ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Thursday, April 28, 2022

[Allegedly] Corrupt Government Contracts in Oklahoma

As reported here on, Oklahoma's Department of Tourism and Recreation has cancelled its contract with Swadley’s Foggy Bottom Kitchen, which provides food service in Oklahoma state parks “due to suspected fraudulent activity and questionable business practices.”  More specifically, in its termination letter, the Department noted that Swadley's seemed to be engaged in "highly questionable billing, invoicing, and record keeping practices."

BBQSwadley's insists that it has done nothing wrong and that it has cooperated with state employees all along . Swadley's cause was not furthered when a 2018 video surfaced in which Swadley's founder Brent Swadley states, “I bootlegged barbecue. I wouldn’t be where I’m at today if I followed by the rules and satisfied all the permits and all the legalities and stuff out there. Sometimes you’ve just got to go out there and do it and don’t worry about it.”

Swadley's won the contract to provide food services in Oklahoma's state parks after a bid procedure in which it was the only bidder, and the reporting suggests that the terms of the contract changed significantly in Swadley's favor after it was awarded the contract.  Swadley's was allegedly paid $17 million in management fees and renovation costs, and there are suggestions that the  Department had not engaged in adequate oversight.  Swadley's was paid $1.3 million in management fees alone, a marked increase from the $0 paid to previous operators.  

In the meanwhile, the state is scrambling to provide food service and catering in its state parks.  You do not want to be around a hungry Oklahoman who can't find a barbecue joint.

April 28, 2022 in Current Affairs, Food and Drink, Government Contracting, In the News | Permalink | Comments (0)

Friday, January 7, 2022

Horizon and Organic Milk Contracts

As the New York Times reported yesterday. Horizon Organic gave notice to 89 small dairies in the Northeast that it would be discontinuing its contracts with them.  Horizon then granted the small dairies a reprieve, extending the contract until February 2023 and also agreeing to pay them more for their milk.  

MilkingOrganic dairy farming is a niche, and Horizon plays a key role in that niche.  Low milk prices threatened to drive small dairies out of business at the start of the century.  Organic milk made it possible for small farms to survive if they could get certified.  Organic milk fetches a higher price and enables small dairy farms to stay afloat.  But now the organic milk market is also flooded (sorry) with milk from Western farms.  Dairy used to be a local or regional business.  But with ultra-pasteurization, the industry has gone national, making it harder for small dairies to compete.  One sentence from the Times report sums up the problem:

One company, Aurora Organic, has 27,000 dairy cows on four farms in Colorado and Texas, according to its website — the equivalent of about 500 small New England farms. 

The Northeastern farmers claim that these "factory farms," effectively the Wal*Marts of the organic dairy industry, are skirting federal regulations for organic certification.  The regulations relate to giving the cows access to pasture and to the cows' "heritage."  There are limits on the conversion of conventional diary cows for use on organic farms. Compliance with these regulations is costly, and so the Northeastern farmers claim unfair competition.  Appeals to the Biden Administration's Secretary of Agriculture, Tom Vilsack, have followed.

The story ends on a grim note.  One farming couple with thirty cows had been selling their milk to horizon.  Ms. Smith is 68; her husband is 77.  They were hoping to transfer the farm to their forty-year-old son.  Instead, given the uncertainty, they sold the herd. 

January 7, 2022 in Current Affairs, Food and Drink, In the News | Permalink | Comments (0)

Friday, October 8, 2021

Weekend Frivolity: The Is-a-Taco-a-Sandwich Debate!

The following clip is full of things I hate:

  1. Taco Bell
  2. Formal debates
  3. Popular culture parodying academic discourse
  4. The debate over whether a taco (or a wrap or a reuben or an oreo cookie or an accordion or whatever) is a sandwich
  5. TV commercials (unless they are GEICO commercials)

But when you combine all of these things, it somehow creates the ideal clip for frivolity!

By the way, the answer is that a sandwich has to be food, so sorry Taco Bell!

