ContractsProf Blog

A Tale of a University and a Football Coach

A recent case out of the Western District of Pennsylvania, Douglas v. University of Pittsburgh, Civil Action No. 15-938 (behind paywall), found that there were factual disputes precluding summary judgment regarding whether or not a contract was in place between the plaintiff, an assistant football coach, and the University. 

The plaintiff alleged that he was orally told by Pittsburgh's head football coach when he was offered the job that it would be a two-year-contract with $225,000 in the first year and $240,000 in the second year, with other perks. The plaintiff accepted the terms and began the job immediately upon receiving this alleged oral offer from the head coach. 

A little more than a week later, the plaintiff received a proposed Employment Contract. The contract had his second-year salary as $235,000 instead of $240,000 and also stated that the University could terminate the plaintiff's employment if the head coach left the school. The plaintiff had concerns about these clauses and other parts of the contract and brought these concerns to the head coach, who allegedly told the plaintiff that he would take care of the issues. 

A few months later, the plaintiff moved his wife and children to join him in Pittsburgh. Over the course of the next few months, the plaintiff claims to have periodically raised the issue that he had never signed a contract and was allegedly told by various people not to worry about it. 

Less than a year after the plaintiff started the assistant coach job, the head coach left Pittsburgh to take a job at the University of Wisconsin. Pittsburgh then subsequently terminated the plaintiff and all of the other assistant football coaches. The University informed the plaintiff that, because he had never signed the Employment Contract, he was an "at-will" employee. The plaintiff, in the wake of losing his job, took a job at Florida State for $40,000 per year, necessitating more moving costs. 

Not happy about how this all played out, the plaintiff sued the University of Pittsburgh. The plaintiff's allegation was that he was orally offered a contract for two years of employment that he accepted, and that the University breached that oral contract. The University responded that the conversation between the plaintiff and the head coach on which the plaintiff pins his hopes did not have enough essential terms to be considered a contract and that the essential terms were in the Employment Contract. Although the plaintiff refused to sign that written contract, the University maintained that he accepted the terms of the written contract when he continued to work for the University. The plaintiff, however, argued that the head coach's offer of employment was specific enough, giving job duties, term, and salary, to constitute a binding contract between the parties, and the plaintiff stated that he resigned from his job and moved his family in reliance on this. 

The University moved for summary judgment but the court found that there was enough evidence that a jury could conclude that the plaintiff and the University had agreed to enough essential terms to form a contract. However, the court dismissed the plaintiff's claims for fraud in the inducement and negligent misrepresentation as merely duplicating the surviving breach of contract claim. I'll keep you posted on what happens!

Law360 has an article about the filing of this lawsuit here. 

 

Auto Leases and Contract Defenses

The New York Times ran this article today about car leases and how difficult it is to get out of them.  The article discusses one auto lessee who found that she had a medical condition that prevented her from driving.  When she tried to get out of her lease with Ford, she was told that there was no way that she could escape her obligations unless she joined the military or died.

Which brings me to contract defenses.  It would seem that being informed of a rare medical condition that prevents you from driving would constitute a classic changed circumstances situation that would allow a successful frustration of purpose defense.  But alas, most car leases allocate the risk of these unlikely events onto the consumer. In other words, although this specific medical condition may have been unforeseeable, the contract probably shifts the risk onto the consumer of all events which would prevent the consumer from making payments or from driving. 

Just another example of the interplay between contract clauses and doctrine.

 

 

 

 

 

 

 

 

 

Weekly Top Ten SSRN Contracts Downloads (October 27, 2016)

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	374	Choice of Forum Agreements Under the Brussels I Recast and Under the Hague Convention: Coherences and Clashes Matthias Weller EBS Universität für Wirtschaft und Recht
2	285	The Myth of Free John M. Newman University of Memphis - Cecil C. Humphreys School of Law
3	240	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
4	240	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
5	235	Inside Safe Assets Anna Gelpern and Erik F. Gerding Georgetown University Law Center and University of Colorado Law School
6	172	Online RPM and MFN Under Antitrust Law and Economics Pinar Akman and D. Daniel Sokol University of Leeds and University of Florida - Levin College of Law
7	136	The Reform of the French Law of Obligations: Les Jeux Sont Faits Jan M. Smits and Caroline Calomme Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI) and Maastricht European Private Law Institute (M-EPLI)
8	133	Tort Reform through the Backdoor: A Critique of Law & Apologies Yonathan A. Arbel and Yotam Kaplan Harvard Law School and Hebrew University of Jerusalem
9	126	Engineering Humans with Contracts Brett M. Frischmann and Evan Selinger Yeshiva University - Benjamin N. Cardozo School of Law and Rochester Institute of Technology - Department of Philosophy
10	150	Is Privacy Policy Language Irrelevant to Consumers? Lior Strahilevitz and Matthew B. Kugler University of Chicago Law School and Northwestern University - Pritzker School of Law

