ContractsProf Blog

Uber fails to establish an accord and satisfaction on a motion to dismiss

If you're looking for a recent accord and satisfaction case, look no further! I've got one for you out of the Northern District of California, TSI USA LLC v. Uber Technologies, Inc., Case No. 17-cv-03536-HSG (behind paywall). In the case, Uber and TSI had a contract that Uber terminated. TSI received a termination notice and a check for a little over $200,000. TSI responded to Uber with outstanding invoices Uber owed payment on, amounting to more than $1.4 million. TSI eventually sued Uber for, inter alia, breach of contract, and Uber moved to dismiss the claim, arguing that that TSI's cashing of the $200,000 check operated as an accord and satisfaction, prohibiting TSI's breach of contract claim. 

The court disagreed. Accord and satisfaction requires that the check be presented in good faith and with a conspicuous statement that it is meant to satisfy the entire debt. Construing the facts in the light most favorable to TSI, Uber could not establish that its check of $200,000 met "reasonable commercial standards of fair dealing," given that TSI alleged Uber owed over $1.4 million. In addition, while the termination notice stated "by executing below you acknowledge and agree that such payment constitutes full and final payment," it was followed by a line for signature labeled "Chief Executive Officer." TSI asserted that it thought the signature of the CEO was required for the payment to constitute full and final payment, not that the cashing of the check by itself. The court agreed with TSI that the language was not so "explicit and unequivocal as a matter of law so as to preclude TSI from asserting its breach of contract claim." Therefore, the breach of contract claim survived. 

Deciding insubordination isn't the same as judging spiritual leadership

I just blogged about the ministerial exception of the First Amendment, and now here's another case discussing it! This recent case out of California, Sumner v. Simpson University, C077302, was a dispute over Sumner's dismissal for insubordination. Sumner sued for breach of her employment contract. Simpson argued that the ministerial exception of the First Amendment protected its contractual decision from judicial examination. The court agreed that Simpson was a religious group and also found that Sumner was a ministerial employee even though she wasn't technically titled a minister. Her job duties at the university required her to have a doctorate in ministry or a related field and included promoting the university through preaching appearances. 

However, the court still permitted Sumner's breach of contract claim to go forward, based on the fact that the ministerial exception should not bar all contract actions involving a religious group and its ministerial employees. Rather, it should only operate to bar those causes of action that would require the court to decide religious matters. Sumner was purportedly terminated for insubordination, which was defined by the faculty handbook incorporated into Sumner's contract. The alleged insubordination involved Sumner's violation of the university's written protocol. Sumner, however, alleged that she was never provided with the written protocol and so her conduct could not be found to be insubordinate. Resolving this dispute would not require "wad[ing] into doctrinal waters," because Sumner's religious qualifications weren't at issue and the dispute didn't concern Simpson's religious autonomy. 

Sometimes you've just got to shrug and live with the precedent you've got

There comes a time in every teaching semester (usually very early on...) where you have to coax your students to be comfortable with courts contradicting each other. You have to teach them to distinguish the cases, to make sense of it, but sometimes I feel like the answer to the contradictions is "the parties didn't argue that point and it just got missed and now we just have to deal."

I was thinking about this as I read a recent case out of the Third Circuit, Cook v. General Nutrition Corp., No. 17-3216 (behind paywall), which affirmed a failed lawsuit against GNC for, among other things, breach of contract. The appellants made several arguments for why their claims should not have been dismissed, one of them that GNC's termination of the contract was a breach. But the Third Circuit noted that termination was permitted by the contract: "[The contract] expressly permit[ted] GNC to unilaterally modify or cancel the agreement at any time, with or without notice."

That was the line that gave me pause, because I only recently taught Harris v. Blockbuster, which holds a contractual provision illusory precisely because it permitted Blockbuster to unilaterally change the contract at any time without even having to provide any notice. Other courts have definitely agreed with Harris, and  while it's been distinguished I didn't really see any courts disagreeing with the conclusion. Third Circuit courts do seem to apply the illusory promise doctrine, so it doesn't seem like they've just decided to do without this doctrine in the Third Circuit. 

It does seem like Harris can be read as only applying in the context of agreements to arbitrate and not all agreements (although there was apparently an arbitration clause in the GNC contract). Unfortunately, this is just me guessing as to how you can distinguish Harris, because there is zero discussion of illusory promises in the Third Circuit's very brief opinion. The court asserts that the contract gave GNC this right, and that while it might be "unfortunate," it was permissible and therefore not a breach. 

