ContractsProf Blog

Time Is of the Essence...Or Is It?

Multiple sources report that Syracuse University is suing its long-term law firm over the firm's failure to put a "time is of the essence" clause into one of the university's contracts. I can't seem to track down the docket online so I haven't been able to look at the actual court documents but if you're teaching "time is of the essence" clauses next semester and looking for a recent controversy, here's one!

Weekly Top Ten SSRN Contracts Downloads (December 29, 2016)

For your reading pleasure, ContractsProf Blog presents the final Top Ten Downloads list of 2016. We also hope our readers will resolve (notwithstanding Calvin, below) to have a happy and productive 2017!

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	306	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
2	183	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
3	113	The Commercial Law of Bitcoin and Blocktrain Transactions Stephen M. McJohn and Ian McJohn Suffolk University Law School and Independent
4	109	Contractual Estoppel and the Misrepresentation Act 1967 Richard Hooley University of Cambridge - Faculty of Law
5	108	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
6	92	Local Governments and Risky Home Loans Kathleen C. Engel Suffolk University Law School
7	92	The New Lex Mercatoria: An Emerging Challenge to Legal Systems in Cross-Border Transactions Jan H. Hendrik Dalhuisen King's College London
8	91	Excessive Contractual Penalties in Football Despina Mavromati Court of Arbitration for Sport
9	86	'And So the Legal World Goes Round': The Search for a Meaningful Law of Restitution (in Response to Virgo, 'All the World's a Stage') Steve Hedley University College Cork
10	83	The Corporation as Courthouse Rory Van Loo Boston University School of Law

 

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

Rank	Downloads	Paper Title
1	306	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
2	183	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
3	109	Contractual Estoppel and the Misrepresentation Act 1967 Richard Hooley University of Cambridge - Faculty of Law
4	108	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
5	92	The New Lex Mercatoria: An Emerging Challenge to Legal Systems in Cross-Border Transactions Jan H. Hendrik Dalhuisen King's College London
6	91	Excessive Contractual Penalties in Football Despina Mavromati Court of Arbitration for Sport
7	86	'And So the Legal World Goes Round': The Search for a Meaningful Law of Restitution (in Response to Virgo, 'All the World's a Stage') Steve Hedley University College Cork
8	83	The Corporation as Courthouse Rory Van Loo Boston University School of Law
9	82	Remedies Ariel Porat Tel Aviv University
10	72	Drafting for Dispute Resolution John M. Newman University of Memphis - Cecil C. Humphreys School of Law

Contractual Brouhaha in the Fashion World

There is major drama happening in the world of high fashion, and it all revolves around an alleged non-compete. Carolina Herrera has sued Oscar de la Renta to keep Laura Kim from working for the rival company. According to CH, Kim signed a non-compete with CH which gave it the option of paying Kim fifty percent of her salary and health benefits in exchange for Kim not competing against it for six months. The six months seems like a suitably short period of time in the fast-moving fashion industry, especially as it has important impacts on New York Fashion Week in February. 

The judge ordered a TRO which has since been lifted pending a preliminary injunction hearing in the new year. In the meantime, you should go to this article for all of the juicy details on what exactly went down between Kim and CH. 

Faculty Handbook as Contract

Just a quick entry in advance of a weekend that is a holiday for many, but this post on Inside Higher Ed caught my eye, discussing an in-progress case against NYU. An appellate court allowed two professors' complaint to survive a motion to dismiss based on sufficient allegations that the faculty handbook was a formal binding contract. One to keep an eye on in the new year. 

However you plan to spend this upcoming weekend, I hope it's full of peace and joy. 

Weekly Top Ten SSRN Contracts Downloads (December 22, 2016)

Wishing you all the joys of the season from us here at ContractsProf Blog!  Now go help yourself to the gift of recent scholarship from our collective favorite area of the law.

