ContractsProf Blog

Tuesday Top Ten - Contracts & Commercial Law Downloads for October 20, 2020

Guess what day it is? That obviously makes it time for the hottest new scholarship in contracts and commercial law according to our friends at SSRN. Enjoy!

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 28 Aug 2020 - 27 Oct 2020

Rank	Paper	Downloads
1.	The Argentine Collective Action Clause Controversy (La Controversia Argentina sobre las Cláusulas de Acción Colectiva) Lee C. Buchheit and G. Mitu Gulati Center for Contract and Economic Organization and Duke University School of Law	453
2.	Comments on Prof. Chris Kuner's Blog Schrems II Re-Examined of 25 August 2020 Douwe Korff Oxford Martin School - Global Cyber Capacity Centre	237
3.	Avoiding a Lost Decade - Sovereign Debt Workouts in the Post-COVID Era (with Spanish Translation) Lee C. Buchheit and G. Mitu Gulati Center for Contract and Economic Organization and Duke University School of Law	225
4.	Specific Performance Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	138
5.	COVID-19 and Frustration in English law Hugh Beale and Christian Twigg-Flesner Warwick School of Law and University of Warwick - School of Law	110
6.	Chapter 2 – Ownership and Assignment of Intellectual Property Jorge L. Contreras University of Utah - S.J. Quinney College of Law	109
7.	Distributing Civil Justice Matthew A. Shapiro Rutgers, The State University of New Jersey - Rutgers Law School	102
8.	Forum Shopping COVID-19 Business Interruption Insurance Claims Christopher C. French The Pennsylvania State University (University Park) – Penn State Law	84
9.	A General Defense of Information Fiduciaries Andrew F. Tuch Washington University in St Louis - School of Law	83
10.	Legal Air Cover Patrick Bolton, G. Mitu Gulati and Ugo Panizza Columbia Business School - Department of Economics, Duke University School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	72

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 28 Aug 2020 - 27 Oct 2020

Rank	Paper	Downloads
1.	The Argentine Collective Action Clause Controversy (La Controversia Argentina sobre las Cláusulas de Acción Colectiva) Lee C. Buchheit and G. Mitu Gulati Center for Contract and Economic Organization and Duke University School of Law	453
2.	כלכלה התנהגותית ודיני חוזים: תובנות תיאורטיות וממצאים אמפיריים Behavioral Economics and Contract Law: Theoretical Insights and Empirical Findings Doron Teichman, Eyal Zamir and Yuval Farkash Hebrew University of Jerusalem - Faculty of Law, Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem - Faculty of Law	303
3.	Specific Performance Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	138
4.	COVID-19 and Frustration in English law Hugh Beale and Christian Twigg-Flesner Warwick School of Law and University of Warwick - School of Law	110
5.	Legal Air Cover Patrick Bolton, G. Mitu Gulati and Ugo Panizza Columbia Business School - Department of Economics, Duke University School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	72
6.	Arbitration in the Age of Covid: Examining Arbitration's Move Online Amy J. Schmitz University of Missouri School of Law	66
7.	Provisional Measures in Aid of Arbitration Ronald A. Brand University of Pittsburgh - School of Law	56
8.	Protecting Third Parties in Contracts Kish Parella Washington and Lee University - School of Law	53
9.	Access to and Porting of Data under Contract Law: Consumer Protection Rules and Market-Based Principles Axel Metzger Humboldt-Universität zu Berlin, Juristische Fakultät	52
10.	Tax MACs: A Study of M&A Termination Rights Triggered by Material Adverse Changes in Tax Law Heather M. Field University of California, Hastings College of the Law	47

COVID Litigation Update

Getting perspective for the prospects for victory in multi-district litigation

According to this article from Bloomberg news, COVID-related insurance cases are begin sent to multi-district panels for resolution.  One case features companies that insure against ski-vacation cancellation.  The plaintiffs in these cases purchased optional cancellation insurance when they bought their ski passes.  When resorts closed due to COVID, the insurers refused to pay claims.  The seven-judge Judicial Panel on Multidistrict Litigation (JPML) consolidated such claims, finding that they involve common factual questions.  The JPML also consolidated thirty actions against Society Insurance company, which is denying business interruption claims brought by restaurants and other businesses hit hard by the pandemic.   

The Sacha Baron Cohen Release, 2.0

We're a bit late to this party, but since a second Borat film has just come out, it seems timely enough.  We covered the first Borat release obsessively here (and also here, here, here and here), since it actually generated a contract dispute that was resolved in Sacha Baron Cohen's favor.  For those interested in a more sober take on the affair, Russell Korobkin has that angle covered here.

Cohen (pictured as Ali G, left) is in trouble again for having broadcast his encounter with Alabama politician Roy Moore for a television show called "Who Is America."  Mr Cohen induced Mr. Moore into a purported demonstration of a device that a disguised Mr. Cohen touted as a pedophile detector.  To Mr. Moore's dismay, the device seemed to identify him as a pedophile.  

Moore and his wife sued, alleging defamation per se, intentional infliction of emotional distress, and fraud.  The fraud claim is crucial.  Mr. Cohen was able to defend himself against false light claims in earlier cases based on releases that the plaintiffs had signed.  Mr. Moore signed a similar release, but despite Mr. Cohen's lawyers' insistence that the release clearly covered any allegations of fraud in the inducement, the District Court is allowing the case to proceed, perhaps because there is some question as to the identity of the parties to the release.  Cohen's joke of acting through alter egos may backfire if a court can't even tell whether he and his co-defendants are parties to a release.

But Moore's case (and Rudy Giuliani's inevitable case) seems distinguishable from the suit against the first Borat movie.  Moore and Giuliani are public figures, and First Amendment protections for ridiculing public figures are very generous.

Two cents on the movie.  Cohen's shtick is getting old and predictable.  His accents are terrible.  Also, I know it is supposed to be a low-budget movie made by a Kazakhstani agency, but the production values are ridiculously poor.  The entire film is in terrible taste, but every once in a while, it's really, really funny.  Maria Bakalova is the breakout star of the movie.  She manages to induce suspension of disbelief when such suspension no longer seems possible.  

