ContractsProf Blog

Guest Post: Michael Murray on Transfers & Licensing of Copyrights to NFT Purchasers

I am delighted to introduce our readers to my former colleague, Michael D. Murray (left), now the Spears-Gilbert Associate Professor of Law and the University of Kentucky Rosenberg College of Law.  Michael is a prolific author, having published 27 books and with 45 papers available on his SSRN site.  He writes on a broad range of subjects, so it was only a matter of time before he would hit the jackpot and write something about contracts law.  I invited him to share a summary of one of his recent pieces, with which followers of the blog will already have a passing familiarity from our weekly Top Ten from this week.  But once the contracts scholarship spider bites you, it may have transformative effects, so this may not be the last we hear from Michael.

Transfers and Licensing of Copyrights to NFT Purchasers
6 Stan. J. Blockchain L. & Pol'y _____ (forthcoming, 2022)

This article seeks to educate non-fungible token (NFT) creators, purchasers, and the attorneys who counsel them regarding the question of what if any of the copyrights to the tokenized works should be transferred or licensed to NFT purchasers and bring clarification to the issues of copyright transfer and licensing in the world of NFTs and blockchains.

NFTs have introduced several wrinkles into the analysis of intellectual property rights in general and copyright law in particular. NFTs are a cryptography tool defined and operated by a “smart contract.” A smart contract is a small bit of code that makes up a simple computer program that runs the operation of an NFT. Smart contracts use blockchain technology to verify and record the existence and ownership of digital assets and physical three-dimensional assets. An NFT purchaser purchases control over the smart contract that defines and operates the functions of the NFT. The smart contract creates a registry entry on the blockchain that is understood in the NFT industry and crypto community to represent proof of ownership of the asset linked to the NFT, whether that be an artwork, a piece of real estate, or other asset. An NFT does not automatically provide ownership or control of the copyright to the artwork linked to the NFT, which leads to the topic of transfers of such rights to NFT purchasers.

Artists and creatives who mint NFTs and collectors and investors who purchase and use them often have very different understandings and expectations when it comes to the copyrights associated with the content linked to an NFT. The default rule of copyright law is that the copyright to creative works does not transfer to the purchaser of the works, so that unless the NFT creator does something to actively transfer or license the rights to the purchaser, the NFT purchaser will have no copyright rights to the works linked to the NFT.

An NFT creator may be very happy to transfer or license some or all of the copyrights to the purchaser of the NFT. In general, a transfer of all of the copyright rights to the purchaser is called an assignment of the copyright, and an assignment must be performed in writing, not orally or by implication from conduct of the parties. Transfer of fewer than all of the copyright rights is typically called a license of the rights.

With NFTs, there are several means discussed in the article to communicate license terms. They are presented here in order of their likely recognition as a valid legal license of part of the copyright intellectual property of the artwork:

• Bargained for exchange between seller and purchaser before purchase
• License terms coded into the smart contract of the NFT
• Pop-up clickwrap license terms (“Click here to accept these terms . . .”) at the point of purchase
• License terms provided in the listing and item description on the NFT sales platform
• License terms provided on the website of the NFT creator

The minter of an NFT who is the creator and owner of the copyright to the artwork linked to the NFT should carefully consider what rights might be transferred or shared with the purchaser of the NFT. If the artist routinely uses artworks in on-going commercial projects or plans to create derivative works or reproductions of existing works, then these rights should be protected and excluded from the purchaser and any other subsequent owners of the NFT. But if the minter and copyright owner is a follower of the open-source, cooperative, community-building philosophy that is surprisingly common in the crypto and metaverse world, then the creator may want to share, give away, or give up all of the rights to the artwork linked to the NFT. There are many options in between, but the drafter of a license should consider the following rights when designing the license terms:

• Right to Display
• Right to Copy for Specific Incidental Purposes
• Right to Create Derivative Works
• Right to Commercially Exploit the Artwork
• Sharing Everything—Use of Creative Commons Licenses
• Selling Everything—Assigning the Copyright to the Purchaser

Offering one right need not exclude any others, as any license could offer two or three or all of the possible uses. A bespoke license should be one that will satisfy a purchaser now but protect the creator’s rights on an ongoing basis into a distant future.

Licensing most often is a serious business decision of the artist and creator of a work because we tend to assume that the works we are trying to protect deserve to be protected from copying and uncontrolled distribution or exploitation. With traditional fine arts in their physical forms, it usually mattered greatly to the artists whether someone could copy their works, beat them to the intended marketplace or into new markets, make derivative works from their works, and out hustle them in exploiting the works until there was no point in claiming the works or attempting to control them. With highly complicated and labor-intensive ventures such as video game development, motion picture production, and building entire new worlds in the metaverse, it generally has been viewed as essential that the end product of years of work will not be duplicated and distributed freely with no compensation and control by those who expended the time, effort, and money to bring the work into existence. When it was more difficult to make a copy of the work in a painting or sculptural medium, there was a natural barrier that could slow down exploitation to a reasonable and policeable level. Digital artistic expression in the visual arts, film, and performing arts has changed the equation because it can be so easily duplicated and distributed with no perceivable loss in fidelity of content.

The developers of the metaverse currently contemplate using NFTs as a medium of exchange, a ticket to events, a calling card allowing entrance to gatherings, and, of course, as artist expression to literally and figuratively color in the alternative reality experience. Digital artistic expression will be ubiquitous in the metaverse, and one question to answer will be who will be able to exploit the value of these creations now and for the future. Copyright licenses are one answer to this question.

Contracts Aspects to the Fifth Circuit's NetChoice v. Paxton Ruling

In May we posted about the Eleventh Circuit's ruling in NetChoice, LLC v. Attorney General, which struck down many provisions of a Florida statute that sought to regulate social media companies as common carriers engaged in "censorship."  The Eleventh Circuit quoted from the language that animated the challenged legislation: The law was created to punish “the ‘big tech’ oligarchs in Silicon Valley” who “silenc[e]” “conservative” speech in favor of a “radical leftist” agenda.  Subtle. Before that, we posted about Texas HB 20, which is similar.  Judge Pitman of the District Court for the Western District of Texas had enjoined the enforcement of HB 20 in a 30-page opinion.  The Fifth Circuit lifted that injunction, and then last week, it issued an opinion in the case, NetChoice v. Paxton. 

It's a 113-page doozy.  Fortunately, in a 6000-word post, Eric Goldman (right) has gone through the entire opinion carefully, and he provides not only a trenchant analysis but also links to sources so that readers can do their own deep dive into the case.  That leaves little for us to say except to address to the contractual connection in this case.  But first, an overview.

Professor Goldman's post begins helpfully with a synopsis of how HB 20 fared in the Fifth Circuit, an edited version of which appears below:

The Texas law has four main provisions. Here’s where they stand after the Fifth Circuit’s ruling:

• mandatory editorial transparency requirements. . . . [unanimously upheld]

• digital due process requirements, including an appellate process for aggrieved users. . . . [unanimously upheld]

• restrictions on viewpoint-biased content moderation. The panel voted 2-1 to lift the injunction for multiple reasons. However, only one vote (Oldham) endorsed the common carriage justification. . . .

• a ban on email service providers deploying anti-spam filters unless they give appellate rights to all filtered senders. No one has yet challenged this provision, so it was never enjoined and remains available for AG Paxton to enforce. . . . 

The Fifth Circuit opinion begins by saying that HB 20 "generally prohibits large social media platforms from censoring speech based on the viewpoint of its speaker."  Because, as Professor Goldman points out, the social media platforms are private actors who, as such, by definition, cannot engage in censorship, they are not lawfully susceptible to regulation on that basis.  Indeed, as Professor Goldman notes as well, what is really going on here is government censorship of the social media companies' expression.  One way to state the issue might have been "Can social media platforms be prohibited by statute from suppressing speech on the basis that they are state actors engaged in censorship?  So posed, under current law, the answer is no.  By defining content regulation as "censorship" the Fifth Circuit is making new law and deciding the case in advance by making words mean what it wants them to mean.  It doesn't even pay them extra, as the equitable Humpty Dumpty does.

