of Law
1515 Commerce Street, Fort Worth Texas 76102
February 22-23, 2013
CALL FOR PAPERS

Submissions are cordially invited for the 8th Annual International Conference on Contracts, the largest annual scholarly and educational conference devoted to Contracts and related areas of commercial law. Papers and works-in-progress are welcome from those who study Contracts from any perspective, whether doctrinal, pedagogical, theoretical, empirical, historical, economic, critical, comparative, or interdisciplinary. Works that take an international or civil law approach are also welcome. Junior scholars are particularly encouraged to participate. Those interested in proposing and organizing panels (3-5 presenters) on specific themes are especially encouraged to do so.

Individual submissions should be made by a brief abstract (one page is sufficient) of the paper or WIP that includes contact information for the author(s). Individual submissions will be placed on panels with like submissions. Panel proposals should include the name and contact information of the moderator or organizer, and a summary of the proposed papers or works in progress. There is no publication commitment for the conference, but organizers of individual panels are free to arrange for publication on their own.

Submissions: Deadline is Monday, December 17, 2012. Proposals submitted earlier will be accepted on a rolling basis. Proposals submitted after the deadline will be accepted on a space-available basis. Submissions should be directed to:
Franklin G. Snyder
[email protected]

Registration: Fee for the Conference is $249 ($299 after January 1, 2013), which includes a Continental breakfast and lunch on both Friday and Saturday, and the Conference Dinner on Friday night. A web site for Conference registration and other information will soon be available..

Accommodations: The conference hotel is the Sheraton Fort Worth Hotel and Spa, which has a special rate of $129/night for those who book before January 21, 2013. The Sheraton is across the street from Texas Wesleyan School of Law. The law school and the hotel are less than a half-hour from Dallas-Fort Worth International Airport, and three blocks from the Intermodal Transportation Center. A free shuttle bus links the school and the hotel with popular Fort Worth destinations including Sundance Square and the Historic Stockyards. Commuter rail service makes popular Dallas destinations such as Dealey Plaza, the Sixth Floor Museum, the Deep Ellum musical scene, and the American Airlines Center easily accessible from the hotel and the law school. Here is a link to reserve rooms at the Sheraton for the Conference.

We look forward to seeing you in Fort Worth!

[JT]

Contracts Law Theory in London, 2013

Prince Saprai (UCL), George Letsas (UCL) and Greg Klass (Georgetown) are organising a conference on the Philosophical Foundations of Contract Law to take place next May (Friday 10th and Saturday 11th May 2013) in London at the University College London Laws Faculty.  The organizers will be producing a volume to be published by Oxford University Press from the papers at the conference.

Confirmed speakers include:

• 
  Aditi Bagchi (Fordham)
• Randy Barnett (Georgetown)
• Lisa Bernstein (Chicago)
• Curtis Bridgeman (Florida State)
• Mindy Chen-Wishart (Oxford)
• Charles Fried (Harvard)
• Avery Katz (Columbia)
• Dori Kimel (Oxford)
• Gregory Klass (Georgetown)
• Jody Kraus (Columbia)
• George Letsas (UCL)
• Daniel Markovits (Yale)
• Liam Murphy (NYU)
• David Owens (Reading)
• James Penner (UCL)
• Margaret Jane Radin (Michigan)
• Joseph Raz (Columbia / KCL)
• Prince Saprai (UCL)
• Robert Scott (Columbia)
• Stephen Smith (McGill)
• Nicos Stavropoulos (Oxford)
• Robert Stevens (Oxford)
• Charlie Webb (LSE)

Here is a link to the conference website.

Come for the conference; stay for the Jeremy Bentham auto-icon!

[JT]

New in Print

We have an especially large collection of new articles this week in large part thanks to the efforts of Jeff Lipshaw and the good people at Suffolk Law who hosted a conference in honor of the thirtieth anniversary of the publication of Charles Fried's classic work, Contract as Promise.  As the riches below indicate, this conference will provide theoretical fuel to keep contracts profs going for some time to come.  Charles Fried is pictured below.

Kevin Banks and Elizabeth Shilton, Corporate Commitments to Freedom of Association: Is There a Role for Enforcement under Canadian Law? 33 Comp. Lab. L. & Pol'y J. 495 (2012)

Randy E. Barnett, Contract Is Not a Promise; Contract Is Consent, 45 Suffolk U.L. Rev. 647 (2012)

Brian H. Bix, Theories of Contract Law and Enforcing Promissory Morality: Comments on Charles Fried, 45 Suffolk U.L. Rev. 719 (2012)

Jean Braucher, The Sacred and Profane Contracts Machine: The Complex Morality of Contract Law in Action, 45 Suffolk U.L. Rev. 667 (2012) 

Curtis Bridgeman, Civil Recourse or Civil Powers? 39 Fla. St. U. L. Rev. 1 (2011)

Curtis Bridgeman and John C.P. Goldberg, Do Promises Distinguish Contract from Tort? 45 Suffolk U.L. Rev. 873 (2012) 

Thomas V. Burch, Regulating Mandatory Arbitration, 2011 Utah L. Rev. 1309

Richard Craswell, Promises and Prices, 45 Suffolk U.L. Rev. 735 (2012)

Zev J. Eigen, When and Why Individuals Obey Contracts: Experimental Evidence of Consent, Compliance, Promise, and Performance, 41 J. Legal Stud. 67(2012)

Barbara H. Fried, The Holmesian Bad Man Flubs His Entrance, 45 Suffolk U.L. Rev. 627 (2012)

Charles Fried, Contract as Promise Thirty Years On, 45 Suffolk U.L. Rev. 961 (2012).