Mr. Cohen is also being sued by the estate of a Holocaust survivor, Judith Dim Evans, who appeared in a completely gratuitous scene.  The scene wasn't funny, even by the Cohen standard, under which cringe-inducing awkwardness is supposed to be funny, and it didn't advance the plot.  Still, the suit is confusing, Ms. Evans appeared as an embodiment of empathy and humanitas, ignoring Mr. Cohen's preposterous anti-Semitic costume and literally embracing him.  Yes, the film invites us to laugh at anti-Semitism and Holocaust denial, but haven't we been doing that at least since The Producers?  I'm not sure that being surprised that one has been used as a hallmark of Jewish menschlichkeit in a film that satirizes racial and religious bigotry provides the basis for a cause of action.

Weekend Frivolity: Sarah Dooley Album Release Party

One of the best things about teaching at Valparaiso University Law School was getting to work with Laura Dooley, a fantastic, teacher, scholar, and colleague.  In addition, Laura comes with two lovely daughters, one of whom is the supremely talented Sarah Dooley.  Below is a video highlighting Sarah's talents as a singer, songwriter, musician, actor, and comedian.  If you like what you see, please support Sarah's art and Laura's retirement by watching Sarah' album release show tonight!

 

Anti-competitive Contracting

In what promises to one of the biggest fights of the decade, the Justice Department has accused Google of engaging in illegal, monopolistic practices.  At stake are billions of dollars, a battle over what consumers want and -- contracts!  Despite what some of our colleagues might think, it’s not all about constitutional law.  As contracts profs have always known, in a free market capitalist society, it’s all about contracts and contracts are everywhere.  The sure-to-be expensive and lengthy lawsuit claims that Google entered into business contracts with partners, namely makers of mobile phones, which hindered competition.  These “anticompetitive and exclusionary” agreements, according to the Justice Department complaint, make Google the default search engine on Android phones and iPhones in exchange for a share of the advertising revenue that it derives from search queries on those devices.  The amounts are nothing to sneeze at according to the complaint– Google’s payments to Apple accounted for “roughly 15 to 20 percent of Apple’s profits.”  Given that Apple’s gross profit last year was something around $100 billion dollars, that’s a lot of $$$.  (I had to check that ginormous profit number from a few different sources to make sure I was reading that correctly).  In other words, Google thinks the value of being the default search engine on iPhones is worth approximately $15-20 billion dollars (the Justice Dept. filing says public estimates are a bit lower, $8-$12 billion dollars).  Apparently, Google thought losing its status as the default search engine on iPhones would be a “Code Red” situation.  We’ll be hearing more about the terms of these agreements as the case heats up.  

Of course, I couldn't help wondering about the political motivations of this filing given the timing and recent complaints from conservatives about Big Tech bias.  Especially noticeable was the line-up of Attorney Generals who were all from red states and the total absence of any blue state AGs.  It's ironic given the way that conservatives/progressives traditionally line up when it comes to antitrust and consumer protection issues.  In any event, I think it would be a mistake to think that this is a partisan issue (even if politics affected the timing of the filing) - concerns have been raised by both sides for years about the increasing power of Big Tech companies over our lives.  It will be interesting to see how all of this plays out.

Tuesday Top Ten - Contracts & Commercial Law Downloads for October 20, 2020

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 21 Aug 2020 - 20 Oct 2020

Rank	Paper	Downloads
1.	The Argentine Collective Action Clause Controversy (La Controversia Argentina sobre las Cláusulas de Acción Colectiva) Lee C. Buchheit and G. Mitu Gulati Center for Contract and Economic Organization and Duke University School of Law	448
2.	Innovation Versus Encrustation: Agency Costs in Contract Reproduction Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School	377
3.	Specific Performance Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	126
4.	Chapter 2 – Ownership and Assignment of Intellectual Property Jorge L. Contreras University of Utah - S.J. Quinney College of Law	104
5.	Distributing Civil Justice Matthew A. Shapiro Rutgers, The State University of New Jersey - Rutgers Law School	97
6.	COVID-19 and Frustration in English law Hugh Beale and Christian Twigg-Flesner Warwick School of Law and University of Warwick - School of Law	93
7.	A General Defense of Information Fiduciaries Andrew F. Tuch Washington University in St Louis - School of Law	77
8.	Forum Shopping COVID-19 Business Interruption Insurance Claims Christopher C. French The Pennsylvania State University (University Park) – Penn State Law	72
9.	Choice of Law in Latin American Arbitration: Some Empirical Evidence and Reflections on the Latin American Market for Contracts Gilles Cuniberti and Manuel José Segovia González Universite du Luxembourg - Faculty of Law, Economics and Finance and affiliation not provided to SSRN	66
10.	Legal Air Cover Patrick Bolton, G. Mitu Gulati and Ugo Panizza Columbia Business School - Department of Economics, Duke University School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	62

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 21 Aug 2020 - 20 Oct 2020

Rank	Paper	Downloads
1.	The Argentine Collective Action Clause Controversy (La Controversia Argentina sobre las Cláusulas de Acción Colectiva) Lee C. Buchheit and G. Mitu Gulati Center for Contract and Economic Organization and Duke University School of Law	448
2.	Innovation Versus Encrustation: Agency Costs in Contract Reproduction Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School	377
3.	כלכלה התנהגותית ודיני חוזים: תובנות תיאורטיות וממצאים אמפיריים Behavioral Economics and Contract Law: Theoretical Insights and Empirical Findings Doron Teichman, Eyal Zamir and Yuval Farkash Hebrew University of Jerusalem - Faculty of Law, Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem - Faculty of Law	303
4.	Specific Performance Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	126
5.	COVID-19 and Frustration in English law Hugh Beale and Christian Twigg-Flesner Warwick School of Law and University of Warwick - School of Law	93
6.	Legal Air Cover Patrick Bolton, G. Mitu Gulati and Ugo Panizza Columbia Business School - Department of Economics, Duke University School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	62
7.	Arbitration in the Age of Covid: Examining Arbitration's Move Online Amy J. Schmitz University of Missouri School of Law	54
8.	Access to and Porting of Data under Contract Law: Consumer Protection Rules and Market-Based Principles Axel Metzger Humboldt-Universität zu Berlin, Juristische Fakultät	50
9.	The Potential of the COVID-19 Crisis to Cause Legal Disruption to Contracts and Contract Law Christian Twigg-Flesner University of Warwick - School of Law	49
10.	Protecting Third Parties in Contracts Kish Parella Washington and Lee University - School of Law	48

 

The Mailbox Rule and Elections

Over on Twitter, where all serious scholarship happens these days,  NYU's Christopher Sprigman points out that about 1/3 of his colleagues list constitutional law as one of their areas of interest, which is about three times as many as list contracts law.  The same is likely true at the other top law schools, despite the fact many of the students in those law schools will draft and interpret contracts for a living and relatively few of them will practice constitutional law.

