Wednesday, October 28, 2015
Contract "Renewal" Must Have Same (or Nearly the Same) Terms, Says Third Circuit
F & M Equipment, Ltd. (F&M) entered in to a ten-year insurance policy with Indian Harbor Insurance Company (Indian Harbor). The policy included a promise from Indian Harbor that it would offer F&M the option to renew. After ten years, Indian Harbor sent its "renewal policy" with substantially new terms. F&M rejected these terms. Indian Harbor sought a declaratory judgment that its new policy was a "renewal," and F&M counterclaimed for breach of contract.
The District Court ruled for Indian Harbor, but in Indian Harbor Insurance Co., v. F&M Equipment Ltd., the Third Circuit reversed, holding that "for a contract to be considered a renewal, it must contain the same, or nearly the same, terms as the original contract." Sitting in diversity and applying Pennsylvania law, the Third Circuit noted that, because insurance contracts are construed against the drafter, the contract would "be interpreted in light of the insured’s reasonable expectations." With respect to unresolved ambiguities, the Court stated that "inferences should be drawn against the insurance company."
Indian Harbor pointed to case law that it claimed required only that it give notice of its intention to renew on new terms. This reading of the contract, the Court held, would render Indian Harbor's promised renewal illusory. Indian Harbor argued that the duty of good faith and fair dealing would prevent it from offering terms that radically differed from the original contract and calling the offer a "renewal." That well may be, but it does not resolve the question of what constitutes a "renewal." The Court determined that a renewal must contain the same or nearly the same terms, and the new contract that Indian Harbor proffered contained four significant changes. The Court ordered Indian Harbor to offer F&M a genuine renewal of its policy.
Interestingly, Indian Harbor objected that doing so would mean including another promise of renewal, at which point the contract would become perpetual. The Court was unmoved. While not deciding the issue (because it did not have to), the Court essentially told Indian Harbor that it had made its bed and would have to sleep in it.
October 28, 2015 in Recent Cases | Permalink | Comments (0)
Tuesday, October 27, 2015
Weekly Top Tens from the Social Science Research Network
SSRN Top Downloads For Contracts & Commercial Law eJournal
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SSRN Top Downloads For LSN: Contracts (Topic)
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October 27, 2015 in Recent Scholarship | Permalink
Monday, October 26, 2015
Retirement Plans
I expect that when I am retired I will have time to devote myself full time to the joy of dealing with the utility and telecommunications companies, because avoiding being ripped off by these monopolists is really a full-time job. Two recent examples:
1. I don't have a smart phone. I hate telephones, so I get by with a dumb phone and a pre-paid plan. I spend about $200/year on my cellphone. My wife is similar, but she probably spends half as much.
I recently travelled to Europe, and I needed to make exactly one phone call when I arrived. There was no simple way to avoid making the phone call, and having a phone with which to place the call was easier than stealing an iPhone from an unsuspecting tourist. I called my service provider and asked if there was a simple and inexpensive way for me to use my phone for three days in Belgium. Three disconnections and over an hour later, I thought I had a way to do so FOR FREE! I was told that they would send me a new sim card. If I sent the card back within 30 days, there would be no charge. A $26 charge would show up on my credit card, but it would be removed once I returned the sim card. This sounded too good to be true. Had my call been re-routed to some scam artist? On the Internet, I checked and re-checked the number I had called while I was on hold (I had a lot of time to check), and I had the customer service person repeat himself several times to make certain I understood the terms.
Very long story short, my service provider did charge me $26, and then wanted to add something like $80/month for the new phone service I had allegedly ordered. After perhaps another two hours on hold/arguing with "customer service" people, the service provider did what they had repeatedly told me was impossible. They gave me a full refund (except for the original $26, which was a shipping and handling charge). I could live with that. I could console myself that being able to make that phone call was worth $26, even though I would never have agreed to that in advance.
One week later, I received a $50 refund from the telephone service provider. I have no idea how they arrived at that figure. I chalk it up to even more incompetence. I wanted to try to return the refund, to which I am not entitled (beyond the $26), but I know that doing so will take far more time than it is worth. I will consider the "refund" a partial payment for the extensive legal advice I offered about the fraud in which they had engaged by repeatedly telling me that the sim care would cost me nothing and then trying to charge me for it.
2. Adventures with the cable company:
- Unannounced, guys from the cable company dig a hole in our backyard and leave us with an open cable box with cables shooting out of the top of it. They tell me they will be back in a day or two to close the box and bury the lines going across my yard and the yards of my neighbors on either side.
