ContractsProf Blog

The (Sporadically) Weekly Top Ten SSRN Contracts & Commercial Law Downloads (November 21, 2018)

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 22 Sep 2018 - 21 Nov 2018

Rank	Paper	Downloads
1.	Sovereign Debt Restructuring and U.S. Executive Power (Reestructuración de Deuda Soberana y el Poder Ejecutivo Norteamericano) Lee C. Buchheit and G. Mitu Gulati Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law Date Posted: 03 Oct 2018 Last Revised: 01 Nov 2018	587
2.	Requiem for a Paradox: The Dubious Rise and Inevitable Fall of Hipster Antitrust Joshua D. Wright, Elyse Dorsey, Jan Rybnicek and Jonathan Klick George Mason University - Antonin Scalia Law School, Faculty, Government of the United States of America - Federal Trade Commission, Freshfields Bruckhaus Deringer LLP and University of Pennsylvania Law School	461
3.	'Surrounding Circumstances' in Contractual Interpretation: Where are we Now? John Eldridge The University of Sydney Law School	188
4.	Big Data is Not Big Oil: The Role of Analogy in the Law of New Technologies Lauren Henry Scholz Florida State University - College of Law	110
5.	Regulating Blockchain: Techno-Social and Legal Challenges - An Introduction Philipp Hacker, Ioannis Lianos, Georgios Dimitropoulos and Stefan Eich Humboldt University of Berlin, University College London - Faculty of Laws, Hamad Bin Khalifa University and Princeton Society of Fellows	102
6.	The Structure of Remedial Law Stephen Smith McGill University - Faculty of Law	93
7.	The Arbitration-Litigation Paradox Pamela Bookman Temple University Beasley School of Law	80
8.	The Value of Choice and the Justice of Contract Hanoch Dagan Tel Aviv University - Buchmann Faculty of Law	68
9.	Here Lions Roam: CISG As the Measure of a Claim’s Value and Validity and a Debtor’s Dischargeability Amir Shachmurove Troutman Sanders LLP	66
10.	Art 6:102: Implied Terms Helge Dedek McGill University - Faculty of Law	59

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 22 Sep 2018 - 21 Nov 2018

Rank	Paper	Downloads
1.	'Surrounding Circumstances' in Contractual Interpretation: Where are we Now? John Eldridge The University of Sydney Law School	188
2.	Fusion and Theories of Equity in Common Law Systems P G Turner University of Cambridge - St. Catharine's College	108
3.	The Arbitration-Litigation Paradox Pamela Bookman Temple University Beasley School of Law	80
4.	The Value of Choice and the Justice of Contract Hanoch Dagan Tel Aviv University - Buchmann Faculty of Law	68
5.	Art 6:102: Implied Terms Helge Dedek McGill University - Faculty of Law	59
6.	Addressing Infringement: Developments in Content Regulation in the US and the DNS Annemarie Bridy University of Idaho	56
7.	The Modernization of European Consumer Law: A Pig in a Poke? Marco Loos University of Amsterdam - Centre for the Study of European Contract Law (CSECL)	51
8.	Substituted Performance in Contract Law: An Analysis Badrinath Srinivasan Independent	49
9.	Transaction Costs of Blockchain Smart Contracts Jakub J. Szczerbowski SWPS University of Social Sciences and Humanities	47
10.	Revisiting Unconscionability: Reciprocity and Justice C. Scott Pryor Campbell University - Norman Adrian Wiggins School of Law	41

 

The vital difference between a promise and a condition

I always tell my students that if you want people to promise to do something, you'd better make sure you don't phrase it as a condition in your contract, and a recent case out of the Middle District of Pennsylvania, Allen v. SWEPI, LP, No. 4:18-CV-01179 (behind paywall), carries just that lesson. 