 

SSRN Top Downloads For
Law & Society: Private Law - Contracts eJournal

Rank	Downloads	Paper Title
1	374	Choice of Forum Agreements Under the Brussels I Recast and Under the Hague Convention: Coherences and Clashes Matthias Weller EBS Universität für Wirtschaft und Recht
2	285	The Myth of Free John M. Newman University of Memphis - Cecil C. Humphreys School of Law
3	240	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
4	240	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
5	136	The Reform of the French Law of Obligations: Les Jeux Sont Faits Jan M. Smits and Caroline Calomme Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI) and Maastricht European Private Law Institute (M-EPLI)
6	125	Optimal Fee-Shifting Bylaws Albert H. Choi University of Virginia School of Law
7	121	Evolution or Intelligent Design? The Variation in Pari Passu Clauses Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School
8	111	'All the World's a Stage': The Seven Ages of Unjust Enrichment Graham Virgo University of Cambridge - Faculty of Law
9	104	The Expanding Circle of Contract Law Jan M. Smits Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
10	100	Signing Without Reading Gerrit De Geest Washington University in Saint Louis - School of Law

Scholarship Spotlight: "Trust and Enforcement in Banking, Bitcoin, and the Blockchain" (Catherine Christopher - Texas Tech)

 

Bitcoin and other alternative currencies have been of particular interest in the contracts scholarly community for many reasons, including the potential elimination of intermediaries in electronic financial transactions and also the possibility of self-enforcing "smart contracts." In both cases, the major touted feature of the blockchain technology underlying bitcoin is that it allows for transactions to be "trustless." Catherine (Cassie) Christopher (Texas Tech) suggests in a new article, however, that the purported lack of need for trust is overblown and that intermediaries still have an important role to play.

Here is Professor Christopher's abstract:

Bitcoin has long been touted as a currency and a payment system that relies on cryptography and mathematics rather than trust. But is Bitcoin really trustless? And if so, would that be a good thing? This article under-takes a critical deconstruction of Bitcoin and the blockchain, their themes of democracy and transparency, and the idea that they are trustless. The article then proposes a new conceptualization of the role of trust in business and contracting: the bridging model, which allows for a more nuanced understanding of the interplay between enforcement and trust in contract formation. The bridging model is applied first to traditional banking, to illustrate and analyze the enforcement mechanisms underpinning the U.S. dollar as currency and the banking system as a whole, and to demonstrate that the enforcement mechanisms (government backing and regulation) are not as robust as generally believed. The bridging model is then applied to Bitcoin, to show not only that the system requires more trust than is generally understood, but also that both currency and payment systems benefit from the involvement of trusted intermediaries in response to problems and crises.

"The Bridging Model: Exploring the Roles of Trust and Enforcement in Banking, Bitcoin, and the Blockchain" is published in the Nevada Law Review at 17 Nev. L. Rev. 1 (2016), and is available for SSRN download here.

Judicial Disagreement Over Contract Ambiguity: When Are Things OBVIOUS?

We've been talking about contract interpretation in my Contracts class lately and I'm always struck by how many cases involve a lower court ruling of ambiguity and then an appellate court reversal of that ruling, because it always strikes me as such a funny thing. The very definition of ambiguity would seem to be "multiple people disagreeing on the meaning of the word," but the appellate court decisions in those cases necessarily have to dismiss the reasonableness of the lower court's understanding of the meaning in order to assert that the meaning is SO OBVIOUS. This always makes these cases feel a little more...condescending? Than the typical reversal. Like, "We don't know what you were so confused about, lower court, this is OBVIOUS." 

A recent case out of California, Borgwat v. Shasta Union Elementary School District, No. C078692, is another example of this. The plaintiff, upon retiring from the defendant, was entitled to a monthly post-retirement contribution toward her "medical insurance coverage." For a couple of years, the defendant paid the contribution toward the plaintiff's dental and vision coverage. But then the defendant concluded that dental and vision insurance was not included in "medical insurance coverage" and ceased paying the contribution. This lawsuit resulted. 