H/T Texas A&M School of Law Professor Wayne Barnes

October 8, 2021 in Food and Drink, Television | Permalink | Comments (0)

Wednesday, April 28, 2021

Rexing Quality Eggs Fries in the 7th Circuit

This case, out of the 7th Circuit, comes to us from @NY_Contracts, which may evidence some sort of eggsistential crisis.  In the case, Rexing Quality Eggs v. Rembrandt Enterprises Rexing agreed to buy twelve loads of eggs per week from Rembrandt.  A load consists of no less than 25 pallets of eggs, with each pallet holding 900 dozen eggs.   That's a lot of eggs!  No wonder one of the parties bawked!

EggFrom the start, there were problems with the quality of Rembrandt's eggs.  Then, a party to which Rexing was selling a lot of eggs notified Rexing that it no longer needed them, depriving Rexing of a major customer for the eggs it was getting from Rembrandt.  But Rexing had nothing to squawk about, because their agreement with that other party was never formalized (oy!)  Rexing, apparently a hard-boiled sort, started refusing delivery, Rembrandt sought assurances of performance.  Rexing responded by alleging breach of express warranties of quality and alleging that its performance was excused under the contract's force majeure clause.  Not having received the assurances it sought, Rembrandt, clucked a bit, but attempted to mitigate its damages by selling its eggs elsewhere. 

Fearing the frying pan of Rembrandt's suit to collect on unpaid invoices, Rexing jumped into the fire, seeking a declaration that its performance was excused through force majeure and that its repudiation was a justified response to Rembrandt's breaches of warranty.  Rembrandt counterclaimed for breach of contract.  The district court granted Rembrandt summary judgment on Rexing's claims.  That part of the case was over easy.  The force majeure argument played no role in the appeal.  A jury awarded Rembrandt nearly $1.5 million in damages for eggs sold below the contract price and for eggs that it could not sell elsewhere.

EggThe trial court denied Rembrandt's request for pre-judgment interest based on a contractual provision which the trial court struck as usurious.  The Seventh Circuit found that the challenged provision fell within the business credit exception to Iowa's anti-usury statute and remanded the case for calculation of contractual interest.

The court describes Rexing Quality Eggs as "the unincorporated trade name under which the Rexing brothers have bought and sold eggs for more than twenty years."  I hope for the brothers sake that this does not mean that they have no liability shield.  Otherwise, this judgment is going to make a hash of the brothers' personal finances, as well as their business.

April 28, 2021 in Food and Drink, Recent Cases | Permalink | Comments (4)

Wednesday, March 24, 2021

Nancy Kim's Annual Wrap Contracts Update

Wrap ContractsWe've got all your contracts needs covered here on the blog.  If you need a legal Limerick, we've got them here.  If you need to learn about wrap contracts, Nancy Kim's book covers the basics, and her recent article, "New Developments in Digital and Wrap Contracts," forthcoming in The Business Lawyer,  keeps you updated on the latest developments.  

Last year's update followed courts' articulation and refinement of a reasonable or constructive notice and manifestation of assent requirement.  This year's installment features three cases involving Uber which clarify that standard by specifying what indicia of notice and assent must be present and which, if absent, negate consent to a wrap or digital contract.  The article then explores the pitfalls that await companies that use multiple versions of their contracts, some electronic, some on paper.  Finally, Nancy discusses cases that shows the downside of class action and class representation waivers when a company gets hit with huge filing fees after lots of employees avail themselves of the company's mandatory arbitration provision.