But why should we have to choose?  Let's get a bit contractual on the Constitution.  There is a lot of litigation lately about the validity of ballots sent by mail.  As reported on NPR, and here in WaPo, a Michigan court ruled that ballots are valid if mailed by November 2nd, so long as they arrive within two weeks of election day. An intermediate appellate court reversed that ruling, saying that mail-in ballots must be received by election day.  

Bracketing constitutional issues about state control over election rules, why can't we just adopt a simple, uniform rule that will be good nationwide.  If the mailbox rule is good enough for contractual acceptances, why isn't it good enough for elections?  In both cases, the communication is timely and irrevocable once out of the control of the person sending the communication.  I can't see any downside to the rule in the election context that would not apply more forcefully in the contractual context.  In most elections, mail-in ballots will not make a different in the outcome.  This year, they will likely be crucial, but in states where the election is close, isn't it worthwhile to wait a few weeks to make sure we get the count right and count all ballots that were sent in before election day?

Contracts Limerick of the . . . Year

My passion for Limericks ran out when my thesaurus broke.  And still, the muse occasionally o'ertakes me, and I am powerless to resist.  Especially since my muse is Seven of Nine.

The Alaska Supreme Court decided Brady v. State of Alaska in 1998.  The state was experiencing an infestation of bark beetles.  The Brady brothers thought they had a solution.  If the state would just sell them 400 forested acres in a negotiated land sale, they would harvest the timber and then re-forest.  This plan, they proposed, would address the beetle infestation.  

The state seemed interested and entered into negotiations with the brothers.  Seeking to ingratiate themselves with the authorities, the brothers offered to gather data that the state could use in developing a Forest Land-Use Plan (FLUP).  The state accepted this offer.  The state also accepted a $3000 "pre-sale deposit" and sent the brothers encouraging letters about an impending negotiated sale.

There was no sale.  There never could have been such a sale, because such a non-competitive negotiated sale would circumvent state regulations that prohibited the negotiated sale of that much contiguous acreage.  The Bradys then submitted an invoice for $26,250 for the professional services they provided in contributing to the FLUP.

The case is primarily a vehicle for teaching the contours of unjust enrichments doctrine.  The Brady brothers were seeking a business advantage in offering their services, and so the state was not unjustly enriched.  There are two exceptions to this general rule.  The Bradys could have recovered had they manifested an expectation of payment in advance (they didn't).  They also could have recovered if they had relied on the state's promise to pay (they didn't).

Along the way, the case touches on breach of contract and promissory estoppel.  The court quickly concludes that there was no breach of contract because there never was a promise.  No promise, no promissory estoppel.  The case pairs well with Hoffman v. Red Owl Stores, another Limerickworthy case.  Arguably there is no more of a promise in Hofmann than in Brady. 

And now, the Limerick:

Brady’s FLUP seemed an ideal solution
To a plague of beetle pollution.
But when your work is done gratis,
You don’t earn the status
Of one who can claim restitution.

Duty to Disclose What’s Hidden in the Fine Print

 

TL;DR version:  If you want to enforce a provision that isn’t obviously part of the transaction (such as an arbitration clause), you should expressly draw it to the consumer’s attention, explain it to them, and then have them sign it.

Isaac Sutton agreed to purchase a 2016 Chevy Silverado on credit from David Stanley Chevrolet (DSC) and trade in his 2013 Challenger. He was told that his credit was approved. He was given $22,800 for the Challenger for which he still owed $25,400.  For the purchase of the Silverado, he received 86 pages of documents which included a retail installment sale contract and a purchase agreement. 

The purchase agreement was 2 pages and contained four separate signature lines.  The first signature line followed the “VEHICLE PURCHASE DESCRIPTION.”  Under the VEHICLE PURCHASE DESCRIPTION section was another section titled “TRADE-IN VEHICLE.”  That section, had no signature line but immediately underneath it was in “small red-colored font” a “DISPUTE RESOLUTION CLAUSE.”  Underneath this clause was a second signature line.  The third signature line was underneath the “PURCHASE PRICE DISCLOSURE.”  The fourth signature line was at the bottom of the page underneath a section titled “SECURITY AGREEMENT.”

Sutton testified that the DSC finance manager told him the purchase agreement was for verifying personal information and information about the two vehicles.  Sutton testified that the finance manager pointed out the signature lines and then after Sutton signed, he took the documents away.  The manager, not surprisingly, did not point out the dispute resolution clause or explain what it meant.

Sutton left his Challenger at the dealership and drove off with his Silverado.  Several days later, DSC informed him that the financing was not approved and that he needed a co-signor to purchase the Silverado.  When Sutton arrived at DSC, he was told that he didn’t need a co-signor after all and there was no need to return the vehicle. 

His lender for the Challenger then contacted him about late payments on the vehicle.  Sutton called DSC who said it was not their responsibility to make payments since they did not own the Challenger.  A few days later, DSC told him that the Challenger had been stolen and it was not their responsibility.  Sutton then made an insurance claim on the Challenger and DSC took back the Silverado.  Sutton, in the meantime, continued to make payments on the Challenger.