Having started with a faulty premise, the opinion continues:

But the platforms argue that buried somewhere in the person’s enumerated right to free speech lies a corporation’s unenumerated right to muzzle speech.

The implications of the platforms’ argument are staggering. On the platforms’ view, email providers, mobile phone companies, and banks could cancel the accounts of anyone who sends an email, makes a phone call, or spends money in support of a disfavored political party, candidate, or business . . . 

That is almost certainly a mischaracterization of the platforms' arguments, because their argument is that they are not and should not be treated like "email providers, mobile phone companies," etc.  And with that, the District Court's injunction is vacated.

But on to the contracts angle.  I have been writing a lot lately about the interaction of First Amendment law and contracts law.  The relationships between the social media platforms and their users are governed by a contract -- the platforms' terms of service.  My co-blogger and co-author Nancy Kim has spent much of her career highlighting the dangers of expansive or exploitative terms of service.  I am not unaware of the hazards.  But terms of service are routinely enforced, and it is a huge problem when the government suddenly steps in to change contractual relations based on the wholly unsubstantiated claim that the social media companies discriminate against conservative voices.  If the social media companies muzzle speech, they muzzle speech that violates their terms and conditions.  As a frequent user of social media, I'm glad that they do it, and I hope they do it better, which means doing it more, as there are ever-new automated mechanisms for flooding popular sites with speech that has little to do with insight and everything to do with incitement of political violence.

The Fifth Circuit opinion surgically excerpts passages from the platforms' terms of service in order to make those platforms look like public fora or common carriers.  What the opinion does not do is note the substantive components of those terms of service and community standards.  Twitter's terms of service, for example, specifically prohibit posts that promote or encourage:

• Violence
• Terrorism/violent extremism
• Child sexual exploitation
• Abuse/harassment
• Hateful conduct
• Perpetrators of violent attacks
• Suicide or self-harm
• Graphic violence and adult content
• Illegal or certain regulated goods or services

Facebook's community standards are broader but non-partisan and pretty damn thoughtful.

But the ultimate point is.  These are private sites with private rules.  Citing Justice Kennedy's dictum in Packingham, the Fifth Circuit calls the each platform a "monopolist"of the modern public sphere.  But the very fluidity of these markets shows the opposite.  Who had even heard of TikTok five years ago?  My students are contemptuous of Facebook and prefer platforms like Snapchat and Instagram that I would never use.  Alternatives to Twitter abound, and if they are less successful than Twitter, that is because they suck, and one of the main reasons that they suck is that they don't have the powerful algorithms that the best platforms have, which allow them, among other things, to enforce their terms of service effectively.

Let's hope that SCOTUS takes this case.  It just about has to given the 5th Circuit/11th Circuit split and the global nature of the Internet.  And let's hope that it enjoins these attempts at government censorship masquerading as regulating private censorship (which is not a thing). 

Tuesday Top Ten - Contracts & Commercial Law Downloads for September 27, 2022

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 29 Jul 2022 - 27 Sep 2022

Rank	Paper	Downloads
1.	The Private Law of Stablecoins Kara J. Bruce, Christopher K. Odinet and Andrea Tosato University of Oklahoma College of Law, University of Iowa - College of Law and University of Nottingham, School of Law	1,561
2.	How Privilege Undermines Cybersecurity Daniel Schwarcz, Josephine Wolff and Daniel W Woods University of Minnesota Law School, The Fletcher School of Law and Diplomacy, Tufts University and University of Edinburgh	632
3.	A Century of Business in the Supreme Court, 1920-2020 Lee Epstein and Mitu Gulati University of Southern California and University of Virginia School of Law	431
4.	Transfers and Licensing of Copyrights to NFT Purchasers Michael D. Murray University of Kentucky, J. David Rosenberg College of Law	230
5.	The Restatements as Law Frederick Schauer University of Virginia School of Law	208
6.	Contractual Landmines Robert E. Scott, Stephen J. Choi and Mitu Gulati Columbia University - Law School, New York University School of Law and University of Virginia School of Law	118
7.	Lost Synergies and M&A Damages: Considering Cineplex v. Cineworld Jonathan Chan and Martin Petrin UCL and University of Western Ontario	117
8.	Teaching Slavery in Commercial Law Carliss Chatman Washington and Lee University School of Law	108
9.	The Market for Corporate Criminals Andrew Jennings Brooklyn Law School	78
10.	Private Law and The Embedded Person Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	70

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 29 Jul 2022 - 27 Sep 2022

Rank	Paper	Downloads
1.	The Private Law of Stablecoins Kara J. Bruce, Christopher K. Odinet and Andrea Tosato University of Oklahoma College of Law, University of Iowa - College of Law and University of Nottingham, School of Law	1,561
2.	The Restatements as Law Frederick Schauer University of Virginia School of Law	208
3.	Contractual Landmines Robert E. Scott, Stephen J. Choi and Mitu Gulati Columbia University - Law School, New York University School of Law and University of Virginia School of Law	118
4.	Lost Synergies and M&A Damages: Considering Cineplex v. Cineworld Jonathan Chan and Martin Petrin UCL and University of Western Ontario	117
5.	Teaching Slavery in Commercial Law Carliss Chatman Washington and Lee University School of Law	108
6.	Private Law and The Embedded Person Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	70
7.	A Pyrrhic Victory for Unjust Enrichment in Singapore? Rachel Leow and Timothy Liau London School of Economics - Law School and National University of Singapore (NUS) - Faculty of Law	65
8.	Unjust Enrichment in Australia 2020-2021 Kit Barker, Samuel Walpole and Penelope Bristow University of Queensland - TC Beirne School of Law, TC Beirne School of Law and The University of Queensland - T.C. Beirne School of Law	62
9.	Market Humiliation Hila Keren Southwestern Law School	54
10.	Australia’s Product Intervention Power and Protection from Consumer Harm: An Evaluation Lucinda O'Brien, Ian Ramsay and Paul Ali Melbourne Law School, Melbourne Law School - University of Melbourne and University of Melbourne - Law School	49

 

Ben & Jerry's Sues Alleges Breach of Contract by Its Acquirer, Unilever

Today, we return to a topic that I've blogged about before, but with a new twist.  Back in June, I posted here about Arkansas Times, LP v. Waldrip, which was a First Amendment challenge to Arkansas Act 710 (Act 710).  Act 710 requires that contractors seeking to work with the state provide a certification that they will not participate in a boycott of Israel.  The First Amendment came in second in that race, and for once, I, a person who thinks our First Amendment jurisprudence is dumb, think it should have come in first.  At the end of that post, I comment on Act 710 and the similar acts passed by state legislatures across the country:

Act 710, like its counterparts in other states, defines “boycott of Israel” to include any actions "intended to limit commercial relations with Israel, or persons or entities doing business in Israel or in Israeli-controlled territories . . . ” (emphasis added).  The "Israeli-controlled territories" are not Israel.  If they were, then there would be 5.3 million Palestinians entitled to Israeli citizenship.  That ain't happening.  The "Israeli-controlled territories" are occupied territories.  Boycotting the occupation is not a boycott of Israel.  These state acts punish entities not for boycotting Israel but for boycotting the occupation.  There's a huge difference.  Ask Ben & Jerry's, which is subject to divestment actions by Arkansas and other states for its refusal to sell its products in the occupied territories.  But Ben & Jerry's has remained committed to selling its products in Israel.  

The inclusion of the language about the "Israeli-controlled territories" is, in my view, conclusive proof that Act 710 is not an economic measure.  It is a political measure and compelled compliance with the state's political stance on the Israeli occupation violates the First Amendment.  Even if I did not think Act 710 violated the First Amendment, I would still find it preposterous that any U.S. state would blur the lines between support for Israel and support of the occupation.