David Adam Friedman, Bringing Order to Contracts against Public Policy, 39 Fla. St. L. Rev. 563 (2012)

Avery Katz, Virtue Ethics and Efficient Breach, 45 Suffolk U.L. Rev. 777 (2012)

Gregory Klass, Promise Etc. 45 Suffolk U.L. Rev. 695 (2012) 

Juliet P.  Kostritsky, The Promise Principle and Contract Interpretation. 45 Suffolk U.L. Rev. 843 (2012)

Roy Kreitner, On the New Pluralism in Contract Theory, 45 Suffolk U.L. Rev. 915 (2012)

Jeffrey M. Lipshaw, Contract as Meaning: An Introduction to "Contract as Promise at 30," 45 Suffolk U.L. Rev. 601 (2012)

Daniel Markovits and Alan Schwartz, The Expectation Remedy and the Promissory Basis of Contract, 45 Suffolk U.L. Rev. 799 (2012)

Nathan B. Oman, Promise and Private Law, 45 Suffolk U.L. Rev. 935-960 (2012)

Nathan B. Oman, Why There Is No Duty to Pay Damages: Powers, Duties, and Private Law. 39 Fla. St. U. L. Rev. 137 (2011)

James M. "Jamie" Parker, Jr. and J.K. Leonard. Why Your Secretary Is Really Worth a Million
Dollars: Exploring the Harsh Penalty for Not Proofreading Your Fee Agreements in Anglo-Dutch Petroleum v. Greenberg Peden. 2 St. Mary's J. Legal Mal. & Ethics 104 (2012) 

Henry E. Smith, The Equitable Dimension of Contract, 45 Suffolk U.L. Rev. 897-914 (2012) 

George Triantis, Promissory Autonomy, Imperfect Courts, and the Immorality of the Expectations Damages Default, 45 Suffolk U.L. Rev. 827-841 (2012)

Peer Zumbansen, Rethinking the Nature of the Firm: The Corporation As a Governance Object. 35 Seattle U. L. Rev. 1469 (2012)

[JT]

Contracts in the Real World

I’m a bit behind in my blogging as I am finishing up a few writing projects. That doesn’t, however, mean that I haven’t found the time to read other people's writing.  In fact, I recently received Lawrence Cunningham’s book, Contracts in the Real World:  Stories of Popular Contracts and Why They Matter.  I suggest that you all run out and order the same (here – I’ve made it easy for you by providing the link).  First of all, let me make it clear that I do not know Professor Cunningham.  I’ve never even met him although he might have once disagreed with me on a list serve dispute.  His book is a very interesting collection of modern day contracts – newsworthy contracts involving current events or celebrities – and he does a brilliant job of tying them in with  classic contract law cases.  I think it might be fun to fit in a few of these examples to jazz up classroom discussion.  For contracts nuts, it’s just plain fun reading.  It’s in many ways a staunch defense of contract law, assuring us that it still works and does what it’s supposed to do.  I tend to agree when it comes to non-digital contracts.  When it comes to digital contracts, however, I think things are a total mess....

[Nancy Kim]

Weekly Top Tens from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 
July 27, 2012 to September 25, 2012

Rank	Downloads	Paper Title
1	1700	A Transactional Genealogy of Scandal: From Michael Milken to Enron to Goldman Sachs  William W. Bratton, Adam J. Levitin,  University of Pennsylvania - Law School, Georgetown University - Law Center
2	185	Allocating Risk Through Contract: Evidence from M&A and Policy Implications  John C. Coates, IV,  Harvard Law School
3	175	Hollywood Deals: Soft Contracts for Hard Markets  Jonathan Barnett,  USC Gould School of Law
4	125	Intellectual Property and Shrinkwrap Licenses  Mark A. Lemley,  Stanford Law School
5	103	The Importance of Fault in Contract Law  Robert A. Hillman,  Cornell Law School
6	96	Disarming the Trojan Horse of the UAAA and SPARTA: How America Should Reform its Sports Agent Laws to Conform with True Agency Principles  Marc Edelman,  Barry University - Dwayne O. Andreas School of Law
7	95	The Tenuous Case for Derivatives Clearinghouses  Adam J. Levitin,  Georgetown University - Law Center
8	95	An Analysis of the Proposed Interchange Fee Litigation Settlement  Adam J. Levitin,  Georgetown University - Law Center
9	94	CDS Zombies  Anna Gelpern, G. Mitu Gulati,  American University Washington College of Law, Duke University - School of Law
10	79	Economic Analysis of Contract Law from the Internal Point of View  Rebecca Stone,  New York University School of Law

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
July 27, 2012 to September 25, 2012