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	302	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
2	243	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
3	177	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
4	105	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
5	102	Contractual Estoppel and the Misrepresentation Act 1967 Richard Hooley University of Cambridge - Faculty of Law
6	98	The Commercial Law of Bitcoin and Blocktrain Transactions Stephen M. McJohn and Ian McJohn Suffolk University Law School and Independent
7	91	Local Governments and Risky Home Loans Kathleen C. Engel Suffolk University Law School
8	87	Excessive Contractual Penalties in Football Despina Mavromati Court of Arbitration for Sport
9	86	The New Lex Mercatoria: An Emerging Challenge to Legal Systems in Cross-Border Transactions Jan H. Hendrik Dalhuisen King's College London
10	85	'And So the Legal World Goes Round': The Search for a Meaningful Law of Restitution (in Response to Virgo, 'All the World's a Stage') Steve Hedley University College Cork

 

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

Rank	Downloads	Paper Title
1	302	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
2	177	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
3	105	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
4	102	Contractual Estoppel and the Misrepresentation Act 1967 Richard Hooley University of Cambridge - Faculty of Law
5	87	Excessive Contractual Penalties in Football Despina Mavromati Court of Arbitration for Sport
6	86	The New Lex Mercatoria: An Emerging Challenge to Legal Systems in Cross-Border Transactions Jan H. Hendrik Dalhuisen King's College London
7	85	'And So the Legal World Goes Round': The Search for a Meaningful Law of Restitution (in Response to Virgo, 'All the World's a Stage') Steve Hedley University College Cork
8	76	The Corporation as Courthouse Rory Van Loo Boston University School of Law
9	63	Forced Arbitration: How Corporations Use the Fine Print to Bully Americans AAJ Research American Association for Justice
10	72	Remedies Ariel Porat Tel Aviv University

The Continuing Impact of Confidentiality Provisions

Confidentiality provisions are everywhere these days, especially in all of those arbitrations most contracts now require. I've blogged about them in connection with Donald Trump, and now they are playing a starring role in the very messy divorce between Johnny Depp and Amber Heard, in which Depp is allegedly refusing to provide Heard's divorce settlement because he alleges she breached their agreement's confidentiality provision when she spoke out publicly against domestic violence. 

It's unclear to me what the wording of the confidentiality provision was and whether Heard's behavior really did violate it. What is clear to me is that the confidentiality provision is being used to prevent communications of encouragement and support to people who are victims of domestic violence. There is a dual tragedy here: Not only are words of encouragement being muffled, but victims of domestic violence are now receiving the message that those words of encouragement could lead to punishing consequences. 

Confidentiality provisions can make sense, and there are definitely situations where they are vital to a deal getting done. But there are also situations where they seem to be operating against public policy. 

Reminder: Moral Obligations Do Not Equal Legal Obligations

A recent case out of Arkansas, Baxter v. Wing, No. CV-16-21 (behind paywall), has a nice discussion of the difference between moral obligation and legal obligation. In the case, a man named one of his four stepchildren, Susannah, as the sole beneficiary of his life insurance policy and asked her to share it with her three siblings.

Nobody disputed that it was the deceased man's wish that Susannah share the money with her siblings. The problem, though, was that her obligation to comply with his wishes was merely moral, not legal, and the court could do nothing to force her to comply with it. The deceased man gave Susannah instructions, but he did not make her any promise, nor did Susannah make any promise in exchange. There was no deal along the lines of, "I promise to make you the sole beneficiary if you promise in exchange to share the proceeds with your siblings." The deceased man gave Susannah instructions, which did not rise to the level of an enforceable contract. 

Cases like this are valuable when you're teaching consideration but they always make me sad, because consideration cases so frequently seem to be about families feuding on a level so rancorous that they turn to the court system. Tough cases to get through. 

KCON XII Early Bird Deadline is TODAY (December 15)

(Reposted at the front of the blog for deadline day)

From Danielle Hart via the AALS Contracts Listserv:

The 12th International Conference on Contracts is just around the corner and the substantive content of the conference is starting to take shape nicely.  Here are some highlights so far:

•  Seana Shiffrin, Professor of Philosophy and Pete Kameron Professor of Law and Social Justice at UCLA, will be giving a keynote address currently entitled, “Enhancing Moral Relationships Through Strict Liability”

• A panel of O’Melveny & Myers attorneys will give the second keynote address currently entitled, “Drafting Complex Contracts: Behind the Scenes of the LaGuardia Project”

• There is a sizeable contingent of international contracts scholars joining us in February including, but certainly not limited to:

Mindy Chen-Wishart, the Associate Dean of Taught Graduate Studies at Oxford Law Faculty who also holds a fractional Professorship at the National University of Singapore and a Visiting Professorship at Hong Kong University, and

Eyal Zamir, Augusto Levi Professor of Commercial Law, Hebrew University of Jerusalem Faculty of Law.