The lower court found the phrase "medical insurance coverage" to be ambiguous and allowed extrinsic evidence to illuminate its definition, including the fact that the defendant had initially paid the plaintiff the contribution for a few years. Therefore, the lower court endorsed the plaintiff's interpretation that "medical insurance coverage" included dental and vision insurance. 

The appellate court here reversed, though, saying that "medical insurance coverage" was not an ambiguous term. The relevant section of the contract was Section 5.7 but the appellate court looked to Section 5.2, which dealt with benefits during the course of employment. In that section, the defendant had agreed to pay sums "toward the cost of medical, dental and vision benefit coverage." The fact that dental and vision were considered independent from medical insurance in Section 5.2 rendered the use of "medical insurance" in Section 5.7 unambiguous: It can't include dental and vision insurance, because the parties in Section 5.2 revealed that they didn't understand medical to include dental and vision insurance when they felt it necessary to list all three. For this reason, the appellate court refused to allow any extrinsic evidence, because the defendant's mistake in paying for the dental and vision insurance could not change the unambiguous terms of the contract. 

So there you have it. OBVIOUSLY. :-)

New 'Comparative Law In Practice' publication offered at discounted rate

‘Comparative Law in Practice’ By Duncan Fairgrieve

We are pleased to offer you 20% discount on the book!

RSP: £70

Discount Price: £56

To order with your discount visit www.hartpub.co.uk and use the code CV7 at the checkout

Comparative Law in Practice Contract Law in a Mid-Channel Jurisdiction Duncan Fairgrieve This book provides a comparative study of contract law, examining the interaction of common law and civil law approaches to contract law. Drawing extensively upon English, French and European law, the book explores how the law of contract of Jersey, Channel Islands, has been influenced by both civil law and common law sources. It is argued that this jurisdiction is a striking example of comparative law in action, given that Jersey contract law is made up of a blend of common law and civil law approaches. Jersey law is premised upon a subjective approach to contracts, in which civil law concepts such as cause (rather than consideration) and vices de consentement are the foundational aspects, but is nonetheless highly influenced by the common law in areas such as remedies (damages, termination, etc).

The book analyses a series of key issues from a comparative and European perspective, including the principles underlying contract law (comparing and contrasting civil and common law approaches), the formation of contract, requirements of reciprocity (cause vs consideration), the structure and approach of precontractual liability, the role of good faith in a mixed system, the architecture of remedies, and more.

Duncan Fairgrieve is Senior Research Fellow in Comparative Law at the British Institute of International and Comparative Law and Professeur Associé at Université Paris Dauphine PSL, France. Oct 2016 9781782257219 208pp

Hbk RSP: £70

Discount Price: £56

Use discount code CV7 at the checkout to obtain your discount

Whistleblower lawsuit begins against Penn State in Sandusky case

            In 2011, when charges were first brought against assistant Penn State football coach, Jerry Sandusky, for sexually preying on children, fellow assistant coach Mike McQueary was consequently suspended with pay. However, after Sandusky was found guilty of abusing 10 boys in 2012, Penn State terminated McQueary’s $140,000-a-year-job because of what he believes was retaliation by the University for helping prosecutors. These allegations arose after claims that that prosecutors were purposely misled by high-ranking university administrators.

            In McQueary’s “whistleblower lawsuit,” he seeks more than $4 million in damages because he claims he can no longer find work as a football coach since he is now associated with being part of a cover-up. McQueary testified that he was even turned down for a job at RiteAid because of his association with Sandusky. He alleges that the University’s president defamed him personally on the day Sandusky was formally charged. McQueary, who personally witnessed Sandusky sexually assaulting a boy in the university’s locker room, reported the incident to the head coach a the time, Joe Paterno, and then later met with the university’s athletic director and vice-president.   Yet because McQueary never reported the allegations directly to the police, his conduct is also under investigation in a separate suit.

            In this case, we are therefore left with the question of whether the Penn State has adequate grounds to not renew McQueary’s contract. McQueary claims that the University knew about the abuse for almost eleven years, but failed to act on it. When two administrators were charged with perjury and failing to report suspected child abuse, McQueary stated knew his job was in trouble. The United States Supreme Court in Lawson v. FMR LLC, outlined the prohibition of retaliatory actions based on whistleblowing, including discharge, demotion, suspension, or discrimination. However, the Court limited its analysis federal contractors and those working within the financial markets. Yet should we extend the protections of this whistleblower rule if, in essence, the person did not take the appropriate steps to ensure that the improper actions were stopped? McQueary witnessed Sandusky’s abuse in 2001, but charges were not brought against him until 2009. Eight years went by. Eight years filled with approximately 45 more incidents of abuse.   Does eight years of no action warrant these types of monetary damages? Or, on the other hand, should someone be punished for not being able to find a job because they were simply guilty by association? McQueary reported the incident to many of his supervisors and were reassured they were going to take care of it. Should he be punished because of their apathy or decision to turn a blind eye? These are the questions that a jury of nine women and three men will have to decide at the end of this trial.