Rank	Downloads	Paper Title
1	183	Allocating Risk Through Contract: Evidence from M&A and Policy Implications  John C. Coates, IV,  Harvard Law School
2	175	Hollywood Deals: Soft Contracts for Hard Markets  Jonathan Barnett,  USC Gould School of Law
3	103	The Importance of Fault in Contract Law  Robert A. Hillman,  Cornell Law School
4	96	Disarming the Trojan Horse of the UAAA and SPARTA: How America Should Reform its Sports Agent Laws to Conform with True Agency Principles  Marc Edelman,  Barry University - Dwayne O. Andreas School of Law
5	95	The Return-Reducing Ripple Effects of the 'Carried Interest' Tax Proposals  Heather M. Field,  University of California - Hastings College of the Law
6	94	CDS Zombies  Anna Gelpern, G. Mitu Gulati,  American University Washington College of Law, Duke University - School of Law
7	79	Economic Analysis of Contract Law from the Internal Point of View  Rebecca Stone,  New York University School of Law
8	68	Contracts, Treaties and Umbrella Clauses: Some Jurisdictional Issues in International Investment Arbitration  Velimir Zivkovic,  University of Belgrade - Faculty of Law
9	67	When Nudges Fail: Slippery Defaults  Lauren E. Willis,  Loyola Law School Los Angeles
10	65	The Contract that Neither Party Intends  David McLauchlan,  Victoria University of Wellington - Faculty of Law

[JT]

Contracts Limerick of the Week: B. Lewis Productions v. Angelou

Some people are just too impatient!

Last week, I taught B. Lewis Productions v. Angelou for the first time.  For those unfamiliar with the case, Butch Lewis, a boxing promoter, entered into an agreement to be Maya Angelou's exclusive agent for the purpose of the marketing her writings for greeting cards, calendars and other items on which one could slap a few lines of verse.  In 1997, Mr. Lewis negotiated a deal with Hallmark on Ms. Angelou's behalf.  According to the case, their deal soured in March 1997 when Ms. Angelou saw Mr. Lewis "punctuate a conversation" with a group of white men in Las Vegas by grabbing his crotch.  As the court put it, after witnessing this conduct, Ms. Angelou "burned up his [Mr. Lewis's] ears" and told him that their venture was at an end.  

Although Ms. Angelou's literary agent wrote to inform Mr. Lewis that Ms. Angelou was not going to pursue a deal with Hallmark, there was some evidence that the two continued to work towards that goal in 1998. In 1999, Ms. Angelou went ahead with the deal on her own while also notifying Mr. Lewis that their agreement had terminated.  In 2000, Ms. Angelou signed a deal with Hallmark that gave her a $1 million advance.  After Judge Mukasey of the Southern District of New York denied Ms. Angelou and Hallmark's motion for summary judgment, Ms. Angelou settled with Mr. Lewis for $1 million.

Having been my colleague and BFF for five years but now dead to me, Alan White knows a Limerickworthy case when he sees one.  So, a bit belatedly, here it is:

B. Lewis Productions v. Angelou Limerick

"Your actions were lewd and obtrusive,"
 Said Maya, in language abusive.
But Butch still can sell
Her poems on "Get Well"
Cards, 'cause their deal said exclusive. 

[JT]

Save the Date: 8th International Conference on Contracts in Fort Worth

Blog Founder and contracts impressario extraordinaire (the Diaghilev of Contracts), Frank Snyder, will be our host at the 8th International Conference on Contracts to be held at the Texas Wesleyan School of Law in Fort Worth, Texas on Friday & Saturday, February 22 & 23, 2013.

A call for papers will be coming out in due course, along with information about registration and conerence hotels.  But for now, just put a big red circle around the date.  

Frank and his colleagues will have to live up to the very high standards set by previous incarnations of the conference such as: the one held this year in San Diego, where Mel Eisenberg was honored, last year at the Stetson University College of Law, where the conference presentations were upstaged by a shipwreck, and in 2010 at UNLV Law School, where blog contributor Keith Rowley was host.  

This year will feature another lifetime achievement honoree and the usual array of contracts law and lore.

So do save the date.  Texas awaits

[JT]

Sometimes a Hyphen is Just a Hyphen

Did varying hyphen use in a credit swap agreement create an ambiguity?  According to a panel of New York appellate judges (First Department): No, an errant hypen here-or-there does not change the natural meaning of the language.

Here’s a nice summary of the case from the NYLJ (link may require subscription):

Brazilian infrastructure company Concessionaria Do Rodoanel Oeste does not have to pay a termination fee for prepaying $895 million in loans and thereby terminating interest rate swap agreements with investment banks Banco Espirito Santo, Caiza Banco de Investimento and Credit Agricole Corporate Investment Bank, a unanimous appeals panel has ruled in rejecting the banks' argument that the inconsistent use of a hyphen in the swap agreements created ambiguity.