Sutton sued DSC claiming, among other things, fraud in the inducement to purchase the vehicle, breach of contract, violation of the Oklahoma Consumer Protection Act, and conversion.  DSC filed a motion to compel arbitration which was contained in the two-page purchase agreement.  Sutton responded that the retail installment sale contract contained a merger clause and that the installment contract did not contain an arbitration agreement. Sutton also claimed that the alleged agreement to the arbitration clause was fraudulently induced and unconscionable. I think it’s worth noting that Sutton testified that his family was on a tight budget and that if he were required to pay arbitration fees, he would have to find a new home (!)  I also think it’s worth noting that Sutton acted like a responsible and honest adult, continuing to make payments on his car even after it was stolen. DSC, on the other hand, comes off as not the best place to buy your next car.

The Supreme Court of Oklahoma found that “due to the false impression created by both the finance manager and the structure of the purchase agreement itself” the dealership had a duty to inform Sutton of the dispute resolution clause.  The court pointed out that unlike the other sections, the dispute resolution clause was a “totally unrelated provision” that was “tucked-in right before the apparent signature line for the trade-in vehicle section.”  Furthermore, the “unrelated provision” was in “much smaller font size.”  The court concluded that Sutton’s failure to read the “finely printed” clause was no defense for the dealership and that given “the circumstances which created a false impression" concerning the dispute resolution clause, the finance manager “was under a duty to disclose the material information to Sutton.”

The dissent had their opinions but I don’t think much of them although you can read them for yourselves if you want some blah-blah alarmist arguments about the duty to read and how all commerce will cease if we don’t make consumers stick to every single term in their unread contracts.  I think the Supreme Court of Oklahoma reached the right result – essentially, the court enforced the reasonable expectations of the consumer.  This doesn’t mean a business can’t impose a clause in a standard form contract that reallocates rights.  If it does, however, it has to at least bring it to the consumer’s attention rather than sneaking it into the fine print.  In other words, if a clause is not salient, it’s up to the drafter to make it so by drawing it to the consumer’s attention.

The case is Sutton v. David Stanley Chevrolet, 2020 OK 87 Case No. 117587, (10/13/2020)

H/T to Stephen Sepinuck who first posted about this to the Contracts Prof list serve.

Hey, Won't You Play, Another Somebody Violated Some White House NDA Song?

The Trump Administration is once again suing to enforce one of its non-disclosure agreements (NDAs) with one of its former employees.  In this case, the defendant is the ex-BFF of Melania Trump (pictured), Stephanie Winston Wolkoff, author of Melania and Me: The Rise and Fall of My Friendship with the First Lady.  That book is no-doubt a White-House memoire all that will enjoy lasting fame alongside those of George F. Kennan, Robert McNamara, and Henry Kissinger.  Among its substantive revelations is the bombshell that Melania Trump really doesn't care what people think of her.  Who would have guessed that?

According to the complaint, Ms. Wolkoff was volunteered to serve as the First Lady's advisor and signed a "Gratuitous Services Agreement" in which she promised to maintain strict confidentiality with respect to all "nonpublic, privileged or confidential information."  Her official duties involves advising the First Lady on speeches, appearances and policies.  Her unofficial duties apparently involved taping her private conversations with the First Lady, which is, you know, just what good friends do.  According to the government, Ms. Wolkoff's non-disclosure obligations continued after she left her volunteer position and had no end date.

As with the Mary Trump book and the John Bolton book, and the Stormy Daniels case (not to mention the Omarosa case), this suit comes too late to prevent the harm that an NDA is supposed to prevent.  The book has been published and became a New York Times #1 bestseller; the recordings of Ms. Wolkoff's conversations with the First Lady have gone viral.  The purpose of the suit (we imagine) is not to prevent disclosures but to disgorge profits made in violation of the NDA.  If the purpose of such suits is to deter future violations, the strategy seems to be failing.  So, perhaps the motivation is pure cussedness.  A fine use of tax dollars and the resources of the federal government.

And it may not work.  According to this article on Politico, in addition to wasting government resources, the case may be frivolous.  The article cites Brad Moss, a national security attorney, as follows: "The case law has been expressly clear for decades that former officials cannot be contractually censored for anything other than classified information.  .  . ."  The complaint identifies no classified information disclosed in Ms. Wolkoff's book.  Indeed, the case may in the end reveal that the White House's NDA's are overbroad and unenforceable.

B.J. Thomas, can you take us out?

 

Tuesday Top Ten - Contracts & Commercial Law Downloads for October 13, 2020

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 14 Aug 2020 - 13 Oct 2020

Rank	Paper	Downloads
1.	Innovation Versus Encrustation: Agency Costs in Contract Reproduction Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School	375
2.	Specific Performance Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	117
3.	Chapter 2 – Ownership and Assignment of Intellectual Property Jorge L. Contreras University of Utah - S.J. Quinney College of Law	95
4.	Distributing Civil Justice Matthew A. Shapiro Rutgers, The State University of New Jersey - Rutgers Law School	94
5.	Forum Shopping COVID-19 Business Interruption Insurance Claims Christopher C. French The Pennsylvania State University (University Park) – Penn State Law	66
6.	COVID-19 and Frustration in English law Hugh Beale and Christian Twigg-Flesner Warwick School of Law and University of Warwick - School of Law	66
7.	A General Defense of Information Fiduciaries Andrew F. Tuch Washington University in St Louis - School of Law	65
8.	Choice of Law in Latin American Arbitration: Some Empirical Evidence and Reflections on the Latin American Market for Contracts Gilles Cuniberti and Manuel José Segovia González Universite du Luxembourg - Faculty of Law, Economics and Finance and affiliation not provided to SSRN	58
9.	Contracting COVID: Private Order and Public Good Jonathan C. Lipson Temple University - James E. Beasley School of Law	50
10.	Inhabiting Different Realities: Incrementalism, Paradigms and the New Prospect Syren Johnstone Faculty of Law, University of Hong Kong	49