•  And, of course, there are already some great panels to look forward to that run the gamut from behavioral law and economics to intimate contracts and commodification.

So if you have not done so already, we would like to encourage you to please take advantage of the early bird registration deadline—December 15th (www.swlaw.edu/kconxii)—and to reserve a room at the Omni at your earliest convenience:

https://www.omnihotels.com/hotels/los-angeles-california-plaza/meetings/kcon-conference-southwestern-law-school.

Guests may also confirm their reservation at the negotiated rate by calling 1.800.THE.OMNI (843-6664) and referencing the “KCON Conf Southwestern Law School” guestroom block. 

If you have any questions or concerns before then, please feel free to get in touch with me, Hila Keren or Dov Waisman at [email protected]. Wishing you all a very good end of the semester!

Danni 

Danielle Kie Hart

Weekly Top Ten SSRN Contracts Downloads (December 15, 2016)

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	324	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
2	286	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
3	241	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
4	169	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
5	99	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
6	87	First or Second Best? Judicial Law-Making in European Private Law Chantal Mak University of Amsterdam - Centre for the Study of European Contract Law (CSECL)
7	85	Local Governments and Risky Home Loans Kathleen C. Engel Suffolk University Law School
8	84	The Death of Contract, Redux: Boilerplate and the End of Interpretation Jason MacLean Lakehead University - Bora Laskin Faculty of Law
9	82	Excessive Contractual Penalties in Football Despina Mavromati Court of Arbitration for Sport
10	82	Contractual Estoppel and the Misrepresentation Act 1967 Richard Hooley University of Cambridge - Faculty of Law

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

Rank	Downloads	Paper Title
1	324	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
2	286	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
3	169	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
4	99	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
5	87	First or Second Best? Judicial Law-Making in European Private Law Chantal Mak University of Amsterdam - Centre for the Study of European Contract Law (CSECL)
6	84	The Death of Contract, Redux: Boilerplate and the End of Interpretation Jason MacLean Lakehead University - Bora Laskin Faculty of Law
7	82	Excessive Contractual Penalties in Football Despina Mavromati Court of Arbitration for Sport
8	82	Contractual Estoppel and the Misrepresentation Act 1967 Richard Hooley University of Cambridge - Faculty of Law
9	81	'And So the Legal World Goes Round': The Search for a Meaningful Law of Restitution (in Response to Virgo, 'All the World's a Stage') Steve Hedley University College Cork
10	79	The New Lex Mercatoria: An Emerging Challenge to Legal Systems in Cross-Border Transactions Jan H. Hendrik Dalhuisen King's College London

In Which Messy Handwriting Renders a Contract Ambiguous

If you've ever been in charge of taking care of a swimming pool, you know that it has a lot of moving parts and requires a working knowledge of chemistry and an adroitness at mathematics that is often lacked by those who become lawyers.* So I started reading this case because the first sentence told me it was about a swimming pool, but it's an interesting and fairly straightforward situation of contract ambiguity being resolved by extrinsic evidence. If you're looking for a recent case for your students to see this in action, this one might be it. 

The case is Horizon Pools & Landscapes, Inc. v. Sucarichi, No. 01-15-01079-CV, out of Texas. Sucarichi entered into a contract with Horizon to install a swimming pool and spa. The dispute centered around the number of lights Horizon was supposed to install. Sucarichi alleged that Horizon was supposed to install three lights total: two in the swimming pool and one in the spa. Horizon maintained that it was supposed to install two lights total: one in the swimming pool and one in the spa. 

The contract was ambiguous on this point. The contract was divided into many different sections. The relevant ones were as follows: 

• A section reading "Lights(s)" [sic] with the handwritten notation "(2) L.E.D."
• A section reading "Pool Light" with a handwritten notation that was illegible
• A section concerning the spa reading "Light 100 watt." 