Nobel Prize for contracts research awarded to Harvard and MIT professors

            The Royal Swedish Academy of Sciences announced that Oliver Hart and Bengt Holmstrom have been awarded the Nobel Prize in economics based on their understanding of how to best design contracts. Hart, a British professor at Harvard, and Holmstrom, a Finnish professor at MIT, have worked independently in the area of contract theory.

            Both Hart and Holmstrom have studied how contracts work, focusing specifically on the need for trade-offs when setting the terms of a contract. Holmstrom applied his analysis to insurance contracts and performance pay. His work proposed that performance-based pay should be closely linked to managerial performance. Yet, if it is difficult to measure performance, then the pay package ought to be a fixed salary.

            Hart’s work analyzed instances where contracts were deemed incomplete because not all of the outcomes could be specified. In these cases, Hart suggested that the rights to make a decision becomes critical to the parties because decision rights are closely associated to ownership rights. Hart’s work is therefore could impact the day-to-day operations of businesses as people may learn how to contract to increase their decision-making power. According to the Academy, both Hart and Holmstrom “have helped us understand many of the contracts we observe in real life. They have also given us new ways of thinking about how contracts should be designed, both in private markets and in the realm of public policy.”

Upcoming Symposium: Divergence and Reform in the Common Law of Contracts (November 19, 2016)

From the symposium website, which you can also access here:

 

 

Symposium 2016 | Divergence and Reform in the Common Law of Contracts

With our co-hosts Dean Blake Morant of The George Washington University Law School and Professors Larry DiMatteo of the University of Florida and Martin Hogg of the University of Edinburgh, The George Washington Law Review is proud to present its Fall 2016 Symposium, Divergence and Reform in the Common Law of Contracts.  

This Symposium continues a tradition of biennial conferences that began at the University of Sheffield, UK in 2011, followed by a conference held at the University of Edinburgh in 2013.  But this 2016 Symposium is not your grandfather’s contract law.  Instead, this conference takes a 21st Century approach to comparative issues in contract law, examining the most pressing controversies, debates, and challenges currently shaping the United States and United Kingdom’s shared legal tradition in the area of common law contracts.

We are also honored to welcome Rt. Hon. Lord Hodge, a Justice on the Supreme Court of the United Kingdom, as our keynote speaker.  Lord Hodge’s extensive experience on the bench steeped in the common law tradition will provide unique insight and an in-depth understanding of the role of American and English courts in shaping contract law doctrine.  

Click here to RSVP for the November 19 panel discussions.  If you are interested in obtaining CLE credit for this event, please indicate on the RSVP form.* 

*Upon request, the law school will submit applications to state bar associations for continuing legal education credits.  Please note that CLE approval is ultimately at the discretion of individual states and no advance assurance can be given that credit will be granted in all cases.  Please contact [email protected] for CLE-specific questions.

 

Schedule of Events: Saturday, November 19, 2016:

 

8:00-8:45 AM: Breakfast and Registration

8:45–10:45 AM: Opening Address and Keynote Speaker

• Dean Blake Morant, The George Washington University Law School, “Importance of Comparative Law for Law Reform”
• Hon. Lord Hodge, Justice on the U.K. Supreme Court, Keynote Address

11:00 AM: Panel 1 – Share Economy and the Edges of Contract Law

• Moderator: Judge Barbara Keenan, U.S. Court of Appeals for the Fourth Circuit
• Miriam Cherry, Director, William C. Wefel Center for Employment Law and Professor of Law, St. Louis University Law School
• Rolf Weber, Faculty of Law, University of Zurich
• Matthias Storme, Professor of Law, KU Leuven

12:30 PM: Panel 2 – Contractual Remedies

• Larry DiMatteo, Huber Hurst Professor of Contract Law, University of Florida Levin College of Law

1:30 PM: Lunch

2:45 PM: Panel 3 – Contract Interpretation and Good Faith

• Robert Stevens, Herbert Smith Freehills Professor of English Private Law, University of Oxford
• Lawrence Cunningham, Henry St. George Tucker III Research Professor, The George Washington University Law School
• Professor Martin Hogg, Professor of the Law of Obligations, Edinburgh Law School

4:50 PM: Panel 4 – Consumer Contract Law

• Moderator: Judge Carlos Lucero, U.S. Court of Appeals for the Tenth Circuit
• Geraint Howells, Chair Professor of Commercial Law and Dean of the Law School, City University of Hong Kong
• James Nehf, Professor of Law and Cleon H. Foust Fellow, Indiana University Robert H. McKinney School of Law

5:45 PM: Closing Reception

Subject to revision. All events to be held at The George Washington University Law School.  For more information, please contact Carla Graff, Law Review Senior Projects Editor, at [email protected].

