ContractsProf Blog

Non-Competes and Unemployment

Democratic Senators Elizabeth Warren of Massachusetts (and a former Democratic party candidate for President) and Chris Murphy of Connecticut are urging the Federal Trade Commission to take action against non-competes, warning that they will exacerbate the already challenging task of finding employment for those affected by the pandemic.  Scholars such as Orly Lobel have written extensively about the effect that non-competes have on employee mobility, and how they may disproportionately affect certain demographic groups (i.e. women, people of color).  As I mentioned in a previous post, many states have already started to crack down on noncompete agreements on the grounds that they are unlawful restraints on trade and against public policy.  Other states have not.  Even in those states that have restricted their use, the non-compete clauses stubbornly remain in employment contracts either because employers haven’t updated their contracts or because they think their employees aren’t aware of the law and think these clauses will serve as an effective deterrent.  As I note in my book, The Fundamentals of Contract Law and Clauses, employers should avoid this type of bad faith drafting behavior -- not only is it unethical, but putting clauses that employers know are unlawful in their employment agreement may result in penalties and even jail time in some jurisdictions!

The Gap and Lease Obligations

In another case involving pandemic-related contractual breaches, the Gap is suing Simon Property Group, the owner of multiple shopping malls, to get out of its leases.  This is after Simon sued Gap in June when Gap went on a rent strike to save money.  At that time, the CEO of Simon, David Simon, said, “The bottom line is, we do have a contract and we do expect to get paid.”  At that time, Gap owed Simon $65.9 million in rent and fees.  Now Gap is suing to cancel its leases or avoid rent indefinitely, retroactive to March when its stores were ordered to close as part of government orders or restrictions.  According to an article published in Bloomberg, Gap is arguing that the Covid-19 pandemic caused it “severe and irreparable hardships” and that it “frustrated the express purpose of these leases and made their principal object illegal, impossible, and impracticable, all for a period of time that remains unknown and unknowable.”  (It seems to me that the Gap legal department needs to brush up on their basic assumption defenses, rather than throwing them all in the same pot in a messy stew).

Simon is not the only mall owner who is being subject to Gap’s “illegal, impossible, and impracticable” argument.  It’s also not the first time the Gap has tangled with a mall owner over lease payments.  Last week, it was ordered to continue paying rent on a space in the Bow Tie Building in New York.  The judge did, however, give the Gap a 10-percent reduction in rent in light of the “extraordinary circumstances” caused by the pandemic. 

Just a Link Before I Go

Great post on the Law and Political Economy take on Contracts from Luke Herrine. 

This post is part of a series on introducing critical perspectives, including critical race perspectives, into contracts teaching.  Other posts in the series include:

• Guest Post by Deborah Post on Williams v. Walker-Thomas
• Guest Post by Chaumtoli Huq, Part III: Counter-Hegemonic Narratives
• Guest Post by Chaumtoli Huq, Part II: Freedom to Contract and the Reasonable ManGuest Post by Chaumtoli Huq, Part I: The Decolonial Framework
• Guest Post by Deborah Zalesne, The (In)Visibility of Race in Contracts: Thoughts for Teachers
• What Should a Court Do in Response to Racist Contractual Threats? Wolf v. Marlton Corp.
• Guest Post by Charles Calleros: Raising Issues of Race, Ethnicity, and Culture in 1L Contracts: Language Barriers
• Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part II – Consideration
• Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part I – Mutual Assent
• Teaching Assistants, Emily Houh's Redemptive Theory of Contract Law

MOVING!

We are packing up the house we have lived in for the past sixteen years (below, mostly packed).

I am heading out to Oklahoma, where I start teaching next month at the Oklahoma City University School of Law, and I can prove it!  Well, sort of.  The page will be very spiffy pretty soon.

You may notice that things are quieter here than usual, but you can find other things to do with your time.  Get to know your family, your pets, your neighbors (from a safe distance).  

See you on the other side of the journey!

Tuesday Top Ten - Contracts & Commercial Law Downloads for July 28, 2020

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 29 May 2020 - 28 Jul 2020

Rank	Paper	Downloads
1.	Blockchain Code as Antitrust Thibault Schrepel and Vitalik Buterin Harvard University (Berkman Center) and Ethereum Foundation	2,319
2.	Contracts for Clouds, Revisited: An Analysis of the Standard Contracts for 40 Cloud Computing Services Johan David Michels, Christopher Millard and Felicity Turton Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	662
3.	The Social Cost of Contract David A. Hoffman and Cathy Hwang University of Pennsylvania Law School and University of Virginia School of Law	322
4.	Pervasive Infancy: Reassessing the Contract Capacity of Adults in Modern America Michael Lewis Rath, Young and Pignatelli	178
5.	Lost in Transmission: Unilateral Mistakes in Automated Contracts Kelvin F.K. Low and Dr Eliza Mik City University of Hong Kong and Melbourne Law School	150
6.	When Contract’s Basic Assumptions Fail: From Rose 2d to COVID-19 Hanoch Dagan and Ohad Somech Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	146
7.	License to All or Access to All? A Law and Economics Assessment of Standard Development Organizations’ Licensing Rules Anne Layne-Farrar and Richard Stark Charles River Associates and Cravath, Swaine & Moore LLP	130
8.	Windstream and Contract Opportunism Elisabeth de Fontenay Duke University School of Law	108
9.	A Dangerous Chimera: Anti-Suit Injunctions Based on a 'Right to Be Sued' at the Place of Domicile Under the Brussels Ia Regulation? Mukarrum Ahmed Lancaster University	101
10.	Unjust Enrichment in Australia: Whats Is(n't) it? Implications for Legal Reasoning and Practice Kit Barker University of Queensland - TC Beirne School of Law	96