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 14 Aug 2020 - 13 Oct 2020

Rank	Paper	Downloads
1.	Innovation Versus Encrustation: Agency Costs in Contract Reproduction Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School	375
2.	כלכלה התנהגותית ודיני חוזים: תובנות תיאורטיות וממצאים אמפיריים Behavioral Economics and Contract Law: Theoretical Insights and Empirical Findings Doron Teichman, Eyal Zamir and Yuval Farkash Hebrew University of Jerusalem - Faculty of Law, Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem - Faculty of Law	301
3.	Specific Performance Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	117
4.	COVID-19 and Frustration in English law Hugh Beale and Christian Twigg-Flesner Warwick School of Law and University of Warwick - School of Law	66
5.	Access to and Porting of Data under Contract Law: Consumer Protection Rules and Market-Based Principles Axel Metzger Humboldt-Universität zu Berlin, Juristische Fakultät	47
6.	Private Rules and Standards Tun-Jen Chiang George Mason University School of Law	47
7.	Tax MACs: A Study of M&A Termination Rights Triggered by Material Adverse Changes in Tax Law Heather M. Field University of California, Hastings College of the Law	47
8.	The Potential of the COVID-19 Crisis to Cause Legal Disruption to Contracts and Contract Law Christian Twigg-Flesner University of Warwick - School of Law	46
9.	Protecting Third Parties in Contracts Kish Parella Washington and Lee University - School of Law	39
10.	Arbitration in the Age of Covid: Examining Arbitration's Move Online Amy J. Schmitz University of Missouri School of Law	34

 

Judge Amy Coney Barrett and Contracts

The focus of Judge Barrett's confirmation proceedings will be on her constitutional jurisprudence, but as important is it is, constitutional law  makes up only a portion of the Supreme Court's decisions.*  As we have had reason to note here before (see, e.g. here, here, here, and here), SCOTUS decisions can have a huge impact on the law of contracts and commercial relations. 

Fortunately for us, the SCOTUSBlog has done its usual outstanding job of reviewing all aspects of Judge Barrett's record as a judge on the 7th Circuit.  You can find their work here.  

Here are excerpts from their summary of Judge Barrett's record on contracts and commercial law:

One area that many people are concerned with is her business decisions. These were coded broadly as decisions affecting business liability, contracts and deals.

An example of such a decision was in the case Burlaka v. Contract Transport Services LLC, where Barrett authored the majority opinion for the panel. In Burlaka, “truck drivers … brought individual, collective, and class action claims against Contract Transport Services (CTS), their former employer, for failing to provide overtime pay in violation of the Fair Labor Standards Act (FLSA), which requires overtime pay for any employee who works more than forty hours in a workweek.” The district court ruled against the drivers on the grounds that they were engaged in interstate commerce and thus exempt from FLSA. In her opinion, Barrett resoundingly agreed: “These facts plainly demonstrate that at least some spotters drove trailers carrying finalized goods destined for out-of-state delivery. Such a service, even if purely intrastate and interrupted briefly, would nevertheless constitute ‘driving in interstate commerce’ because it would be part of the goods’ continuous interstate journey.” This case presents an example of one of Barrett’s pro-business decisions in which she ruled against the employees and in favor of the business entity.

Barrett’s decisions were coded as pro-big business when a business entity was the clear victor or when a large corporate entity was successful against a much smaller business entity. Barrett’s decisions in this domain were split into opinions she authored, opinions she joined, unsigned orders and unsigned per curiam opinions.

Barrett was pro-business in all opinion types except per curiam opinions, of which there were only three. This puts her in territory similar to many of the current Supreme Court justices. Conservative judges tend to rule more frequently in favor of big business, although the reason for this differs a bit between Supreme Court justices and court of appeals judges. On the Supreme Court, there is more gray area, due to the many petitions filed at the court and the justices’ wide discretion as to which cases they hear. Conversely, court of appeals judges hear many more cases on mandatory appeal and affirm lower-court decisions more often. This fact, along with the percentage of Republican-nominated judges on the 7th Circuit, might help explain Barrett’s high likelihood of ruling in favor of big business.

Don't expect this aspect of Judge Barrett's record as an appellate judge to garner much attention in the confirmation hearings, but don't be surprised when Justice Barrett joins in a series of 6-3 decisions in which the court sides with amicus briefs filed on behalf of chambers of commerce.  Such a result would likely not amount to a sea-change on the Court.  While Jonathan Adler has collected essays arguing that the Roberts Court's record on business cases is mixed, most scholars still regard it as a pro-business court.  You can find empirical evidence in support of this perspective here.  

Mark Tushnet, in his recent book, Taking Back the Constitution, provides a nuanced view.  The Roberts Court is pro-business, he contends, but that general attitude does not always dictate the outcome of cases, as many business cases pit large business interests against small business interests, and in such cases, even pro-business Justices might not agree.  The conservatives on the Court, Tushnet argues, favor business interests over the policies supported by government regulation, but they have a hard time dealing with state regulation of business because of their commitment to federalism. 

I find Tushnet persuasive on this point, which means that the voting patterns of pro-business conservatives, if that is what Judge Barrett is, can be hard to predict in cases that implicate contractual relations.  Still, on issues that have been of concern to this blog before, such as the enforceability of arbitration clauses and class-action waivers, there is no reason to think that the Court will reverse its decade-long record of siding with businesses, even in the face of state laws designed to protect consumers against what Peggy Radin has identified as the democratic degradation effected through boilerplate contracts.  

* In another capacity, I might be tempted to comment on Judge Barrett's originalism, but I think Eric Segall has that area covered.  My position on originalism is not the same as Eric's but I think we agree that she was not nominated and will not be affirmed because of some abstract commitment to an interpretive methodology.  She was nominated and will be affirmed because her writings and record as an appellate judge are a strong indication that she will strengthen the conservative majority on the Court.  

Fargo, Season 4: The Wages of Breach of Contract

Coen Brothers at Cannes, photo by Georges Biard

Spoiler alert: this post reveals the plot of the first episode.  If you are the kind of person who watches Coen Brother joints for the plot, read no further.  Ever.

The setup for the current Chris-Rock featuring season of Fargo consists of a series of contractual agreements.  Mind you, there may be legality issues that would cause the contracts to be unenforceable, but the parties to the contracts are unlikely to resort to legal process.

