ContractsProf Blog

Reminder: To materially modify terms, the other party has to agree

I just taught modification of terms earlier today so this recent case out of Missouri, Andes v. Dickey, Docket Number WD80135 (behind paywall), caught my eye. It involves an agreement regarding a jointly-owned residence between a woman and her daughter, which to me tinges the entire litigation with an extra layer of tragedy over the fact that they ended up in litigation against each other. 

Andes and Dickey bought a house together and reached an agreement with each other (unsurprisingly not involving legal counsel) regarding use of the house, payment for the house, etc. One of the terms of this agreement between Andes and Dickey was that Andes would buy Dickey out through payment of monthly installments of $2,000 until the amount of $66,875.50 was reached (roughly thirty-three months of payments). The parties reduced this agreement to writing and signed it. They then also obtained a line of credit together to make the extensive renovations and repairs that the house turned out to need. 

Andes and Dickey began clashing over the terms of their joint ownership of the house. Andes threatened to terminate Dickey's access to the line of credit and then suggested that Dickey take the remaining balance in the line of credit (around $70,000) as satisfaction of the buy-out provision, giving Andes the house. Dickey rejected Andes's proposal that she accept the line of credit as buy-out. Instead, worried that Andes would cut off her access to the line of credit, she withdrew the remaining balance of the line of credit and deposited it in a different account that she claimed she intended should still be used for renovations. Andes, finding out that Dickey had withdrawn the balance, asserted several times that Dickey should accept the line of credit balance as buy-out under their agreement. Every time, Dickey continued to state that she would not so accept it and that the money should continue to be used to renovate the house. 

This led Andes to sue, claiming that she had bought out Dickey and seeking specific performance that Dickey's interest in the house be transferred to Andes. The trial court found that the buy-out provision had been satisfied and gave Andes the title to the house. Dickey appealed. 

The appeal centers on whether or not the original buy-out provision was effectively modified so that the line-of-credit balance would satisfy it. This was not a situation where Andes simply tried to accelerate payment. Both Andes and Dickey were obligors under the line of credit. So, in giving Dickey the line-of-credit balance, Andes was not paying funds from herself to Dickey, as the parties had agreed. Instead, Andes was promising to assume sole liability for the line of credit. This, the court found, was materially different from the terms the parties had reached and so Dickey needed to accept the new terms. Both parties agreed that Dickey had consistently rejected Andes's proposals regarding the line of credit, so there was no acceptance, so there was no effective modification. No buy-out happened and the original buy-out terms remained in effect.  

At any rate, the new supposed deal regarding the line of credit concerned real estate and so should have been in writing, which it was not. 

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (August 31, 2017)

Top Downloads For: Contracts & Commercial Law eJournal

Recent Top Papers (60 days) as of: 02 Jul 2017 - 31 Aug 2017

Rank	Paper	Downloads
1.	How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?) Lee C. Buchheit and G. Mitu Gulati Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law	2,640
2.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	298
3.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	157
4.	Relational Contracts of Adhesion David A. Hoffman University of Pennsylvania Law School	150
5.	Aspects of Loyalty Lionel Smith McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law	136
6.	Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems Philipp Hacker European University Institute	135
7.	Justice, Fault, and Efficiency in Contract Law Larry A. DiMatteo University of Florida - Levin College of Law	106
8.	What Law Governs Forum Selection Clauses Symeon C. Symeonides Willamette University - College of Law	105
9.	Personal Data, Exploitative Contracts, and Algorithmic Fairness: Autonomous Vehicles Meet the Internet of Things Philipp Hacker European University Institute	96
10.	Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture Stefan Grundmann and Philipp Hacker Humboldt University of Berlin - Faculty of Law and European University Institute	90

 

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

Recent Top Papers (60 days) as of: 02 Jul 2017 - 31 Aug 2017

Rank	Paper	Downloads
1.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	298
2.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	157
3.	Relational Contracts of Adhesion David A. Hoffman University of Pennsylvania Law School	150
4.	What Law Governs Forum Selection Clauses Symeon C. Symeonides Willamette University - College of Law	105
5.	Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture Stefan Grundmann and Philipp Hacker Humboldt University of Berlin - Faculty of Law and European University Institute	90
6.	Property and the Construction of the Information Economy: A Neo-Polanyian Ontology Julie E. Cohen Georgetown University Law Center	67
7.	The Rise of Modern Commercial Arbitration and the Limits of Private Ordering Christian R. Burset Yale University, Faculty of Arts & Sciences, Department of History, Students	57
8.	Forum-Selection Provisions in Corporate 'Contracts' Helen Hershkoff and Marcel Kahan New York University School of Law and New York University School of Law	53
9.	The Quantitative Study of Privacy-Policy Decisions in the Draft Restatement of Consumer Contracts Gregory Klass Georgetown University Law Center	51
10.	Taking Contracting Digital: Examination of the Smart Contracts Experiment Folake Alabi New York University (NYU), School of Law, Student	50

A quick reminder about third-party beneficiaries

There has to be some evidence that you were intended to be a third-party beneficiary in order to be able to enforce the contract. 