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 29 May 2020 - 28 Jul 2020

Rank	Paper	Downloads
1.	The Social Cost of Contract David A. Hoffman and Cathy Hwang University of Pennsylvania Law School and University of Virginia School of Law	322
2.	Pervasive Infancy: Reassessing the Contract Capacity of Adults in Modern America Michael Lewis Rath, Young and Pignatelli	178
3.	Lost in Transmission: Unilateral Mistakes in Automated Contracts Kelvin F.K. Low and Dr Eliza Mik City University of Hong Kong and Melbourne Law School	150
4.	When Contract’s Basic Assumptions Fail: From Rose 2d to COVID-19 Hanoch Dagan and Ohad Somech Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	146
5.	Delaware's Global Competitiveness William J. Moon University of Maryland Francis King Carey School of Law	112
6.	Frustration, not Fortitude: the Case for Applying the Doctrine of Frustration to Leases Affected by COVID-19 Eu-Yen Tay Independent	95
7.	Relationship as Product: Transacting in the Age of Loneliness Shmuel I. Becher and Sarah Dadush Victoria University of Wellington and Rutgers, The State University of New Jersey - Rutgers Law School	77
8.	Symposium Article: Complete Contracts in Finance Elisabeth de Fontenay Duke University School of Law	64
9.	Illegality of Contracts In Ghana; Filling the Gap Jonathan Asare GIMPA Law Faculty	60
10.	Hashing Out Agreements: An Overview of 'Smart' Contracts under Canadian Law Florian Martin-Bariteau and Marco Pontello University of Ottawa - Common Law Section and University of Ottawa, Common Law Section, Students	59

“Trade Secret” as an End Run Around Non-Compete and Non-Solicitation Restrictions?

Tesla recently sued its competitor, Rivian, claiming that Rivian was poaching its former employees and encouraging them to misappropriate Tesla’s trade secrets.  What struck me was that many of the alleged trade secret misappropriation claims in the complaint (available here ) involved information relating recruitment and retention efforts, including compensation.  Tesla’s employees sign an NDA that requires them not to disclose Tesla’s “Proprietary Information” which is defined rather broadly to include “all information, in whatever form and format, to which have access by virtue of and in the course of" employment and encompassing, “technical data, trade secrets, know-how,…plans, designs,. .. methods, processes, data, programs, lists of or information relating to, employees, suppliers…financial information and other business information.” 

Note that the definition of “proprietary information” is greater than “trade secret” so that the employee’s contractual obligation is greater than it would otherwise be under trade secret law alone.  Perhaps not surprisingly, Tesla filed breach of contract claims against the individual defendants (the former Tesla employees) as well as an intentional interference of contract claim against Rivian.

In a case involving Fidelity, a former employee left Fidelity to join Merrill Lynch.  The employee allegedly took information regarding customer accounts and also contacted Fidelity clients and tried to solicit their business. That employee’s contract included a non-solicitation clause that stated that he would not “directly or indirectly … solicit in any manner or induce or attempt to induce any customer or prospective customer with whom Employee had personal contact or about whom Employee otherwise learned during the course of the Employee’s employment with the Fidelity Companies.”

In both cases, the alleged trade secrets involved information that could be referred to as relational and closely tied to the services side of the business, rather than the product development or technical side.  The Tesla employment contracts are governed by California law which essentially finds non-compete and non-solicitation clauses unenforceable.  The Fidelity contract, on the other hand, was governed by Georgia law which permits non-solicitation clauses if they are reasonable (i.e. if the employee had worked with the client while employed at Fidelity) but takes a tougher stance on non-compete clauses (although not as tough as California).

These two situations led me to wonder whether companies are using confidentiality clauses in their employment agreements as a way to achieve the same result as a non-compete and/or non-solicitation clause.  As states have increasingly restricted or, in the case of California, essentially prohibited the enforceability of non-compete clauses and non-solicitation clauses, companies seem to be increasingly leaning on trade secret law and confidentiality clauses in employment agreements to keep their former employees from joining competitors.

Guest Post by Carliss Chatman on the Bar Exam

The Injustice of the Bar Exam
Carliss Chatman

There are many practices in the legal profession that we continue because of tradition.    Next week, in the midst of a global pandemic, law school graduates in the class of 2020 will be forced to disregard public health recommendations to spend two days sitting for the Bar Exam—for no better reason than that’s just the way we’ve always done it.   As of today, 22 states— Arkansas, Arizona, Colorado, Idaho, Iowa, Kansas, Minnesota, Missouri, Mississippi, Montana, Nebraska, North Carolina, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Virginia, Washington, West Virginia, Wisconsin, and Wyoming — plan to offer the Bar Exam live on July 28-29. “The bar exam is a horrible way to determine who is qualified to be an attorney, especially since the exam does not even test the skill set that attorneys need for practice.”

Admission to the legal profession has undergone numerous changes since our country’s founding, many inspired not by a desire to ensure competence, but instead a desire to exclude certain people from the profession.  Legal academics, judges, and practitioners have acknowledged these improper motivations, and some have made noble efforts to reform these systems—but to no avail.  The legal profession, particularly the upper echelons of the profession, remains disproportionately White and male.  response of bar examiners to the Novel Corona Virus and our current unpredictable life through this pandemic, has been at least tone deaf and at most a total disregard of public health. This system does not just need an overhaul; we need to start over.

I do not need current and future students to suffer the way I did in law school and during bar preparation to prove that they are worthy of joining the profession. Instead, I believe we should strive to correct what was wrong about our experiences—from the lack of diversity on our campuses, to the classroom and bar examination experiences that approach hazing. There are many reasons to abandon the current bar examiner driven character and fitness followed by a bar exam process.

First, the bar examiners hold cartel power. In Ben Edward’s Professional Prospectus, he explains that  cartelization occurs when professionals act in their own interest rather than that of the public.  For attorneys, many bar association rules seem more designed to restrain competition between lawyers than to protect the public.  Bar examiners appear interested in continuing to exist, and as a profession the idea that a certain number of people sitting for the exam in each state must fail each administration has devolved into protectionism, that does more to protect the cartel than the public.  As a result, the bar examiners have little oversight.  