- We receive notice that we must upgrade our cable box, and we follow onscreen instructions to have it sent to us.
- We receive an invoice with a new charge for "additional outlets"
- We install the new cable box and while speaking with someone who activates it remotely, I set up a service call so that they can come back, close up the cable box, fill in the hole and bury the cable before the ground freezes.
- The next morning I receive a call confirming the cancellation of my service call.
- I call back immediately, outraged that I have to re-schedule a service call that I never cancelled, and I am able to get it rescheduled, although the cable company still says that they have a record indicating, that in the 12 hours since I scheduled the service call, I called them to cancel it.
- While on the phone, I ask them about the "additional outlet" charge, and they inform me that it is a shipping and handling charge for the new cable box (that they insisted that I needed).
I pointed out that it is misleading (to say the least) to call a shipping and handling charge an "additional outlet" charge. Because I was livid, or perhaps just because I bothered to ask, they agreed to remove the "additional outlet" charge. Similarly, we are now enjoying a $50 "discount" on our cable services because I threatened to switch to a satellite dish and because we "had not had a discount in a while."
It does now seem to be the policy of the monopolists that they will just keep raising the rates of loyal customers until they crack, and then they will lower them until they see an opportunity to start ratcheting up the price again. Last year, I got fed up with what we were being charged for garbage collection, placed a phone call, and got the bill reduced by 50%. I then told my neighbors that they should all do the same. And they did. And it worked.
How all of this slips below the radar and is not the subject of federal regulation or class actions is beyond me!
October 26, 2015 in Commentary, Miscellaneous | Permalink | Comments (1)
Thursday, October 22, 2015
Call for Submissions: Valparaiso University Law Review
My law school's Law Review has a few spots open for this Volume's Issue 3.
The Law Review has achieved a top 80 ranking in Washington and Lee Law School's Student Edited General Journal Rankings based on journal cites and case cites. It has also achieved a top 100 ranking in the Expresso Law Review Rankings for 2014–15 and has featured articles in recent years from important and influential scholars such as Professor Larry Kramer, former Dean of Stanford Law School and Professor G. Edward White of the University of Virginia School of Law. Our students are eager to have submissions on contracts law and contracts-related subjects.
Please send your submissions to [email protected] and our Articles Editor, Stephanie Kroeze, will be in contact with you.
October 22, 2015 in Law Schools, Miscellaneous | Permalink
DNA Test Kits, Law Enforcement and TOS
23andme just issued a report that indicates that it has received 4 requests for customer information from law enforcement agencies and the FBI. The company was able to fend off those requests. Given that the company has over a million customers, that's not a large number, but the implications are chilling. As Jeremy Telman and I argue in a forthcoming article, the personal data collected by private companies may be used by the government in ways that may surprise us (and, in some cases, deprive of us basic constitutional rights....) 23andme extracts its customers consent by including the following in its TOS:
"Further, you acknowledge and agree that 23andMe is free to preserve and disclose any and all Personal Information to law enforcement agencies or others if required to do so by law or in the good faith belief that such preservation or disclosure is reasonably necessary to: (a) comply with legal process (such as a judicial proceeding, court order, or government inquiry) or obligations that 23andMe may owe pursuant to ethical and other professional rules, laws, and regulations; (b) enforce the 23andMe TOS; (c) respond to claims that any content violates the rights of third parties; or (d) protect the rights, property, or personal safety of 23andMe, its employees, its users, its clients, and the public. In such event we will notify you through the contact information you have provided to us in advance, unless doing so would violate the law or a court order."
Nevermind that this provision is not one that most customers would have bothered to read, hidden as it is behind a hyperlink and buried in the text. You can read more about the potential use of DNA test kits by law enforcement agencies here and here.
But wait - there's more! As I was scrolling through 23andme's terms, I found another provision that potentially affects even more customers:
"Genetic Information you share with others could be used against your interests. You should be careful about sharing your Genetic Information with others. Currently, very few businesses or insurance companies request genetic information, but this could change in the future. While the Genetic Information Nondiscrimination Act was signed into law in the United States in 2008, its protection against discrimination by employers and health insurance companies for employment and coverage issues has not been clearly established. In addition, GINA does not cover life or disability insurance providers. Some, but not all, states and other jurisdictions have laws that protect individuals with regard to their Genetic Information. You may want to consult a lawyer to understand the extent of legal protection of your Genetic Information before you share it with anybody.