So, Ben & Jerry's.  This stuff makes me nuts.  I have family in Israel.  My father, who lived in Mevaseret Zion, near Jerusalem, loved Ben & Jerry's, and he always had some in the freezer when I came to visit.  He passed a year and a half ago, but my mother is still there.  I visited in July, and we bought some Ben & Jerry's in the local supermarket.  It would be different if my parents lived in Hebron.  A lot of things would be different if my parents lived in Hebron, because I would never visit them there, and we likely would not be on speaking terms.  We also would not be buying Ben & Jerry's in the occupied territories, but that would be the least of our problems.

In 2000, the real Ben and Jerry sold their company, Ben & Jerry's, to Unilever for $325 million.  At that time, they did not relinquish control over the company's social mission.  Selling their product in the Israeli-occupied territories is inconsistent with that mission,  As Rupert Neate reports in The Guardian, Unilever sold the Israeli arm of Ben & Jerry’s to Avi Zinger, the owner of American Quality Products (AQP), which would distribute Ben Jerry's products in the occupied territories.  Ben & Jerry objected and demanded that the deal be unwound.  Zinger sued Unilever, and Unilever settled by selling to Zinger the license to distribute Ben Jerry's ice cream. Zinger apparently intends to distribute Ben & Jerry's in the occupied territories.

Ben and Jerry claim that the sale of a license violates the terms of the 2000 sale and they are suint to have the sale revoked.  Unilever is claiming that it cannot revoke the sale.  A District Court refused Ben and Jerry's motion to preliminarily enjoin the sale.  They are now amending their complaint and will be back in court in November.  Hard to know how their contractual claim should fare.  We'll have to wait to see the complaint and look at the terms of the sale in 2000.  In the meantime though, I hope the judge is aware (because most state legislatures apparently are not) that, under current law, the occupied territories are not a part of the state of Israel.

Borat Drafts Better Releases than the State of Florida

Long-time fans of the Blog or of Borat will recall that Sacha Baron Cohen has been sued repeatedly by the people who appear in his films.  We memorialized the release from the original Borat movie here (with links to prior posts).   A second rounds of posts begins here and ends here.  Mr. Cohen escaped liability every time because of an iron-clad release (left) that all of the victims of his comedic stylings signed before filming began.  

As Eduardo Medina and Remy Tumin report in The New York Times here, some of the Venezuelan migrants who were put on a plane in Texas and sent to Martha's Vineyard are suing Governor DeSantis and others for what they are alleging was a "fraudulent and discriminatory scheme."  Never mind that Florida's governor for some reason spent taxpayer money (the complaint says that chartering the flights cost $615,000) to send fifty migrants who were not even in Florida to Massachusetts.  Never mind the horror of exploiting fifty human beings, who may be asylum seekers, for a political stunt.  The complaint alleges intentional infliction of emotional distress and false imprisonment.  Others have alleged kidnapping, and human trafficking.  As Julia Shapero  reports in The Hill here, a democratic lawmaker is suing to enjoin Governor DeSantis from any more such flights.  

Never fear, whenever people attack the GOP, Jonathan Turley is there! Professor Turley argues here that the migrants have signed a waiver.  He thinks that the migrants will have to show that the waiver was secured by trick or fraud.  He provides a blurry image of the "official consent" document.  

There are problems.  First, although the document is bilingual, the Spanish translation of the English portion of the document is incomplete.  Second, unlike the Borat release, which specifically named and released the filmmakers from all of the claims brought by plaintiffs, the Florida release simply says that the migrants will hold defendants "harmless of all liability arising out of or in any way relating to any injuries and damages that may occur during the agreed transport to locations outside of Texas."  The Borat release specifically waives claims to fraudulent inducement.  This release does not, and it may be couched in such broad terms as to be unenforceable as a matter of public policy.  And there is plenty of evidence of fraudulent inducement and (thus far) not much evidence on the other side.  Third, the Borat filmmakers represented that plaintiffs would appear in a "documentary-style film."  They did appear in a documentary-style film.  So the fraudulent inducement claim was weak in any case.  Time will tell whether any of the representations that Governor DeSantis's agents made were remotely true.  Finally, the stakes here are much higher than being filmed in a fake documentary.

This may be occasion to rethink the law of releases.  Contributing blog editor Nancy Kim has written a book, Consentability (right), about problematic exchanges in which it is just not reasonable to construe people as having given meaningful consent.  This seems like such an area.

Governor DeSantis denounces the suit as "political theater."  Wait.  The Florida man who authorized and paid for sending 50 Venezuelan migrants from Texas to Martha's Vineyard calls a lawsuit political theater?  Is he saying political theater is a bad thing?  So confused. 

Stay tuned.

Sid DeLong, Warranties Law and the Restatement Second of Contracts

Why Does the Restatement Omit the Law of Warranties?

Sidney W. DeLong

Warranties can be critical elements in the modern business transaction. In real property transactions, courts have long enforced express and implied warranties relating to title and possession. In corporate mergers and acquisitions, contractual warranties, along with covenants, conditions, and representations, are fundamental to a well-designed allocation of information risks and assurances among the parties.

In contracts for the sale of goods, Article 2 is replete with the rules relating to warranty. It contains four sections describing different kinds of warranties (§§ 2-312 (Warranty of Title); § 2-313 (Express warranty); § 2-314 (Implied warranty of Merchantability); and § 2-315 (Implied Warranty of Fitness for a Particular Purpose). In addition, § 2-316 contains rules for disclaiming warranties and § 2-317 says how warranties and disclaimers are to be construed.

One would expect, therefore, to find cognate sections in the Restatement (Second) of the Law: Contracts addressing warranties arising in non-sales transactions. Alas, one would be disappointed. You are about to read virtually everything that the Restatement has to say about warranty, which appears in Comment d to Section 2 (quoted in full as follows):

Promise of event beyond human control, warranty. Words which in terms promise that an event not within human control will occur may be interpreted to include a promise to answer for harm caused by the failure of the event to occur. An example is a warranty of an existing or past fact, such as a warranty that a horse is sound, or that a ship arrived in a foreign port some days previously. Such promises are often made when the parties are ignorant of the actual facts regarding which they bargain and may be dealt with as if the warrantor could cause the fact to be as he asserted. It is then immaterial that the actual condition of affairs may be irrevocably fixed before the promises made.

Words of warranty, like other conduct, must be interpreted in the light of the circumstances and the reasonable expectations of the parties. In an insurance contract, a warranty by the insured is usually not a promise at all; It may be merely a representation of fact, or, more commonly, the fact warranted is a condition of the insurer's duty to pay. In the sale of goods, on the other hand, a similar warranty normally also includes a promise to answer for damages.”

And that’s it. One must infer the Restatement’s view of warranty from this fragment. One thing seems clear: by identifying a warranty as a form of promise rather than a representation of fact, the Restatement assimilates warranty to the law of contractual agreement rather than the tort law of misrepresentation. By doing so, it seeks to change the illocutionary force of warranty, as a speech act theorist would say.

Speech act theory differentiates between the illocutionary force of statements of fact and promises. In speech act theory, an “assertive” speech act like a representation of fact makes a true or false statement about the world. A “commissive” speech act, like a promise, commits the speaker to act in some way. An assertion is true or false when it is made, but making an assertion imposes no obligation on the speaker. By contrast, a promise imposes on the speaker an obligation to act, but is neither true nor false because it does not communicate anything factual about the state of the world. To the extent that these speech acts can create legal liability for breach of the legal obligations they create, false assertions can make the speaker liable in tort for fraud while broken promises can make the speaker liable for breach of contract. At common law, this line between fraud and contract was strictly observed.

Because they both make assertions about the world and create legal obligations to act, sales warranties are hybrid speech acts, potentially making the speaker responsible both for having made a truthful representation and committing the speaker to perform a promise. Thus, Prosser called warranty: “a freak hybrid born of the illicit intercourse of tort and contract.”  Perhaps it would be more charitable to call it the duckbilled platypus of sales law, confusing to legal taxonomists who try to police the boundaries between tort and contract but perfectly able to survive and thrive despite their theoretical confusion. (I am assuming that duckbilled platypuses thrive, at least on their better days.) Unfortunately, the failure of warranty to fit comfortably into either the tort or contract family creates enduring problems for courts adjudicating warranty claims.