The contract was for the purposes of exploring for oil and gas on the Allens' land and read that the agreement was "made on the condition that within sixty (60) days from the Effective Date of this lease, [the defendant] shall pay to the [Allens] the sum of Two Thousand Dollars ($2000.00) per acre for the first year." The defendant never paid the Allens this sum, and the Allens sued. However, the defendant argued that this was nothing but an option contract. It had the right to rent the land for oil and gas exploration if it paid the required sum. However, it was not required to pay that sum. Instead, the payment was a condition that had to be fulfilled before the contract would come into operation. The court agreed and dismissed the Allens' breach of contract causes of action. 

The court then also dismissed the Allens' promissory estoppel claim, because it found that there had been a valid and enforceable contract between the parties -- it was just an option contract that the defendant chose not to exercise. 

The Allens seem to have thought they had rented this land to the defendant. I think that what they wanted to accomplish (or thought they were getting) with the quoted clause was to make sure they were paid within 60 days. However, in phrasing it as a condition, what they got was no commitment from the defendant at all. 

No Compete Clauses in Bilateral Contracts (No Unilaterality)

In a recent case, employment agency Robert Half International, Inc. (“Robert Half”) brought suit against a former employee, Nicholas Billingham, and Billingham’s current employer, Beacon Hill Staffing (a competitor of Robert Half) for actual and anticipatory breach of contract. Billingham’s contract with Robert Half included the agreement that Billingham would not compete with or solicit clients from Robert Half if leaving the company.  Nonetheless, Billingham accepted employment with Robert Half’s direct competitor where he stated that he intended to “add to my team quickly and take market share from Beacon Hill’s competitors.”  Robert Half brought suit.  Billingham and Beacon Hill moved to dismiss the complaint for failure to state a claim.

Billingham first defended himself arguing that unilateral contracts cannot be anticipatorily breached since they technically seen do not arise until the actual performance has been rendered.  He argued that his contract was unilateral since his remaining obligations were not yet due.  (Strangely, he did so although he had already terminated the relationship himself.)  The court corrected him on this point, noting that a unilateral contract is one that “occurs when there is only one promisor and the other party accepts, not by mutual promise, but by actual performance or forbearance.”  (Quoting Williston § 1:17).  To help my students distinguish accepting by beginning of performance in bilateral contracts from offers for unilateral contracts, which is sometimes confusing for them, I tell them that they must scrutinize what type of acceptance is sought by the offeror: if onlythe actual performance, then there is a truly an offer for a unilateral contract. If this is not clearly the case, there is an offer for a “regular” bilateral contract.  In this instance, the contract between Billingham and Plaintiff was bilateral, not unilateral.  Robert Half promised to employ Billingham in exchange for Billingham's promise to abide by the restrictive covenants in the Agreement.  Billingham's promise included the prospectiveagreement that he would refrain from certain activities upon departing the company.  Billingham was thus not correct that the agreement “became unilateral” after his resignation.  That is a legal impossibility.  His obligations to forbear from the non-competitive agreements became due the moment he left Robert Half.  As with many other contractual issues, unilaterality and bilaterality are examined at the point of contract formation, not by looking at what actually happened thereafter.

The court thus found that plaintiffs had sufficiently pled a claim of anticipatory, if not actual, breach of contract. 

Plaintiffs also stated a claim for unjust enrichment. Defendants argued that Robert Half has not actually “conferred” any benefits on Beacon Hill and would thus not be liable for compensation under that theory.  The court noted that this is wrong.  Beacon Hill received a “benefit” from Billingham's employment through the revenue that he generates, his professional training, his relationships with customers and candidates, and his industry knowledge.  Beacon Hill's retention of these benefits is “unjust” as they are benefits that Billingham is barred, by the agreement, from conferring on Beacon Hill.

The case is Robert Half International Inc. v. Billingham, 317 F.Supp.3d 379, 385 (D.D.C., 2018).