Furthermore, Genetic Information that you choose to share with your physician or other health care provider may become part of your medical record and through that route be accessible to other health care providers and/or insurance companies in the future. Genetic Information that you share with family, friends or employers may be used against your interests. Even if you share Genetic Information that has no or limited meaning today, that information could have greater meaning in the future as new discoveries are made. If you are asked by an insurance company whether you have learned Genetic Information about health conditions and you do not disclose this to them, this may be considered to be fraud."
This is information that might be very useful to a potential customer. So why is this buried way down in the TOS? Maybe because it might make potential customers think twice about purchasing the kit? (Ya think?) Back in the good old days, companies posted potential dangers relating to the use of their products and services where you could see them. We used to call them notices and they had to be conspicuous. Now they bury them in the fine print and call them "contracts."
October 22, 2015 in Commentary, Current Affairs, Miscellaneous, Web/Tech | Permalink | Comments (0)
Wednesday, October 21, 2015
Ninth Circuit Affirms: No Recovery in "Brasher Doubloon" Case
In Swoger v. Rare Coin Wholesalers, plaintiff William Swogen (Swogen) sued for recovery of a consulting fee in connection with a rare coin. The Brasher Doubloons were minted in the 18th century in New York and were among the first coins minted in the United States. The Brasher Doubloons, a $15 gold piece, feature an image of an eagle. Ephraim Brasher punched his initials on the wing of the bird (see image). However, Defendants owned a Brasher Doubloon in which Brasher had punched his initials on the breast of the eagle. The coin they owned (and subsequently sold) was exceedingly rare and thus exceedingly valuable. Swoger offered to sell defendants information that he thought would prove his claim the "Punch the Breast" Brasher Doubloon was the first legal tender coin minted in the U.S.
Defendants offered $250,000 for the information, but Swoger wanted $500,000. The parties met at a numismatic trade show, and Swoger shared his information with defendants, which purported to show that their coin must have been minted pursuant to a federal act that specified the weight of gold coins. Defendants refused to pay Swoger for the information he provided, and he sued, alleging breach of contract, quantum meruit and other non-contractual claims.
The district court dismissed Swoger's claims because he provided no evidence in support of them. The federal act in question applied only to foreign coins, and so the Brasher Doubloon would not have been minted pursuant to it. Swoger did not in fact provide defendants with any information in support of his theory that the Brasher Doubloon was the first legal tender coin minted in the United States. Moreover, all of the information that Swoger provided was publicly available.
On appeal, Swoger claimed that even if the Brasher Doubloon was not minted pursuant to the Act; it was minted in accordance with the Act, as it was the same weight as Spanish Doubloons and thus could circulate as having a certain value. The Ninth Circuit rejected this argument, because only Congress can recognize a coin as legal tender of the United States, and Swoger, even taking all of his factual allegations as true, did nothing to show that Congress did so with respect to the Brasher Doubloon.
Too bad, but certainly a very interesting fact pattern. And the coin has an undeniable rough beauty.
October 21, 2015 in Recent Cases | Permalink | Comments (0)
Online Reviews – Are You Hot or Not?
Amazon is suing approximately 1,000 individuals who are allegedly in breach of contract with the Seattle online retailer for violating its terms of service. Amazon is also alleging breach of Washington consumer protection laws.
In April, Amazon sued middlemen websites offering to produce positive reviews, but this time, Amazon is targeting the actual freelance writers of the reviews, who often merely offer to post various product sellers’ own “reviews” for as little as $5. (You now ask yourself “$5? Really? That’s nothing!” That’s right… to most people, but remember that some people don’t make that much money, so every little bit helps, and numerous of the freelancers are thought to be located outside the United States.) The product sellers and freelancers are alleged to have found each other on www.fiverr.com, a marketplace for odd jobs and “gigs” of various types.
There are powerful incentives to plant fraudulent reviews online. About 45 percent of consumers consider product reviews when weighing an online purchase. Two-thirds of shoppers trust consumer opinions online. For small businesses, it can be more economical to pay for positive reviews than to buy advertising. For example, a half-star increase in a restaurant's online rating can increase the likelihood of securing, say, a 7 p.m. booking by 15 to 20 percent. “A restaurateur might be tempted to pay $250 for 50 positive reviews online in the hopes of raising that rating.”
As law professors, we are not beyond online reviews and thus potential abuses ourselves. See, for example, www.ratemyprofessor.com. There, anyone can claim that they have taken your course and rank you on your “Helpfulness,” “Clarity,” and “Easiness,” give you an overall grade as well as an indication of whether you are hot or not (clearly a crucial aspect of being a law professor…) To stay anonymous, people simply have to create a random anonymous sounding email address. Not even a user screen name appears to be required. Hopefully, that website does not have nearly as much credibility as, for example, Yelp or TripAdvisor, but the potential for abuse of online reviews is clear both within as well as beyond our own circles.