Rodoanel took out $895 million in loans to complete a highway project and hedged them by entering into interest rate swap agreements, a type of derivative, with the banks. Rodoanel decided to pay down the debt before it was due, allowing it to terminate the swap agreements. The banks claimed that Rodoanel owed them a termination fee, called the "Close Out Amount" or "Close-out Amount" in different documents. They said that the differing punctuation created ambiguity about what the term meant, requiring the use of parol evidence in addition to the contracts themselves.

The trial court held that the discrepancy in hyphenation caused an ambiguity and allowed the banks to introduce parol evidence.  The appellate panel reversed and held that the agreement was not ambiguous and that the “ordinary and natural meaning” of the language was dispositive.  It appeared to the court that the banks were attempting to manufacture an ambiguity to effectuate a result that the banks should have provided for in the agreement:

If plaintiffs, who are commercially sophisticated "hedge providers," had intended that, in the event of an early termination, the party "in the money" was entitled to retain the benefits of this favorable market condition, they could easily have expressed this intent in the language of the interest rate swap agreement.

Further, the court wrote that punctuation is a guide in interpreting a contract, but should not be used to contravene the parties’ clearly manifested intent:

Ultimately, this case serves as a reminder that, in a contract containing punctuation marks, the words and not the punctuation guide us in its interpretation (see 17A CJS Contracts §406; 12 AM Jur Contracts §256). Punctuation is always subordinate to the text and is never allowed to control its meaning (Sirvint v. Fidelity & Deposit Co. of Md., 242 App Div 187, 189 [1st Dept. 1934), affd, 266 NY 482 [1934]; see also 17A Jur 2d Contracts §366 [2011]; 68A NY Jur Insurance §869). Of course, punctuation in a contract may serve as a guide to resolve an ambiguity that has not been created by punctuation or the absence therein, but it cannot, by itself, create ambiguity (Wirth & Hamid Fair Booking, Inc. v. Wirth, 265 NY 214 [1934]; see also Stoddart v. Golden, 179 Cal 663, 178 P. 797 [1919]; Randolph v. Fireman's Fund Ins. Co., 255 Iowa 943, 124 NW2d 528 [1963]). It is a cardinal principle of contract interpretation that mistakes in grammar, spelling or punctuation should not be permitted to alter, contravene or vitiate manifest intention of the parties as gathered from the language employed (Sirvint, 242 App Div at 189; Wirth & Hamid Fair Booking, 265 NY at 219).

Banco Espírito Santo, S.A. v. Concessionária Do Rodoanel Oeste S.A., 652013/11, NYLJ 1202571875870, at *1 (App. Div., 1st, Decided September 18, 2012) (link may require subscription to NYLJ).

[Meredith R. Miller]

Estate of Mario Puzo Seeks Declaration Permitting Publication of Sequels to "the Godfather"

As reported here by Entertainment Weekly, Anthony Puzo (“Puzo”), son of Mario Puzo—well-known author of popular mafia novel “The Godfather”—has alleged, on behalf of the Puzo Estate (the “Estate”), material breach of contract and tortious interference on the part of Paramount Pictures (“Paramount”), and has petitioned a Manhattan federal court to deny Paramount the right to make future Godfather films.

Paramount first brought suit in February of 2012 seeking to enjoin the Estate from publishing sequel novels written by new authors using elements and characters from “The Godfather.”  Paramount sought a court declaration that a 1969 agreement that it entered into with Mario Puzo had granted it all rights and copyright interests, including literary rights and rights to the usage of its characters in any sequel or variation of “The Godfather.” Paramount claims that the only right left to the Estate was the right to publish the original novel.

However, in his Counterclaim, Anthony Puzo alleges that his father deleted the language that would have granted Paramount the exclusive right to publish any versions or adaptations of “The Godfather”, and instead opted to retain those rights himself (rights which, if so retained, now belong to his Estate). In addition, Puzo claims Paramount tortiously interfered with contracts between the Estate and Grand Central Publishing Company and Random House, which have agreed to publish various novels using characters from “The Godfather” written by new authors.

Puzo claims Paramount has attempted to either delay, or prevent entirely, the publishing of the new novels. In light of Paramount’s conduct, Puzo and the Estate seek a termination of the 1969 agreement and, which would then permit the publication of the books at issue and whatever else might follow. In addition to declaratory relief, Puzo seeks actual damages expected to be in excess of $5 million, punitive damages for Paramount’s alleged malicious conduct and costs of the suit.

As reported here on boston.com, the Estate-commissioned novel, “The Family Corleone,” was published in May, but profits from the book are to remain in escrow until the litigation between the parties has been settled.

[Christina Phillips & JT]

Teaching B. Lewis Productions v. Angelou

In addition to teaching Lucy v. Zehmer for the first time this semester, I was also introduced to a new case, B. Lewis Productions, Inc. v. Angelou, thanks to the Kunz & Chomsky casebook.  The case is a modern re-telling of Wood v. Lucy, Lady Duff-Gordon.

In 1994, Butch Lewis, a boxing promoter and manager, entered into a letter agreeement with the autobiographer and poet, Maya Angelou (left) to promote her writings through their pubication on greeting cards, stationery, calendars, etc.  According to the case, Mr. Lewis came very close to closing the deal with Hallmark, but Ms. Angelou backed out, perhaps because she was disturbed when she saw him "punctuate a conversation with white people by grabbing his crotch."  Why the court thought it was important or thought that Angelous thought it important that Lewis's audience is white is a subject reserved for our speculation.  