The story unfolds like a cock-eyed fable.  First, we have the Jewish mob, but then the Irish mob arrives in town (the town in question is Kansas City).  The two gangs work out a deal.  The Jewish mobsters trade the youngest son of their leader in return for the youngest son of the Irish mob's leader.  The boys switch households and are presumed to be hostages to keep the peace between the mob families.  Along the way, they may bridge the cultural divide and promote harmonious future dealings.  The deal is sealed, significantly for our purposes with a spit handshake.  Significantly because, in my view, the spit is consideration.  No spit, no deal.

It doesn't work out.  The Irish boy, who becomes a very interesting character called Rabbi Mulligan, betrays his new family, allows the Irish mob into the Jewish mob's headquarters, and mass murder ensues.  Rabbi Mulligan is encouraged to kill the Jewish boy who has replaced him with his own mob family.  He does so with some reluctance.  He is, after all, a little boy.

In the next iteration, the exchange occurs between the Irish mob family and the Italian mob family.  The approach to consideration has not changed.  Both leaders spit into their hands and shake, and the exchange takes place at a pre-arranged time and location.  Rabbi Mulligan is once again exchanged, this time for a young Italian.  This time, the Italians breach the agreement, committing pretty much the same mass murder in pretty much the same (now Irish) headquarters.  Rabbi Mulligan now gets to shoot his own father.  This experience may shape his attitude towards attributes like loyalty in succeeding episodes, but I won't go there.

Chris Rock, photo by Zohar Elkayam

This deal worked out so well for all involved that the winning party, which if history serves as any guide, is destined to be the losing party in the third go-round, decides to enter the same deal with the new kids on the block, the Black mafia, headed up by Chris Rock.  Chris Rock gives up his son in exchange for a little Italian boy.  Rabbi Mulligan looks after the little Black boy in the Italian household, where he is largely neglected and made to subsist on peanut butter sandwiches.  Times change; consideration morphs.  This time the deal is sealed in blood.  No blood, no deal.  

The emphasis on the spit-shakes and the blood-shake is a useful illustration, in my view, of Lon Fuller's three functions of consideration.  All who witnessed the handshakes will attest that both parties spit or cut themselves before shaking.  All present regard that as evidence of a bargain.  Evidentiary function: ✓.  The spit, and even more so, the blood, satisfy the cautionary function: ✓.  And once again, with all the witnesses, there could be no doubt that third parties would understand the significance of the action.  Two men shaking hands on a street could mean anything.  But if they spit into their hands first, or if they cut their hands first, that's a bargain.  Channeling function: ✓.

Mind you, none of it makes any sense as a plot device, given that the bargain never had the desired effect before, but I don't go to the Fargo series at this point looking for plots that are entirely coherent.  After all, is it really likely that Billy Bob Thornton could walk into a mob headquarters (in season 1), kill everybody, and walk out while the FBI has the joint staked out?  Mind you Key and Peele would not be my top choices as detectives (it was pure casting genius), but still.  In season 2, there was the absurd plot device of UFOs showing up just when the body count was at its highest, and at no other time.  That was actually annoying.  And season 3, which was a lot of fun, don't get me wrong, didn't make a lick of sense.  So I'm willing to suspend disbelief and accept the premise that the Italian mob and the Black mob have a deal.  I'm looking forward to finding out just how it is going to be breached.  This is especially so because episode 1 could have been devised by Lon Fuller to illustrate his understanding of consideration.

Weekend Frivolity: Answering a Student's Question

One of my students asked me why so many of my hypotheticals involve cats, rather than dogs.  We ran out of time before I could complete my answer, so here's the full version:

 

Weekend Frivolity: Of Muffins and Market Failure

If you follow the blog's Twitter feed, you already know that I love bran muffins.  I think I got addicted in college or perhaps in grad school.  In any case, it was in the 80s.  As far as I can recall, I believe I could confidently walk into any coffee shop throughout the 90s and into the aughts, order coffee and a bran muffin and settle in for a satisfying mid-afternoon snack, lupper, or linner. 

Life was good.  Bran muffins were something I could just assume would be a constant in my life, like Cheerios, or Yoplait yogurt, or French Roast coffee.  Sure, sometimes the cafe would be out of bran muffins, but they felt bad about that, and it only signified that I was not alone in my love of bran muffins.

And then, somehow, imperceptibly, the world shifted.  I had a child, I got a real job, and I stopped having time to frequent cafes.  In the meantime, people's taste seems to have moved away from bran muffins.  Now, when I see muffins on display that seem to fit the description of the wanted suspect, they almost always turn out to be something slightly off -- like banana nut muffins -- or highly objectionable -- like chocolate chip muffins.  I'm sorry, if you want whatever that is, you don't want a muffin, and your cupcake masquerading as a muffin is squeezing out shelf space that ought to be occupied by the object of my affection.

What has happened here?  First, I think there has been a generational shift.  My generation (I'm a boomer) grew up on Euell Gibbons telling us to eat healthy cereals like Grape Nuts, and we associate foods made from bran with digestive regularity and general well-being.  Along came GenX, who had never been exposed to Euell Gibbons' homespun charm, and they think a blueberry muffin every bit as beneficial as a bran muffin.  Slowly, demand declined, and shops catering to the younger folks stopped stocking bran muffins and started ordering desserts that look like muffins instead.  And now it is near impossible to find them in a grocery store.  When I do find them, they are likely to be too moist and too sweet, because people now think that a muffin is a pastry.  

Aside: there really no reason for bakeries to offer varieties of bagels other than plain, poppy seed, sesame, and everything.  What of onion? you say.  Well, a bialy can be quite nice, but the amount of onion (and garlic and salt) on an everything bagel is perfectly adequate.  A bagel that features only onion or garlic or salt is like a sit-com that features a secondary character from a successful sit-com.  Remember the Mindy show, featuring Mindy from Mork and Mindy?  Of course you don't; that's a terrible idea!  The George Costanza hour?  No thank you.  Joey?  We know where that went.  (But I do recommend Episodes!) Yes, I concede that cinnamon-raisin bagels have their place, but their place is with a smear of cream cheese.  Any other topping is likely an error, and ordinary consumers just can't be trusted with such consequential matters.  Moreover, cinnamon-raisin bagels are the slippery slope that leads to war crimes such as blueberry bagels, asiago cheese bagels, and the bagel-shaped bread you can buy at Panera.