In the Uber cases discussed in Part II of the article, the courts first determine whether the contract terms were “reasonably communicated” to the plaintiff.  That part of the test turns on whether the terms are "sufficiently conspicuous."  They next evaluate whether the terms were accepted and, if so, how.  Courts engage in both a "high-level contextual analysis” and “micro-analysis of particular elements of that context,” and so the outcomes of the cases turn on a very detailed analysis of website/digital design.  For example, in one case, an Uber rider was not subject to the company's arbitration clause.  When she registered with Uber, she received notice that by registering, she was agreeing to Uber's Terms of Service (ToS), but she was not required to read those ToS or separately agree to them.  She was thus unaware that the ToS included an arbitration clause and therefore could not be bound to it.  Nancy summarizes the cases:

Nancy_kimFirst, terms accessible only via a hyperlink . . . should be clearly labeled and marked so that the user’s intent to agree to terms is clearly and unambiguously expressed. Furthermore, conspicuousness of terms alone is not sufficient to establish reasonable notice. Rather, conspicuousness is one factor in determining assent. Finally, the reasonableness of notice depends upon the nature of the transaction because the parties may expect certain terms in some transactions but may not expect them in others. Term that are unexpected given the nature of the transaction require specific notice, and blanket assent to terms may not suffice to establish assent to these unexpected terms.

After discussing a few non-Uber cases that raise similar issues, Nancy sums up the recent developments in this area:

 Increasingly, courts are incorporating screenshots into their opinions and engaging in micro-level analysis that depends not simply on the color of hyperlinks, but the color of the text and other design elements, the placement of hyperlinks, the text used to attract the user’s attention, and whether there is specific notice of terms that would otherwise be unexpected
In part III, Nancy discusses a couple of cases in which financial services companies claimed to have provided customers with notice of arbitration provisions both through electronic contracting and through notice by mail.  In both cases discussed, the courts found the digital notice to be inadequate and that the financial services companies failed to establish that their customers had actually received notice of mandatory arbitration by mail.
Finally, in part IV, bwahaha!!  Companies that require individual arbitration are finding that arbitration fees add up.  When 5000 Doordash drivers brought individual actions against the company, the fees added up to $12 million!  Postmates is facing claims from a similar number of couriers and may have to pay $9.36 million.  Hey food delivery services that insist on calling your employees independent contractors, you just got served with a piping hot dish of karma!

March 24, 2021 in Food and Drink, Recent Scholarship | Permalink | Comments (0)

Tuesday, February 23, 2021

Judge Shaves the Foam off the Cold Brew Served up at Red Robin

I guess this is a breach of Red Robin contract case.  As reported here (and elsewhere), a bunch of Stella Artois enthusiasts filed a nationwide class action against Red Robin, alleging that they had paid for sixteen-ounce beers but were served in fourteen-ounce glasses. If you multiply those two ounces by all the sales at the franchise-owned stores, you get yourself to the $5 million amount in controversy requirement and qualify to make a claim under the Class Action Fairness Act.  Or so Red Robin Claimed in trying to move the case to federal court.  U.S. District Judge Jennifer Dorsey rejected Red Robin's math and remanded back to state court.  Red Robin's calculations left out the inconvenient fact that  the issue was only two ounces of beer per each sixteen-ounce sale and that not all beer sales were for sixteen-ounce beer sales.

StellaJudge Dorsey then lit up Red Robin with beer puns:

  • Red Robin's figures are mostly foam 
  • [Plaintiff's] remand motion takes the fizz out of those numbers
  • Red Robin distills this number down further
  • [T]emperance must be exercised
  • Red Robin tries to tap into sales 
  • Nor has Red Robin shown that a fee award will get it to the fill line
  • Red Robin attempts to satisfy [its] burden with a strange brew
  • Red Robin makes no effort to address that stout disparity

I'm generally not a fan of jokey legal opinions, as it denigrates the parties' claims.  But as this is only a ruling on a procedural motion in a case where not much seems to be at stake, I raise my glass to Judge Dorsey.

[h/t to OCU 1L Howard Hennessey]


February 23, 2021 in Food and Drink, Recent Cases | Permalink | Comments (2)

Friday, December 11, 2020

Weekend Frivolity: Happy Chanukah!

Sorry, Nancy Kim, my wife already got me the gift you were thinking of getting me.

Cat book

Tomorrow, we make latkes!

December 11, 2020 in Books, Food and Drink | Permalink | Comments (0)

Sunday, December 6, 2020

Weekend Frivolity: Where Does Almond Milk Come From?