As shown, though, some companies are taking action. TripAdvisor claims that it has a team of 300 people using fraud detection techniques to weed out fake reviews. But fraudulent reviews aren't thought to be going away anytime soon. One source estimates that as many as 10-15% of online reviews are fake (to me, that seems a low estimate, but I may just be a bit too cynical when it comes to online reviews).
So, next time you are reading reviews of a restaurant online, I suppose the learning is that you should take the reviews with a grain of salt.
October 21, 2015 in Current Affairs, E-commerce, Food and Drink, In the News, Labor Contracts, True Contracts, Web/Tech | Permalink | Comments (0)
Tuesday, October 20, 2015
Weekly Top Tens from the Social Science Research Network
SSRN Top Downloads For Contracts & Commercial Law eJournal
RECENT TOP PAPERS
|
Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 438 | An Overview of Privacy Law Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law |
| 2 | 381 | Bitcoin and the Uniform Commercial Code Jeanne L. Schroeder Yeshiva University - Benjamin N. Cardozo School of Law |
| 3 | 330 | Contract as Automaton: The Computational Representation of Financial Agreements Mark D. Flood and Oliver R. Goodenough Government of the United States of America - Office of Financial Research and Vermont Law School |
| 4 | 226 | Efficiencies and Regulatory Shortcuts: How Should We Regulate Companies like Airbnb and Uber? Benjamin G. Edelman and Damien Geradin Harvard University - HBS Negotiations, Organizations and Markets Unit and George Mason University School of LawTilburg University - Tilburg Law and Economics Center (TILEC) |
| 5 | 169 | Privacy in the Clouds: An Empirical Study of the Terms of Service and Privacy Policies of 20 Cloud Service Providers Dimitra Kamarinou, Christopher Millard and W. Kuan Hon Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies and Queen Mary University of London, School of Law - Centre for Commercial Law Studies |
| 6 | 131 | Reasoned Awards in International Commercial Arbitration: Embracing and Exceeding the Common Law-Civil Law Dichotomy S.I. Strong University of Missouri School of Law |
| 7 | 127 | Defective Arbitration Clauses: An Overview Badrinath Srinivasan Independent |
| 8 | 119 | The Normative Force of Consent Heidi M Hurd University of Illinois College of Law |
| 9 | 104 | The Myth of 'Legal' Consent in a Consumer Culture Jennifer Ann Drobac Indiana University Robert H. McKinney School of Law |
| 10 | 86 | Good Faith in English Contract Law: A 'Contagious Disease of Alien Origin' Andre Sinanan Independent |
SSRN Top Downloads For LSN: Contracts (Topic)
RECENT TOP PAPERS
October 20, 2015 in Recent Scholarship | Permalink
Death of a Defendant in a Unilateral Contracts Case
As reported in The New York Times here, Irwin Schiff, a famous opponent of federal taxation, passed away in prison at the age of 87. He had been sentenced in 2005 for tax evasion. He claimed that he was being truthful when he reported that he had "no income in the constitutional sense."
His life is of interest to contracts profs because of Newman v. Schiff. In 1983, Schiff offered $100,000 to anyone who could cite a section from the Internal Revenue Code (Code) that required an individual to file a federal tax return. Schiff issued this challenge on a CBS new show called "Nightwatch." Mr. Newman heard the challenge on a rebroadcast of the show and responded the next day when he had a chance to look through the Code and identify the relevant sections. Schiff refused to pay, informing Newman that his response was both procedurally and substantively flaws. Newman sued.
The District Court agreed with Schiff that Newman response was procedurally flawed. It construed the offer to be open only until the end of the Nightwatch broadcast. Mr. Newman was late. But he was not wrong. The District Court characterized Schiff's position on taxes as "blatant nonsense." As the Times obituary notes, his son writes on economic topics. The son found his father's positions compelling but impractical. Schiff remained committed to his beliefs right up to the end.
Hat tip to Gonzaga Law's Scott Burnham.
October 20, 2015 in Famous Cases, In the News | Permalink | Comments (0)
Friday, October 16, 2015
The Seventh Circuit and the Removal of Unpublished Opinions from Legal Limbo
Class action plaintiffs began working with Cellular Sales (Cellular), which sells Verizon wireless services, in 2010. Cellular required that they form a business entity like an LLC and that they sign a sales agreement that identified them as independent contractors. The sales agreements did not contain arbitration clauses. In 2011, the plaintiffs became employees of Cellular and signed new compensation agreements that did contain arbitration clauses. When plaintiffs brought claims that, before the compensation agreements entered into force, they were misclassified as independent contractors when they were really employees, Cellular sought to compel arbitration. The District Court denied that motion.