The court found that it was equally plausible that the contract here required three lights total, with the first general light section referring to two in the swimming pool and the spa section referring to one, or that the contract required two lights total, with the first general light section giving just the total of lights to be installed between the swimming pool and the spa. The illegibility of the "Pool Light" section made this question impossible to resolve without looking to extrinsic evidence. 

Horizon admitted that its salesman filled out the contract (including the illegible notation). Horizon also did not contest that its salesman told Sucarichi he needed to have two lights installed in his swimming pool. Sucarichi testified that he thought the contract provided for two lights in the swimming pool, based on the Horizon salesman's recommendation, and one light in the spa, for three total. He wrote as much in a letter to Horizon prior to the beginning of the court case, when he was trying to get Horizon to add the second light. Therefore, the court thought there was sufficient proof that the parties had agreed to install a total of three lights, with two in the swimming pool and one in the spa. 

One of the lessons to take away: Make sure your contracts are legible! 

*gross overgeneralization based on me and my frequent intense confusion when I try to take care of our family swimming pool. My talents lie elsewhere!

Weekly Top Ten SSRN Contracts Downloads (December 9, 2016)

A day late, but certainly not a dollar short: Here are this week's Top Ten SSRN Contracts downloads.

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	314	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
2	264	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
3	239	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
4	159	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
5	97	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
6	86	First or Second Best? Judicial Law-Making in European Private Law Chantal Mak University of Amsterdam - Centre for the Study of European Contract Law (CSECL)
7	83	Local Governments and Risky Home Loans Kathleen C. Engel Suffolk University Law School
8	77	The Death of Contract, Redux: Boilerplate and the End of Interpretation Jason MacLean Lakehead University - Bora Laskin Faculty of Law
9	75	'And So the Legal World Goes Round': The Search for a Meaningful Law of Restitution (in Response to Virgo, 'All the World's a Stage') Steve Hedley University College Cork
10	72	Excessive Contractual Penalties in Football Despina Mavromati Court of Arbitration for Sport

 

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

Rank	Downloads	Paper Title
1	314	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
2	264	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
3	159	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
4	97	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
5	86	First or Second Best? Judicial Law-Making in European Private Law Chantal Mak University of Amsterdam - Centre for the Study of European Contract Law (CSECL)
6	77	The Death of Contract, Redux: Boilerplate and the End of Interpretation Jason MacLean Lakehead University - Bora Laskin Faculty of Law
7	75	'And So the Legal World Goes Round': The Search for a Meaningful Law of Restitution (in Response to Virgo, 'All the World's a Stage') Steve Hedley University College Cork
8	72	Excessive Contractual Penalties in Football Despina Mavromati Court of Arbitration for Sport
9	63	The New Lex Mercatoria: An Emerging Challenge to Legal Systems in Cross-Border Transactions Jan H. Hendrik Dalhuisen King's College London
10	59	Forced Arbitration: How Corporations Use the Fine Print to Bully Americans AAJ Research American Association for Justice

 

KCON XII Reminder: December 15 Registration and Hotel Deadline Approaching

From Danielle Hart via the AALS Contracts Listserv (NB: edited to fix hotel link on 12/9):

The 12th International Conference on Contracts is just around the corner and the substantive content of the conference is starting to take shape nicely.  Here are some highlights so far:

•  Seana Shiffrin, Professor of Philosophy and Pete Kameron Professor of Law and Social Justice at UCLA, will be giving a keynote address currently entitled, “Enhancing Moral Relationships Through Strict Liability”

• A panel of O’Melveny & Myers attorneys will give the second keynote address currently entitled, “Drafting Complex Contracts: Behind the Scenes of the LaGuardia Project”

• There is a sizeable contingent of international contracts scholars joining us in February including, but certainly not limited to:

Mindy Chen-Wishart, the Associate Dean of Taught Graduate Studies at Oxford Law Faculty who also holds a fractional Professorship at the National University of Singapore and a Visiting Professorship at Hong Kong University, and

Eyal Zamir, Augusto Levi Professor of Commercial Law, Hebrew University of Jerusalem Faculty of Law.

•  And, of course, there are already some great panels to look forward to that run the gamut from behavioral law and economics to intimate contracts and commodification.