A Showdown Involving the NFL, the AP, and Professional Photographers

Above the Law has a write-up of a case involving charges of copyright infringement against the NFL for using photographs without permission, but the case has a very strong contract angle, as the allegations involve the scope and validity of the license that the AP granted to the NFL for the photos. The Second Circuit has a contract-interpretation-focused analysis that permits the photographers' lawsuit to go forward (the district court had dismissed the complaint). You can read the full decision here.

(Ostensibly) Weekly Top Ten SSRN Contracts & Commercial Law Downloads (September 20, 2018)

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 22 Jul 2018 - 20 Sep 2018

Rank	Paper	Downloads
1.	Coin-Operated Capitalism Shaanan Cohney, David A. Hoffman, Jeremy Sklaroff and David A. Wishnick University of Pennsylvania, School of Engineering & Applied Science, University of Pennsylvania Law School, University of Pennsylvania Law School - Student/Alumni/Adjunct and University of Pennsylvania - Center for Technology, Innovation & Competition	4,565
2.	Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society Deborah Thorne, Pamela Foohey, Robert M. Lawless and Katherine M. Porter University of Idaho, Indiana University Maurer School of Law, University of Illinois College of Law and University of California - Irvine School of Law	3,033
3.	Online Contracts (2018) Eric Goldman Santa Clara University - School of Law	434
4.	The SAFE, the KISS, and the Note: A Survey of Startup Seed Financing Contracts John F. Coyle and Joseph M. Green University of North Carolina School of Law and Thomson Reuters Practical Law	328
5.	Will the Sharing Economy Increase Inequality? Gregory M. Stein University of Tennessee College of Law	217
6.	Demystifying Technology. Do Smart Contracts Require a New Legal Framework? Regulatory Fragmentation, Self-Regulation, Public Regulation. Marco Dell'Erba New York University School of Law	191
7.	Bankruptcy Claims Trading Jared A. Ellias University of California, Hastings	148
8.	Blockchain Bills of Lading Elson Ong National University of Singapore (NUS) - Centre for Maritime Law	129
9.	New Frontiers in Private Fiduciary Law Paul B. Miller Notre Dame Law School	126
10.	Poor Consumer(s) Law: The Case of High-Cost Credit and Payday Loans Shmuel I. Becher, Yuval Feldman and Orly Lobel Victoria University of Wellington, Bar-Ilan University - Faculty of Law and University of San Diego School of Law	115

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 22 Jul 2018 - 20 Sep 2018

Rank	Paper	Downloads
1.	Online Contracts (2018) Eric Goldman Santa Clara University - School of Law	434
2.	The SAFE, the KISS, and the Note: A Survey of Startup Seed Financing Contracts John F. Coyle and Joseph M. Green University of North Carolina School of Law and Thomson Reuters Practical Law	328
3.	Will the Sharing Economy Increase Inequality? Gregory M. Stein University of Tennessee College of Law	217
4.	Demystifying Technology. Do Smart Contracts Require a New Legal Framework? Regulatory Fragmentation, Self-Regulation, Public Regulation. Marco Dell'Erba New York University School of Law	191
5.	The Impact of the Hague Principles on Choice of Law in International Commercial Contracts Michael Douglas and Nicholas Loadsman The University of Western Australia Law School and Clayton Utz	100
6.	Arbitration Nation: Data from Four Providers Andrea Chandrasekher and David Horton University of California, Davis - School of Law and University of California, Davis - School of Law	96
7.	Purposive Contractual Interpretation Andrew Robertson The University of Melbourne - Law School	92
8.	The Chilling Effect of Governance-by-Data on Data Markets Niva Elkin-Koren and Michal Gal University of Haifa - Faculty of Law and University of Haifa - Faculty of Law	66
9.	Split Derivatives: Inside the World's Most Misunderstood Contract Dan Awrey University of Oxford, Faculty of Law	64
10.	Foundationalism About Contract Law: A Sceptical View George Letsas and Prince Saprai University College London - Faculty of Laws and University College London - Faculty of Laws	60

Deadline TODAY for CSLSA Conference Registration and Hotel Block

For any of you considering attending and presenting your work (at any stage) at the Central States Law Schools Association’s 2018 Annual Scholarship Conference next month, TODAY (September 20) is your last chance to register and reserve a room in the hotel block (Sheraton - Downtown Fort Worth, which is literally next door to the law school and is offering $159/night)!