The legal profession has an access to justice problem.  While it is most clearly a problem for low-income individuals, it is also true for the middle class, who are too wealthy for pro bono services, but too poor to afford the legal counsel they need in all but the most dire of circumstances.  Pro bono services exist, and there is a right to counsel in criminal litigation, but in all other circumstances most people go without legal representation.  For clients in need of civil litigation and administrative law-based services, which includes life-altering controversies like landlord-tenant disputes, debt collection, tax audits, and immigration, there is little guidance on how to find a competent attorney, and no support for the expense of representation.  Small businesses often go without legal advice on structuring and contracts, to their own demise.   Our system perpetuates these inequalities by assuming there is reason to restrict the number of legal practitioners in a state even more than the restrictive process of graduating from college, taking the LSAT, and completing law school. 

The current system also fails to adequately measure and promote competence, as Ben Edwards notes.  A disconnect exists between what is learned in law school and tested on the bar exam, and what is needed in practice. Consequently, a student can do very well in law school and pass the bar exam without even a passing understanding of many elements that are fundamental to every day legal practice.  When I graduated from law school in 2001, I had never written or even seen a contract, and I did not understand the importance of discovery or due diligence.  I did understand the rules of evidence and procedure, but I did not understand how those rules translated to what guides an attorney in everyday practice. 

In some subjects there’s also a lack of depth, and an overemphasis on commonly tested areas.  I teach an array of business law related bar tested subjects: Contracts, Business Entities, Sales, and Core UCC Concepts (a survey of Articles 2, 3, 4, and 9).  I also teach Professional Responsibility.  In all of these courses, professors have the ability to make judgment calls, as it is impossible to cover any subject comprehensively in a 3- or 4-hour course.  Most of the time, when choosing between two topics I will choose what is on the bar exam.  So, for example, in Core UCC Concepts, I minimize time spent on banking, credit cards, and electronic payments, opting instead to spend more time on Article 9. I am aware that most of my students will only take one class on the UCC beyond first year Contracts, and I feel a duty to ensure that I expose them to what they need most for the bar exam, rather than exploring the law behind the electronic payments they engage with every day.

The most disturbing outcome of the current system involve civil rights abuses, primarily through the character and fitness process.  The purpose of the character and fitness examination is to protect the public and the justice system by ensuring that those admitted to the bar are worthy of trust and confidence.  To accomplish this goal, many states still scrutinize personal mental health records, require extensive explanations of items deep in an applicant’s past, which re-victimizes those in recovery.  This is a system in which a rape victim must explain why they sought counseling and were medicated during law school, while the perpetrator sails through the process if the victim chooses not to prosecute.  Such a system should not be sustained. The message of the character and fitness process is not to graduate from law school healthy and whole, with proper coping mechanisms for stress.  Instead, an applicant will be better off avoiding creating a record of “mental or emotional instability” or “drug or alcohol dependency.”   Adding even further insult to injury, to appeal a denial of a license requires funds many bar applicants do not have. Appearing before the board of law examiners without counsel almost always ensures a failure to obtain a license.

This summer has shown us that the system has no transparency and inadequate oversight.  State-by-state, it is difficult to determine who is in charge of the exam, who has the authority to veto board of law examiner decisions, and even to whom one can appeal.  Without any explanation, it appears these decisions are made with a complete disregard for human life.  Harm is being done to students.  To date, this harm is psychological, emotional, and financial for many.  When graduates sit for live exams next week in 22 states, this harm could get more serious, resulting in the death of these graduates and their loved ones. 

No aspect of our justice system accurately reflects the makeup of America, nor does it reflect those who fall victim to the justice system’s shortcomings.  The structure in place for licensing attorneys contributes to these disparities.  Bar examiners have shown that they are not equipped to evolve with the times, nor are they equipped to properly assess the competency of graduates to practice law.  The goal appears to be to maintain cartel power, not to advance access to justice.  For these reasons, it is essential that all lawyers, as members of a self-governing profession, take this power away from the bar examiners and design a new system for admitting members. What was once a mere scholarly debate has become, in the age of Covid-19, a matter of life and death.

Introducing Guest Blogger Carliss Chatman

Today we welcome Carliss Chatman (left) as a guest poster on the blog. 

Professor Chatman is an Associate Professor of Law at the Washington and Lee University School of Law. where she teaches an array of business law, commercial law, and ethics classes.  Her scholarship interests are in the fields of corporate law, ethics, and civil procedure. Her scholarship draws on her 11 years of legal practice in complex commercial litigation, mass tort litigation and the representation of small and start-up businesses in the United States and the Kingdom of Saudi Arabia. 

Professor Chatman's work is also influenced by over two decades of service on non-profit boards and involvement with community organizations. Through leadership positions, she has developed expertise in corporate governance and non-profit regulation. Professor Chatman has actively advocated on behalf of non-profit organizations at state and federal legislatures.  

Her recently published scholarship has addressed corporate personhood and attorney whistleblowers.  Her forthcoming scholarship explores the consequences of granting legal personhood to fetuses. She also has  a co-authored casebook, Business Entities: A Systems Approach, forthcoming with Carolina Academic Press.  In addition to her more traditional scholarship, Professor Chatman also writes for broader audiences, with publications in media including: Slate, Time Magazine, CNN Online, and the Washington Post.

We are grateful to Professor Chatman for taking the time to share her thoughts with our readers today.