 So if you have not done so already, we would like to encourage you to please take advantage of the early bird registration deadline—December 15th (www.swlaw.edu/kconxii)—and to reserve a room at the Omni at your earliest convenience:

https://www.omnihotels.com/hotels/los-angeles-california-plaza/meetings/kcon-conference-southwestern-law-school.

Guests may also confirm their reservation at the negotiated rate by calling 1.800.THE.OMNI (843-6664) and referencing the “KCON Conf Southwestern Law School” guestroom block. 

If you have any questions or concerns before then, please feel free to get in touch with me, Hila Keren or Dov Waisman at [email protected]. Wishing you all a very good end of the semester!

Danni 

Danielle Kie Hart

Prince's Complicated Legal Legacy Continues

When the legendary musician Prince died suddenly, he left behind an enormous volume of music and no will. The courts have already been dealing with how to distribute Prince's assets to a complicated and squabbling cadre of potential heirs. The rights to all of his music have raised their own complicated issues that have most recently manifested themselves in a lawsuit in the District of Minnesota, NPG Records, Inc. v. Roc Nation LLC, Case No. 16-cv-03909. 

The case revolves around Roc Nation's streaming of Prince's music on its streaming service Tidal, and whether or not it had the contractual rights to do so. Roc Nation alleges yes, based on what it terms both written and oral agreements that it struck with Prince before his death. Commentators have tried to draw conclusions about these agreements based on Prince's statements and other behavior before his death. NPG, meanwhile, claims that there was a single contract between Prince and Roc Nation and that it only allowed Roc Nation to stream a very limited number of songs, which Roc Nation has now violated in streaming a much wider variety of Prince's song catalog. The case has been reported on in multiple places, including here and here and here and here.

If this case progresses, it seems like it's going to require an untangling of written contracts between the parties, whatever oral statements Prince will allege to have been made, and the interaction between the two. It adds an interesting layer to consider that Prince was notorious for fighting for artists' rights to their music and had a fraught relationship with online streaming of music. He does seem to have favored Tidal above the other Internet services. In any case, although NPG claims that there was never any such license and Tidal has been infringing the songs' copyright since it began streaming them, NPG has already proactively sought to cancel any license that Prince may have granted to Roc Nation to stream the music in question. 

(I'd post something Prince-related from YouTube, but Prince didn't like his music to be on YouTube. And, in fact, Lenz v. Universal Music Corp., the recent case that wended its way through the Ninth Circuit and is currently on petition to the Supreme Court, involves a Prince song in a YouTube video.)

Air Force None?

Recently, Donald Trump famously tweeted that “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”  Trump has not said why he believes the planes will cost "more than $4 billion." Boeing says it currently has an Air Force One contract worth $170 million.

This raises several contractual issues that could be used as an interesting issue-spotting practice for our students. At first blush, it seems like an impossible attempt at a breach of contract that would, conversely, at least give very reasonable grounds for insecurity if not constitute an anticipatory repudiation outright.

Needless to say, Trump’s remark that “[w]e want Boeing to make a lot of money, but not that much money” finds no support in contract law. One contractual party has no control over how much money the other party should make. One would have thought that Trump – as a staunch “market forces” supporter – would have understood and embraced that idea, but that either was not the case or he is flip-flopping in that respect as well.

Digging deeper into the story, however, it turns out that “not even [Boeing] can estimate the cost of the program at this time, since the Pentagon has not even decided all the bells and whistles it wants on the new Air Force One." Further, “without knowing all the security features, it is hard to estimate the cost … and the Air Force isn't even sure whether it wants two or three of the planes.” Does a contract even exist at this point, then, when the essential terms have apparently not been mutually agreed upon, or is there simply an unenforceable agreement to agree? A valid argument cold be made for the latter, I think.

Mr. Trump has been accused of overestimating the cost of the planes. Does he, however, have a point? “So far[,] the Air Force has budgeted $2.9 billion through 2021 for two new Air Force Ones.” It is not inconceivable that the price tag may, in these circumstances, run higher than that. That circularity goes back to the essential terms – the price in this case – arguably not having been decided on yet.

There might, of course, be other issues in this that I have not seen in my admittedly hasty review of the story, but it is interesting how the media jumps at a legally related story without thoroughly or even superficially attempting to get the law right.