The crotch grab took place in Las Vegas, which makes it seem quite tame, but in any case Angelou was angry.  She shared some choice words with Lewis and told him that their joint venture was at an end, but subsequent letters indicated that her interest remained.  Angelou famously likened herself to Balzac and other 19th-century writers who said "I write for money."  Perhaps she did not want to burn her bridges entirely with Lewis, if he could get her a sweet deal with Hallmark.

In 2000, Angelou negotiated her own deal with Hallmark, leaving Lewis out.  Since their original letter agreement stressed that Lewis would be her exclusive agent, and that status was confirmed in a 1996 letter from Angelou, Lewis, playing the role of Wood, sued for breach of contract.  

After a lengthy discussion of Wood v. Lucy, the Southern Distrct of New York denied summary judgment to both sides, leaving open the question of whether Angelou had successfully terminated her agreement with Lewis before entering into negotiations with Hallmark.  According to the Kunz & Chomsky casebook, the parties then settled for $1 million.  

The case got me thinking about why more poets don't write greeting cards.  I am married to a poet, so I know that very few can write for money, as Balzac put it, although many would be happy to do so if they could.  

Imagine how touched your mother would be to receive a Mother's Day Card with a excerpt from Philip Larkin's "This Be the Verse":

Man hands down misery to man.
It deepens like a coastal shelf.
Get out as early as you can,
And don't have any kids yourself.

That would really make Mom's day!

Of course, the first verse of that poem would make an even better card, but this is a family-friendly blog.

[JT]

Weekly Top Tens from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days)  TOP 10 Papers for Journal of Contracts & Commercial Law eJournal  July 19, 2012 to September 17, 2012 Rank Downloads Paper Title 1 1643 A Transactional Genealogy of Scandal: From Michael Milken to Enron to Goldman Sachs  William W. Bratton, Adam J. Levitin,  University of Pennsylvania - Law School, Georgetown University - Law Center 2 190 What Can Be Wrong with an Option? An Optional Common European Sales Law as a Regulatory Tool  Horst Eidenmueller,  University of Munich 3 179 You Definitely Should Have: A Contractual Look at Israeli Wedding Gift Culture  Zvi H. Triger,  Striks School of Law, The College of Management Academic Studies (COLMAN) 4 168 Hollywood Deals: Soft Contracts for Hard Markets  Jonathan Barnett,  USC Gould School of Law 5 153 Featuring People in Ads  Eric Goldman, Rebecca Tushnet,  Santa Clara University - School of Law, Georgetown University - Law Center 6 138 Allocating Risk Through Contract: Evidence from M&A and Policy Implications  John C. Coates, IV,  Harvard Law School 7 113 Intellectual Property and Shrinkwrap Licenses  Mark A. Lemley,  Stanford Law School 8 96 The Importance of Fault in Contract Law  Robert A. Hillman,  Cornell Law School 9 91 The Tenuous Case for Derivatives Clearinghouses  Adam J. Levitin,  Georgetown University - Law Center 10 89 Disarming the Trojan Horse of the UAAA and SPARTA: How America Should Reform its Sports Agent Laws to Conform with True Agency Principles  Marc Edelman,  Barry University - Dwayne O. Andreas School of Law

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
July 19, 2012 to September 17, 2012

Rank	Downloads	Paper Title
1	190	What Can Be Wrong with an Option? An Optional Common European Sales Law as a Regulatory Tool  Horst Eidenmueller,  University of Munich
2	179	You Definitely Should Have: A Contractual Look at Israeli Wedding Gift Culture  Zvi H. Triger,  Striks School of Law, The College of Management Academic Studies (COLMAN)
3	168	Hollywood Deals: Soft Contracts for Hard Markets  Jonathan Barnett,  USC Gould School of Law
4	137	Allocating Risk Through Contract: Evidence from M&A and Policy Implications  John C. Coates, IV,  Harvard Law School
5	96	The Importance of Fault in Contract Law  Robert A. Hillman,  Cornell Law School
6	92	The Return-Reducing Ripple Effects of the 'Carried Interest' Tax Proposals  Heather M. Field,  University of California - Hastings College of the Law
7	89	Disarming the Trojan Horse of the UAAA and SPARTA: How America Should Reform its Sports Agent Laws to Conform with True Agency Principles  Marc Edelman,  Barry University - Dwayne O. Andreas School of Law
8	88	Autonomy, Pluralism, and Contract Theory  Hanoch Dagan,  Tel Aviv University - Buchmann Faculty of Law
9	81	CDS Zombies  Anna Gelpern, G. Mitu Gulati,  American University Washington College of Law, Duke University - School of Law
10	75	The Government’s Proposed 'Review of Australian Contract Law': A Preliminary Positive Response  Luke R. Nottage,  University of Sydney - Faculty of Law

[JT]