H/T: Miriam Cherry

Welcoming guest bloggers

It is a huge honor and joy for me to be able to announce the fact that the ContractsProf Blog will benefit greatly from upcoming guest blogs written by Professor Peter Linzer and Ms. Ashley Brost, respectively.  I will be overseas for a Fulbright research visit soon and, subsequently, be addressing elder care issues, so I might be inactive for a month or two myself.

Professor Linzer is, as everyone is well aware, one of the nation's leading Contract Law scholars.  I am humbled as I am sure we all are that such a very prominent professor should choose to enlighten us further with his wisdom and insight.  In order to not leave out anything important and because of Professor Linzer's fame, I will simply let this function as his introduction.

Welcoming also bright, new voices in our industry, I am happy to say that I am working with one of my very best 3L law students and research assistant, Ashley Brost, on her assistance in helping me generate timely, interesting, and thought-provoking blogs.  Although she has not quite yet graduated from law school, I am fully confident that she is able to bring up issues of much relevance and interest to you.  I have trained her to do so.  The responsibility for the blog is, of course, fully mine as its editor-in-chief.  Ms. Brost is, as mentioned, one of our very brightest law students who will be clerking on the Eight Circuit Court of Appeals after her graduation.  She already has landed a job with a prominent law firm after that.

Welcome, both!

Warning: Don't Bury Your Arbitration Clause in a Hodge-Podge Paragraph (my official legal term)

I have never been to a trampoline park but doing this blog has given me the impression that they're dangerous! I've already blogged about one in New York, in which the court refused to enforce a waiver of liability for negligence. Now, in this recent case out of Louisiana, Duhon v. Activelaf, No. 2016-CC-0818, a court again finds against another trampoline park's enforceability of its contract terms. This time the term at issue is the contract's arbitration provision. 

The plaintiff was injured at the trampoline park and filed suit seeking damages. The trampoline park responded seeking to compel arbitration pursuant to the agreement that the plaintiff was required to sign before entering the trampoline park.

However, the Louisiana Supreme Court found that the plaintiff did not consent to the arbitration clause. It noted that the clause was buried in the rest of the fairly lengthy agreement in such a way as to be concealed from the plaintiff. Specifically, it was found in the eleventh line of the third paragraph, a paragraph that also meandered through topics such as: the customer's physical ability to partake of the trampoline park, assumption of risks, agreement to follow the trampoline park's rules, and certification that customers would explain those rules to any children accompanying them. To the court, this hodge-podge, catch-all paragraph drowned the arbitration clause in the middle of unrelated information. This was extra-noteworthy because the rest of the agreement was divided into short one-topic paragraphs, save the relevant one containing the arbitration language. The court refers to it as being "camouflaged" within an eleven-sentence paragraph, nine sentences of which had nothing to do with arbitration. Because of this, the court found that the plaintiff did not truly consent to the arbitration provision. 

This was reinforced by a lack of mutuality in the provision. The clause required all customers of the trampoline park to submit to arbitration, but there was no corresponding requirement on the trampoline park's part. In conclusion, the court found the arbitration clause to be unenforceable. 

KCON XII Call for Participation Now Live: Get Those Cards and Letters Coming!

Donald Trump's Many Confidentiality Provisions

A friend of mine asked me the other day about the ongoing controversy over all of that unaired Apprentice footage that is apparently sitting around somewhere. MGM and Mark Burnett have both claimed that they are not allowed to release the tapes due to confidentiality provisions in their contracts with Donald Trump. (Fortune has an article about this here, as does the New York Times.) My friend's question basically boiled down to this: Yeah, sure, maybe that deal made sense when the contract was signed with a New York self-professed billionaire but now he's running for President of the United States, and shouldn't that mean something? 