 

If you have already registered but held off on booking your hotel accommodations, well... you should take care of that today!

 

The conference will be Friday, October 12 and Saturday, October 13 at Texas A&M University School of Law in Fort Worth. Those who have attended in the past can attest to the fact that CSLSA provides a friendly and constructive environment for promoting legal scholarship across the board, including strong showings in areas beloved to readers of this blog, like contracts, commercial law, teaching methods, and more.

 

All the conference and hotel information you need is accessible here: http://www.cslsa.us/

 

I (Mark, that is) hope to see many of you in Fort Worth next month. But today is your last chance!

Executives and Sexual Harassment Allegations

Rachel Arnow-Richman (Denver Law) has an op-ed today in the San Francisco Chronicle about CBS’s ouster of CEO Les Moonves and companies’ contractual obligations to their highest executives in the midst of severe sexual harassment allegations:

“If #MeToo is to have lasting impact, companies must consistently take a hard line against high-level harassment, not just when it aligns with their other interests. This means abandoning contracts that insulate executives from accountability in favor of those that preserve employers’ ability to respond swiftly and nimbly to alleged violations of law.” 

Court refuses to judge what adequate spiritual leadership looks like

A recent case out of the Third Circuit, Lee v. Sixth Mount Zion Baptist Church of Pittsburgh, No. 17-3086, applies the ministerial exception of the First Amendment and refuses to entangle the court in a breach of contract dispute between a pastor and his former church. The parties had entered into a contract providing that Lee would serve as the Church's pastor for a twenty-year term. The contract provided for termination if its terms were breached. The Church terminated Lee's employment and alleged that he had failed to provide adequate spiritual leadership, as he was required to do by the terms of the contract. Lee disputed this, but the court refused to get involved, citing the ministerial exception. Courts aren't supposed to get entangled in "religious governance and doctrine," and asking the court to judge the quality of Lee's spiritual leadership under the contract would be just such an entanglement. 

 

You can listen to the oral arguments here. Some press coverage of the district court's decision can be found here. 

Here's one for the "house renovations gone wrong" file

If you're turning to teaching damages in your semester, here's a recent case out of Florida for you, Forbes v. Prime General Contractors, Inc., Case No. 2D17-353. This is one of those cases where the homeowners and the contractor had a contract where the homeowners would pay periodically, as milestones for the work were reached. After completion of the scheduled demolition, though, the contractor told the homeowners that the cost to complete the project had almost doubled. The homeowners refused to pay the extra money, insisting on enforcement of the cost in the contract. The contractor walked off the job at that point. The home, having been in the demolition stage of the project, was uninhabitable. The homeowners rented another house and looked in vain for another contractor to finish the job. Finally, they bought a new house and let the old house go into foreclosure. They also sued the contractor for breach of contract. 

The homeowners won their beach of contract case, but the lower court only awarded them their cost of renting the alternative house as damages, stating that the homeowners had failed to prove any other damages and also had failed to mitigate damages. The appellate court disagreed. The appellate court permitted the homeowners to treat the breach of contract as total and found that they should be awarded damages to place them in the position they would have been in had they never signed the contract. This could include reimbursement of the amount they had paid the contractor and the equity they lost in their home when they had to let it lapse into foreclosure, as well as the rent they had paid. 

The appellate court also found that the homeowners had taken reasonable steps to mitigate damages. They rented while they searched for someone to finish the renovations. When that search failed, they bought a new house rather than continuing to make rent payments. Even if they hadn't bought the new house, they would not have been able to afford continuing to pay rent and the mortgage on the uninhabitable house, so whether they were renting or owning that house would have lapsed into foreclosure either way. The appellate court found that there was nothing else the homeowners could have done to avoid further damages. 

Intersection between Animal Law and Contracts law - new book

From our friends at Animal Legal Defense Funds:

Animal Law – New Perspectives on Teaching Traditional Law presents a fresh perspective on the courses that law professors are already teaching, all while introducing law students to the relevance of animal issues in a variety of areas, including:·         Contract Law

·         Constitutional Law

·         Criminal Law

·         Environmental Law

·         Property Law

·         Tort Law

·         Wills and Trusts Law

Due to the ubiquitous presence and use of animals in our society, animal law overlaps with most other areas of the law and provides an engaging lens through which to explore core legal concepts. Analyzing animal law cases within traditional areas of law encourages critical thinking about the function of certain legal constructs and tests the law’s ability to respond to new information and evolving social norms.