Problems with considering warranty as a tort: To see a warranty as a tortious misrepresentation raises questions about how the elements of fraud apply. If the warranty is false, the warrantor’s liability does not turn on either its scienter or intent but only its agreement to be liable. Must a warrantee, like the recipient of a misrepresentation of fact, show reasonable reliance on the truth of the warranty in order to recover? In Article 2 warranties, courts generally do not require a buyer to reasonably rely on the warranty for it to become part of the basis of the bargain. But courts differ on whether recovery is barred by a warrantee’s actual knowledge of the falsity of the warranty. See CBS Inc vs. Ziff Davis Pub. Co. 553 N.E.2d 997,1011 (N.Y. 1990) (“This view of reliance, -- i.e., as requiring no more than reliance on the express warranty as being part of the bargain between the parties -- reflects the prevailing perception of an action for breach of express warranty that is no longer grounded in tort, but essentially in contract.”) Farnsworth said that Ziff indicates that tort is being absorbed into contract rather than vice versa. Farnsworth Contracts 4th ed.) section 1.7.

Red Angus, or so Wkipedia warrants

Problems with considering warranty as a contract: If modern warranty law fits poorly with tort law, it fits even less well with contract law. First there is the speech act problem. If contracts are promises and promises are commitments to act in a certain way, what can it mean to “promise” that something is the case? If the warrantor can bring about the warranted condition, an implied promise is clear. A seller who warrants that the cow it promises to sell to the buyer is a pure-blooded Angus is promising to deliver a pure-blooded Angus. But as Comment d confirms, by warranting a condition over which both parties know the promisor has no control, one is not promising to act at all. Instead, the courts construe the warranty to be an implied promise to compensate the warrantee if the warranted facts turn out not to be the case. Thus, a statement of fact is construed to imply a promise.

But to infer an implied promise to indemnify from the mere making of a false statement of fact threatens to turn any tort into a contract to indemnify. For example, a person who makes a materially false statement with the intention that the hearer rely thereby incurs potential liability to indemnify the hearer for loss incurred in reliance on the statement. If both parties are aware of this rule, then should the court infer that the speaker “promised” to indemnify by making the statement?  

But conceptualizing a warranty as a promise raises many collateral questions about non-Article 2 warranty-promises that the Restatement leaves unaddressed and unanswered, to wit:  What exactly is a warranty? Is it always a promise? How is a warranty made? Must the warrantee to whom the warranty is made rely in any way on the warranty as a condition to its enforceability? Does a warranty require consideration in order to be enforceable? Can a warranty be disclaimed, and if so, when and how? What if a warranty is made and disclaimed in the same agreement? How and when is a warranty “breached”? May warranties arise by implication with nothing being said by either party? When is a warranty breached for purposes of the statute of limitations? Can breach of warranty be a repudiation of the contract? Can breach of warranty be a material breach of contract suspending the counterparty’s duty to perform and justifying cancellation of the contract if the warranty is never fulfilled? What is the correct measure of damages when a warranty is breached?

At the time the Restatement (Second) was being drafted, someone must have suggested that these questions be answered by importing Article 2’s warranty provisions wholesale into the Restatement. But that was a temptation that the drafters wisely resisted. To bring the Restatement into conformity with Article 2’s warranty provisions would have threatened the entire Restatement project.  

For it is not often recognized that Article 2’s warranty provisions violate the most fundamental principles of mutual assent intrinsic to contract theory. They represent an overthrow of the common law of express warranty, in which warranties did not arise from mere descriptions of goods being sold but from language that expressly “guaranteed” the accuracy of those descriptions. Chandelor v Lopus  Exchequer Chamber Cro. Jac. 4 (1603) (Seller’s description of bezoar stone did not guarantee its authenticity).

Under Article 2, both implied and express warranties are now recognized to constitute an entirely different sort of legal obligation from the common law of express warranties. An implied warranty of merchantability arises automatically upon any sale of goods from a merchant dealer. § 2-314. Many analysts now consider the implied warranty of merchantability to be a form of product regulation having nothing to do with either mutual assent or reliance. It is an obligation imposed by law, not by agreement, which is the mark of tort, not of contract.

Assent and reliance are also eliminated as necessary to Article 2 express warranties, which abandon Chandelor’s requirement that a seller must expressly assume warranty obligations. Under § 2-313, the mere use of descriptive language by either party, if followed by performance, may create warranty obligations without either party being aware that a warranty was made.  Thus, if buyer orders a shipment of 50,000 20-V-lithium ion batteries and seller ships 50,000 batteries, they are expressly warranted to be 20-V lithium ion batteries. § 2-106 (2) (shipment accepts order for immediate delivery); § 2-313 (1) (b) (express warranty created by any description of the goods that is made part of the basis of the bargain.)

Drafted in the 1970’s, The Second Restatement was notable for the number of provisions that it imported from Article 2, which had become popular with courts and commentators. But despite the view that express warranty was part of contract law and not the tort law of deceit, the drafters saw that incorporation of the Article 2 rules on warranty for non-Article 2 warranties would completely undo the unity of contract law. Since they could not generally acknowledge warranty without extensive reference to Article 2’s novel rules, they left the development of the general principles of non-Article 2 warranty law to the courts, where they are apparently developing smoothly without the guidance of the Restatement. This dodge permitted the Restatement to preserve its illusion of doctrinal coherence in achieving Williston’s great project of rationalizing all of contract law.

The mathematician Kurt Gödel (left) famously demonstrated (in layman’s terms, i.e. so far as I can understand it) that any system of logic that was rich enough to permit all mathematical truths to be deduced would inevitably give rise to contradictions, while any system consistent enough to eliminate all contradictions would inevitably be unable to generate all truthful mathematical propositions. All logical systems are either inconsistent or incomplete. The Restatement appears to have fallen prey to Gödel’s Theorem: it cannot accommodate all the rules of Article 2 warranty law without violating its fundamental premises about mutual assent.

UConn Settles with Former Basketball Coach for $3.9 Million.

Two pieces of news that I came across this week highlight just how broken college sports is.  First, as Zac Al-Khateeb reported here in The Sporting News (in a story first reported in The New York Times' The Athletes, the University of Texas at Austin spent $280,000 on a recruitment trip involving Arch Manning and some other students.  The system disgusts me so much that I can't be bothered to keep up with the current state of things.  I don't know whether players are allowed to be paid yet. If they are not allowed to be paid, well, this story suggests that they absolutely are being paid.  And if they are being paid, well, pay them to play, not to have dinner at the local steakhouse with their families.  But please, do start paying them and do it soon, so that the entire corrupt system can come crashing down under the weight of its own excess, greed, and unreality.  

Second, Billy Witz reports here in the New York Times, that the University of Connecticut (UConn) has agreed to a $3.9 million settlement with its former coach Kevin Ollie (right), who was fired for cause in connection with an NCAA recruiting violation investigation that ultimately resulted in the team being placed on probation for two years.  An arbitrator had awarded Mr. Ollie, who was found to have skirted NCAA rules, the $11 million remaining on his contract at the time of his termination.   UConn had originally responded by calling that award "nonsensical."  The fact that Ollie negotiated down from an arbitral award suggests that he was less than 100% confident that it would hold up, but who knows what absurd terms were in the contract.  Paying coaches millions of dollars to head teams made up of talented athletes who get paid nothing and who are supposed to be attending college rather than training for professional sports is what is really non-sensical. 

NO OTHER COUNTRY IN THE WORLD DOES THIS!!!  And it does not pay for itself.  Not even close.  This article from Tom Dart in The Guardian about the University of Houston has the same message as every other truthful article about college sports: "A handful of athletics departments, such as Texas (which has newly renovated one end of its football stadium at a cost of $175m) are profitable. Many others, such as Houston, subsidise sports programmes through funds from the university’s wider budget, mandatory student fees of hundreds or even thousands of dollars each year, and donations." 