Seventh Circuit Finds Doctor Was Entitled To Lost Professional Fees

When Trinity Medical Center (Trinity) terminated Dr. Bassam Assaf’s employment as its medical director, Assaf filed suit for breach of contract.  Assaf and Trinity’s new CEO, Tom Tibbitts, negotiated an out-of-court settlement.  In return for dropping his claim, Assaf agreed to the following terms:

•  A salary of $50,000 each year from 2009-2011; and
• Automatic one-year renewal of his employment thereafter unless either party gave 90-days notice of intention to terminate the agreement 

Trinity later claimed that the agreement was incomplete and invalid and refused to reinstate him.  Then, in 2011, it provided notice of termination to Assaf in accordance with the notice terms agreed to.  This must have put Assaf into some perplexity, as he had never been reinstated.  "I haven't been employed for three years, and now on top of that, I'm fired," he might have cried.  In the District Court, the Magistrate decided to enforce the contract, but ultimately found that under Illinois law, he could not order Trinity to reinstate Dr. Assaf. The Magistrate also refused Assaf’s request for professional fees separate from his salary, finding that Assaf had failed to provide adequate evidence of any such lost fees during discovery and thus that Trinity had no opportunity to challenge Assaf's evidence

In Assaf v. Trinity Medical Center, the Seventh Circuit upheld part of the Magistrate's ruling but found that the Magistrate had abused his discretion in preventing Assaf from introducing evidence of lost professional fees.  Assaf sought specific performance of the settlement agreement, entitling him to employment through 2012.  He claimed that Trinity could not terminate him pursuant to an agreement that it had breached.  But while contract law does not permit a party in material breach to benefit from a contract term, the Seventh Circuit was not persuaded that Trinity had taken unfair advantage of the contact terms simply by exercising its right of termination with notice.  

The Magistrate denied Assaf's claims for professional fees because Assaf had disclosed his damage calculations after discovery had ended.   The Seventh Circuit found that excusion of the evidence was an abuse of discretion.  Assaf provided the information a month before trial was set to begin.  Not only was Trinity aware that Assaf sought professional fees, it had access to the information regarding these fees all along, since the information was contained in Trinity's files.  The case was remanded for a determination of the fees owed to Dr. Assaf.

[Christina Phillips & JT]

Contracts Limerick of the Week: Lucy v. Zehmer

Speaking of Lucy v. Zehmer, I had never taught the case until this year.  I don't know why so many casebooks no longer include it.  My students responded very well to it, and we had a very interesting discussion both of the joke/dare issue and of the drunkenness issue.  How drunk does one have to be to be adjudicated incompetent to enter into a contract?  Zehmer claimed he was "high as a Georgia pine."  That might have been enough, but the court didn't buy it.

Lucy v. Zehmer Limerick 

Some come to Virginnie to dine
Some come to draft contracts and sign.
As did Zehmer, and so
He was bound even though
He was high as an old Georgia pine.

[JT]

Is Boyz II Men v. Aaron Rodgers the New Lucy v. Zehmer?

Last night, the Green Bay Packers redeemed themselves against the Chicago Bears after a disappointing Week 1 loss to the San Francisco 49ers. However, the Packers' quarterback, Aaron Rodgers, still has not redeemed himself after allegedly backing out on a bet with Nathan Morris of the R&B group, Boyz II Men.  The terms of their original deal reportedly were as follows: (i) Boyz II Men agreed to perform the national anthem before the Packers' week 1 game with the 49ers at Lambeau Field; and (ii) in exchange, Aaron Rodgers agreed to wear a 49ers jersey but only if the Packers lost to the 49ers.  (Even though Boyz II Men were part of the "East Coast Family" of the 1990s, they're apparently fans of a West Coast NFL team, the San Francisco 49ers. But I digress.)  Sounds like a pretty straightforward promise to perform in exchange for a promise to perform subject to a condition precedent, right?  Well, Boyz II Men performed, and the 49ers won, but... Aaron Rodgers has not worn the 49ers jersey.  Cue the Twittersphere and TMZ.  Rodgers, like Zehmer, claims that his jersey-wearing promise was a joke.  In this interview clip, Rodgers says, "It was a [unintelligible] joke between friends" that's been "blown out of proportion."  Morris claims it was a serious deal, tweeting after the game that he "was pressing the jersey now."  However, Boyz II Men also suggested they will give Aaron Rodgers more time to perform.  If not, anyone want to represent them against Rodgers?  Or is this the End of the Road for this matter?

[Heidi R. Anderson]

CSLSA Conference: Submission Deadline Approaching

Annual Scholarship Conference

October 19-20

Cleveland-Marshall College of Law

The Central States Law Schools Association 2012 Scholarship Conference will be held October 19 and 20, 2012 at the Cleveland-Marshall College of Law, in Cleveland, Ohio.  We invite law faculty from across the country to submit proposals to present papers or works in progress.

            The purpose of CSLSA is to foster scholarly exchanges among law faculty across legal disciplines.  The annual CSLSA conference is a forum for legal scholars, especially more junior scholars, to present working papers or finished articles on any law-related topic in a relaxed and supportive setting where junior and senior scholars from various disciplines are available to comment.  More mature scholars have an opportunity to test new ideas in a less formal setting than is generally available for their work. 