This reminder courtesy of a recent case out of the Southern District of New York, Fashion One Television LLC v. Fashion TV Programmgesellschaft MBH, 16-CV-5328 (JMF), where Fashion One Television tried to sue on a contract between the defendant and Fashion One LLC. Fashion One LLC was a "direct affiliate" of Fashion One Television, with the same owner and principal place of business. However, that doesn't change the fact that Fashion One Television was still a separate legally distinct entity who did not sign the contract, and nothing on the face of the contract indicated that Fashion One Television was an intended beneficiary of the contract entitled to enforce the contract. The contract had a merger clause and a clause that prohibited it from being assigned. So, Fashion One Television was not an intended third-party beneficiary, could not enforce the contract, and lacked standing, and its complaint was dismissed. 

Beware starting work on a property before you own the property

When I poke through recent contracts cases trying to find ones to blog about, I tend to decide pretty quickly whether I want to spend time reading an opinion or not. This recent case out of Virginia, American Demolition and Design v. Pinkston, CL16000199-00 (behind paywall), caught my eye because the very first paragraph sounds like a hypo: 

This case arises out of a contractual negotiation for sale of real property . . . from . . . Pinkston to . . . Sweet. The negotiations never resulted in a final contract for sale of the property and no conveyance of the real property ever resulted. After the parties entered into contractual negotiations, but before the parties terminated contractual dealings, with oral permission from Pinkston, Sweet began preliminary construction on the property for the purpose of improving parts of the farmhouse located on the property. Although Pinkston discovered that Sweet’s work on the property had exceeded the scope of their discussions, Pinkston never stopped Sweet from performing further work on the property. Finally, when Sweet and Pinkston learned that a lien against the property hindered Pinkston from conveying title, Sweet stopped all work on the property. The property was subsequently rendered to be worth only a fraction of what it was previously worth before Sweet began working on the property.

So, naturally, I stopped to read the rest. Sweet brought the suit quantum meruit, for recovery of the value of his work performed on the property.  

The court acknowledged that there was no written contract about Sweet's work on the property, but the parties did make oral agreements on the subject that the court used in evaluating the quasi-contract claim. The work that Sweet performed on the property apparently brought the value of the property down, raising the question of whether it conferred a benefit on Pinkston as is required for recovery. However, the court noted that Pinkston knew Sweet was doing the work and did nothing to prevent him from doing it. In fact, they negotiated that Sweet would do the work. Therefore, the court found the work was a benefit that Sweet conferred on Pinkston with Pinkston's knowledge, despite the effect of the work on the value of the property at issue. 

But mere rendering of the services is not enough to merit recovery. The circumstances also must indicate that it would be inequitable for Pinkston to retain the benefit of Sweet's work without compensating him for it. There was no evidence that the parties ever thought Pinkston would pay Sweet for his labor. It was very clear that Sweet, expecting to buy the property, was in fact performing the work for himself, not Pinkston. Not only did Sweet not expect Pinkston to pay him, he expected to have to pay Pinkston when he bought the house. Therefore, the circumstances did not indicate that Pinkston needed to pay Sweet for his work. 

The case stands as a word of warning: be careful expending time and effort on a piece of real estate before negotiations for it have concluded. 

Is Amazon Selling Products or Services?

As first reported on Above the Law, the Federal Circuit Court of Appeals has just ruled that Amazon is nothing but a simple purveyor of “online services” and does not make “sales” of goods. Although the issue in the case was one of intellectual property infringement and thus not the UCC, the differentiation between “goods” and “services” is also highly relevant to the choice of law analyses that our students will have to do on the bar and practitioners in real life.