In Holick v. Cellular Sales of New York, the Seventh Circuit affirmed. Although the Court acknowledged that an arbitration clause can apply retroactively, it cannot do so when the cause of action arises under a contract that does not contain an arbitration clause. In construing arbitration clauses, courts must give effect to the parties' intentions, and the Seventh Circuit saw no evidence that the parties intended to arbitrate disputes arising pursuant to their sales agreements.
Not so small aside: in its opinion the Seventh Circuit notes that plaintiffs relied heavily on an unpublished Fourth Circuit opinion. I found this curious and so I dug a bit. According to the Illinois Bar Journal the Seventh Circuit changed its rules relating to unpublished opinions in 2006. It is now permissible to cite to unpublished opinions issued on or after January 1, 2007. Citation to unpublished opinions issued prior to 2007 is still prohibited. Well, this is progress. As my colleague, David Cleveland has argued in numerous articles, unpublished opinions are a bad idea, and allowing parties to cite to them goes a long way towards eliminating the dangers of the designation.
But why draw the line at 2007? When I was in college, I saw a play called Sister Mary Ignatius Explains It All to You. I have no idea what compelled me to see that play and even less idea why I remember this one joke, but here it is: Sister Mary Ignatius explains that before Vatican II, unbaptized babies were consigned to limbo. After Vatican II, they are allowed to enter heaven. Sister Mary Ignatius is asked what becomes of the pre-Vatican II babies that were in Limbo. She pauses. "They are still in limbo." Maybe it was the delivery, but I still love that line, and remember it 30 years later. Yup, the rest of my college years are a blur.
Interestingly enough, I read on Slate that in 2007, the Vatican investigated the concept of limbo and either eliminated it entirely or at least determined that unbaptized babies do not end up there. The articles I read suggest that limbo was just for unbaptized babies, but I thought the virtuous pagans (like Virgil pictured right) were there as well (discussing prosody I am told). In any case, 2007. The very same year that unpublished opinions emerged from limbo! Coincidence?
October 16, 2015 in Commentary, Recent Cases | Permalink | Comments (0)
Thursday, October 15, 2015
Contracting over Privacy
Last month, we posted a notice about the Contracting over Privacy conference that is upcoming this week at the University of Chicago Law School. The full conference program (reproduced below) is available here. You can download the papers from that same site.
Friday, October 16, 2015
Session 1: Kristen Anderson, Federal Trade Commission, Moderator
9:30 – 10:15: Florencia Marrota-Wurgler, New York University, Understanding Privacy Policies: Self-Regulation, Market Forces, and Enforcement Actions
10: 15 – 11:00: Alessandro Acquisti, Rainer Böhme, Sarah Spiekermann, and Kai-Lung Hui Carnegie Mellon University, How Feasible Are Markets for Personal Data?
Session 2: Susanne Augenhofer, Humboldt University in Berlin, Moderator
11: 15 – 12: 00: Paul Schwartz, U.C. Berkeley, Comparative Contractual Privacy Law: The U.S., Germany, and E.U.
Session 3: Aaron Burstein, Federal Trade Commission, Moderator
1:30 – 2:15: Omri Ben-Shahar and Adam Chilton, University of Chicago, An Experimental Test of How the Formal Properties of Privacy Disclosures Influence Behavior
2:15 – 3:00: Lior Strahilevitz, University of Chicago & Matthew Kugler, U.S. Court of Appeals – 7th Circuit, Is Privacy Policy Language Irrelevant to Consumers?
Session 4: Randy Picker, University of Chicago, Moderator
3:15 – 4:00: Kirsten Martin, George Washington University, Explicit Versus Implicit Privacy Contracts: Comparing the Impact of Privacy Notices and Norms on Consumer Trust
4:00 – 4:45: Ian Ayres, Yale University, A Laffer Curve for Invasions of Privacy
Saturday, October 17, 2015
Session 5: Ariel Feldman, University of Chicago, Moderator
9:30 – 10:15: Joel Reidenberg, Fordham University, Jaspreet Bhatia, Carnegie Mellon University, et al., Automated Measurement and Comparison of Privacy Policy Ambiguity
10: 15 – 11:00: Richard Brooks, Columbia University, The Information Fiduciary: Beyond Contracting over Privacy
Session 6: Sebastien Gay, University of Chicago, Moderator
11: 15 – 12: 00: Oren Bar-Gill, Harvard University, & Omri Ben-Shahar, University of Chicago, Optimal Defaults for Consumer Contracts
This event is free and open to the public, but seating may be limited.