The (Quasi) Weekly Top Ten SSRN Contracts & Commercial Law Downloads (November 10, 2018)

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 11 Sep 2018 - 10 Nov 2018

Rank	Paper	Downloads
1.	Sovereign Debt Restructuring and U.S. Executive Power (Reestructuración de Deuda Soberana y el Poder Ejecutivo Norteamericano) Lee C. Buchheit and G. Mitu Gulati Cleary Gottlieb Steen & Hamilton LLP - New York Office and Duke University School of Law	579
2.	Requiem for a Paradox: The Dubious Rise and Inevitable Fall of Hipster Antitrust Joshua D. Wright, Elyse Dorsey, Jan Rybnicek and Jonathan Klick George Mason University - Antonin Scalia Law School, Faculty, Government of the United States of America - Federal Trade Commission, Freshfields Bruckhaus Deringer LLP and University of Pennsylvania Law School	444
3.	The New Law of Penalties: Mapping the Terrain John Eldridge The University of Sydney Law School	246
4.	The Private Law Critique of International Investment Law Julian Arato Brooklyn Law School Date Posted: 13 Sep 2018 Last Revised: 21 Oct 2018	227
5.	'Surrounding Circumstances' in Contractual Interpretation: Where are we Now? John Eldridge The University of Sydney Law School Date Posted: 27 Sep 2018 Last Revised: 24 Oct 2018	181
6.	Reputation Failure: Market Discipline and Its Limits Yonathan A. Arbel University of Alabama - School of Law	105
7.	Noncompetes as Tax Evasion Rebecca Morrow Wake Forest University - School of Law	92
8.	Big Data Is Not Big Oil: On Analogical Reasoning, New Technologies, and Law Lauren Henry Scholz Florida State University - College of Law	89
9.	The Structure of Remedial Law Stephen Smith McGill University - Faculty of Law	82
10.	The Enduring Distinction Between Business Entities and Security Interests Ofer Eldar and Andrew Verstein Duke University School of Law and Wake Forest University School of Law	79

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 11 Sep 2018 - 10 Nov 2018

Rank	Paper	Downloads
1.	The New Law of Penalties: Mapping the Terrain John Eldridge The University of Sydney Law School	246
2.	'Surrounding Circumstances' in Contractual Interpretation: Where are we Now? John Eldridge The University of Sydney Law School	181
3.	Reputation Failure: Market Discipline and Its Limits Yonathan A. Arbel University of Alabama - School of Law	105
4.	Fusion and Theories of Equity in Common Law Systems P G Turner University of Cambridge - St. Catharine's College	78
5.	The Arbitration-Litigation Paradox Pamela Bookman Temple University Beasley School of Law	75
6.	The Value of Choice and the Justice of Contract Hanoch Dagan Tel Aviv University - Buchmann Faculty of Law	57
7.	How Did We End Up in a World Where Browsewraps are Enforced Even When They Waive All Consumer Rights? Cheryl B. Preston Brigham Young University - J. Reuben Clark Law School	54
8.	Addressing Infringement: Developments in Content Regulation in the US and the DNS Annemarie Bridy University of Idaho	50
9.	Introduction to the Research Handbook on Fiduciary Law D. Gordon Smith and Andrew S. Gold Brigham Young University - J. Reuben Clark Law School and Brooklyn Law School	38
10.	Transaction Costs of Blockchain Smart Contracts Jakub J. Szczerbowski SWPS University of Social Sciences and Humanities	38

Not remembering signing your arbitration agreement doesn't mean you didn't sign it

Another day, another arbitration compelled, this time in a recent case out of the Northern District of Illinois, Nitka v. ERJ Dining IV, LLC, Case No. 18 cv 3279. The plaintiff sued the defendant for sexual harassment, sex discrimination, and assault and battery. The defendant countered that the plaintiff had signed an agreement to arbitrate disputes relating to her employment, which these were. The plaintiff stated she had no memory of signing the arbitration agreement, but the defendant's Vice President of People and Development testified that it required new employees to sign such agreements before entering employment and maintained them in the usual course of business. The plaintiff's arbitration agreement was located in her personnel file. Furthermore, the plaintiff had apparently affirmatively indicated on an electronic form that she had signed the agreement. 