Considering Parol Evidence to Decide If There Was Ever a Contract

One of the things I find students struggle with when it comes to parol evidence is determining for what purpose they are considering the evidence. A recent case out of Maryland, Wiencek + Associates Architects + Planners v. Community Homes Housing, Inc., No. 0642 September Term 2015 (behind paywall), has a nice discussion on this. 

In the case, the parties both signed a document that was called "Agreement to Redevelop and Preserve Affordable Housing." The contract contained an integration clause. Both parties also admitted later that they had signed the document because it was required to obtain financing from the Department of Housing and Urban Development ("HUD"), which the parties had both desired. HUD, however, refused to guarantee any financing for the project. Community Homes then took the position that there was no contract with Wiencek because the contract was not to take effect unless HUD financing was received. Wiencek disagreed and sued Community Homes for breach of contract.

The trial court considered parol evidence to determine whether the contract between the parties was enforceable. Wiencek argued this was improper because of the contract's integration clause. But Community Homes noted that the parol evidence was not being considered to add a term to the contract; rather,  it was being considered to determine if the contract even existed in the first place, and therefore was permissible. The court agreed with Community Homes that considering parol evidence was perfectly acceptable in this situation. The court noted that it could not enforce the contract's integration clause when what it was trying to determine was whether the contract containing the integration clause even existed. 

The parties here had agreed orally that the contract would not come into effect unless HUD guaranteed financing. Although there was nothing in the contract about that, the parol evidence admitted as to the intent of the parties was clear. The contract was only signed in order to try to obtain the HUD financing; once that objective had failed, the parties did not intend the contract to be enforceable any longer. 

Wiencek tried to make an argument that the law should have a policy to deter "fictitious" contracts. In effect, Wiencek claimed that the court was allowing the parties to "pretend" to have entered into a contract to try to "trick" HUD into providing financing, with no intention of actually entering into a contract with each other. The court, however, did not see any reason to enforce the contract between the parties in this circumstance. It was the court's view that, if HUD felt it had been harmed by the representation that there had been a contract between the parties (even though the court did not decide one way or the other whether that representation was incorrect), HUD should seek a remedy from the court for the harm, not Wiencek. 

Can a Breach of Contract Become Elder Abuse and Bad Faith?

A California Court of Appeals recently answered yes to this question, although finding that in the case at issue, the facts didn’t warrant a finding of actual elder abuse.

At bottom, the facts were as follows: an elderly couple – the wife was in her 80s – suffered rain damage to their house and claimed repair benefits under an insurance policy. The insurance company initiated investigations as to whether the damage was covered. The investigations were, among other things, hampered by the couple having discarded debris from the damaged room although the insurance company had requested an immediate investigation and announced its arrival two days later.

The couple first claimed bad faith in the insurance company subsequently denying part of the insurance claim. The court granted the insurance company’s motion for summary judgment in this respect, finding that a mere incorrect denial of insurance policy benefits does not constitute bad faith. Said the court: “[A]n insurer denying or delaying the payment of policy benefits due to the existence of a genuine dispute with its insured as to the existence of coverage liability or the amount of the insured's coverage claim is not liable in bad faith even though it might be liable for breach of contract.”

The bad faith issue also came up in another case where a husband died from a lethal dose of a prescription drug, the insurer assigned an investigator, who unsuccessfully attempted to obtain information from the plaintiff wife regarding the husband's state of mind before his death and the source of the fatal drugs. Where the insurer simply tried to “do all it reasonably could” to determine the cause of death, no bad faith was at issue in simply denying benefits.

California law broadly defines financial abuse of an elder as “occurring when a person or entity takes, secretes, appropriates, obtains, or retains real or personal property of an elder for a wrongful use or with intent to defraud, or both,” as well as “by undue influence.” See Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst.Code, § 15610.30, subds. (a)(1), (a)(3).)). Additionally, the wrongdoer must have known or should have known that the conduct was likely to be harmful to the elder. In this case, however, the improper conduct was missing: there was no evidence that the insurance company acted in subjective bad faith or unreasonably denied policy benefits. This stands in contrast to cases where, for example, insurance companies have employed deceptive practices in executing contract such as annuity agreements with senior citizens.