October 15, 2015 in Conferences, Recent Scholarship | Permalink
Tuesday, October 13, 2015
New in Print from Cardozo Law's Mitchell Engler
Congratulations to Cardozo Law's Mitchell Engler (pictured) on the publication of his Pay for Play: The Compensated Leisure Flow of Contract Damages, available for download here on SSRN. The article is published in the George Mason Law Review. Here is the abstract:
Contract damages aim to leave the injured party in as good a position as if the contract had been fulfilled. But discharged laborers often obtain a much better result due to the lack of a reduction for their excused work effort on breach. After first exposing the problematic ramifications of this unjustified deviation, this Article then provides two workable corrections.
Legal neglect of the labor/leisure tradeoff primarily explains the defect. Under this economic principle, workers must sacrifice valuable leisure to get paid. Contract law, however, can provide discharged workers compensated leisure: full payment despite retention of their leisure time after the breach. Interestingly, legal disregard of the leisure tradeoff also permeates the current firestorm over the value of a law degree. Evidencing a pattern of leisure time neglect, legal analyses similarly overstate service contract damages and the value of a law degree.
Practicalities also play a role as recognition of the flaw does not itself yield a ready solution. Current law’s mitigation offset for new work might seem to be the most feasible response. But mitigation does not apply if the new work is insufficiently comparable or if the worker could handle both jobs under the lost volume doctrine. Given mitigation’s limited scope, I demonstrate a superior offset. In theory, the contract price should be reduced by the worker’s lowest acceptable price for the job. With such reduction, the worker would receive just his real benefit, limited to the “surplus” value of the deal. I propose a novel way to estimate this proper offset: a sliding scale percentage reduction keyed to probability findings on job comparability or lost volume capacity. Labor elasticity studies provide another innovative way to estimate the offset as such studies calibrate the impact of wage changes on hourly work choices. Either approach would enhance the law’s coherence, fairness, and efficiency.
October 13, 2015 in Contract Profs, Recent Scholarship | Permalink
Weekly Top Tens from the Social Science Research Network
SSRN Top Downloads For Contracts & Commercial Law eJournal
RECENT TOP PAPERS
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 369 | Bitcoin and the Uniform Commercial Code Jeanne L. Schroeder Yeshiva University - Benjamin N. Cardozo School of Law |
| 2 | 328 | Contract as Automaton: The Computational Representation of Financial Agreements Mark D. Flood and Oliver R. Goodenough Government of the United States of America - Office of Financial Research and Vermont Law School |
| 3 | 276 | An Overview of Privacy Law Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law |
| 4 | 164 | Efficiencies and Regulatory Shortcuts: How Should We Regulate Companies like Airbnb and Uber? Benjamin G. Edelman and Damien Geradin Harvard University - HBS Negotiations, Organizations and Markets Unit and George Mason University School of LawTilburg University - Tilburg Law and Economics Center (TILEC) |
| 5 | 156 | Privacy in the Clouds: An Empirical Study of the Terms of Service and Privacy Policies of 20 Cloud Service Providers Dimitra Kamarinou, Christopher Millard and W. Kuan Hon Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies and Queen Mary University of London, School of Law - Centre for Commercial Law Studies |
| 6 | 129 | Reasoned Awards in International Commercial Arbitration: Embracing and Exceeding the Common Law-Civil Law Dichotomy S.I. Strong University of Missouri School of Law |
| 7 | 124 | Defective Arbitration Clauses: An Overview Badrinath Srinivasan Independent |
| 8 | 118 | The Normative Force of Consent Heidi M Hurd University of Illinois College of Law |
| 9 | 113 | R. v. Jones (1703): The Origins of the 'Reasonable Person' Simon Stern University of Toronto - Faculty of Law |
| 10 | 101 | The Myth of 'Legal' Consent in a Consumer Culture Jennifer Ann Drobac Indiana University Robert H. McKinney School of Law |
SSRN Top Downloads For LSN: Contracts (Topic)
RECENT TOP PAPERS
October 13, 2015 in Recent Scholarship | Permalink
Monday, October 12, 2015
Sears Makes a Mistake
Some shoppers on Sears.com thought it was their lucky day when they saw expensive play sets and fancy toys available for the low price of $11.95. Consumerist has the story here. If you saw a storybook cottage that typically costs hundreds of dollars listed for sale at the low, low price of $11.95, what would you think? That's right. Unless it was advertised as a huge blowout sale, you would probably guess it was a mistake. Apparently, Sears lists items sold by third parties and gets a cut - and this time, a third party had made a pricing error on its items. Of course, some Sears sellers were upset - even though Sears refunded their money and gave them a $5 gift card. So, for all those upset sellers, let's run through the mistake scenario to see whether the law would be on your side:
Was this a mistake of a basic assumption? - Yes, it was a pricing error and pricing errors are generally considered basic assumption mistakes.