How did the Court come to its somewhat bizarre decision? Amazon, as you know, sells millions, if not billions, of dollars worth of tangible, physical products ranging from toilet paper to jewelry, books to toys, and much, much more. They clearly enter into online sales contracts with buyers and exchange the products for money. “Amazon” is the name branded in a major way in these transactions whereas the names of the actual sellers – where these differ from Amazon itself – are listed in much smaller font sizes. Often, it is Amazon itself that packages and ships the products to the buyers, whereas at other times, third party buyers are responsible for the shipping. Amazon “consummates” the sale when the buyer clicks the link that says “buy” on the Amazon website. Amazon then processes the payments and receives quite significant amounts of money for this automated process.

Clearly a “sale,” right? Nope. I guess “a sale is not a sale when a court says so.” As regards the IP dispute, the crucial issue was whether or not Amazon could control the acts of the third-party vendors. You would think that even that would clearly be the case given the enormous control Amazon has over what is marketed on its website and how this is done. Amazon, however, argued that it sells so many items that it cannot possibly police all of them. Thus, it won on its argument that it was not liable under IP law for a knock-off item that had been sold on the Amazon website as the real product (cute animal-shaped pillowcases).

Had this been an issue of contracts law and had the court still found that the transaction was not a sale of goods under UCC Art. 2, would it have erred? Arguably so. Under the “predominant factor test” used in many, if not most, jurisdictions, courts look at a variety of factors such as the language of the contract, the final product (or service) bought and sold, cost allocation, and the general circumstances of the case. When you buy an item on Amazon, it is true that you obtain the service of being able to shop from your computer and not a physical location, but at the end of the day, it is still the product that you want and buy, not the service. Apart from the relatively small service fee (which gets deducted from the price paid to the seller), the largest percentage of the sales price is for the product. Modernly, online buyers have become so used to that “service” being provided that it is arguably not even that much of a service anymore; it is just a method enabling buyers to buy… the product. Clearly, it seems to me, a “sale” under Art. 2.

Again, this was not a UCC issue, but it does still show that courts apparently still produce rather odd holdings in relation to e-commerce, even in 2017.

The case is Milo & Gabby LLC v. Amazon.com, Inc., (Fed. Cir. 2017)

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (August 24, 2017)

Welcome, for many of our readers, to the first weekly Top Ten list of the new academic year. For those new to ContractsProf Blog, the Top Ten list is a longstanding feature we post to help stay on the abreast of trends and hot topics in the areas of contracts and commercial law. If anything on the list piques your interest, consider clicking through to the SSRN page and giving the author another download. Authors like downloads.

 

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 25 Jun 2017 - 24 Aug 2017

Rank	Paper	Downloads
1.	How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?) Lee C. Buchheit and G. Mitu Gulati Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law	2,536
2.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	287
3.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	149
4.	Relational Contracts of Adhesion David A. Hoffman University of Pennsylvania Law School	146
5.	Aspects of Loyalty Lionel Smith McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law	128
6.	Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems Philipp Hacker European University Institute	122
7.	Justice, Fault, and Efficiency in Contract Law Larry A. DiMatteo University of Florida - Levin College of Law	100
8.	What Law Governs Forum Selection Clauses Symeon C. Symeonides Willamette University - College of Law	96
9.	Over-Reliance Under Contractual Disgorgement Yehonatan Givati and Yotam Kaplan Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem	90
10.	Personal Data, Exploitative Contracts, and Algorithmic Fairness: Autonomous Vehicles Meet the Internet of Things Philipp Hacker European University Institute	87

  

Top Downloads For:

Law & Society: Private Law - Contracts eJournal 

Recent Top Papers (60 days)

As of: 25 Jun 2017 - 24 Aug 2017

Rank	Paper	Downloads
1.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	287
2.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	149
3.	Relational Contracts of Adhesion David A. Hoffman University of Pennsylvania Law School	146
4.	Property and Sovereignty Imbricated: Why Religion Is Not an Excuse to Discriminate in Public Accommodations Joseph William Singer Harvard Law School	99
5.	What Law Governs Forum Selection Clauses Symeon C. Symeonides Willamette University - College of Law	96
6.	Over-Reliance Under Contractual Disgorgement Yehonatan Givati and Yotam Kaplan Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem	90
7.	Springwell-watch: New Insights into the Nature of Contractual Estoppel Joanne P. Braithwaite London School of Economics - Law Department	78
8.	Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture Stefan Grundmann and Philipp Hacker Humboldt University of Berlin - Faculty of Law and European University Institute	76
9.	Property and the Construction of the Information Economy: A Neo-Polanyian Ontology Julie E. Cohen Georgetown University Law Center	62
10.	Liberal Contract Theory and Actually Existing Contracts Luke Herrine New York University (NYU) - Furman Center for Real Estate and Urban Policy	57