It’s a crucial time for academics to begin making and discussing these important connections. Animal law is a rapidly growing field and an increasing number of students are attending law school to study it full-time, or at least incorporate it into their practice after graduation.

Professors can purchase the book through the publisher Carolina Academic Press or through RedShelf, buying only the chapters relevant to their area of expertise.

Webinar

The authors of the book will be hosting a free webinar Friday, September 28, 2018 from 12:00 – 1:30 p.m. PT. This webinar will give professors and law students an opportunity to hear from the authors as they discuss the inspiration behind the book and why it’s important for law professors to include animal law in their discussions. They will also detail substantive features in every chapter, and review ways in which they can be incorporated into pre-existing courses.

For more information, please visit aldf.org/casebook

Course Guides

Finally, for those professors interested in teaching an entire course on animal law, the Animal Legal Defense Fund, the nation’s preeminent legal advocacy for animals, has developed three curriculum resources to provide tangible support and guidance to those who wish to offer new classes but may not have the time to design them from scratch. Each guide serves as a comprehensive sample syllabus with a suggested course outline, textbooks, topics, reading and writing assignments, student objectives, and teaching notes. For anyone wishing to expand the animal law offerings at their school by offering an elective in one of these areas, the guides will be an invaluable resource.

The three course guides, and memos in support of adding such a class to the curriculum, are now available on our animal law instructor site and are linked here:

·         Companion Animal Law Course Guide and Supporting Memo

·         Farmed Animal Law Course Guide and Supporting Memo

·         Wildlife Law Course Guide and Supporting Memo

UCC statute of limitations dooms claim

Here at the beginning of the semester, I've just been going over determining whether the UCC or common law applies to contract claims, and here's a recent case out of the Seventh Circuit, Heiman v. Bimbo Foods Bakeries Distribution Co., No. 17-3366, that illustrates why that question can be important. 

The case involves some pretty eyebrow-raising allegations, as, according to the complaint, the defendant began "fabricating" breaches of the contract between the parties, so that it could terminate the contract based on these allegedly faked breaches. Pretty dramatic stuff, but the case falls apart on a statute of limitations issue. The UCC statute of limitations is four years; the relevant common law statute of limitations was ten years. All parties agreed that the cause of action accrued in 2011, so the statute of limitations would have already run if the UCC applied; not so if the common law statute of limitations was applied. 

The court looked at the primary purpose of the agreement. The agreement at issue was a distribution agreement, and the court noted that jurisdictions overwhelmingly interpret distributorship agreements to be about the sale of goods. While the agreement certainly also covered "a significant amount of services," those serves were all "incidental to the larger purpose of the contract, which [was] to sell goods to consumers." Therefore, the contract was governed by the UCC and barred as untimely. 

There was also a tortious interference claim that likewise failed because the complaint admitted that the plaintiff was aware of the possibility of its tortious interference claim in 2011, and so therefore this claim was also untimely under the relevant statute of limitations. The court also added that a party cannot tortiously interfere with its own contract, so the claim failed on the merits as well. 

Weekly Top Ten SSRN Contracts & Commercial Law Downloads (September 4, 2018)

 

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 09 Jun 2018 - 08 Aug 2018

 

Rank	Paper	Downloads
1.	Online Contracts (2018) Eric Goldman Santa Clara University - School of Law	371
2.	Data Pollution Omri Ben-Shahar University of Chicago Law School	250
3.	The Persistence of 'Dumb' Contracts Jeffrey M. Lipshaw Suffolk University Law School	200
4.	Cash America and the Structure of Bondholder Remedies G. Mitu Gulati and Marcel Kahan Duke University School of Law and New York University School of Law	153
5.	Not-So-Smart Blockchain Contracts and Artificial Responsibility Adam J. Kolber Brooklyn Law School	131
6.	Behavioral Law and Economics - Introduction Eyal Zamir and Doron Teichman Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem - Faculty of Law	131
7.	Force Majeure and Excuses in Smart Contracts Eric Tjong Tjin Tai Tilburg Law School	120
8.	New Frontiers in Private Fiduciary Law Paul B. Miller Notre Dame Law School	109
9.	Personalizing Mandatory Rules in Contract Law Omri Ben-Shahar and Ariel Porat University of Chicago Law School and Tel Aviv University	98
10.	Freedom, Choice, and Contracts Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	95