Was the mistake made by one or both parties (was it a mutual or unilateral mistake?) - Here, Sears mistakenly believed that the prices listed on its website were accurate (not all $11.95) while the customers saw what the prices were - $11.95 - so it was a unilateral mistake made by Sears.
Did it have a material effect? Yes, there's a big difference between $11.95 and hundreds of dollars so Sears would make less money on the transaction.
Did the non-mistaken party (the Sears customers) know or should they have known of the mistake? - Yes, because they should know that expensive playsets are typically not sold for such a low price unless it is part of a promotion or clearance sale.
Did the mistaken party bear the risk of the mistake? You might think Sears would, since it is their website. But based upon existing case law (i.e. Donovan v. RRL Corp), since there's no lack of good faith here and Sears presumably acted reasonably in managing its website - it does not constitute "neglect of a legal duty" and Sears likely doesn't bear the risk of the mistake.
So - there you have it. Sorry kids - guess you'll just have to go outside and build your own play castles with branches and old bed sheets...
October 12, 2015 in Commentary, E-commerce, In the News, Web/Tech | Permalink | Comments (4)
Friday, October 9, 2015
SCOTUS Continues to Wrestle with Post-Concepcion Fallout
In DIRECTV, Inc. v. Inburgia, SCOTUS is addressing the enforceability of an arbitration clause with a class-action waiver. The clause provides that the entire arbitration clause is invalid if state law prohibits class action waivers. At the time the agreement was written, California law clearly prohibited class action waivers. SCOTUS subsequently ruled that California's law must yield to the Federal Arbitration Act. According to the SCOTUSblog entry on the case, the issue in the case is "Whether the California Court of Appeal erred by holding, in direct conflict with the Ninth Circuit, that a reference to state law in an arbitration agreement governed by the Federal Arbitration Act requires the application of state law preempted by the Federal Arbitration Act."
The California court refused to enforce the arbitration agreement, and it was widely predicted that the Court would reverse that decision, in accordance with its Concepcion decision. At oral argument, the Justices seemed agreed that the California courts had gotten the case wrong, but as Justice Kagan put it, "Wrongness is just not what we do here." In other words, the Court cannot step in every time a state court makes a mistake, and here the contract was so poorly drafted that the blame lies as much with the parties as with the court.
Justice Scalia seemed to think that the Court had to choose between two "horribles." One horrible would be second-guessing state courts on every case of contract interpretation; the other would be permitting state courts to get away with ignoring the Federal Arbitration Act in favor of state laws that SCOTUS held must yield before that federal law.
SCOTUSblog provides a commentary on the oral arguments, which took place this week, from Ronald Mann here. Ronald Mann's preview of the case is also on SCOTUSblog here.
October 9, 2015 in Recent Cases | Permalink | Comments (0)
Tuesday, October 6, 2015
Contractual Promise to Assist with Hobnobbing
In California (where else?), a state court judge has, for now, refused to dismiss a fraud claim against Mark Zuckerberg of Facebook fame. A breach of contract claim is also still under consideration.
What is the latter all about? As we wrote here earlier, one of Zuckerberg's former neighbors alleges that he promised to sell property adjoining Zuckerberg's at a discount in return for Zuckerberg's promise to provide the neighbor with "personal referrals and business promotion activities." The property changed hands, but Zuckerberg allegedly failed to make good on his promises.
Is he contractually bound to do so? I don't see why not. The promise is not illusory, and although it is not directly monetary in nature, it does seem to constitute true consideration (Zuckerberg would give up time and effort to get the discount and run the risk of inconveniencing his connections).
Of course, promises such as these are probably very hard to enforce via court action. What would a court realistically do? Force Zuckerberg to help the former neighbor hobnob now that the parties undoubtedly dislike each other intensely? Require him to host a certain number of cocktail parties and invite the ex-neigbor? Such relief is unrealistic, just as it would likely be next to impossible to monetize the alleged loss here.
The temptation to contract in part in return for return benefits from the rich and famous is continually present now as it has been for decades, if not centuries. But numerous cases show how such deals are next to impossible to enforce, contracts law principles or not. A higher sales price would undoubtedly have been smarter here.