Weekend Frivolity: Yet Another Pandemic-Induced Hamilton Variant

 

 

The Social Meaning of "Contract"

Generally, readers of this blog tend to think of contracts with a certain reverence. To break a promise is not something that contracts profs take lightly. But during times of crisis and turmoil, the inviolability of a contract is less a given.  The past few months have been an unusually volatile period of time.  "Contract" is often referred to in a negative light during times of social turbulence, as something that is broken or should be broken.  There has been a lot of discussion in the media in the past few months about the breaking of the social contract when it comes to race and economic equality.  And last week, Greta Thunberg, the environmental activist, talked about the need to “tear up and abandon valid contracts and deals.” 

This isn’t the first time, of course, that social disruption has led to calls to breach existing contracts.  The last time it reverberated throughout larger society was during the Great Recession when scholars, such as Brent White , argued for the morality of "strategic default" where homeowners breach their contracts with large banks by walking away with from their underwater mortgages.

Maybe contracts law and (at least some) contracts scholars have been too complacent.  For the past few decades, the role of contracts in promoting marketplace efficiency has dominated contracts scholarship, without equal discussion of its role in promoting fairness - or perpetuating unfairness. Have contracts profs allowed contracts to be hijacked by free market economics? 

The next few months - maybe years - will see performance defaults that will require courts to consider which promises must be kept and which may be excused -- and should prompt contracts scholars and courts to rethink the meaning and purpose of contracts and contract enforcement. 

 

 

Loyola Law Review Symposium on Consentability

The Loyola Law Review (Vol. 66, Spring 2020) recently published a symposium issue on my book, Consentability:  Consent and Its Limits with a foreword by Brian Bix and contributions by Lori Andrews, Philip Cook and Kimberly Krawiec, Evan Selinger and Woodrow Hartzog, Sharon Thompson, Jonathan Witmer-Rich, R. George Wright, Eric Zacks, and Deborah Zalesne.  It was really an honor to be able to engage with these incredible scholars on a wide range of subjects involving questions of consent and consentability, and I am thankful to Danni Hart for organizing this symposium. Although the symposium issue is not yet available on the law school's website,  here is a link to Evan Selinger and Woody Hartzog's article, and a link to my Author's Response.  An excerpt of my Author's Response is below:

This book project first started as a way for me to understand why the law permits individuals to consent to some activities but not others. This captures one of the two meanings of the term “consentability.” The first meaning refers to legality. Certain acts are simply not permitted and so one is not allowed to consent to them. These activities include paid sex work and selling one’s organs. But the question of legality or legal permissibility is tied to the second meaning of consentability, that of possibility. Some acts are not legal because it seems unlikely that anyone could or would actually want to consent to them. The nature of the act itself makes us question the validity of the consent. We believe that something went awry in the decision-making process—that there was some type of coercion involved, a lack of information about what the activity entailed, or some other defect in the decision- making process. We suspect, in other words, that given what the activity entails, nobody would really want to participate. This, however, raises the question—what does it mean to consent? 

Consent plays a unique and critical role in a society which is premised upon individual liberties.  Guilt or innocence often hinges upon consent, as do violations of rules and regulations.  Yet, the meaning of consent is amorphous and what the law and society deem to constitute consent in one context, would not suffice to constitute consent in another.

My book proposes a framework for evaluating consentabilty that recognizes the integrality and essence of consent.  Consent requires three conditions:  a manifestation (a word or act) of consent, knowledge, and voluntariness.  The amount required of each condition (what I refer to as “robustness”) depends upon the activity.  In my book, I introduced a hierarchy of threats to the autonomy interest based upon a number of factors.  This hierarchy ranges from the "highest level" (death) to lower levels (temporary restrictions on the use of one's property).  The greater the threat to the autonomy interest, the more robust the consent conditions must be in order to constitute “valid” consent.  Consent is invalid where the threat to autonomy outweighs the conditions of consent.  Consent is valid where the conditions of consent outweigh the threat to autonomy.

My definition of autonomy used within the context of the framework is not meant to assess the worth or value of an activity, but to assess whether the act might constrain the future self in such a way that it justifies greater caution (i.e. more robust consent conditions) before proceeding.  The potential harm that someone might suffer from clicking “Agree” to a website’s terms and conditions before making a purchase generally poses less of a threat to the autonomy interest than signing a form to have a kidney removed, and so requires less robust consent conditions.  Consenting to a kiss requires less robust conditions than consenting to sex.  The greater the risk associated with the activity, the more certain we want to be that consent was given—and so the more robust must be the conditions of consent.

 

 

Contracts Issues in Trump v. Trump (Sup. Ct. Dutchess Co., July 13, 2020)

As we reported recently, A New York Appeals Court lifted a temporary injunction against the publisher of Mary Trump's book, Too Much and Never Enough. The book has been released, and we know its contents.  But its contents are not the stuff of this blog.  Rather, we are interested in Justice Greenwald's handling of the contractual issues relevant to his decision to vacate the temporary restraining order (TRO) and preliminary injunction against May Trump.

The dispute arose out of a 2001 stipulation, ending lawsuits related to the estate of Fred Trump.  The court assumed arguendo that the stipulation should be treated as a contract, and that assumption seems well-supported in New York's case law relating to such stipulations.  The stipulation includes a confidentiality clause.  However, it is not clear that the clause was to cover anything beyond the matters in dispute in the estate litigation.  Moreover, Justice Greenwald observes, "the clause is so overly broad, as to be ineffective."

The court finds that no action based on the stipulation can stand against the book's publisher, which was not a party to the stipulation and is not Mary Trump's agent.  As to Mary Trump, the court applied a three-part test for the granting of a preliminary injunction: a showing of likely success on the merits; a showing of irreparable harm; and a balance of equities favoring the plaintiff.

The case was brought by Robert Trump, the President's brother, and the complaint identified no particular harm to Robert Trump that would follow from the publication of the book.  The court accordingly found that plaintiff could not show that he would likely succeed on the merits of his claim.  Because it was his burden to produce "clear and convincing evidence," Plaintiff did not help his cause by averring that he did not know the contents of the book.  As King Lear put it in a similar context, "Nothing will come of nothing."  