To allow scheduling of the conference, please send an abstract of no more than 500 words to Secretary Missy Lonegrass at [email protected] by September 22, 2012. Any late submissions will be considered on a space available basis only.

For those who are interested, the CSLSA mentorship program pairs interested junior scholars with more senior mentors in their fields of expertise to provide feedback on their presentations or papers.  To participate in the mentorship program as either a mentor or mentee, please contact Vice-President Elizabeth Young at [email protected].

            In keeping with tradition, CSLSA is able to pay for one night’s lodging for presenters from member schools.  If a school is interested in joining CSLSA and has not received an invoice, please contact Treasurer Carolyn Dessin at [email protected].

     For more information about CSLSA, visit our website at http://cslsa.us/.

[JT]

Student's Claims Against Dental School Brushed Aside

The Indiana University School of Dentistry (IUSD) dismissed Sung Yeun Park, citing her lack of professionalism, failing grades, and breach of confidentiality rules. Park sought readmission through a suit in the Southern District of Indiana alleging breach of contract, as well as equal protection and due process violations.  The district court dismissed Park’s claims for failure to state a claim, and the Seventh Circuit affirmed in Park v. Indiana University School of Dentistry.

Park alleged that IUSD breached its contract with her by failing to follow the dismissal procedures found in IUSD’s Student Handbook and Codes of Conduct, making her claim similar to those in the more successful Georgia case, Barnes v. Board of Regents, about which we recently blogged.   While the Seventh Circuit expressed some skepticism that there was an implied contract between IUSD and its students, Indiana courts in any case take a deferential approach to educational institutions' processes for student discipline. The court noted that “literal adherence to internal rules will not be required where the dismissal rests upon expert judgments as to academic or professional standards.”  The faculty at IUSD determined that Park “failed to progress in her professional development and failed to demonstrate fitness to practice” at the level deemed to be required. Because there was no indication that the decision was made in bad faith, the Seventh Circuit refused to second-guess the judgment of the administration, thereby determining Park had no claim for breach of contract.

Her due process argument amounted to a claim that her constitutional rights were violated because the IUSD had not followed the appropriate procedures, but her the Court found that her contractual interest is protected by state contracts law, not the federal constitution.  Nor did the Court accept Park's claim that her inability to pursue her chosen career path constituted a substantive due process violation.  The complaint contained insufficient allegations to state an equal protection claim.

The Seventh Circuit suggested that Park's claims could also have been dismissed on sovereign immunity grounds, but IUSD for some reason waived that defense by not raising it.

[Christina Phillips and JT]

Weekly Top Tens from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 
July 12, 2012 to September 10, 2012

Rank	Downloads	Paper Title
1	1578	A Transactional Genealogy of Scandal: From Michael Milken to Enron to Goldman Sachs  William W. Bratton, Adam J. Levitin,  University of Pennsylvania - Law School, Georgetown University - Law Center
2	178	What Can Be Wrong with an Option? An Optional Common European Sales Law as a Regulatory Tool  Horst Eidenmueller,  University of Munich
3	175	You Definitely Should Have: A Contractual Look at Israeli Wedding Gift Culture  Zvi H. Triger,  Striks School of Law, The College of Management Academic Studies (COLMAN)
4	172	The Dynamics of Contract Evolution  Stephen J. Choi, G. Mitu Gulati, Eric A. Posner,  New York University (NYU) - School of Law, Duke University - School of Law, University of Chicago - Law School
5	163	Hollywood Deals: Soft Contracts for Hard Markets  Jonathan Barnett,  USC Gould School of Law
6	147	Featuring People in Ads  Eric Goldman, Rebecca Tushnet,  Santa Clara University - School of Law, Georgetown University - Law Center
7	126	Contract and Innovation: The Limited Role of Generalist Courts in the Evolution of Novel Contractual Terms  Ronald J. Gilson, Charles F. Sabel, Robert E. Scott,  Stanford Law School, Columbia University - Law School, Columbia University - Law School
8	93	The Importance of Fault in Contract Law  Robert A. Hillman,  Cornell Law School
9	88	Intellectual Property and Shrinkwrap Licenses  Mark A. Lemley,  Stanford Law School
10	88	Disarming the Trojan Horse of the UAAA and SPARTA: How America Should Reform its Sports Agent Laws to Conform with True Agency Principles  Marc Edelman,  Barry University - Dwayne O. Andreas School of Law

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
July 12, 2012 to September 10, 2012