"We Built This City" (that was just to give you the earworm)

This case, out of the Northern District of California, Chaquico v. Freiberg, Case No. 17-cv-02423-MEJ, concerns a fairly common entertainment law issue that results when bands lose and gain members: who gets to still use the band name? Jefferson Starship has a fairly rocky naming history, having originally been called Jefferson Airplane and later morphing into Starship after a prior fight over the name. Because band name ownership can be a tricky thing to decide under intellectual property law, and because it might result in rulings that the band members (current and former) might not like, bands frequently try to handle these disputes by contract. Like with any contract, the efficacy of this approach differs based on the wording of the particular contract, which is what happens with the contract claims in this case: based on wording and timing and the interplay of other contracts, the court dismisses all of them but those that happened after January 2016.  

(If you're interested in this sort of thing, Rebecca Tushnet writes up another of these cases, this one involving the band Boston.)

Beauty Salon's Customer Lists Weren't Confidential When They Were on Social Media (and more beauty salon rulings)

A recent case out of New York, Eva Scrivo Fifth Avenue, Inc. v. Rush, 656723/2016, stems from the defendant, Rush, being discovered working for a rival beauty salon, Marie Robinson, while still employed by the plaintiff, Scrivo. Scrivo terminated Rush upon learning of this. Rush spoke to two clients in the Scrivo salon before exiting the salon, allegedly saying she would get in touch with them, and at least one of the clients left the salon, refusing to be serviced by anyone but Rush. Rush also posted a note on her personal Instagram saying that she would be moving to Marie Robinson and people should get in touch with her for appointments. 

Scrivo sued alleging, among other things, breach of contract, based on the restrictive covenant contained in the Employment Agreement, which prohibited Rush from, among other things, soliciting Scrivo's clients and disclosing confidential information and trade secrets. Scrivo sought to enjoin Rush from soliciting, communicating with, or providing services to anyone she serviced while working for Scrivo, for a period of one year. 

Unfortunately for Scrivo, the court denied its motion. The court noted that the noncompete needed to protect Scrivo's legitimate interests, avoid undue hardship on Rush, and be in the public interest. The court found that Scrivo failed to demonstrate the that noncompete was necessary to protect its interests. There was nothing about Rush's services that were "unique or extraordinary," and Rush was replaceable. Scrivo's customer lists were not confidential information, because the identity of its customers was pretty readily available online in social media posts and Scrivo never attempted to hide any of it. None of the skills Rush used in cutting hair were confidential, either. Rush claimed to be self-taught, claimed not to have taken any customer lists, and claimed that any clients that followed her did so of their own accord and initiative and that she did not solicit them. 

Not only was the court dubious that Scrivo had legitimate interest to protect, the court also thought the sought injunction was unduly burdensome on Rush. Scrivo provided evidence that Rush had serviced 900 clients over the course of six years at Scrivo. Rush would surely have to therefore affirmatively ask each person who came to Marie Robinson if they had ever been serviced at Scrivo in order to ascertain if there was a possibility Rush had worked on them. Scrivo wanted Rush to turn away clients who came in independently, and the noncompete had only required Rush to refrain from soliciting clients. 

Finally, the court didn't think Scrivo would suffer any irreparable harm without injunctive relief. If Scrivo could prove Rush violated the noncompete, then Scrivo could get the value of the services the client didn't purchase from Scrivo. 

Los Angeles Allegedly Violates Free Speech Rights with Entertainment Contracts

Pershing Square in downtown Los Angeles is an outdoor area that is regularly the home of free summer concerts and demonstrations of various kinds throughout the year. You would think you could snap as many photos as you wanted of events there since it is an outdoor, public area, right?

This past summer, the answer was no. A photojournalist wanted to take pictures of, among others, the B-52s. However, he was informed of a policy that had been set up with the performers per contractual agreement. The policy barred professional photography equipment, albeit not cell phone usage, from the square during concerts.

ACLU has complained to the Los Angeles City Attorney and the General Manager of the Department of Recreation and Parks, claiming that the city does not have a right to contract away the general public’s First Amendment rights because some performers want it that way.

How do you see contractual rights intersecting with the First Amendment in the government contracting context? Comment below!

Things to Think About Before You Put Your Project on Kickstarter

The Internet has encouraged so many cool and interesting ways of creating. Scrolling through Kickstarter, to pick just one website, can expose you to an incredible variety of artistic endeavors that you can support, many of which involve board games. In fact, several of my friends have Kickstartered several board games, and I own several other Kickstarter board games that didn't come from friends at all.