The court's discussion of irreparable harm is more extended, but there too, plaintiff does not fare well.  Plaintiff wants to construe the contract as stipulating that breach of the confidentiality agreement would constitute irreparable harm entitling plaintiff to injunctive relief.  The court reiterates its skepticism regarding whether the non-disclosure agreement reached the contents of Mary Trumps book and notes that one cannot contract for equitable relief.  The court's reasoning here is also colored by Judge Greenwald's conviction that the non-disclosure agreement was overbroad, as it lacked temporal, geographic, or subject-matter limitations.  

As to the balance of equities, Robert Trump could say very little about his equitable interest in seeking an injunction, and the public interest in Mary Trump's book seems to be significant.  Moreover, the court was persuaded by Mary Trump's brief, which highlighted our constitutional aversion to prior restraints on speech.  Moreover, the book is out, and so the injunction is moot.  Unable to resist the play on the parties' shared name, the court concludes: “Con. Law trumps Contracts”.  

Tuesday Top Ten - Contracts & Commercial Law Downloads for July 21, 2020

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 22 May 2020 - 21 Jul 2020

Rank	Paper	Downloads
1.	Blockchain Code as Antitrust Thibault Schrepel and Vitalik Buterin Harvard University (Berkman Center) and Ethereum Foundation	2,296
2.	Contracts for Clouds, Revisited: An Analysis of the Standard Contracts for 40 Cloud Computing Services Johan David Michels, Christopher Millard and Felicity Turton Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	646
3.	The Social Cost of Contract David A. Hoffman and Cathy Hwang University of Pennsylvania Law School and University of Virginia School of Law	303
4.	Pervasive Infancy: Reassessing the Contract Capacity of Adults in Modern America Michael Lewis Rath, Young and Pignatelli	171
5.	Lost in Transmission: Unilateral Mistakes in Automated Contracts Kelvin F.K. Low and Dr Eliza Mik City University of Hong Kong and Melbourne Law School	147
6.	When Contract’s Basic Assumptions Fail: From Rose 2d to COVID-19 Hanoch Dagan and Ohad Somech Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	144
7.	Measuring 'Access to Justice' in the Rush to Digitize Amy J. Schmitz University of Missouri School of Law	121
8.	License to All or Access to All? A Law and Economics Assessment of Standard Development Organizations’ Licensing Rules Anne Layne-Farrar and Richard Stark Charles River Associates and Cravath, Swaine & Moore LLP	107
9.	Windstream and Contract Opportunism Elisabeth de Fontenay Duke University School of Law	102
10.	A Dangerous Chimera: Anti-Suit Injunctions Based on a 'Right to Be Sued' at the Place of Domicile Under the Brussels Ia Regulation? Mukarrum Ahmed Lancaster University	97

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 22 May 2020 - 21 Jul 2020

Rank	Paper	Downloads
1.	The Social Cost of Contract David A. Hoffman and Cathy Hwang University of Pennsylvania Law School and University of Virginia School of Law	303
2.	Pervasive Infancy: Reassessing the Contract Capacity of Adults in Modern America Michael Lewis Rath, Young and Pignatelli	171
3.	Lost in Transmission: Unilateral Mistakes in Automated Contracts Kelvin F.K. Low and Dr Eliza Mik City University of Hong Kong and Melbourne Law School	147
4.	When Contract’s Basic Assumptions Fail: From Rose 2d to COVID-19 Hanoch Dagan and Ohad Somech Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	144
5.	Measuring 'Access to Justice' in the Rush to Digitize Amy J. Schmitz University of Missouri School of Law	121
6.	Delaware's Global Competitiveness William J. Moon University of Maryland Francis King Carey School of Law	104
7.	Frustration, not Fortitude: the Case for Applying the Doctrine of Frustration to Leases Affected by COVID-19 Eu-Yen Tay Independent	93
8.	Stop Teaching Consideration Alan M. White CUNY School of Law	77
9.	Illegality of Contracts In Ghana; Filling the Gap Jonathan Asare GIMPA Law Faculty	59
10.	Contracts on the Seabed Christiana Ochoa Indiana University Maurer School of Law	58

Relationship as Product - Guest Post by Shmuel I. Becher & Sarah Dadush

Today we have a guest post from Shmuel I. Becher and Sarah Dadush based on their article, Relationship as Product:  Transacting in the Age of Loneliness.

 

One interesting way to look at human relationships is to distinguish between social/communal norms on the one hand, and market/exchange norms, on the other. For instance, if a friend invites you over for dinner, you will probably express your gratitude by giving them a kiss or a hug. You would not offer them payment in exchange for their “service” of having you over. At the same time, if you have dinner at a restaurant, you will expect to pay for your meal, and you will not expect to hug the waitress or to kiss (or be kissed by) the chef. There’s a business sphere and a social sphere. These spheres should be kept distinct, if not separate.  

When businesses contract with consumers, they operate in the market/exchange sphere. But what happens when businesses deliberately blur this reality? More and more businesses are marketing their products and services emotionally, addressing consumers as one would approach a friend, lover, family member or caring community member.

Consider the following real-world illustrations:

• A company sends an e-mail titled “A Love Note from Everyday Oil,” greeting its customers with “Hello to this beautiful community of people we love!” and ending its message with “xoxo, Emma”.
• A telecom company greets a customer returning from a trip overseas with an unsolicited text message, simply saying “Welcome home! We hope you had a safe trip.”
• A petrol company e-mails a customer, congratulating him on being “a great customer” and informing him that “we thought we’d return the favor” by offering a few cents discount on fuel.
• An investing banking company emails a client, saying “Friendly note: [Name of client,] We want to reward you with up to $500 offer.”
• After unsubscribing from an email list, a window pops up, saying “Is this goodbye?....We still think you’re awesome though so don’t be a stranger”.
• An airline texts a traveler saying “In case you missed tomorrow’s local weather memo for… it’s going to rain … and quite a lot we hear. This could easily put a damper on your travel plans. Wear your galoshes, remember your umbrella….”
• A hotel chain promises its club members “Whenever you travel, we are waiting with open doors and open hearts to serve you.”