My brother is a great source of zany humor.

December 6, 2020 in Food and Drink | Permalink | Comments (1)

Tuesday, November 24, 2020

Tyson Foods Succumbs to the Power of the ContractsProf Blog

TysonOn Thursday, we blogged about a wrongful death claim filed against Tyson Foods.  Plaintiff alleged, among other things, that managers at the plant established a betting pool to see who could come up with the best estimate of how many workers would get infected with COVID.  

On Friday, according to this CNBC report, Tyson announced that it was suspending without pay the managers named in the complaint and that it had hired former U.S. Attorney General Eric Holder to investigate alleged misconduct at its facility in Waterloo, Iowa.  The report makes no mention of the role the ContractsProf Blog's expose had in prompting Tyson's response, but the timing could not be coincidental.

November 24, 2020 in About this Blog, Current Affairs, Food and Drink, In the News, Recent Cases | Permalink | Comments (3)

Thursday, November 19, 2020

A Follow-Up on Yesterday's Post

Yesterday, we linked to and summarized some of the findings of a New Yorker article by Eyal Press, highlighting Eugene Scalia's Labor Department's laissez faire approach to regulation of health and safety violations during the COVID pandemic.

TysonToday, we noticed this related article from the Huffington Post  by Sanjana Karanth(h/t Ben Davis).  The article reports on a wrongful-death lawsuit filed by the family of a worker at a Tyson plant in Iowa who died from COVID, allegedly after exposure at work.  The plaintiff was one of five workers from the same factory who died from COVID; about 1000 employees -- over a third of the workforce -- were infected.  The complaint alleges that managers at the plant set up a betting pool in which managers would try to guess how many workers would become infected.  The complaint also alleges that the plant manager called COVID "a glorified flu" and instructed workers to show up, even if they had symptoms.  

And now the link to yesterday's post:  here is the closing paragraph of the article:

The Occupational Safety and Health Administration and the Centers for Disease Control and Prevention issued guidance at the beginning of the pandemic recommending that meatpacking companies put up physical barriers, enforce social distancing and install more hand-sanitizing stations, among other steps. But the guidance is not mandatory and is mostly unenforceable.

November 19, 2020 in Current Affairs, Food and Drink, In the News, Labor Contracts, Recent Cases | Permalink | Comments (0)

Tuesday, November 17, 2020

Taboo Trades: Marijuana

Riddle me this: what is the opposite of the Bermuda Triangle?

Answer: Corona Winter in Oklahoma City.


KrawiecBecause when you combine munchies-inducing medical marijuana joints on every corner, easy access to Trader Joe's, and obstacles to exercise indoors or out, unwelcome things that disappeared last summer (like my love handles) return.

Which is just our way of saying that we have neglected to plug the on Taboo Trades podcast, hosted by Kim Krawiec (pictured, right) , which is about things we maybe shouldn't be selling but do anyway .  The latest episode, on Marijuana Legalization, is available.  Kim interviews Pat Oglesby on pot taxes.

November 17, 2020 in Contract Profs, Food and Drink, Weblogs | Permalink | Comments (0)

Saturday, October 10, 2020

Weekend Frivolity: Of Muffins and Market Failure

Bran muffinIf 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.

OatbranmuffinsWhat 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.  

BagaelAside: 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. 

October 10, 2020 in Commentary, Food and Drink | Permalink | Comments (0)

Wednesday, September 30, 2020

A Series of Takes on Hamer v. Sidway, Part III: A Lighter Take on Promises Not to Curse

In Part I of this series, I provided an overview of my reasons for thinking that courts ought not to be in the business of enforcing twenty-year-old oral promises between family members made at a family gathering.  In Part II, I summarized Douglas Baird's work reconstructing alternative narratives of what might have been going on in Hamer v. Sidway.  Today, I want to focus on my view that it would always be impossible to verify Willie's performance of his promise to refrain from swearing.  