When sports programs do well, they bring in money that is used on sports.  When law schools do well (and many make a profit for their universities most years), they contribute to the university's overall budget.  Instead of painting their faces, attending tail-gating parties, and screaming for three hours on a Saturday, undergraduates should be bringing snacks and coffee to the law libraries and encouraging the students who are training to become the lawyers of tomorrow.  Their tuition dollars are funding that climbing wall in your college gymnasium today.  

Quentin Tarantino Settles NFT Case

Back in January, co-blogger Nancy Kim alerted us all to a fight involving Quentin Tarantino's rights to NFT of scenes from Pulp Fiction, the greatest movie ever.  Citizen Kane? The Seven Samurai? The Seventh Seal?  The Princess Bride?  Morons!  

Anyway, last week, Eli Tan of Coindesk brought news of a settlement.  Tan reports that the first NFT that Mr. Tarantino put up for sale went for over $1 million.  Miramax claimed that it owned the rights to Pulp Fiction, but did it own the rights to an NFT, created much later?  The parties settled their dispute and hinted at plans to jointly distribute NFTs in the future.

C'mon Quentin!  It used to be about the art!  It's about some real token, not some digital token.  Something you would risk everything for -- like going back to your apartment to recover something of purely sentimental value when you know that an assassin is waiting for you there.   It was about something so pure that everyone just looked on it with wonder, and you were willing to give Ringo and Honey-Bunny your wallet just to protect it.  See, money is not what you are after!  You are after that moment of enlightenment when you appreciate the little differences that make Europe special, like being able to walk into a McDonald's and order a Royale with cheese.  Or the delight in winning, incontrovertibly, an argument over whether a foot massage is sexual. 

NFT's are like art dressed up in somebody else's clothing, so that even the coolest of customers end up looking like dorks!  

Now you're the dork, Quentin.  Have you always been the dork?

Tuesday Top Ten - Contracts & Commercial Law Downloads for September 20, 2022

Welcome all to this week's edition of the Tuesday Top Ten! Plenty of contract and commercial law goodness is happening over on SSRN, and we hope you'll take some time to check it out. Let's roll the tape, shall we?

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 22 Jul 2022 - 20 Sep 2022

Rank	Paper	Downloads
1.	The Private Law of Stablecoins Kara J. Bruce, Christopher K. Odinet and Andrea Tosato University of Oklahoma College of Law, University of Iowa - College of Law and University of Nottingham, School of Law	1,470
2.	How Privilege Undermines Cybersecurity Daniel Schwarcz, Josephine Wolff and Daniel W Woods University of Minnesota Law School, The Fletcher School of Law and Diplomacy, Tufts University and University of Edinburgh	599
3.	A Century of Business in the Supreme Court, 1920-2020 Lee Epstein and Mitu Gulati University of Southern California and University of Virginia School of Law	431
4.	Transfers and Licensing of Copyrights to NFT Purchasers Michael D. Murray University of Kentucky, J. David Rosenberg College of Law	202
5.	The Restatements as Law Frederick Schauer University of Virginia School of Law	200
6.	Contractual Landmines Robert E. Scott, Stephen J. Choi and Mitu Gulati Columbia University - Law School, New York University School of Law and University of Virginia School of Law	116
7.	Based On a True Story: Life Story Rights, Modularity and Ownership of the Self Jorge L. Contreras and Dave Fagundes University of Utah - S.J. Quinney College of Law and University of Houston Law Center	110
8.	Teaching Slavery in Commercial Law Carliss Chatman Washington and Lee University School of Law	106
9.	The Market for Corporate Criminals Andrew Jennings Brooklyn Law School	72
10.	Private Law and The Embedded Person Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	69

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 22 Jul 2022 - 20 Sep 2022

Rank	Paper	Downloads
1.	The Private Law of Stablecoins Kara J. Bruce, Christopher K. Odinet and Andrea Tosato University of Oklahoma College of Law, University of Iowa - College of Law and University of Nottingham, School of Law	1,470
2.	The Restatements as Law Frederick Schauer University of Virginia School of Law	200
3.	Contractual Landmines Robert E. Scott, Stephen J. Choi and Mitu Gulati Columbia University - Law School, New York University School of Law and University of Virginia School of Law	116
4.	Based On a True Story: Life Story Rights, Modularity and Ownership of the Self Jorge L. Contreras and Dave Fagundes University of Utah - S.J. Quinney College of Law and University of Houston Law Center	110
5.	Teaching Slavery in Commercial Law Carliss Chatman Washington and Lee University School of Law	106
6.	Private Law and The Embedded Person Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	69
7.	Lost Synergies and M&A Damages: Considering Cineplex v. Cineworld Jonathan Chan and Martin Petrin UCL and University of Western Ontario	65
8.	A Pyrrhic Victory for Unjust Enrichment in Singapore? Rachel Leow and Timothy Liau Assistant Professor and National University of Singapore (NUS) - Faculty of Law	63
9.	Unjust Enrichment in Australia 2020-2021 Kit Barker, Samuel Walpole and Penelope Bristow University of Queensland - TC Beirne School of Law, TC Beirne School of Law and The University of Queensland - T.C. Beirne School of Law	62
10.	Market Humiliation Hila Keren Southwestern Law School	53

10th Circuit Rules Unsigned Settlement Agreement Enforceable

Oklahoma City's Devon Tower; Image by
Urbanative, CC BY-SA 3.0, via Wikimedia Commons

In 2018, two employees of defendant Line Finders (LF) were injured in a gas-line explosion allegedly caused by an employee of plaintiff Devon Energy (Devon).  One of the employees sought compensation from Devon, and Devon sought indemnification from LF under the parties' master agreement.  LF refused, and Devon sued, alleging breach of contract, seeking declaratory relief and damages.  

In April and May, 2021, the parties negotiated a settlement agreement.  After several rounds, Devon sent LF the final version.  LF's attorney responded on May 21st, "The settlement agreement looks fine. Please send me an execution version and I will procure signature."  As the 10th Circuit puts it in Devon Energy Production L.P. v. Line Finders, LLC, Devon did not "immediately" send the agreement.  It did not send it that week.  Or the next week.  Or the week after that.  Not in a box, not with a fox, not in a house, not with a mouse.  Not here, not there, not anywhere.

And then, on June 9th, the other injured employee sent a demand letter to Devon.  On June 11th, Devon signed.  On June 17th, it sent the signed agreement to LF.  What a lovely fact pattern!

Devon of course insisted that the parties had already agreed.  LF countered that they had agreed to be bound upon execution, and the agreement had not been executed.  Moreover, LF contended, the agreement was based on mistake and fraud because LF did not expect the second employee to make a demand and Devon failed to immediately disclose when he did.   Oooh!  Better still!

The District Court found for Devon.  Agreement had already been reached on May 21st.  The agreement did not require execution.  Nor was there a mistake, because both parties knew that a second demand was possible.  Finally, the timing for a fraud claim doesn't work, because at the time of the parties' agreement (May 21st), Devon did not know that the second employee would issue a demand on June 9th.  

The 10th Circuit agreed with the District Court.  While Devon's original April 7th counteroffer had language requiring execution, its May 21st settlement agreement had no such agreement.  The parties were bound based on LF's attorney's agreement.   Moreover, an agreement signed by one party after agreement binds the other.  That occurred in this case, said the court, when Devon signed on June 11th.  

As to the mistake/fraud claims, LF had acknowledged that, at the time it agreed to the settlement, it regarded a second demand from its injured employees as a remote possibility.  A remote possibility is still a possibility.  This was no mistake.  It was a gamble, and LF lost the bet.  And there was no fraud because, as already noted, at the time the parties entered their settlement agreement, neither party knew that a second demand was in the offing.