Many businesses are using emotional or love promises when communicating with consumers. Some consumers – perhaps even some readers of this blog – may brush off such promises and friendly communications as harmless. Aren’t these emails and texts just cute and innocent gestures that make our lives more pleasant and fun? As we explain in our article (Relationship as Product: Transacting in the Age of Loveliness), often the answer is “absolutely no”.

Humans need relationships to flourish. Relationships are crucial to our wellbeing (as Covid-19 is brutally reminding us). At the same time, Americans suffer from a loneliness epidemic (recall Bowling Alone, and see also here). This creates fertile ground for firms to pretend to be in communal relationship with us.

Indeed, firms are selling relationship as if it were a product, manipulating people into believing that individuals can form deep, meaningful and emotionally satisfying relationships with firms. The examples above are just a few mundane illustrations. Alas, firms are using these kinds of manipulations in other, more serious, contexts.

For example, online payday lenders frequently frame their messages around an offer to “help.” “‘We Help’ is our simple mantra”, “Call us on 1300 WE HELP”, “know that you’ll be welcomed at [payday lender] and treated with the same respect and care that we would a dear friend in need” are just a few examples. Lenders also use social media platforms to post content depicting their firm as fun, helpful, and always available—the virtues of a human friend. Individuals will find this content intermingled on their feeds with posts from family and friends.

Another example is real estate agencies. The real estate market involves complicated transactions that are stressful and risky. This provides the perfect setting for a real estate company to claim to be the client’s “protector,” promising to stand by them “every step of the way.” In a specific ad we came across, a woman of color was being embraced by a white man and “watched over” by a white woman (the realtor). Overall, the ad implies that the (female, non-white) client will be shielded and guided by the firm as she carries out her real estate transaction.

The loneliness epidemic can cause people to crave deep relationships. Firms realize that and frame their communications with consumers accordingly. In so doing, businesses lead consumers to believe, or at least imagine, that their (commercial/exchange) relationship with a firm can somehow fulfill their (communal/social) relationship craving. But firms are not people, and they are not capable of love or true friendship. As the New York Times cautions its readers, “Sorry, but your favorite company can’t be your friend”.

By luring consumers to believe they can form deep and intimate relationships with firms, consumers are led to lower their guards, to be forgiving of firms that misstep, and to behave in a less self-interested, more firm-regarding way. The emotional marketing literature suggests that firms that succeed in securing emotionally committed customers generate higher returns. This makes sense. Emotionally invested consumers will continue “purchasing even when there are good reasons to switch. This is a loyalty that will lead someone to keep their accounts with Wells Fargo despite it repeatedly getting fined, to get the new Samsung Galaxy even after the 7 was recalled, or to buy a VW in the face of the emissions test scandal” (see here).

Business-to-consumer contracts should reflect market norms and exchange relationships. Strategies that market and sell these exchanges as if they were social and intimate relationships are manipulative. Such strategies harm not only consumers, but honest competitors and society at large. The article thus offers avenues for addressing the relationship as product phenomenon legally. In particular, it suggests rethinking the puffery doctrine and exploring the possibilities for treating such marketing and selling techniques as deceptive or unfair trade practices.

This guest blog post is based on Shmuel I. Becher & Sarah Dadush, Relationship as Product: Transacting in the Age of Loneliness.

Guest Post by Deborah Post on Williams v. Walker-Thomas

The Square Deal Furniture Company*
Deborah Waire Post

            Every time I teach Williams v. Walker-Thomas, I am transported back in time to my own childhood. My observation of commercial relationships at that time, my experiences as a poor black person living among other working class white and black families on an integrated street in a small city, bear no relation at all to the language of the lower court decision or the dissent on appeal. Nor do they have a strong resemblance to the relationships described by Judge Skelly Wright in his decision. I did not experience retail sales as impersonal or arms-length transactions. And I certainly did not view my parents as unsophisticated purchasers. My parents were poor, not stupid—and like Ora Williams they dealt regularly with a person from a company like Walker-Thomas. I am pretty sure the extension of credit to my parents had nothing to do with income, assets, debts, or prior credit history. It had a lot to do with the personal relationship between them and the salesman from the Square Deal Furniture Company.

            Mrs. Williams was a good credit risk because she had a personal relationship with Walker-Thomas and its agents. There is a lot less risk of default in a personal relationship. Imagine going through a cafeteria line and finding you are a little short of cash. The cashier smiles and lets you take the cup of coffee anyway. You probably will take extra care to stop by and pay for that coffee the next day. You probably would do it even if you knew that the cashier couldn't remember which of the several dozen people he had seen the day before had been given credit. Would you hesitate to take a soda from a soda machine if the machine were out of order and dispensed soda without accepting coins? Would you mail the telephone company the change you find in the coin return?

            The representative of the Square Deal Furniture Store was a weekly visitor to our house. In retrospect, I am sure this had something to do with the timing of my parents' weekly paychecks. When he came, the salesman sat at the kitchen table and drank coffee with my Dad. He talked about lots of things besides the purchases and the payments my parents made. From where we sat as children, he seemed like a family friend. He listened to my parents when they explained they couldn't make a payment that week but would double up the next week. He sympathized when someone got sick. And over the years, he sold us a lot of merchandise. I have vivid memories of the white oxford shirts and plaid skirts we got to start school one year and the "French provincial" sofa, coffee table, and end tables that spruced up our living room for a couple of weeks before they showed signs of premature aging.

            The furniture was shoddy, the clothes were fine, but that isn't the point. The point is the relationship that you develop with someone who is given the privileged status of "friend." You pay unless there is a catastrophe—an illness or loss of employment or something like that. And if you can't pay, you return what you did not pay for. But you certainly wouldn't expect someone to show up at your house with a truck and remove everything you had ever purchased.