Making the case even weirder, the neighbor's attorney has petitioned the court to withdraw from the case for ethical reasons.
October 6, 2015 in Celebrity Contracts, In the News, Web/Tech | Permalink | Comments (0)
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October 6, 2015 in Recent Scholarship | Permalink
Monday, October 5, 2015
Judge John Hodgman Enforces a "Contract"
This week, the The New York Times Magazine's the "The Ethicist" column is finally given over to an actual ethicist, Kwame Anthony Appiah, who is a fabulous choice. Similarly excellent is the editors' choice to add a bonus advice column from "Judge John Hodgman" and to print said column in a font that people over 40 can read (Judge Hodgman's column used to appear on a page designed to appeal to young hipsters and to put off people who really need to just bite the bullet and use reading glasses).
I hate to disagree with so learned a judge, but I think Judge Hodgman errs in his opening opinion in the new format. His column assesses whether a written commitment is binding. The writing reads as follows, "I, Taylor W., will allow Cora W. to dress me as a woman this Christmas." Judge Hodgman describes the writing as "contract," his end of which Taylor W. must uphold.
Sorry, Judge. I see nothing more than a gratuitous promise here. There is no consideration. Moreover, this seems to be a social and not a legally binding agreement. I question whether the parties ever intended to be legally bound. Taylor W. may be bound in foro conscientiae, but he is not bound under the law of contracts.
October 5, 2015 in Commentary | Permalink | Comments (2)
New in Print: Books from Carolina Academic Press
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October 5, 2015 in Books, Recent Scholarship, Teaching | Permalink
Saturday, October 3, 2015
Gag Clauses in Consumer Contracts
They’re still doing it: companies not wanting negative online reviews of their products or services attempt to contractually prohibit unsatisfied customers from posting such feedback. Not only that, but some companies also seek to take legal and other retaliatory action against their customers if they defy such attempted clauses.
For example, the FTC recently instigated suit against weight-loss company Roca Labs for threatening legal action against customers writing negative comments about the company’s allegedly ineffective weight loss powder. (H/t to my colleagues on the AALS Contracts listserv for mentioning this story). When one of Roca Lab’s customers posted a comment on the Better Business Bureau website, the company cited to their contract with the client that stated, “You will not disparage RL and/or any of its employees, products or services... If you breach this agreement... we retain all legal rights and remedies against the breaching customer..." The company also asked the customer for information about her contacts on Twitter and Facebook (she luckily declined…).
There is no federal law prohibiting companies from trying to suppress negative reviews, but the FTC alleged unfair practices, among other things because the clause in question was buried in fine print. The issue may also be a First Amendment problem, according to an attorney for www.pissedconsumer.com, a third-party website that, as the name indicates, allows negative reviews of companies. http://www.cbsnews.com/news/ftc-lawsuit-roca-labs-weight-loss-powder-gag-clause-customers-sued/
I could not agree more that the voice of customers who have been disappointed for good reason should be heard. It is, frankly, ridiculous what some companies can get away with in this country in this day and age, in my opinion. (In the EU, for example, much more consumer-friendly regulations exist. In the USA, the legislative balancing of consumers v. companies often, in my opinion, is more of a slant favoring businesses, but that’s a thought for another day). But here’s the thing: what about the true risk of disgruntled customers posting reviews that don’t quite reflect what really happened, that exaggerate the situation, or that simply make things seem worse than what they really were? Even with emoticons, things can seem very harsh once written down even if they were not necessarily meant to be.
Take, for example, popular hosting website Airbnb. My husband and I own a historically registered house that requires a lot of upkeep and fixing after 90 years of neglect, so we signed up as hosts to try it out and, of course, to make a little extra money. We love it! We meet the most interesting people that truly enjoy our house. But as one’s success on that and other websites is, in reality, often tied closely to having a large amount of very good reviews, we also live with the constant worry that one day, somebody could post a negative review about something that most people would probably consider seemingly minor (our house is almost 100 years old, and there are necessarily small kinks with a house like that). See also Nancy Kim’s recent blog on our apparently increasing need to judge each other negatively. At least Airbnb allows its users to post comments to reviews, but not all websites follow such practice.
My point is simply this: it is, of course, to go overboard to require one’s paying customers to not post negative reviews via contractual clauses or other methods. But how do we balance the need for true and honest, productive reviews with the risk of disgruntled and perhaps even dishonest customers? Comment below!
October 3, 2015 in Current Affairs, In the News, Legislation, True Contracts, Web/Tech | Permalink | Comments (2)