Douglas Baird's piece already notes that Willie was unable to provide witnesses who could verify his claim.  Apparently he was unable to remember the names of or identify his college chums.  To which I say,

This is fine

But in this post, I am more concerned with Willie's promise not to swear.  In my non-professional life, I swear like a sailor.  When my daughter was born, I committed myself to checking my language when speaking in her presence.  When she was 2 or 3, we started to notice that, when experiencing mild frustration, she would lower her head a bit and whisper, "Oh, shhh---."  I have no idea where she got that from.

More recently, just as I was about to start a class, I realized that I left some papers that I needed for teaching in my office.  I teach with a microphone for the benefit of my Zoomers, and I forgot to turn it off as I dragged my aging body down the stairs, into my office, and then up the stairs again.  When I came back in, the students of Section 5, "The Fighting Fifth,"* was in hysterics.  They were amused by the jangling keys that accompanied me on my journey, and, they informed me, "You may have dropped an f-bomb."  I have no recollection of having cursed.  But a room full of amused students will confirm that I did.

OCU Law School
My takeaway from this is that Willie's unverifiable promise could not have been a serious one, and so he can never be rewarded for having "performed."  It's just a very hard thing to monitor.  Even the mild-mannered legal philosopher, Scott Shapiro, has been known to speak colorfully when inclusive legal positivists are his subject matter.

*Our first-year class is divided into seven sections.  I teach four of them face-to-face.  I have concluded that it is boring to call them sections two through five, so I want them to come up with nicknames for themselves.  They have refused, so I am making up names for them.

September 30, 2020 in Commentary, Famous Cases, Food and Drink | Permalink | Comments (0)

Tuesday, May 5, 2020

Ben Davis on the Executive Order Pertaining to Meat & Poultry Processing Plants

DavisBen Davis, of the University of Toledo College of Law, has posted Worker Endangerment in the Meat Industry During COVID-19 on Jurist.  The post comments on the President's Executive Order relating to the food supply chain. The Executive Order was a response to the closing of some meat and poultry processing plants in response to outbreaks of COVID-19 at the plants. 

The executive order suggests that the plants closed due to state action and alleges that state regulations "may differ from or be inconsistent with interim guidance recently issued by the Centers for Disease Control and Prevention (CDC) of the Department of Health and Human Services and the Occupational Safety and Health Administration (OSHA) of the Department of Labor."  Ben's post makes clear why state regulations might differ with CDC and OSHA guidances, which are filled with what he calls "mealy-mouthed phrases" but I would call weasel words.  Basically, the guidances say that, ideally, plant operators should consider allowing workers  to socially distance themselves if feasible.   If states imposed stricter guidelines, they saved lives.

It is not true that state action is the cause of the closures.  Rather, the companies are closing their plants on their own.  I didn't know that lying in executive orders was a thing now, but I concede, that was very retro thinking.  Moreover, workers do not want to work in unsafe conditions, and thus the Executive Order many not have any effect, according to this CNN report.

According to the Executive Order, the closures "threaten the continued functioning of the national meat and poultry supply chain, undermining critical infrastructure during the national emergency."  As a pescatarian, I can only say, "Really?"  

But I digress.

Reynolds AbbottBen's post highlights the precarious predicament that workers might face as a result of the Executive Order.  They may face a Hobson's choice of returning to an unsafe work environment or losing their unemployment benefits.  Ben cites to reports that some governors, like Iowa's Kim Reynolds (left) and Texas's Greg Abbott (right), are threatening to withdraw such benefits from workers who "voluntarily quit."  The issue goes beyond the plants and could affect workers in many areas of the economy that are opening up before their workers feel safe returning to their jobs.

May 5, 2020 in Commentary, Contract Profs, Current Affairs, Food and Drink, In the News, Labor Contracts | Permalink | Comments (1)

Sunday, May 3, 2020

Weekend Frivolity: Part of the World

Some of our readers might recognize this new feature of the Blog, "Weekend Frivolity" is ripped off form the frivolity segment of the National Security Law Podcast.  In this case, imitation is indeed the sincerest form of flattery.  If you aren't currently subscribing to the podcast, you should be, even if you aren't interested in National Security Law.  It is fun to listen to Bobby Chesney and Steve Vladeck argue about just about anything.