I have never asked my friends how they document their collaborations on the board games they list on Kickstarter, but you can imagine that many people throw ideas up there to see what happens without bothering to hire lawyers or formalize relationships. This, of course, can turn out poorly if you have an eventual falling-out with your friend, but it can also turn out poorly if something even more horribly tragic happens and one of the collaborators dies suddenly and unexpectedly, which may be what happened in the case of the Kickstarter game Divorce! The story is sad and heartbreaking and I read all about it over on The Outline. It's tangled and convoluted and has devolved into a series of oral accusations in large part because there is nothing in writing. And that could be evidence that the parties in question had no collaborative relationship regarding the board game, but it could also be evidence that the parties in question were friends in their twenties who never anticipated that one of them was going to go away for a fun weekend and never come home. 

(h/t to Aja Romano)

Brian O'Conan Hypo

Having disappeared for a couple of weeks into frantic preparation for the new semester, I thought I would re-emerge by sharing a hypo that I do with my students on the first day of class, based on Conan O'Brien's contract dispute with NBC from a few years ago. The hypo goes something like this: 

Brian O’Conan is a comedic host who has helmed a show on CBN, Later at Night, for sixteen years. Later at Night airs at 12:30, and Brian has always wanted to “move up” in the world of late night hosts to host a show at the earlier time of 11:30. Five years ago, in order to keep Brian at the network, CBN promised to give Brian hosting duties for its legendary 11:30 show, Somewhat Late at Night, as soon as Len Jayo’s current contract was up. Somewhat Late at Night is a flagship show that has aired in its time slot on CBN for 43 years; prior to that, it started at 11:15 for 14 years. For its entire 57-year existence, Somewhat Late at Night has begun directly after the late local news.

Brian and CBN enter into a contract with the following terms:

• Brian is guaranteed that he will be the host of Somewhat Late at Night.
• Both Brian and CBN promise to act in good faith in executing the contract.
• Both parties will mitigate any damages caused by a breach of contract, but CBN agrees that it will pay Brian $40 million if it breaches the contract.
• Brian is prohibited from being a late-night host on any other network in the event of a breach of the contract.

As promised by the contract, Brian becomes host of Somewhat Late at Night. After a strong start, Brian’s ratings trail off. Six months into Brian’s stint as host, CBN makes a public announcement that Somewhat Late at Night will be moved to start at midnight. It will use the 11:30 time slot for a new late-night show with old Somewhat Late at Night host Len Jayo.

Brian, learning all of this for the first time from the public announcement, tells CBN it has breached the contract, demands payment of $40 million, and also opens discussions with a competing network, Wolf, to host a new late night show at 11:30.

***

I like this hypo because, even though it was several years ago now, most students recognize the real-life situation this problem was based on and so feel somewhat engaged with it. In addition, even though I have taught them literally nothing about contract law at this point, I think they gain a lot of confidence from being able to examine the problem and come up with ideas for how the analysis should begin. I usually split them up and assign them a side to represent and have them make arguments on their client's behalf, and then allow them time for rebuttal. Along with discussing the contract's terms around the show itself, the students get into discussions about good faith, mitigation of damages, and just basic fairness. When we're done with the discussion, I then ask them how they felt about the side they had been assigned to, and if any of them had wished they'd had the other side. I think it is a good basic introduction to the task of being lawyers that I find relaxes them a little on the first day: If they can already talk about this problem on the first day, imagine how much better they'll be once they know some law!

If you're starting school years like I am, good luck!

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (August 17, 2017)

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 18 Jun 2017 - 17 Aug 2017

Rank	Paper	Downloads
1.	How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?) Lee C. Buchheit and G. Mitu Gulati Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law	2,349
2.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	263
3.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	145
4.	Relational Contracts of Adhesion David A. Hoffman University of Pennsylvania Law School	121
5.	Aspects of Loyalty Lionel Smith McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law	121
6.	Justice, Fault, and Efficiency in Contract Law Larry A. DiMatteo University of Florida - Levin College of Law	95
7.	Over-Reliance Under Contractual Disgorgement Yehonatan Givati and Yotam Kaplan Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem	89
8.	Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems Philipp Hacker European University Institute	86
9.	Disclosure Rules in Contract Law Oren Bar-Gill and Ariel Porat Harvard Law School and Tel Aviv University	84
10.	Springwell-watch: New Insights into the Nature of Contractual Estoppel Joanne P. Braithwaite London School of Economics - Law Department	77