The timing of Devon's signing and returning the agreement does seem fishy.  If the parties were bound on May 21st, why sign on June 11th?  If the claims were equitable, there might be a laches argument, as the timing of the signing seems opportunistic.  But law is law.  The parties were bound and would have been bound regardless of execution.  Interestingly enough, Devon's seemingly opportunistic behavior was a feature, not a bug.  Case law indicating that one signature binds parties after agreement provided powerful support to the court's conclusion that the parties were bound.  But is "looks fine" really agreement?  If all of the terms were agreed to, why not just sign whatever Devon sent on May 21st rather than requesting a "final version?"   

Follow-up on Former Nebraska Coach Scott Frost's Contract

By Huskerdood - Own work, CC BY-SA 4.0

Last week, we posted about Nebraska's decision to fire its head football coach Scott Frost and pay him $15 million in severance.   Victor Goldberg shared Coach Frost's contract and its two addenda, with me.  You can also find it online here.

One big takeaway from Professor Goldberg's work is that sophisticated parties fashion their own remedies, and those remedies often depart from the default rules set out in the common law.  So too in the realm of coaching contracts.  You might think that a coach who gets a $15 million severance package for early termination of his contract would have to mitigate should he land comparable employment at another school.  Not so here.

As Professor Goldberg notes after reviewing the contracts in his comment here, Coach Frost's initial Dec. 2017 contract provided that, while he had no obligation to mitigate, if he got another coaching job, either in the NFL or with another Division I NCAA team, the severance pay (termed "Liquidated Damages") would be offset (set forth in Section 13(b) of the original agreement).  But the addenda provided for neither a duty to mitigate nor an offset (in paragraph 2 of the 2021 addendum and paragraph 3 of the 2019 addendum).  

The mystery to me is why the addenda, negotiated after Coach Frost and Nebraska football suffered through several losing seasons, would be more generous than the original contract, negotiated when Coach Frost was the hottest coach on the market.  One would have to review the contracts as whole to determine what Coach Frost gave up in exchange for more generous liquidated damages provisions.

Burger King Employee Plaintiffs Have Alleged Non-Compete Clause Is an Anti-Trust Violation

In a witty and engaging opinion that begins with a seeming tangent about pro football, Judge Rosenbaum of the 11th Circuit (left) reinstated the anti-trust claims of plaintiff Burger King (BK) employees.  The case is Arrington v. Burger King Worldwide.  After her football intro, Judge Rosenbaum begins by explaining that 99% of BK restaurants are independently owned franchises.  Nonetheless, BK and its franchisees include in their employment agreements a "no-hire agreement" which provides that no BK franchisee can hire a BK employee from another franchise for six months after the employee leaves employment at another franchise. 

The main sticking point was "concerted action."  BK claimed that it and its franchisees were a single economic enterprise incapable of concerted action.  Judge Rosenbaum and the rest of the 11th Circuit panel disagreed. 

The no-hire agreement in question has been in effect since 2010.  It is nasty.  If it is violated, the franchisee who poaches workers must pay all costs and attorneys fees incurred in an action to enforce the provision.  That franchisee may also soon lose its franchise.  Although BK stopped insisting on the provision in new franchise agreements entered into after 2018, it is still in effect for older franchises.  The District Court had dismissed the complaint on the ground that BK is a single economic enterprise and ruled that amendment of the complaint would be futile.

Judge Rosenbaum lays out the structure of BK's franchise system and walks through Section 1 of the Sherman Act.  Arguing by analogy to the 201o Supreme Court case American Needle, Judge Rosenbaum found concerted action.  In that case, the 32 NFL teams gave Reebok an exclusive license to sell team headgear.  The Court there specified that the "concerted action" inquiry is tailored to the facts of the case.  The question is not whether the defendants engage in concerted activities for all purposes but whether they did so in connection with the action or actions at issue. 

When football teams market their own teams' garb, they are not furthering the common interest of the NFL.  On the contrary, they are competing against one another.  As Judge Rosenbaum notes, "No self-respecting Dolphins fan would ever buy a Jets or Patriots hat (at least not for herself). And Jets and Patriots fans are pretty unlikely to purchase Dolphins garb (though they are missing the boat on that one)."  As the spouse of a proud Buffalonian, I can attest that my in-laws would at best take a "hate the sin, love the sinner" approach if I were to show up at a family gathering in aqua and orange, and a costume change would be in order.   

The syllogism then quickly arrives at its conclusion: "So too here. Burger King and its franchisees, though they certainly have some economic interests in common, each separately pursue their own economic interests when hiring employees."  BK still argued that the restraint on trade involved was not unreasonable.  Judge Rosenbaum would not bite on that one, remanding the issue back to the District Court.  When it gets there, I hope the plaintiffs' attorney will ask in voice dripping with sarcasm and innuendo, "If it was so 'reasonable' [using air quote hands here], why did not you take it out of your franchise agreements in 2018?"

Weekend Frivolity: Steve Buscemi as Williston's "Tramp"

Yesterday in Contracts I was talking through the Williston's "tramp" hypothetical.  One of my students recommended the movie, "Big Daddy" as illustrative.  It does indeed present an interesting twist on the old hypo.  For some reason, the star of this movie, Steve Buscemi, does not appear until 1:45 of this clip, so best to fast-forward to there.

Potential exam questions (one for each semester of contracts):

1.  Contracts I: Did sweet, charming Steve Buscemi give consideration to the obnoxious man by ending the conversation?

2.  Contracts II: Assuming that delightful Steve Buscemi formed an agreement with the obnoxious man, was the obnoxious man's contractual obligation excused because McDonald's stops serving breakfast at 10:30 instead of 11:

a. If McDonald's changed its hours after the parties reached agreement?

b. If the mind-blowing change in McDonald's breakfast hours was a fact in existence at the time of the agreement of which neither party was aware?

H/t: OCU 1L Silas Grams

The Case of the Nebraska Football Coach's Buyout

By Huskerdood - Own work, CC BY-SA 4.0

You have to be an extraordinary person to be an elite college football coach.  You must be unusually savvy about contracts.  That must be true, because I know a lot about contracts but I can't make any sense of the incentive structures in the contract of former Nebraska head coach Scott Frost (right).  Andrew Doughty of BetMGM has the numbers here.

Coach Frost had an extraordinary second season, leading the University of Central Florida to an undefeated campaign and defeating Auburn in the Peach Bowl.  Nebraska paid $3 million to buy out his contract and then agreed to a seven year, $35 million contract with Coach Frost.  Two dismal years in, the contract was extended through 2026.  After two more dismal years, Nebraska and Coach Frost renegotiated his contract, reducing his annual salary to a miserly $4 million/year.  The buyout structure is complicated, but in the end, Coach Frost is entitled to a $15 million buyout.  If the team had waited until October to buy him out, it would have owed only $7.5 million.  

You might think that Nebraska is not really out that $15 million because Coach Frost has a duty to mitigate.  Except that I seem to recall reading somewhere in  Victor Goldberg's  Rethinking Contract Law and Contract Design that coaches' contracts often specify that there is no duty to mitigate [if someone can find the cite or knows from some other source, please chime in].  Moreover, Coach Frost's record at Nebraska was 16-31 overall, 10-26 against conference opponents, and the team was winless against ranked teams.  When Nebraska landed Coach Frost, he was the most sought-after young coach in college football.  Now, he's asking Kramer's question after a prolonged cigar binge:

Why, you might ask, did Nebraska not wait until October?  Some sportswriters speculate that the timing was dictated by an upcoming game against the Oklahoma Sooners.  Nebraska's athletic director did not want to see his team humiliated by the team he played for.  One would think that even rabid Nebraska football fans would not think that motivation justified a $7.5 million price tag.  But there are other reasons that would surely pass a business-judgment-rule type sniff test.  It seems there are advantages to being the first in the pool when it comes to picking a new head coach.

Has Nebraska learned its lesson?  Coach Frost's resume shows that past performance is no guarantee of future success.