I'm tipping my hat extra hard in the post because I discovered this video on Bobby's Twitter feed.  It has something of an Austin feel to it, but I'm afraid I don't know if the Bar & Grill responsible for this video is an Austin joint.  Perhaps a knowledgeable reader can enlighten me in the comments!


May 3, 2020 in Current Affairs, Food and Drink, Music, Weblogs | Permalink | Comments (0)

Wednesday, June 19, 2019

A brand new apple variety leads to a discussion about extrinsic evidence

Continuing the theme of thinking about fall courses, a recent case out of the Western District of Washington, Phytelligence, Inc. v. Washington State University, Case No. C18-405 RSM (behind paywall), has a discussion about both extrinsic evidence and agreements to agree -- both topics my students often struggle with. Might be worthwhile to take a look at this recent analysis, especially if you teach in Washington. 

Plus it's a dispute about a new apple variety, which is pretty cool. You can read more about it here and here


June 19, 2019 in Commentary, Current Affairs, Food and Drink, In the News, Law Schools, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, May 22, 2019

Salmonella-infected Chicken is not a "Defective" Product

Salmonella-infected raw chicken meat is not “defective” under Maine law.  Anyone selling such meat also do not violate the implied warranties of merchantability or fitness for a particular purpose.  This is so even if tons of meat have been recalled by a manufacturer precisely because of a salmonella outbreak affecting the meat. Such held the United States Court of Appeals for the Tenth Circuit recently. Unknown

The result may seem both incredibly gross and grotesque, but in a strange way, makes sense.  In the case, a raw food manufacturer sold almost 2 million pounds of raw meat to a food processor preparing chicken products such as frozen chicken cordon bleu products.  The manufacturer recalled the meat, causing losses to the processor in excess of $10 million.  The processor filed suit for breach of contract.  Both the trial and appellate courts held that the processor had failed to state a claim under F.R.C.P. 12(b)(6).

Why?  Because salmonella is an “inherent, unavoidable, and recognized component of raw chicken that is eliminated by proper cooking methods.”  Even though the recall admitted that the recall was adulterated with salmonella, the complaint did not allege that the chicken was contaminated with a form of salmonella that could notbe eliminated by proper cooking.  The sick consumers could have contracted the infections from merely touching the raw meat. Images

This shows the relatively low level of sanitary integrity that can be expected in today’s meat market. Bon Appetit! 

The case is Scarlett v. Air Methods Corporation, 2019 WL 1828908

May 22, 2019 in Current Affairs, Food and Drink, Miscellaneous, True Contracts | Permalink

Thursday, May 2, 2019

The difficulties in establish an oral agreement, the difficulties in establishing promissory estoppel

A recent case out of the Fifth Circuit, Mr. Mudbug, Inc. v. Bloomin' Brands, Inc., No. 18-30626 (behind paywall), reminds us that, in the case of establishing the existence of an oral agreement, it helps to have testimony that comes from a third party.

The plaintiff asserted that it had entered into an oral agreement with the defendant where the defendant promised to buy 28 million pounds of various dressings. However, all of the testimony about the existence of the oral agreement came from the plaintiff's executives. While it was true that the plaintiff and the defendant had a ten-year business relationship, that by itself did not establish the existence of the 28-million-pound contract, especially where the defendant had provided evidence that it consistently refused to commit to a specific volume of purchasing. 

Having failed to establish the existence of a contract, the plaintiff turned to promissory estoppel, but you can only have promissory estoppel where a promise exists. The plaintiff asserted that the defendant told it that it would have to "substantially enlarge its . . . facilities" if it wanted "to produce all of the food products" that the defendant would need. But this was a declaration of fact, not a promise that the defendant would enter into contracts with the plaintiff if it expanded. 