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 18 Jun 2017 - 17 Aug 2017

Rank	Paper	Downloads
1.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	263
2.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	145
3.	Relational Contracts of Adhesion David A. Hoffman University of Pennsylvania Law School	121
4.	Property and Sovereignty Imbricated: Why Religion Is Not an Excuse to Discriminate in Public Accommodations Joseph William Singer Harvard Law School	99
5.	Over-Reliance Under Contractual Disgorgement Yehonatan Givati and Yotam Kaplan Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem	89
6.	Disclosure Rules in Contract Law Oren Bar-Gill and Ariel Porat Harvard Law School and Tel Aviv University	84
7.	Springwell-watch: New Insights into the Nature of Contractual Estoppel Joanne P. Braithwaite London School of Economics - Law Department	77
8.	Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture Stefan Grundmann and Philipp Hacker Humboldt University of Berlin - Faculty of Law and European University Institute	73
9.	What Law Governs Forum Selection Clauses Symeon C. Symeonides Willamette University - College of Law	73
10.	Property and the Construction of the Information Economy: A Neo-Polanyian Ontology Julie E. Cohen Georgetown University Law Center	61

 

 

Duress in Demotion and Termination Case: Not so Fast, Employers

In times when it seems that employers often not only attempt to, but also often get away with, unreasonable demotion and/or termination attempts, the Eighth Circuit Court of Appeals has upheld the rights of employees not to be forced into unreasonable demotion “agreements.”

The crucial facts of the case are as follows: In 2011, Timothy Gilkerson was hired by Nebraska Colocation Centers (“NCC”) as a Vice President and General Manager in an IT function that also included Gilkerson’s expanding the company’s customer base. Among other things, the employment contract stated that Mr. Gilkerson could only be fired for cause defined as the “willful misconduct in carrying out Executive’s duties which causes economic harm” to NCC or the “persistent failure to perform the duties and responsibilities of his employment hereunder….” The contract also specified various generous sales and retirement bonuses.

NCC subsequently became dissatisfied with Gilkerson’s sales-related performance. Gilkerson received an employee performance review with an “Unsatisfactory” rating for “Achieved Sales Goals” and “Fulfills the terms of his contract.” Gilkerson signed the review document, but noted his dissatisfaction with the sales goal rating. NCC ultimately determined that Gilkerson was not “effective” in his role, announced the hiring of a new Vice President and, the same day, told Gilkerson that 1) the new employee would be moving into Gilkerson’s office and 2) that Gilkerson’s job ti
tle was changed to something less desirable from his point of view.

Crucially to the case, Gilkerson was presented with a “Mutual Rescission” to rescind the employment contract and a “Term Sheet” which set forth new and much less desirable terms of Gilkerson’s employment. In other words” NCC sought to demote Gilkerson. Importantly, the “mutual rescission” sought to convert Gilkerson’s contractual status to be an at-will employee. Gilkerson smartly consulted with an attorney who told him not to sign the Mutual Rescission. At a subsequent meeting with the NCC president, Gilkerson was told he had two choices: Accept the rescission and term sheet or be fired for cause; an obvious Hobson’s choice. Gilkerson signed. You guessed it: he was then also fired.

Gilkerson filed suit, claiming contractual duress which, in Nebraska, involves a two-part test: First, the agreement obtained must have been obtained by means of pressure. Second, the agreement itself must be unjust, unconscionable, or illegal. Whether particular facts are sufficient to constitute duress is, in Nebraska, a matter of law.

The duress test sounds like a high standard to meet. Sure enough: on a motion for summary judgment, the trial court found that “had the revised terms … been given to a newly-hired employee, they would certainly have been seen as fair, or even generous.” However, as the Court of Appeals pointed out: Gilkerson was not a new employee. It was just wrong for the employer and court to treat him as such. The Court found the new “term sheet” unjust because, after analyzing case precedent, there was no economic justification for requiring Gilkerson to accept an at-will employment agreement, other than “it allowed NCC to avoid the provisions of the Contract that were most favorable to Gilkerson.” No kidding. The court also specifically took issue with the provision that made Gilkerson an at-will employee after having served in a contractually better position for quite some time. The appellate court thus found duress to lie.