Here's the thing.  I never ate bran muffins with an eye to my health.  I eat them because they are delicious and just the right kind of filling.  That's why when bran muffins show up in my house, the only evidence thereof that you will see will be empty wrappers.

I suspect I am not alone.  There is an untapped market of bran muffin eaters who hunger for the comfort of the company of a familiar but now estranged companion. 

District Court Vacates Arbitral Award in Part, Finding Panel Exceeded Powers

Here's something you don't see every day: In Warfield v. Icon Advisors, the federal District Court for the Western District of North Carolina struck down an arbitral award finding that the arbitration panel had, in part, exceeded its authority.  

Plaintiff James Warfield was a mutual funds wholesaler employed at-will by the defendant.   After six months, ICON terminated Warfield.  Warfield was a broker regulated by the Financial Industry Regulatory Authority (FINRA), and when he was terminated, ICON provided grounds for his termination on a Form U5 filed with FINRA.  Warfield brought an arbitration, alleging that the U5 was false and defamatory, and also alleging that ICON engaged in deceptive trade practices.  He sought $5 million in relief.  

The arbitration panel awarded him about $1.2 million, finding that he had been unjustly terminated without just cause.   Citing to § 10(a)(4) of the Federal Arbitration Act, the District Court vacated the award in part, finding that the panel exceeded its powers.  It did so because it recognized a cause of action for wrongful termination without cause, and no such cause of action exists under North Carolina law for at-will employees.  The court upheld the portion of the arbitral award that directed ICON to expunge allegedly defamatory language from the U5 form. 

H/T Charles Calleros

Emirates Airline and Unilateral Contracts

This is a bit out of date but it is still an interesting hypothetical.  According to this story, Emirates Airline is offering to pay medical expenses up to €150,000 ($173,000) and quarantine costs up to €100/day for fourteen days to anyone who contracts COVID-19 during an Emirates flight.  The offer is good through October 31st, so book your tickets now! 

The structure of the offer is similar to the set up to Carbolic Smoke Ball.  There, the company offered €100 to anyone who used their product, which was purported to prevent influenza, and still contracted the disease.  Plaintiff did both, and so was rewarded.  In the re-make, it seems like the difficulty would be proving that one contracted COVID on an Emirates flight.  After all, the airline is not promising immunity from COVID; it is only expressing its confidence that you will not be infected while flying.  But, at least as reported by CNN, Emirates is offering pretty broad coverage, as the language suggests that the offer is good "during the[] trip."  Arguably, if you contract COVID in the airport, in a taxi, in a hotel, on a non-Emirates connecting flight, that all would be covered. 

If nothing else, I think this offer suggests the lengths to which airlines are willing to go to entice people back into travel.  All signs suggest that it is not working.

H/T Miriam Cherry 

Tuesday Top Ten - Contracts & Commercial Law Downloads for October 6, 2020

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 07 Aug 2020 - 06 Oct 2020

Rank	Paper	Downloads
1.	Force Majeure, Frustration and Impossibility: A Qualitative Empirical Analysis Smaran Shetty and Pranav Budihal Columbia Law School and National University of Singapore	794
2.	Innovation Versus Encrustation: Agency Costs in Contract Reproduction Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School	370
3.	Private Ordering and the Role of Shareholder Agreements Jill E. Fisch University of Pennsylvania Law School - Institute for Law and Economics, European Corporate Governance Institute	159
4.	Specific Performance Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	114
5.	The Economics of Class Action Waivers Albert H. Choi and Kathryn E. Spier University of Michigan Law School and Harvard University - Law School - Faculty	99
6.	Distributing Civil Justice Matthew A. Shapiro Rutgers, The State University of New Jersey - Rutgers Law School	91
7.	Chapter 2 – Ownership and Assignment of Intellectual Property Jorge L. Contreras University of Utah - S.J. Quinney College of Law	71
8.	Did the America Invents Act Change University Technology Transfer? Cynthia Dahl University of Pennsylvania Law School	59
9.	Forum Shopping COVID-19 Business Interruption Insurance Claims Christopher C. French The Pennsylvania State University (University Park) – Penn State Law	59
10.	Choice of Law in Latin American Arbitration: Some Empirical Evidence and Reflections on the Latin American Market for Contracts Gilles Cuniberti and Manuel José Segovia González Universite du Luxembourg - Faculty of Law, Economics and Finance and affiliation not provided to SSRN	54

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 07 Aug 2020 - 06 Oct 2020

Rank	Paper	Downloads
1.	Force Majeure, Frustration and Impossibility: A Qualitative Empirical Analysis Smaran Shetty and Pranav Budihal Columbia Law School and National University of Singapore	794
2.	Innovation Versus Encrustation: Agency Costs in Contract Reproduction Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School	370
3.	כלכלה התנהגותית ודיני חוזים: תובנות תיאורטיות וממצאים אמפיריים Behavioral Economics and Contract Law: Theoretical Insights and Empirical Findings Doron Teichman, Eyal Zamir and Yuval Farkash Hebrew University of Jerusalem - Faculty of Law, Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem - Faculty of Law	297
4.	Private Ordering and the Role of Shareholder Agreements Jill E. Fisch University of Pennsylvania Law School - Institute for Law and Economics, European Corporate Governance Institute	159
5.	Specific Performance Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	114
6.	Tax MACs: A Study of M&A Termination Rights Triggered by Material Adverse Changes in Tax Law Heather M. Field University of California, Hastings College of the Law	47
7.	Private Rules and Standards Tun-Jen Chiang George Mason University School of Law	47
8.	The Potential of the COVID-19 Crisis to Cause Legal Disruption to Contracts and Contract Law Christian Twigg-Flesner University of Warwick - School of Law	43
9.	Access to and Porting of Data under Contract Law: Consumer Protection Rules and Market-Based Principles Axel Metzger Humboldt-Universität zu Berlin, Juristische Fakultät	41
10.	COVID-19 and Frustration in English law Hugh Beale and Christian Twigg-Flesner Warwick School of Law and University of Warwick - School of Law	40

 

Promises, Promises on Hoffman v. Red Owl Stores

Long ago, I represented that I would recommend David Hoffman and Tess Wilkinson Ryan's podcast, Promises, Promises to my students.   Somehow, I didn't notice that they have an episode on Hoffman v. Red Own Stores, which I am teaching this week.  But payback is fair play, and so my students recommended the episode to me, touting the episode as "the best one yet" and then, on further consideration, "well, one of my favorite episodes so far."  High praise!