May 2, 2019 in Food and Drink, Recent Cases, True Contracts | Permalink | Comments (0)

Tuesday, March 12, 2019

At the intersection of illegal contracts, immigration policy, and fast food restaurants

When I teach about illegal contracts, I often find myself talking about paid assassins, because for some reason it's the only example I can come up with on the fly (let's not psychoanalyze that too much). A recent case out of California, Lin v. Chiu, B285053, has a different illegality analysis. The case involved a contract concerning an investment of money into the opening of a fast food restaurant franchise. Chiu alleged that Lin used the contract to apply for permanent residency in the United States, even though the contract did not fulfill the requirements for such an application, and therefore the contract was illegal and unenforceable. 

The court disagreed. Even if Lin's attempt to use the contract as the basis for residency might be questionable, the central purpose of the contract itself was a straightforward investment, not anything illegal. Nothing about the alleged illegal use of the contract had anything to do with Lin's contractual rights to repayment of his investment, and there were no allegations that the contract was merely a sham to defraud the U.S. government. It was a bona fide contract in and of itself, with the objective of receiving a return on investment, and not the objective of winning Lin permanent residency. Maybe Lin had an illegal motive underlying his actions, but that did not change the fact that his actions were a legitimate business transaction. Enforcing the investment contract, the court found, would not encourage others to use such contracts as an illegal basis for permanent residency. 

March 12, 2019 in Food and Drink, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Tuesday, June 12, 2018

The Meaning of “Iced Tea”

Here’s a nice little case that lends itself well to classroom use.

The Robertson family owned Duck Commander, Inc. (“DC”), a hunting supplies company that eventually morphed into an iced tea maker after Si Robertson ("Uncle Si") became known for the its members’ affinity for ice tea on a reality TV show about duck hunting.  This was broadcast on the A&E network. Uncle-Si-Iced-Tea_0

In late 2013, DC contracted with Chinook USA, LLC (“Chinook”), a ready-to-drink beverage company, to produce and market the Robertson family’s ice teas in cooperation with the Robertsons.  A fairly elaborate contract is drawn up.  This spells out the corporations’ mutual obligations in relation to “iced tea,” “ready-to-drink [RTD] teas,” and “RTD beverages.”  This includes an integration clause purporting to make the agreement the “entire understanding between the parties.”

A few months later, in the summer of 2014, sales of iced tea apparently did not go as well as the parties had hoped and planned for.  The Robertson family thus branched out into energy drinks and vitamin water.  DC contracted with another marketer of those products.  Chinooks sued DC for breach of contract, among other things claiming that the contractual terms “iced tea,” “ready-to-drink teas,” and “RTD beverages” also encompassed vitamin water and energy drinks and that DC should thus also have dealt with Chinook in relation to those products.

The contract was held to be ambiguous.  Parol evidence was brought in showing that during the contract negotiations, iced tea accounted for about 95% of the focus of the negotiations with coffee products for the other 5%.  No mention had been made of energy drinks or similar products.  After contract execution, a Chinook negotiator sent Chinook an email stating “[T]hank you for taking the time to ask for a confirmation of Chinook USA’s rights as our exclusive licensee of tea ….  This email confirms the same.”

Oops, it’s difficult to claim afterthe fact that when you yourself – a seasoned company with professional negotiators – get a deal for “tea,” you really intended something more than that.  The appellate court thus also affirmed the district court’s judgment against Chinook on its breach of contract claims (see Chinook USA, L.L.C. v. Duck Commander, Incorporated, 2018 WL 1357986).

This case lends itself well to students issue-spotting issues such as contract interpretation, ambiguity, the PER, etc., but could also be used to discuss bargaining powers, party sophistication, and the smartness of, if nothing else, sending confirmatory memos… only they should, of course, be drafted such that they truly represent the parties’ intent.  If that was the case in this matter, was Chinook simply regretting not getting a broader agreement at a point when sales of the originally intended product was already known to falter?  This appears to be the case here.

June 12, 2018 in Food and Drink, Recent Cases, True Contracts | Permalink | Comments (0)