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 09 Jun 2018 - 08 Aug 2018

 

Rank	Paper	Downloads
1.	Online Contracts (2018) Eric Goldman Santa Clara University - School of Law	371
2.	Data Pollution Omri Ben-Shahar University of Chicago Law School	250
3.	The Persistence of 'Dumb' Contracts Jeffrey M. Lipshaw Suffolk University Law School	200
4.	Force Majeure and Excuses in Smart Contracts Eric Tjong Tjin Tai Tilburg Law School	120
5.	Personalizing Mandatory Rules in Contract Law Omri Ben-Shahar and Ariel Porat University of Chicago Law School and Tel Aviv University	98
6.	Freedom, Choice, and Contracts Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	95
7.	The Impact of the French Doctrine of Significant Imbalance on International Business Transactions David Restrepo-Amariles, Eva Mouial Bassilana and Matteo Winkler HEC Paris - Tax & Law, Université Côte d'Azur and HEC Paris	83
8.	Purposive Contractual Interpretation Andrew Robertson The University of Melbourne - Law School	75
9.	Why the Equity of Redemption? D.P. Waddilove Harvard Law School	69
10.	Breach of Contract: A Plea for Clarity and Discipline Neil H. Andrews University of Cambridge - Faculty of Law	66

Reminder that punitive damagers are not typically available for breach of contract claims

I don't blog a lot about contracts damages, but a recent opinion out of New York, St. Stephen Community A.M.E. Church v. 2131 8th Avenue LLC, 650558/11, had a discussion of the damages which it would allow the plaintiff to try to prove at trial. Specifically, the defendant was complaining about the plaintiff's seeking of lost income and punitive damages. The court found that the lost income damages would be permitted to survive to give the plaintiff an opportunity to prove them at trial with sufficient certainty. The plaintiff claimed that its board members would be able to testify at trial about the loss of revenue it suffered, and so the court did not think these were too speculative not to allow such testimony.

The plaintiff's punitive damages claim was a different story, however. The plaintiff argued that punitive damages were appropriate because a breach of fiduciary duty was at stake, but the court found that that was so only when the breach was "an outrageous public wrong," and there was nothing in this case that involved the "moral culpability" the court needed to award punitive damages. Likewise, punitive damages are normally recoverable from a breach of contract action only when there is a public right at issue or when an independent tort justifies such an award. Neither was relevant here, and so the court precluded the plaintiff from recovering punitive damages in connection with its breach of contract claims. 

Job posting - St. Thomas University School of Law

ST. THOMAS UNIVERSITY SCHOOL OF LAW seeks to fill entry-level tenure-track or, lateral tenure-track,-position(s) beginning in Fall 2019 in the areas of: Contracts, Business Associations, Tax Law, Criminal Law & Procedure, Evidence, Health Law, Tax Clinic, Academic Support and Bar Prep. Other doctrinal areas may be considered depending on the institutional needs. All applicants must have a strong academic record and be committed to outstanding teaching, scholarship and service. Prior teaching experience preferred.

 

St. Thomas University School of Law trains lawyers capable of applying legal principles to address and solve problems in an increasingly complex and changing society. The rigorous academic program of the Law School emphasizes lifelong learning and scholarship in a personalized, caring environment under Catholic auspices with a diverse student body and faculty. To this end, the Law School remains committed in teaching, scholarship, and service, to fostering a public order of human dignity, to training lawyers sensitive to the needs of the region’s underrepresented communities, and to expanding access to professional opportunities which includes active partnerships with business, government and the South Florida community.

 

St. Thomas encourages applications from all candidates, including women and minorities, who will contribute to our stimulating and diverse cultural and intellectual environment. The Faculty Recruitment Committee will review applications on a rolling basis, and anticipate attending the AALS Faculty Recruitment Conference in October 2018. Applicants should send a cover letter indicating teaching and scholarly interests, a curriculum vitae to Professor Mark Wolff, Chair Faculty Recruitment Committee at St. Thomas University School of Law, 16401 NW 37th Avenue, Miami Gardens, FL 33054 or email [email protected].