            In contract law, lawyers and judges talk as if the expectations individuals have of one another are created by the pieces of paper they sign. The Walker-Thomas Furniture Company did violence to Mrs. Williams and to the people with whom it dealt on a regular basis. It did violence by charging too much; it did violence by pressuring people to buy more than they could afford; it did violence by threatening harm; it did violence by disregarding friendships. There was bargaining. It was "business." But there was also trust. A salesperson who knows who you are and what you have to do to survive is not going to take more than you can afford to give. And in return, for years at a time, you faithfully make payments that amount to two, three, or even thirty times the market value of the goods you buy. You pay because you can get it on credit and because he will wait to be paid.

            These sales are not entirely "arms-length" nor are they completely self-interested. They are based on personal friendship and they depend on personal loyalty. The trial court in Williams called the cross-collateralization clause a "sharp practice." Skelly Wright talked about an absence of meaningful choice. But the key to the decision in Williams is surprise. I might even go so far as to call it betrayal.

* Published in Amy Kastely, Deborah Post, Nancy Ota & Deborah Zalesne, Contracting Law (5^th ed. Carolina Academic Press 2015).

This post is part of a series on introducing critical perspectives, including critical race perspectives into contracts teaching.  Other posts in the series include:

• Guest Post by Chaumtoli Huq, Part III: Counter-Hegemonic Narratives
• Guest Post by Chaumtoli Huq, Part II: Freedom to Contract and the Reasonable ManGuest Post by Chaumtoli Huq, Part I: The Decolonial Framework
• Guest Post by Deborah Zalesne, The (In)Visibility of Race in Contracts: Thoughts for Teachers
• What Should a Court Do in Response to Racist Contractual Threats? Wolf v. Marlton Corp.
• Guest Post by Charles Calleros: Raising Issues of Race, Ethnicity, and Culture in 1L Contracts: Language Barriers
• Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part II – Consideration
• Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part I – Mutual Assent
• Teaching Assistants, Emily Houh's Redemptive Theory of Contract Law

Introducing Guest Blogger Deborah Post

Today, we welcome Deborah W. Post (pictured) to the blog for a brief guest stint.

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

Professor Post is the author of a book on legal education, Cultivating Intelligence: Power, Law and the Politics of Teaching, written with a colleague, Louise Harmon and published by New York University Press, and a contracts casebook called Contracting Law with co-authors Amy Kastely, Nancy Ota, and Deborah Zalesne.

We are delighted to have Deborah with us!

The Blog Mourns the Passing of John Lewis

. . . and celebrates his memory

Teachers Tell Reese Witherspoon She Should Have Paid Attention During her Contracts Course in "Legally Blonde"

According to the New York Times Draper James, the fashion label of Reese Witherspoon (pictured in movie poster, right), posted the following on Intagram on April 2:

Dear Teachers: We want to say thank you. During quarantine, we see you working harder than ever to educate our children. To show our gratitude, Draper James would like to give teachers a free dress.  To apply, complete the form at the link in bio before this Sunday, April 5th, 11:59 PM ET. (Offer valid while supplies last - winners will be notified on Tuesday, April 7th.)

School teachers were so excited about the offer that they crashed Draper James site.  Over one million applications were submitted, but Draper James only had 250 dresses to give away.   The company attempted to mollify the teachers by offering 30% off on their merchandise, but the teachers were unimpressed, and they got a bit salty.  As one put it on Twitter:

Wow. @draperjames clearly doesn't know how much teachers make. "We love teachers! Here's 30% off our ridiculously expensive dresses." If I'm spending over $100 on an "everyday dress," it better also grade essays. 

The company tried to apologize; it announced that it was making a donation to a charitable organization that helps teachers.  Too late.  As Principal Skinner illustrates (first 30 seconds are most relevant here, it's a big mistake to make a teacher mad.

The teachers filed this class action complaint, alleging breach of contract, promissory estoppel, restitution and various statutory claims under California law.  Draper James moved to dismiss.  The words  in the original Instagram post: "apply," "valid while supplies last," and "winners" all suggest that we are not dealing with an offer here.  Stay tuned.

Instagram’s Terms of Service and Sublicense Rights

Do Instagram’s terms of service permit third parties to distribute photographs posted to users public account even when the user has expressly denied such permission?  That was an issue addressed by Sinclair v. Ziff Davis, LLC and Mashable, Inc. back in April. The plaintiff, Stephanie Sinclair, a professional photographer, owned the copyright to a photograph that she posted to her public Instagram account and which was titled “Child, Bride, Mother/Child Marriage in Guatemala.” Mashable, owned by Ziff Davis, tried to license the photograph for $50.00 for use in an article about female photographers.  Sinclair rejected the offer but Mashable embedded the photograph in its article anyway and published it on its website. Sinclair demanded that Mashable take down the copy of the photograph from the article but Mashable refused. Sinclair sued for copyright infringement.

Pursuant to Instagram’s policies, users can use an API (application programming interface) to embed Instagram posts in their websites.  The defendants, Ziff Davis and Mashable, argued that their use of the photograph was subject to a valid sublicense from Instagram.  The presiding federal judge, Kimba Wood, agreed, finding that by creating an account, Sinclair agreed to Instagram’s Terms of Use and in doing so, “Plaintiff granted Instagram the right to sublicense the Photograph, and Instagram validly exercised that right by granting Mashable a sublicense to display the Photograph.” 

The Terms of Use stated that the user “grant[s] to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to the Content that you post on or through [Instagram], subject to [Instagram’s] Privacy Policy.” 

Of course, nobody reads the Terms of Use, as readers of this blog are well aware, and the plaintiff raised a number of arguments relating to this and the difficulty of locating and comprehending the terms.  The judge was unpersuaded.