Among the features of this episode:

• Ways in which promissory estoppel doctrine changed between the first and second Restatements;
• Insights into the equitable arguments in favor of giving Hoffman relief
• Insights into the legal arguments for why Hoffman's reliance might not seem reasonable
• Pronunciation tips: Wautoma
• Vocabulary builders: naïf; equipoise!
• Avenues not explored: umlauts and diereses!

Sid DeLong, The Parable of the Peloton

The Parable of the Peloton
By Sidney W. DeLong

Cooperation and competition are the yin and yang of contract. A voluntary contractual exchange is a cooperative “win-win” transaction that produces a gain in welfare for both participants. The measure of this subjective gain is the amount by which each trader values what it receives by more than it values what it gives up. This exchange surplus is familiarly known as the “pie,” as in “making the pie larger.”

But each party to a cooperative exchange is also trying to maximize its share of the exchange surplus pie at the expense of the other. This competition does not increase the pie and is a zero-sum or even a minus-sum transaction. The parties’ efforts to maximize their personal profit may be so great as to prevent the transaction or even to tear it apart. Pie-eating contests take place openly in the negotiation of the price terms of the contract, but they can also occur throughout the performance stages of the transaction as parties seek unbargained-for advantages over each other.

The norms of contract law must mediate the opposition between its cooperative and competitive elements. Sins against cooperation are the centrifugal forces that can tear the deal apart through illegitimate competition: hence the rules about good faith, duress, and opportunistic breach. But legitimate competition in the performance of a contract is not sinful but is an expected part with the self-seeking behavior that led to the bargain in the first place.  

Contract’s yin and yang of cooperation and competition are nicely illustrated in the sport of professional bicycle racing. I recently watched the glorious spectacle of the Tour de France and was rewarded with one of the most competitive events in my memory, as always against the matchless backdrop of La Belle France. It naturally led to reflections on contract law, as what does not?

Dozens of professional riders compete to win a long-distance road race with the prize each day going to the individual winner. For most of the race, most of the competitors ride in a large group, called the “peloton.” A group of riders can go much faster than a solo rider by taking turns leading and “drafting” behind each other, reducing the aerodynamic drag on the bikes behind the leaders. Individual riders who try to win the race by speeding up and “breaking away” from the peloton usually fail because their individual talent is overcome by the efficiency of the group.

The competitors are all professional riders, under contract to ride for their sponsor. Most riders on a team are ordered to ride in support of their star rider. They attend to his needs during the race and form a protective shield around him, easing his way to the point at which he will race away to the end alone. These contractual relationships are easy to understand, and do not warrant a parable.

But sometimes, more than one rider will break away, aiming at the formation of an elite coalition of riders from different teams that can employ its own drafting benefits to outride the peloton. Once the group is formed, they ride as an ad hoc team, taking brief turns leading and then drafting in a “pace line.” A good pace line is a thing of beauty to behold, with precise timing and positioning creating a super-fast organism. A good pace line can go much faster working together than any of them can go alone and often can out-pace the peloton. The more closely they cooperate, the faster they go.

Although they may be the product of pre-race planning, the breakaway alliances are usually formed instantly and wordlessly. Breakaway “contract formation” is spontaneous, tentative, and uncertain. The “offerors” must expend significant “search costs,” little busts of energy as riders jump away and invite other riders to join them, often to be disappointed when they don’t. But if it appears that two or three strong riders will succeed, other strong riders (who have been waiting for the opportunity)  will “jump across” to join them and make the group stronger still.

The trick is thus for a select group of strong riders to find each other, to sort themselves out, to winnow out weaker riders, and to work thereafter at maximum effort for a few kilometers to gain an advantage over the rest.

The chief sin in a breakaway is shirking. Each rider must take his turn at the front and not coast along at the rear, literally free-riding on the labors of others. Sometimes the group is joined by an uninvited, parasitic rider, who takes no turns at the front because he is working in the interests of a rider back in the peloton who wants the breakaway to fail or, if it succeeds, for the parasite to capture the win.

But the dynamics of the race make shirking a constant temptation. Each rider is trying to hold something back, even at risk of slowing the group, in order to have a bit more energy left for the final sprint when he can defeat those who spent more of their energy working for the group. Blatant shirking is usually detected and chastised by the other riders, but there is little sanction they can impose.

The alliance often lasts until the final mile, when the breakaway group has a lead that assures them that one of them will be the winner. Then, however, something surprising happens: the alliance is suddenly broken, with each rider trying to move ahead of the others. “All for one and one for all” becomes “Every man for himself.” At this point, drafting is no longer a gift bestowed by the leader on the others but a burden assumed by the hapless rider who is forced to ride in front only to be jumped from behind at the finish.

The moment when the alliance breaks, when the riders move from cooperation to competition, is always uncertain but everyone knows that it is inevitable. Sometimes, when the peloton is pressing near the end of the race, the breakaway riders must calculate carefully how long to work together (necessary to ensure that they will not all be run down) before the group explodes as each breakaway rider seeks individual victory. In this critical interval, each breakaway rider must decide “Am I strong enough to go it alone from this point forward, or should I remain with the group a little longer?”

This ethical implications of this cycle from tentative agreement to trust to inevitable betrayal is understood and accepted by everyone. For a member of a breakaway to breach its tacit contract by jumping into the lead before his allies-of-the-moment is no real betrayal and is never blameworthy, because breakaway contracts are created to be faithfully performed and then to be ruthlessly broken.

 Does the parable of the peloton suggest anything about commercial contract law and its norms?