Other people have raised this issue. What seems to me unique about the Donald Trump situation isn't necessarily the confidentiality provisions over the Apprentice tape, but how often, during this political campaign, we've been debating the secrecy Trump requires from all of those around him. The Apprentice contract is just the latest example of this. Over the summer, several news outlets reported on the unusually broad terms of the NDA Trump required his staffers to sign. To be fair, NDAs are not unusual during a Presidential campaign and Hillary Clinton has allegedly had her staffers sign them as well. But Trump's apparently are unusually broad, and he requires them even of volunteers who show up to make calls for Trump's campaign and presumably never even really meet Trump? What confidential information could these volunteers even know? Well, Trump is the one who gets to tell them that. And he's not afraid to sue on the NDAs: We know of at least one arbitration filed against a former staffer, alleging damages of $10 million. 

Two things I take away from this: 

(1) Donald Trump seems to be obsessed with controlling his image, which makes total sense, as he's made an entire career out of Being Donald Trump and it could even make him President. Trump is so fond of restricting what those around him can say about him that he's even said he'll make his federal employees sign NDAs if he does become President. At the same time, of course, Trump himself doesn't appear to feel restrained in any way to say any thought that comes into his head. So we seem to have a situation where part of the advantage of being rich is being able to say absolutely anything you want and also control to some degree what the people around you get to say, even once your relationship with them has been terminated.  

(2) Despite this, however, we all know more about Donald Trump than I think he wants us to know. In the relentless glare of a Presidential campaign, no matter how many NDAs you leave in your wake, is it just impossible to keep secrets forever? And, maybe, is there something comforting about that? My friend wants to see the Apprentice tapes, but we don't know what's in the Apprentice tapes, and we don't know who even has time to review them. But we do know a great deal, maybe not Apprentice-related, but maybe enough? 

P.S. This is not the first time I've blogged about Donald Trump's contracts. If you're curious, that case hasn't really progressed since that blog entry. 

Non-Assignment Clauses and Patent Assignments

If a patent license agreement contains a non-assignment clause, does that also prohibit assignment of the patent?  A recent case said not necessarily.  It depends on the precise wording.

In Au New Haven v. YKK Corp. (1:15-cv-3411-GHW), (thanks to Finnegan's law firm) YKK entered into an exclusive license agreement with the patent owner, Au New Haven (actually the inventors, but I'm simplifying things here).  The agreement contained the following clause:

“Neither party hereto shall assign, subcontract, sublicense or otherwise transfer this Agreement or any interest hereunder, or assign or delegate any of its rights or obligations hereunder, without the prior written consent of the other party.  Any such attempted assignment, subcontract, sublicense or transfer thereof shall be void and have no force or effect.  This Agreement shall be binding upon, and shall inure to the benefit of the parties hereto and their respective successors and heirs.  “

Subsequently, Au New Haven assigned the patent to Trelleborg without requesting YKK’s consent.  Au New Haven and Trelleborg later sued YKK for patent infringement and breach of the patent licensing agreement.  YKK filed a motion to dismiss against Trelleborg, arguing that Trelleborg lacked standing to sue for patent infringement because Au New Haven failed to obtain YKK’s consent to the patent assignment which meant that it was void as stated in the agreement.

The federal district court (SDNY) stated that the anti-assignment language did not expressly limit transfer of the underlying patent or render it void.  The question then was whether the patent constituted an “interest hereunder,” meaning an interest under the licensing agreement.  The court stated:

“Here, the anti-assignment provision does not expressly bar transfers of the ‘214 Patent itself, or render transfers fo the ‘214 Patent void…the 2014 Assignment would be void ab initio only if the ‘214 Patent is an “interest” under the licensing agreement (i.e., an “interest hereunder”).  The Court finds that it is not.”

The Court’s rationale was that although the ‘214 Patent was the subject of the agreement, it did not “originate” from the licensing agreement, it did not “arise under” the agreement and it was not “created” in accordance with the agreement.  Consequently, the anti-assignment provisions did not render the underlying patent assignment void and Trelleberg had standing to sue for patent infringement.

The decision doesn’t seem right to me.  If the plaintiffs couldn’t assign their rights under the agreement, but they could assign their patent rights to a third party, then wouldn't they be in breach of contract at the very least?  Notably, the Court’s conclusion was limited to whether the patent assignment was void, not whether it breached the licensing agreement.  It was thus following New York law by narrowly construing the effect of an anti-assignment clause.  Still, I don't think it makes sense to construe a clause so that it permits a party to do something that would be a breach of the agreement (which is different from construing a clause as a personal covenant where a violation of the clause would be a breach of contract but the assignment would still be enforceable).  The case could lead to some pretty puzzling results and not necessarily in favor of Au New Haven....