Contracts are, of course, negotiable at the outset. However, in times of fierce competition in many job markets, it is good to see that courts standing up for employees presented with clearly unreasonable employment “choices” and decisions by employers well into an employment situation. It is one thing if an employee is at working will. It is quite another if he/she is not, as this case clearly demonstrates. Contracts must be performed in good faith by both parties. That, of course, includes the employer as well. In times when unemployment rates are dropping, hopefully employees will obtain stronger bargaining positions both at the outset of and during the employment relationship. Nonetheless, presenting employees with unreasonable “choices” such as the above. Of course, employees should rise to the reasonable expectations of employers. But employers do not and should not have carte blanche to do whatever they wish to contractually bound employees. This can hardly come as a surprise to any reasonable employer.

The case is Gilkerson v. Nebraska Colocation Centers LLC., 2017 WL 2656073.

Why Hawkins v. McGee Might be the Best Teaching Tool in Contracts Law

Continuing with responses to Professor Calleros' call for the best contracts cases, Professor Otto Stockmeyer weighs in with his piece 'Reflection on Teaching the First Day of Contracts Class.' In his paper Professor Stockmeyer discuses advice for first year law students and the significance of the Contracts course. He then goes on to assert the 'Hairy Hand' Case, Hawkins v. McGee, is the most significant case and an excellent starting place for law students. 

 

The full paper can be found by following the link below. 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2927249

Why R.R. V. M.H. Might Be the Best Teaching Tool in the Contracts Casebook

Recently, Professor Charles Calleros posted a blog proclaiming Pyeatte v. Pyeatte as the "best teaching tool in contracts law." In his post Professor Calleros issued an open call to colleagues to respond with their interpretations on the best cases for contract law.  David Epstein has answered the call with his choice of RR v. MH, a Massachusetts Supreme Court decision. The case focuses on the concept of surrogate parents and whether their contract would be enforceable. The full piece is found below at the link, and is a promising read for educators and students alike. 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3015923 

Full paper found at the link above. 

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (August 10, 2017)

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 11 Jun 2017 - 10 Aug 2017

Rank	Paper	Downloads
1.	How to Restructure Venezuelan Debt (¿Cómo restructurar la deuda venezolana?) Lee C. Buchheit and G. Mitu Gulati Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law	2,216
2.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	248
3.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	140
4.	Justice, Fault, and Efficiency in Contract Law Larry A. DiMatteo University of Florida - Levin College of Law	90
5.	Over-Reliance Under Contractual Disgorgement Yehonatan Givati and Yotam Kaplan Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem	86
6.	Aspects of Loyalty Lionel Smith McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law	85
7.	Relational Contracts of Adhesion David A. Hoffman University of Pennsylvania Law School	83
8.	Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems Philipp Hacker European University Institute	79
9.	Disclosure Rules in Contract Law Oren Bar-Gill and Ariel Porat Harvard Law School and Tel Aviv University	76
10.	Postscript to Just Relationships: Reply to Gardner, West, and Zipursky Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	75

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 11 Jun 2017 - 10 Aug 2017

Rank	Paper	Downloads
1.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	248
2.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	140
3.	Property and Sovereignty Imbricated: Why Religion Is Not an Excuse to Discriminate in Public Accommodations Joseph William Singer Harvard Law School	98
4.	Over-Reliance Under Contractual Disgorgement Yehonatan Givati and Yotam Kaplan Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem	86
5.	Relational Contracts of Adhesion David A. Hoffman University of Pennsylvania Law School	83
6.	Disclosure Rules in Contract Law Oren Bar-Gill and Ariel Porat Harvard Law School and Tel Aviv University	76
7.	Springwell-watch: New Insights into the Nature of Contractual Estoppel Joanne P. Braithwaite London School of Economics - Law Department	74
8.	Property and the Construction of the Information Economy: A Neo-Polanyian Ontology Julie E. Cohen Georgetown University Law Center	58
9.	Digital Technology as a Challenge to European Contract Law – From the Existing to the Future Architecture Stefan Grundmann and Philipp Hacker Humboldt University of Berlin - Faculty of Law and European University Institute	58
10.	Liberal Contract Theory and Actually Existing Contracts Luke Herrine New York University (NYU) - Furman Center for Real Estate and Urban Policy	51

More Real Estate Misrepresentations

I'm just going to start a little subset of cases involving misrepresentations in the context of real estate transactions. This latest case is out of Tennessee, Hall v. Eagle Rock Development, LLC, No. E2015-01487-COA-R3-CV (you can listen to the oral arguments here). In this case, the Halls won rescission of the purchase contract and a refund of the money they paid, based on misrepresentations regarding the lot's access to public sewage disposal. While there was a dispute as to whether they were specifically told by the development's broker that the lot had access to public sewage, the court found the broker had not been "forthcoming" about the sewage situation, and the other documents involved in the transactions represented at several points that public sewage access would be possible, including the MLS brief and the real estate listings that contained public sewage as a product feature. The website for the development stated that the lots would have public sewage access, and nowhere qualified the statement as being contingent on certain funding requirements. Plus, there was a sewer manhole directly in front of the lot. 