A Sale of a Kid in California

CEDAR COME HOME: The Story of a Girl and Her Goat

Sidney W. DeLong

A few days ago, the national news carried the story of 8-year-old Jessica Long, who had 4-H Club project in which she acquired and raised a 3-month old goat to marketable size. As part of the project, she entered into a contract to sell the goat at the Shasta County Fair.  What she somehow failed to realize was that this was to be what is euphemistically called a “terminal auction,” i.e., after the goat was auctioned off it was to be butchered and the meat provided to the winning bidder.

Jessica’s story is sadly familiar to anyone raised on a family farm, to whom such events are a sort of rite of passage. Farm children must be taught not to treat livestock as pets but as commodities with whom relationships are best left at arms’ length. Jessica bottle-fed the baby goat and the two soon bonded closely. She named the goat “Cedar,” unwittingly violating the corollary to the first rule that farm kids must learn: you never name anything you are going to eat or sell. Unaware of Cedar’s impending doom, Jessica took to leading him around the farm on a leash just as she would a pet dog.  

When Cedar reached marketable size and the time for the fair approached, Jessica learned the grim truth. She was horrified and when she protested, she and her mother told the Fair officials that they wanted to rescind the sale. For some reason, the Fair officials refused her request. Cedar was duly auctioned off to a California politician. But when he learned of Jessica’s protest, he quickly (and wisely) waived his claim to the goat meat. Jessica’s mother offered to compensate the Fair officials for the lost commission on the sale, But they remained adamant, refusing her offer and refusing to return Cedar. Instead they made arrangements for him to be slaughtered, with the meat going to someone other than the buyer.

After negotiations for Cedar’s release failed and before Cedar could be transferred to the slaughterhouse, Jessica and her mom removed Cedar from a holding pen with the other doomed stock and transported him to a farm several hundred miles away in another county.

Alpha from Melbourne, Australia, CC BY-SA 2.0 via Wikimedia Commons

Upon learning this, Fair officials apparently swore out a criminal complaint charging Jessica and her mother with grand theft under California law! The Sheriff of Shasta County served a warrant of some sort, seized Cedar, and delivered him to “unidentified” persons, presumably the slaughterhouse. His edible remains were then sold or given to persons unknown. The family’s best guess was that Cedar was served up at a barbeque at a Future Farmers of America cookout. (Much might be said about the cultural differences between the 4-H Club and the FFA but it is likely that Charlotte’s Web is not on the reading list of either organization.)

When she finally learned of Cedar’s fate, Jessica was devastated. She and her mother have filed a § 1983 action against the Sheriff and are contemplating a lawsuit against the Fair. One imagines that a complaint against the Fair officials will include claims for conversion, filing a false police report, and intentional infliction of emotional distress.

The claim for conversion would be based on Jessica’s ownership of Cedar. Even if the auction had temporarily transferred Jessica’s title to the buyer, as a minor she retained the absolute power to disaffirm the sale, even after it had been fully performed on both sides. Halbman v Lembke, 298 N.W.2d 562 (1989) (Holding that a disaffirming minor must restore the consideration received if possible.). Upon her disaffirmance of the sales contract, title to Cedar would have reverted to her. So when she rescued Cedar, she was merely retaking her own property. Conversely, when the Fair officials forcibly seized and destroyed Cedar, they were converting Jessica’s property.

Under the common law infancy rule, a person may avoid any contractual obligation she enters into before the age of 18 and may do so until shortly after she reaches 18. Restatement (Second) of the Law: Contracts § 14. An artifact of the class system in England, the infancy rule was devised to protect the sons of the rich from liability for their gambling debts and other youthful indiscretions. It certainly did not reflect a social policy against the exploitation of children by greedy adults: it coexisted comfortably with wide-spread child labor of Dickensian dimensions. It has been repurposed as a general protection of all minors in its modern version.

The English infancy rule had little relevance to the life of young people in rural America, where young children assumed major responsibility and a 14-year-old was considered to be an adult for most practical purposes. In today’s agricultural communities it is likely that the infancy rule is largely ignored: any rule that makes all sales from a minor voidable would be anomalous in a farm community where 4-H club and FFA members of high school age regularly sell their livestock and crops in market transactions. It would be shocking to suggest that all such sales can be avoided until the sellers reached the age of 18. Teenagers in the 4-H Club and FFA are instead taught to participate in the grown-up world in which they are expected to keep the promises they make to the adults who do business with them. The norms of the agricultural community of Shasta County have more relevance to Jessica’s life than Section 14 of the Restatement. 

Interestingly, the unwritten norms of the farmers and ranchers of Shasta County were the subject of the seminal empirical study that helped launch the Law and Society movement. Robert C. Ellickson, Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta County, 38 Stan. L. Rev. 623 (1986). Ellickson showed that in Shasta County, community norms rather than legal rules about cattle trespass or economic bargaining were used to resolve disputes over cattle trespass. One might imagine that contemporary Shasta County community norms will also figure largely in how Jessica’s claims are received by her neighboring farmers.

As an outsider, however, one would hope that those norms do not include the filing of criminal charges against an 8-year-old 4-H club member who just wanted her goat back. The case illustrates the uncomfortable coexistence of the criminal and civil law when parties seek to use self-help to gain possession of property that they believe they own. It also raises the dangerous prospect of a disappointed buyer in a sales contract using the criminal law rather than an action of replevin to achieve specific performance of a contract. As the reader may recall, Sherwood v Walker was a claim of replevin by the buyer seeking possession of Rose 2d of Aberlone whom the seller had not delivered. Could Sherwood have sent the Sheriff to seize Rose on the basis of a criminal complaint rather than a civil complaint for replevin?

One thing is clear: When ownership is disputed, as it was here, a sheriff is not competent to resolve the question and should remit the parties to their judicial remedies. Jessica’s 1983 action may drive that point home.

Tuesday Top Ten - Contracts & Commercial Law Downloads for September 13, 2022

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 15 Jul 2022 - 13 Sep 2022

Rank	Paper	Downloads
1.	The Private Law of Stablecoins Kara J. Bruce, Christopher K. Odinet and Andrea Tosato University of Oklahoma College of Law, University of Iowa - College of Law and University of Nottingham, School of Law	1,314
2.	How Privilege Undermines Cybersecurity Daniel Schwarcz, Josephine Wolff and Daniel W Woods University of Minnesota Law School, The Fletcher School of Law and Diplomacy, Tufts University and University of Edinburgh	542
3.	A Century of Business in the Supreme Court, 1920-2020 Lee Epstein and Mitu Gulati University of Southern California and University of Virginia School of Law	423
4.	The Restatements as Law Frederick Schauer University of Virginia School of Law	188
5.	Private Law Legalism Felipe Jiménez USC Gould School of Law	143
6.	Contractual Landmines Robert E. Scott, Stephen J. Choi and Mitu Gulati Columbia University - Law School, New York University School of Law and University of Virginia School of Law	112
7.	Based On a True Story: Life Story Rights, Modularity and Ownership of the Self Jorge L. Contreras and Dave Fagundes University of Utah - S.J. Quinney College of Law and University of Houston Law Center	109
8.	Teaching Slavery in Commercial Law Carliss Chatman Washington and Lee University School of Law	105
9.	The Market for Corporate Criminals Andrew Jennings Brooklyn Law School	70
10.	Private Law and The Embedded Person Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	67