Rank	Downloads	Paper Title
1	178	What Can Be Wrong with an Option? An Optional Common European Sales Law as a Regulatory Tool  Horst Eidenmueller,  University of Munich
2	175	You Definitely Should Have: A Contractual Look at Israeli Wedding Gift Culture  Zvi H. Triger,  Striks School of Law, The College of Management Academic Studies (COLMAN)
3	163	Hollywood Deals: Soft Contracts for Hard Markets  Jonathan Barnett,  USC Gould School of Law
4	93	The Importance of Fault in Contract Law  Robert A. Hillman,  Cornell Law School
5	90	The Return-Reducing Ripple Effects of the 'Carried Interest' Tax Proposals  Heather M. Field,  University of California - Hastings College of the Law
6	88	Disarming the Trojan Horse of the UAAA and SPARTA: How America Should Reform its Sports Agent Laws to Conform with True Agency Principles  Marc Edelman,  Barry University - Dwayne O. Andreas School of Law
7	87	Autonomy, Pluralism, and Contract Theory  Hanoch Dagan,  Tel Aviv University - Buchmann Faculty of Law
8	78	Reflections on the Two-Handed Lawyer: Thinking versus Action in Business Lawyering  Jeffrey M. Lipshaw,  Suffolk University - Law School
9	75	Allocating Risk Through Contract: Evidence from M&A and Policy Implications  John C. Coates, IV,  Harvard Law School
10	67	The Government’s Proposed 'Review of Australian Contract Law': A Preliminary Positive Response  Luke R. Nottage,  University of Sydney - Faculty of Law

[JT]

Contracts Limerick of the Week: Angel v. Murray

We apologize to the honest, hardworking people in the legitimate business of waste management and understand that the business is not "mobbed up" as the following Limerick suggests.  Poetic license.

The Kunz & Chomsky casebook contains a bounty of new cases that provide interesting perspectivs on contracts doctrine.   Angel v. Murray is a vehicle for exploring the doctine of prior consideration/contract modification.  

The City of Newport entered into a five-year contract with Maher for refuse collection, with a contract price of $137,000/year.  Three years in, Maher requested an additional $10,000/year on the ground that the city had added 400 new dwelling units, which was unexpected, since the city had been growing at a rate of 20-25 new units per year.  Under R.2d § 89, the case seems a no brainer.  The modification is "fair and equitable in view of circumstances not anticipated by the parties at the time the contract was made."

The case would be more interesting if Mr. Maher were actually named Mr. Soprano and we had suspicions about the real reasons for the increase in the payments.  We can imagine that such a Mr. Maher might defend himself as follows: 

As Maher explained at Da Bing!
Waste management’s really our t’ing
It costs some cannoli
To dump your e coli;
‘Dis isn’t about buyin’ bling.

I thought I was done writing Limericks, but then I switched to the Kunz & Chomsky casebook and got inspired.   In short,

 

[JT]

Bankruptcy Versus Contract - The Legal Version of Animal Face-Off?

When I was in law school, plenty of people told me to take Bankruptcy Law.  Their pitch was something along the lines of "Bankruptcy Law trumps everything."  I think someone even told me, "When God wants to do something, he looks at the Bankruptcy Code first."  Of course, I didn't believe them.  I didn't take Bankruptcy Law.  And when all of the telecom-related bankruptcies erupted while I was practicing media and telecommunications law in Washington, DC, I learned a lot of bankruptcy law on the fly. And you know what?  Those people in law school were right.  Bankruptcy law really did beat everything!  I was fascinated.  I was awed!  So, it should be no surprise that when I read of the recent rumble involving bankruptcy law, contract law *and* the U.S. Constitution, I was intrigued.  And you should be, too.  Prof. Scott Pryor over at the Faculty Lounge sets up the battle as follows.

Two clauses of Article I of the U.S. Constitution are relevant to the intersection of property, contract remedies, and bankruptcy in the American context. First, Section 10, clause 1 provides that "No State shall pass any Law impairing the Obligation of Contracts" while Section 8, clause 4 empowers Congress "To establish uniform Laws on the subject of Bankruptcies throughout the United States." Oh, and we can't forget about the Tenth Amendment, which, when it comes to the system of dual state-federal sovereignty in the United States, preserves (at least sometimes) the States from federal interference.

Taken together we can conclude that (i) states cannot impair remedies for breach of contract (i.e., cannot discharge contract debts) but that (ii) the federal government can provide for discharge of debts while (iii) neither can take away one's property and, finally, (iv) when it comes to debts of municipalities, the federal bankruptcy powers cannot interfere with them without the consent of their State.

So what? Let's consider the bankruptcy of the City of Stockton, California. Like many municipalities (and states, for that matter) Stockton owes its retired employees far more in pensions than it can hope to pay. (Check the news report here and see here for my previous post on the topic.  For a slightly different take on the immediate cause of Stockton's financial crisis, check the NYT article here.)

Stockton filed bankruptcy to avoid paying the benefits it had contracted to pay but could no longer afford. But wait, the retirees argued, Stockton is an instrumentality of the State of California and, as we have seen, the U.S. Const. Art. 1, Sec. 10 specifically prohibits the states from messing around with contracts. While admitting that the federal government's constitutional bankruptcy power can discharge most contractual obligations, the retirees asserted that it cannot be permitted to do so in Stockton's case without contradicting the constitutional text. The irresistible force meets the immovable object.

You'll have to read the rest of Prof. Pryor's post to reach the exciting, but perhaps temporary, conclusion of Bankruptcy Law v. Contract Law.  It's almost as exciting as Gorilla v. Leopard.  Almost.  (And if you're not familiar with the old Discovery & Animal Planet Series, Animal Face-Off, check it out over at Netflix.  Hippo versus Shark was a personal fave.  Online game version here.)

[Heidi R. Anderson]