The first time the Halls were provided with a disclosure statement indicating they would not have public sewage access was actually the day the sales contract was executed, despite the fact that the sellers had prepared this document months earlier and so could have shared it well in advance. The fact that the Halls signed the disclosure statement while executing the sales contract did not bar their recovery. (Nor did the fact that the Halls' contract stated that they were purchasing the property "as is.")

The Halls maintained that they would never have bought the lot had they known it didn't have public sewage access, not least because it restricted the size of the house they could build on the lot. Accordingly, the court ordered the contract rescinded and the purchase price be refunded, which was exactly the remedy that the Halls were seeking. 

The sellers pointed out that it actually took the Halls three years to figure out public sewage access was not possible. They claimed that the problem here was the Halls' failure to fully investigate the property or fully read the documents they signed at closing. However, the court found that the weight of all the contrary representations the Halls had been given outweighed this. 

Contracts and Commercial Law Scholarship: Weekly Top Ten SSRN Downloads (August 3, 2017)

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 04 Jun 2017 - 03 Aug 2017

Rank	Paper	Downloads
1.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	235
2.	A New Dawn for the Law of Illegality Andrew Burrows University of Oxford - Faculty of Law	142
3.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	138
4.	The Design of Staged Contracting Albert H. Choi and George G. Triantis University of Virginia School of Law and Stanford Law School	120
5.	Justice, Fault, and Efficiency in Contract Law Larry A. DiMatteo University of Florida - Levin College of Law	87
6.	Over-Reliance Under Contractual Disgorgement Yehonatan Givati and Yotam Kaplan Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem	83
7.	Springwell-watch: New Insights into the Nature of Contractual Estoppel Joanne P. Braithwaite London School of Economics - Law Department	73
8.	Corporate Governance for Complex Cryptocurrencies? A Framework for Stability and Decision Making in Blockchain-Based Monetary Systems Philipp Hacker European University Institute	73
9.	Postscript to Just Relationships: Reply to Gardner, West, and Zipursky Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	73
10.	Disclosure Rules in Contract Law Oren Bar-Gill and Ariel Porat Harvard Law School and Tel Aviv University	72

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 04 Jun 2017 - 03 Aug 2017

Rank	Paper	Downloads
1.	Crypto Transaction Dispute Resolution Wulf A. Kaal and Craig Calcaterra University of St. Thomas, Minnesota - School of Law and Department of Mathematics, Metropolitan State University	235
2.	The Choice Theory of Contracts (Introduction) Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	138
3.	The Design of Staged Contracting Albert H. Choi and George G. Triantis University of Virginia School of Law and Stanford Law School	120
4.	Property and Sovereignty Imbricated: Why Religion Is Not an Excuse to Discriminate in Public Accommodations Joseph William Singer Harvard Law School	96
5.	Over-Reliance Under Contractual Disgorgement Yehonatan Givati and Yotam Kaplan Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem	83
6.	Springwell-watch: New Insights into the Nature of Contractual Estoppel Joanne P. Braithwaite London School of Economics - Law Department	73
7.	Disclosure Rules in Contract Law Oren Bar-Gill and Ariel Porat Harvard Law School and Tel Aviv University	72
8.	Property and the Construction of the Information Economy: A Neo-Polanyian Ontology Julie E. Cohen Georgetown University Law Center	54
9.	Liberal Contract Theory and Actually Existing Contracts Luke Herrine New York University (NYU) - Furman Center for Real Estate and Urban Policy	49
10.	Leadership Competencies for Business Lawyers: Using a Framework that Links Strategy, Law, and Ethics George J. Siedel University of Michigan	46

Fact-Checking the Snopes Lawsuit

You, like me, might often resort to Snopes to weed through what's true and what's not in the avalanche of information we're exposed to every day. (My most recent Snopes search: can a gift shop upcharge federal postage stamps? The answer is yes!) Recently Snopes turned to its constituents on the Internet to help provide funding to keep the website alive, precipitated by a lawsuit stemming from several contracts between the parties at issue. The whole thing is a matter of messy corporate structure that really seems like it's going to depend on the court's reading of the stock purchase agreement between the parties. Vox has a rundown of the whole situation here (that I'm quoted in).