Deborah Post Named Lifetime Achievement Honoree for KCON XII

 

The organizers and steering committee for the 12th International Conference on Contracts have announced that this year's Lifetime Achievement honoree will be Deborah Post, Professor of Law at Touro College Jacob D. Fuchsberg School of Law. Professor Post will receive the award honoring her career on February 24, 2017 at KCON XII at Southwestern Law School in Los Angeles.

Deborah W. Post graduated cum laude from Hofstra University with a major in Anthropology and took a job first as an editorial assistant and then as a teaching assistant to Margaret Mead, the noted anthropologist, before attending Harvard Law School. She began her legal career working in the corporate section of a law firm in Houston, Texas. She left practice for a position at the University of Houston Law School and moved to New York to Touro Law Center in 1987. In the academic year 1994-95 she was a visiting professor at Syracuse Law School. In 2000 she was Distinguished Visiting Professor at DePaul Law School. Professor Post has written extensively in what she considers her three areas of expertise: business associations, legal education and critical race theory. Professor Post seeks to apply an anthropologist's sensibilities and methodologies to the study of law.

Among her most recent efforts are a book on legal education, Cultivating Intelligence: Power, Law and the Politics of Teaching written with a colleague, Louise Harmon and published by New York University Press and a casebook for contracts called Contracting Law with co-authors Amy Kastely and Sharon Hom.

Speaking of KCON XII, have you registered get? Conference registration and hotel information is available here. Registration by December 15, 2016 will get you the early-bird rate of $250. You should also register and book your room at the Omni Los Angeles Hotel while discounted rooms in the conference block are still available. But hurry! A conference Call for Proposals will be coming out shortly, and we will publish that information here on the blog.

Weekly Top Ten SSRN Contracts Downloads (October 20, 2016)

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	367	Choice of Forum Agreements Under the Brussels I Recast and Under the Hague Convention: Coherences and Clashes Matthias Weller EBS Universität für Wirtschaft und Recht
2	275	The Myth of Free John M. Newman University of Memphis - Cecil C. Humphreys School of Law
3	220	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
4	215	Inside Safe Assets Anna Gelpern and Erik F. Gerding Georgetown University Law Center and University of Colorado Law School
5	195	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
6	158	Discussion Draft of a Directive on Online Intermediary Platforms Christoph Busch, Gerhard Dannemann, Hans Schulte-Nölke, Aneta Wiewiórowska-Domagalska and Fryderyk Zoll University of Osnabrück - European Legal Studies Institute, Humboldt University of Berlin - Faculty of Law, European Legal Studies Institute Osnabrueck / Radboud University Nijmegen, Universität Osnabrück - European Legal Studies Institute and Universität Osnabruck
7	148	Is Privacy Policy Language Irrelevant to Consumers? Lior Strahilevitz and Matthew B. Kugler University of Chicago Law School and Northwestern University - Pritzker School of Law
8	128	Tort Reform through the Backdoor: A Critique of Law & Apologies Yonathan A. Arbel and Yotam Kaplan Harvard Law School and Hebrew University of Jerusalem
9	118	Engineering Humans with Contracts Brett M. Frischmann and Evan Selinger Yeshiva University - Benjamin N. Cardozo School of Law and Rochester Institute of Technology - Department of Philosophy
10	124	The Reform of the French Law of Obligations: Les Jeux Sont Faits Jan M. Smits and Caroline Calomme Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI) and Maastricht European Private Law Institute (M-EPLI)

SSRN Top Downloads For
Law & Society: Private Law - Contracts eJournal

Rank	Downloads	Paper Title
1	367	Choice of Forum Agreements Under the Brussels I Recast and Under the Hague Convention: Coherences and Clashes Matthias Weller EBS Universität für Wirtschaft und Recht
2	275	The Myth of Free John M. Newman University of Memphis - Cecil C. Humphreys School of Law
3	220	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
4	217	Trophy Hunting Contracts: Unenforceable for Reasons of Public Policy Myanna F. Dellinger University of South Dakota Law School
5	195	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
6	124	The Reform of the French Law of Obligations: Les Jeux Sont Faits Jan M. Smits and Caroline Calomme Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI) and Maastricht European Private Law Institute (M-EPLI)
7	117	Evolution or Intelligent Design? The Variation in Pari Passu Clauses Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School
8	116	Causa and Consideration – A Comparative Overview Dimitar Stoyanov New Bulgarian University, Department of Law
9	100	The Expanding Circle of Contract Law Jan M. Smits Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
10	97	Optimal Fee-Shifting Bylaws Albert H. Choi University of Virginia School of Law