Weekly Top Ten SSRN Contracts Downloads (December 1, 2016)

Our SSRN Top Ten Downloads lists now return after a Thanksgiving hiatus last Thursday.

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	506	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)
2	368	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
3	308	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
4	278	Inside Safe Assets Anna Gelpern and Erik F. Gerding Georgetown University Law Center and University of Colorado Law School
5	236	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
6	222	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
7	128	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
8	127	Crowdfunding Investment Contracts Jack Wroldsen Oklahoma State University Spears School of Business
9	108	The Illiberty of Contract Donald J. Smythe California Western School of Law
10	189	'All the World's a Stage': The Seven Ages of Unjust Enrichment Graham Virgo University of Cambridge - Faculty of Law

 

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

Rank	Downloads	Paper Title
1	506	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)
2	368	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
3	308	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
4	222	Why Have M&A Contracts Grown? Evidence from Twenty Years of Deals John C. Coates, IV Harvard Law School
5	189	'All the World's a Stage': The Seven Ages of Unjust Enrichment Graham Virgo University of Cambridge - Faculty of Law
6	128	The Promise and Problems of Universal, General Theories of Contract Law Brian Bix University of Minnesota Law School
7	127	Crowdfunding Investment Contracts Jack Wroldsen Oklahoma State University Spears School of Business
8	108	The Illiberty of Contract Donald J. Smythe California Western School of Law
9	91	Long-Term Business Relationships and Implicit Contracts in European Private Law Ugljesa Grusic Faculty of Laws, University College London
10	86	First or Second Best? Judicial Law-Making in European Private Law Chantal Mak University of Amsterdam - Centre for the Study of European Contract Law (CSECL)

Outlandish Contract Decision re. ADA-related Construction

How is this for a most bizarre contract law decision: The Chicago Housing Authority (“CHA”) contracted with architectural and engineering company DeStefano and Partners (“DeStefano”) for consulting services in connection with the construction of seven multifamily residential buildings. CHA required a certain percentage of the homes to comply with Section 504 of the Rehabilitation Act of 1973 and other federal law (some of the housing was to be accessible by mobility impaired individuals, some by elderly residents). Among other things, DeStefano was made contractually aware that the company was to “certify that all work was performed under the direct supervision of the Project Architect and that it conforms to… the American with Disabilities Act of 1990 … [and] Section 504 of the Rehabilitation Act of 1973.”

During the construction, CHA was notified by HUD that the project did not meet the various federal requirements. CHA hired another architecture firm to perform the work necessary to comply with its obligations under the voluntary compliance agreement with HUD. CHA incurred more than $4.3 million to bring the buildings into compliance with federal standards and brought suit against DeStefano for material breach of contract.

DeStefano defended itself by, at bottom, arguing that since CHA had a nondelegable duty to comply with the federal accessibility standards, it should not be able to recover damages from DeStefano for CHA’s failure to do so. In other words: “It’s your own fault that you have this problem, not ours, even though we were the designers and the problem was with the design.” Yah.

But wait, it gets better than that: the court agreed! It apparently bought wholesale defendant’s argument that “permitting CHA to proceed with its state-law breach of contract action would discourage CHA from fulfilling its own obligations to prevent discrimination under Section 504 and the ADA, directly undermining the goal and purpose expressed by Congress in enacting those statutes.” It also stated that “notably, however, … there are no provisions within the ADA, or its accompanying regulations, that permit indemnification or the allocation of liability between the various entities subject to the ADA.” The court found that CHA’s duties were, as mentioned, nondelegable and, because the duties were imposed on CHA by HUD, CHA’s failure to comply was the problem. “CHA was a ‘wrongdoer’ in the sense that it failed to ensure the subject premises complied with the applicable federal accessibility standards in order to prevent discrimination.”

Wait a minute! So, in trying to make sure that the housing in fact complied with the law, the housing authority was found to have violated it! That’s just crazy.

This case may work as a good example if you want to train your students how to identify faulty reasoning and logic by courts.

The case is can be found here. Hat tip to Justen Hansen of WesTech Engineering for bringing this to my attention. http://www.westech-inc.com/en-usa