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 15 Jul 2022 - 13 Sep 2022

Rank	Paper	Downloads
1.	The Private Law of Stablecoins Kara J. Bruce, Christopher K. Odinet and Andrea Tosato University of Oklahoma College of Law, University of Iowa - College of Law and University of Nottingham, School of Law	1,314
2.	The Restatements as Law Frederick Schauer University of Virginia School of Law	188
3.	Contractual Landmines Robert E. Scott, Stephen J. Choi and Mitu Gulati Columbia University - Law School, New York University School of Law and University of Virginia School of Law	112
4.	Based On a True Story: Life Story Rights, Modularity and Ownership of the Self Jorge L. Contreras and Dave Fagundes University of Utah - S.J. Quinney College of Law and University of Houston Law Center	109
5.	Teaching Slavery in Commercial Law Carliss Chatman Washington and Lee University School of Law	105
6.	Private Law and The Embedded Person Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	67
7.	Nominal Damages as Vindication Sadie Blanchard Notre Dame Law School	66
8.	Unjust Enrichment in Australia 2020-2021 Kit Barker, Samuel Walpole and Penelope Bristow University of Queensland - TC Beirne School of Law, TC Beirne School of Law and The University of Queensland - T.C. Beirne School of Law	61
9.	A Pyrrhic Victory for Unjust Enrichment in Singapore? Rachel Leow and Timothy Liau National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	60
10.	Market Humiliation Hila Keren Southwestern Law School	52

A Unilateral Contract for a Trip to Mars

Image vy ESA & MPS for OSIRIS Team MPS/UPD/LAM/IAA/RSSD/INTA/UPM/DASP/IDA, CC BY-SA IGO 3.0, CC BY-SA 3.0 igo

This is the time of year when my students are obsessed with unilateral contracts, and I am beating them back, pointing to R.2d § 32 and R.2d § 45 and showing how easily what looks like an offer to enter into a unilateral contract becomes a bilateral contract or an option.  It is nice to have a clear example of something that is and only can be an offer to enter into a unilateral contract.

In 1958, Burma shave posted signs along highways that read:

Free Free

A trip to Mars

For 900

Empty Jars

Burma Shave

According to this story by John Kelly of the Washington Post, one Arliss French, the manager of a Red Owl store (yes, small world!), took the offer seriously enough to earn a trip.  Frenchy (as he was called -- oh, those Midwestern wags!) put up a huge display in his store and promoted Burma Shave by encouraging customers to send him to Mars.  

As with many plans for trips to Mars, Frenchy's faced obstacles.  Burma Shave was losing market share, and men take a long time to use up their shaving cream.  In addition, Burma Shave learned of his efforts and warned him that it was only offering a one-way trip.  Frenchy was undeterred.  But Burma Shave didn't work itself into a lather.  Instead, it bargained!  Frenchy and his wife were sent to the German border town, Moers, pronounced Mars.  Close enough, Frenchy cried, and Burma Shave threw in the trip home as a show of good faith.  

See, SpaceX COO Gwynne Shotwell, this is how we will get to Mars! Or at least Moers.

H/T: Elizabeth Winston

Being Talked About . . .

Last week and the week before, I put up a three-part post (here, here, and here) on what I see as the major differences between teaching at top law schools, which I called "The Legal Academy," and teaching in the schools that I have taught at for most of my career, which I call "The Other Legal Academy."  The posts gathered quite a bit of attention on Twitter.  

According to Oscar Wilde, there is only one thing worse than being talked about and that is not being talked about.  But Oscar Wilde was never talked about on Twitter. . . . 

I joke.  People on Twitter had nice and interesting things to say.  There, and in private correspondence, people in the OLA thanked me for giving voice to their experience.  Other people in the OLA shared their very different experiences in the OLA.  As they say on Twitter, YMMV.  People in the LA reached out to try to bridge the gap between the LA and the OLA.  I appreciate their efforts, but I think they to some extent misconstrued my point.  

I set out as an academic hoping to have the kind of life that my professors had.  I do not have that life, but I love my professional life, and I don't know if I would be happy in the LA.  I also recognize that there are trade-offs.  As Joni Mitchell puts it, "Something's lost, but something's gained in living every day."  Moreover, the very different ways in which people in the LA and the OLA need to allocate their time steadily widens the gulf between my part of OLA and the LA.  Differences in resources and certain structural formations push us farther apart.  I wasn't writing in the hopes of sparking a reform movement.  I was just describing the situation as I have experienced it.  But the LA and the OLA will always overlap to some extent, and I am happy about that.  

Now, over at Prawfsblawg, Jeff Lipshaw has more nice and interesting things to say about his very different experiences in the OLA.  His is an interesting perspective to compare with mine, as Jeff and I have crossed paths numerous times, in large part because of our overlapping interests in commercial law and German social theory.  He focuses on his life as a scholar.  He has not felt as cut off from the LA as I have.  

I started the series noting that there are "at least" two legal academies, and Jeff teaches at a school that is somewhere between where I teach and the LA of my youthful fantasies.  He teaches in a major city, home to plenty of other law schools.  But some of the differences just have to do with differences between Jeff and me.  Perhaps those differences have to do with our personalities or our professional drive, perhaps Jeff is a more talented scholar than I am.  Again YMMV.

The least talked-about part of my three-part post was the part about teaching.  Perhaps that is because that part came last and people were just tired of the topic and or my authorial voice, which was tendentious right from the start.  Perhaps it's because teaching is so personal and idiosyncratic.  But I think the differences in teaching in the OLA and the LA drive everything else.  

Weekend Frivolity: Our Dumb First Amendment

On Fridays, we often post about things that are funny and contract related or funny and not contract related and just contracts adjacent.  Today, I am posting a link to my latest article, which I have uploaded to SSRN.  Although the piece is about the First Amendment, there is a contracts argument in there, and the piece grew out of this blog post.   It is, I hope, the first in a series of articles in which I argue that contractual rights and interests ought to be part of the rights mediation process that, following Jamal Greene, I think constitutional adjudication should entail.

Here's the abstract:

Fifty years ago, public school children in Iowa, including Mary Beth and John Tinker, protested the Vietnam War, signifying their political views by wearing black armbands. The Supreme Court found that the school violated the students' right to freedom of expression when it suspended them for their silent, solemn protest, which caused no substantial disruption and did not interfere with the rights of others.

In 2017, a junior varsity cheerleader, frustrated at not getting picked for the varsity squad, profanely expressed her disappointment in two Snaps that she shared with 250 followers, including other cheerleaders. Her coaches suspended her from the junior varsity team for one year. The Supreme Court, applying the same standard as applied in Tinker, found that the school's disciplinary actions violated the cheerleader's free expression rights.

This is dumb.

The Court's decision in Mahanoy Area School District v. B.L. is dumb because, even under Tinker, B.L.'s profane Snaps were disruptive in ways that the Tinkers' protests were not. It is dumb because the Court furthers no identifiable interest that the First Amendment is supposed to protect by preventing coaches from enforcing their own disciplinary rules. Finally, the Mahanoy decision is dumb because it is a product of the rights absolutism, identified by Jamal Greene in his 2021 book, How Rights Went Wrong. The Court provides near-absolute protection to certain privileged rights, broadly understood, while pretty much ignoring all other interests impacted by its decisions.

Following Greene, this Article advocates that courts engage in rights mediation, deciding only the cases before them. If the courts do so, they will, in many cases, return decision-making processes to politically accountable local officials. Our absolutized First Amendment jurisprudence is dumb, and it results in dumbed-down civil discourse. Not all expression demands the same protection as core political speech. There are other interests to be weighed, and each factual scenario brings with it its own constellation of rights and interests. The weighing of those interests is best achieved through local decision-making processes, and the courts’ role in such matters ought to be small and incremental.

I submitted this article early in the August law review sweeps.  Crickets.  So now it is in shop.  Comments more than welcome.

Interruption in our Feed and a Message from Locutus

Those of you who subscribe to the Blog's RSS feed may have experienced a vague sense of loss or relief because you have no longer been getting daily notices of new content on the Blog.  Apparently Paul Caron's Blog Empire is in the process of migrating over to a new feed service.  The timing is especially irksome as I just encouraged people on the AALS Section on Contracts Listserv to follow the blog and provided instructions on how to subscribe to the feed.  

I have made non-contractual representations that could be charitably described  as illusory.  For that, I apologize.

I hope that our feed will be up and running again soon.

In the meantime, you could just follow us on Twitter.  Blogs are dead, and it must be true because I have read it several times on Twitter.

We will add your biological and technological distinctiveness to our own. Your culture will adapt to service us. Resistance is futile!

Happy Star Trek Day.