The plaintiff then argued that she had been a minor at the time of signing the agreement, but the court pointed out that she ratified the agreement by continuing to work for the defendant after her eighteenth birthday. 

I believe that the plaintiff did not remember signing the arbitration agreement. To be honest, I believe that, even if she remembered, she probably had no idea what it really was. She was a minor trying to get a job at a Chili's. I'm sure she signed what she was told to sign and clicked the electronic check-boxes she was told to click -- exactly the way the vast majority of us do when getting a new job. 

Mirror image rule reminder

Here's one for exam review. 

A recent case out of the District of Oregon, Reed v. Ezelle Investment Properties Inc., Case No. 3:17-cv-01364-YY, contains an application of the mirror image rule. 

The parties in the case were embroiled in a copyright infringement dispute. They had settlement discussions as follows: 

• Reed's counsel sent Ezelle a cease and desist letter that included a settlement agreement proposing to settle the matter for $5,000. 
• Negotiations followed. 
• Ezelle's counsel sent Reed's counsel a thousand dollar check (stating that it was not a settlement offer, although that doesn't seem important to the analysis here). 
• Reed's counsel responded saying that Reed accepted the thousand dollar offer and sending Ezelle's counsel a new proposed settlement agreement. 
• Ezelle's counsel crossed out the proposed agreement's confidentiality clause and sent it back. 
• Reed's counsel said the confidentiality clause was non-negotiable. 
• There were further negotiations that fell apart, leading eventually to this lawsuit. 

Ezelle argued that the parties had settled the case through the above series of events, but the court found there was never a binding settlement because Ezelle never accepted the settlement agreement. Under the mirror image rule, when Ezelle's counsel crossed out the confidentiality clause, that operated as a counteroffer that Reed would have needed to accept. Reed never did. Rather, Reed informed Ezelle that the proposed modification of the settlement agreement was unacceptable. Therefore, there was no binding settlement agreement between the parties. 

Ezelle argued that the confidentiality clause should be classified as immaterial or unconscionable, so that the settlement agreement should be enforced just with the confidentiality clause struck, as Ezelle had desired. However, the court found no reason to strike the confidentiality clause. 

The court went on to find copyright infringement and awarded $1500 in statutory damages, as well as attorneys' fees and costs. 

The fights over arbitration clauses continue

Alison Frankel has a write-up of A-1 Premium Acceptance, Inc v. Hunter, No. SC96672, a case out of Missouri that refuses to substitute an arbitrator when the arbitrator named in the arbitration clause is no longer available (in this case, the specified National Arbitration Forum no longer provides arbitration services on consumer loans like in the contract at issue here). This is yet another court weighing in on a split that's developed: Can arbitration be compelled when the arbitration clause specified a now-unavailable arbitrator, in which case the court substitutes an arbitrator, keeping to the pro-arbitration nature of the contract? Or should courts refuse to rewrite such contracts to compel arbitration in a forum not originally agreed to, rather allowing judicial proceedings to proceed? 

Myanna Dellinger has already written about this issue in a context of another case. Given how many arbitration clauses out there might still be in effect that specify a now-defunct arbitrator, this doesn't seem like an issue that's going away. Frankel's article concludes by quoting A-1's attorney as indicating that it will petition the Supreme Court to resolve the dispute. 

(h/t to Eric Chiappinelli for sending this along to us!)

In honor of the Red Sox, some baseball contracts

Hello! I was away at a conference last week and then the Red Sox* decided to win the World Series, which threw off all productivity for a while. As I ease back into blogging, I thought I'd link you to this piece from Business Insider, analyzing some of the terms set forth in the 2011-era version of Major League Baseball's uniform contract. I find my students always love to look at real-life contracts, and this is a nice point in the year to do it, as it's a nice way to demonstrate that they are now able to (or should be able to!) understand more of the contract than they might have on the first day of class. 

Of course, I always try to impress upon my students that contracts can be negotiated, so here's a list of some more unusual contract clauses baseball players were successful in getting teams to agree to. 

*(not the Red Sex)