Contract Clauses and Transactional Skills

I'm happy to report that my new book, The Fundamentals of Contract Law and Clauses, is now available.  The book is intended to give students a working knowledge of contract law, meaning that they learn the meaning of contract clauses and how they are shaped and affected by doctrine.  It's a textbook but it's not a casebook - it's intended to be used as a supplement in a first year contracts course or a primary text in a business school or undergraduate contracts law course.  (There's a Teacher's Manual which is available to instructors adopting the book which contains discussion points and exercises). 

 It always seemed a bit strange to me to teach contracts law solely by using cases - this emphasizes how to win disputes rather than how to avoid them.  This makes sense for litigators, but transactional attorneys (which I was for a decade) have a different role.  As Mark Burge has pointed out on this blog, contracts is a good gateway to transactional skills but it's not easy to figure out how to do that seamlessly.  Hopefully, this book will be an easy way to incorporate some "transactional skills" into a first year contracts course. 

If Albert Einstein Wins the Nobel Prize...

I was listening to the podcast No Such Thing as a Fish (highly recommended) when I learned that Einstein used his Nobel Prize money as a divorce settlement to his first wife...the only catch being that he divorced her in 1919 and won the Nobel Prize in 1921. The podcast characterized this as: "If I win the Nobel Prize, I'll give you the money." Amazing! Imagine being so confident in your Nobel Prize chances! (I guess if you are Einstein, you would be that confident.) 

I couldn't find the contract myself, although the story was verified by Time and also shows up on Wikipedia. 

I know I just found a new go-to hypo to use in class. 

George Richard Lunn, Clergyman, Politician, Ice House Owner

This week, while teaching parol evidence, I taught the case of Mitchill v. Lath, which involves an oral agreement between the parties to tear down an ice house on land to the land their sales agreement was about. A student asked what the deal was with the guy who owned the land the ice house was on, and I admit I didn't know the deal, so I went and looked it up, and here's the deal: 

He was George Richard Lunn, a clergyman who was born in Iowa but settled in Schenectady, where he was elected mayor on a Socialist ticket and later served in the House of Representatives and as Lieutenant Governor of New York. I had no idea who Lunn was and thought it was interesting that he turned out to have a Wikipedia page. The Wikipedia page doesn't mention his role in Mitchill v. Lath but his Prabook entry does. 

Month-long TV Station Outage and the Duty of Good Faith

DISH Network sells satellite television packages to viewers nationwide.  In 2014, its contracts with Turner Network Sales and FOX News Networks expired. DISH was not able to negotiate renewals with these stations for approximately one month. DISH Network also did not offer complaining subscribers any form of monetary relief for the interruptions with the result that subscribers that had selected packages including FOX and Turner TV filed a class action suit for breach of contract in spite of being able to access literally hundreds of other channels.

One of the issues on appeal before the Eighth Circuit Court of Appeals was whether DISH Network violated the duty of good faith and fair dealing by not providing those two particular channels in an uninterrupted manner.  The court found that not to be the case.

The contract provided a Limitation of Liability Clause which, in relation to interruptions and delays, stated that “[n]either we nor our third-party billing agents … will be liable for any interruption in any service or for any delay or failure to perform, including without limitation … DISH Network’s access to all or any portion of services….”

The covenant of good faith will “not contradict terms or conditions for which a party has bargained.”  Thus, said the court, the argument was precluded by the unambiguous terms of the agreement.  “Courts must take care to ensure that we don’t use the covenant as another means for substituting a different deal from the one the parties contemplated.” 

That makes sense.  I can’t help thinking how litigious our society can be in allowing suits such as the above to proceed that far.  Does it really matter that one cannot get a couple of TV stations out of hundreds for a month?  Is it worth burdening the court system such a matter?

On the other hand, DISH could also just have offered some sort of compensation to its customers.  Cable TV is indeed very expensive these days, so the subscribers do have a point here. 

Furthermore, Cable TV providers still refuse to unbundle services to an arguably sufficient extent.  What about those of us who really truly only want to see a few specific stations?  Why should we continually have to pay for a bunch of extra stations that we never watch?  Until such unbundling become reality, arguments such as there being many other stations to choose from are arguably somewhat irrelevant.

The case is Neil Stokes; Craig Felzien v. DISH Network, L.L.C., 2016 WL 5746329.