Until she wasn’t.  In a surprising turn of events, the same judge granted a motion for reconsideration, stating that while the court stood by its holding that the plaintiff authorized Instagram to grant API users a sublicense to embed public content, a license must convey a licensor’s “explicit consent” to use a copyrighted work, and there was “insufficient evidence that Instagram exercised its right to grant a sublicense to Mashable.” The Platform policy which allegedly granted the sublicense was “insufficiently clear to warrant dismissal.”  The court referenced a case that had been decided earlier in June, McGucken v. Newsweek, LLC, which itself referenced the earlier Sinclair decision and Judge Wood’s opinion. McGucken found that there was “no evidence” of a sublicense agreement between Instagram and the defendants because although the terms governing the use of the API contemplated Instagram allowing a sublicense, they do not “expressly” grant a sublicense to those “who embed publicly posted consent” nor was there evidence of an implied sublicense.

In light of this “persuasive authority,” and to “correct clear error,” Judge Wood granted the motion for reconsideration.

Guest Post by Chaumtoli Huq, Part III: Counter-Hegemonic Narratives

Chaumtoli Huq, Teaching Contracts through a Critical Race & Decolonial Framework, Part III: Counter Hegemonic Narratives to the Doctrine*

There are other places in the contracts curriculum where I try to insert ideas of decoloniality in less direct ways.  As part of the course, I create a separate electronic folder on our course management site that allowed students to share materials related to our course, and I too share materials on critical approaches to the doctrine.  This allowed students to have a place where they can engage with me on these ideas, given the perpetual scarcity of class-time.  When I introduce materials, I place them in the course folder and I spend 10-15 minutes of class time to provide context to the materials.  If students share materials, I announce to the class that there are materials available and try to extrapolate one key point from the material that relates to our study, a practice which encourages and validates students who take the time to provide those materials.  Not doing so would signal that the materials students shared are not important.

For example, while discussing and the rule for offer in Southworth v. Oliver involving lands in Grant County, Oregon, I spend some class time discussing how ranchers like defendants came to acquire land from Pauite Native Americans.  Jacqueline Keeler,  a Navajo/Yankton Dakota Sioux writer living in Portland, Oregon writes in Educating the Oregon Militia on the Northern Pauite Trail of Tears: “scratch the surface of any land issues in the United States, especially in the West, and you are confronted with persisting and strong land claims held by Native nations.”  Roxanne Dunbar-Ortiz in An Indigenous People’s History of United States, on land, writes:

Everything in US history is about the land-who oversaw and cultivated it, fished its waters, maintained its wildlife; who invaded and stole it; how it became a commodity ("real estate") broken into pieces to be bought and sold on the market.

In setting the backdrop to this case, I share an article on the white supremacist origins of Oregon’s statehood in 1859.  Black people were not permitted to move to the state until 1926.  I shared a video of Oregon’s settler colonial occupation of Native American land and brutal expulsion.  I brought the issue of land to the present-day and demonstrate how settler colonialism and white supremacy work in tandem through a discussion of the 2016 armed take-over of a federal wild-life refuge by white militia members .  Further, these materials show that Native American genocide and white supremacy are not matters of the past, but are present today.  I share articles which question the idea of private ownership of land all together.  By questioning the historical basis by which defendants gained a legal claim to the land such that they could make an offer to sell as ranchers, I enabled students to understand the process by which they come to occupy this land.  What seemed like a mechanical rule on offer, and the maxim, the offeror is the master of the offer, gains different meaning.  By creating these short modules connected to a doctrine and providing them to the students, I provided students who were eager to learn about these issues with some foundational materials.  I also invited them to share materials that similarly provided context to the other cases we read.  Some students were animated by that invitation and said it made the study of the doctrine more bearable.  Students often find Contracts dry and technocratic.  I often heard my students say that they thought Contracts was going to be boring, but they found it enjoyable.

In summary, all this may sound like a lot is happening that may take away from class time, but all I have done thus far is introduce an idea, question, music, a quote from a scholar, share materials for context, and that has opened up students to think critically about the doctrine.  The drawback of this method is that there isn’t a longer and perhaps robust discussion, but I err on the side of floodlighting this issue, in hopes that students may be motivated to undertake a deeper investigation as they continue with their legal studies.  There is also the concern of push-back from students who have come to expect one way of learning law.  One student in an evaluation of my course expressed a lack of confidence in my mastery of the subject and rated me poorly.  As an untenured faculty member of color, that of course is a risk when one disrupts dominant modes of legal education, but to remain silent does more harm to all my students, and to me. 

As scholar Teri A. McMurth-Chubb wrote in her piece, Still Writing at the Master’s Table: Decolonizing Rhetoric in Legal Writing For “Woke” Legal Academy, “This decolonized pedagogy is the least of what is required for a ‘woke’ legal academy.”  Most days, my students and I are engaged in what instructors and students in most law courses are doing: close reading of cases, analyzing, understanding the rationale. From the outside perhaps, the class looks like any other, but I hope that, through these simple interventions, more seeds are planted to allow critical thinking to flourish.

*This post is part of a series on introducing critical perspectives, including critical race perspectives into contracts teaching.  Other posts in the series include:

• Guest Post by Chaumtoli Huq, Part II: Freedom to Contract and the Reasonable ManGuest Post by Chaumtoli Huq, Part I: The Decolonial Framework
• Guest Post by Deborah Zalesne, The (In)Visibility of Race in Contracts: Thoughts for Teachers
• What Should a Court Do in Response to Racist Contractual Threats? Wolf v. Marlton Corp.
• Guest Post by Charles Calleros: Raising Issues of Race, Ethnicity, and Culture in 1L Contracts: Language Barriers
• Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part II – Consideration
• Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part I – Mutual Assent
• Teaching Assistants, Emily Houh's Redemptive Theory of Contract Law