ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, October 15, 2018

Lack of Consideration – Or Not!

Currently in the midst of teaching consideration, I found the following case curious not so much because of its somewhat questionable facts, but because of the court’s puzzling reasoning.

Plaintiff Jose Torrez, a skilled laborer, agreed to renovate some buildings owned by defendant Koray Ergur and his companies.  Torrez was promised a bonus of $150,000 for nine months’ worth of work if he would work for the “reduced hourly wage” of $10 per hour.  He did. At some point in time, his hourly pay was increased to $11 per hour.  After completing a total of 18 months of labor, Torrez was terminated and – you guessed it – denied the bonus.  He brought suit claiming, among other things, breach of oral contract and the bonus $150,000 in damages. Images

The court rejected the latter.  Of course, since the contract was for the completion of nine months of labor, the Statute of Frauds was not implicated and the oral promise was thus enforceable if the court had wanted to do so.  It did not, however.  Instead, it found that Torrez had, during the legal proceedings, “contractict[ed] his allegation of reduced wages as the consideration for the $150,000 bonus.”  The court concluded that “while Torrez recited facts in his pleading to support the element of consideration for the promised bonus [i.e. the low pay of $10 per hour], the evidence presented by deposition and at Hearing [i.e. the “non-reduced” hourly wage of $11 per hour] refutes the existence of consideration … Therefore … it is clear that no consideration existed for the promise to pay a bonus.”

The court apparently found that because Torrez actually received one single dollar more per hour over nine months, there was no consideration for the original promise of working for a “reduced salary.”  However, consideration is measured at the point of contract formation, not after the subsequent turn of events.  Receiving only $10 or even $11 per hour instead of what skilled, manual laborers could get is a “reduced wage” given the market for such work.  It is puzzling why the court found that “no consideration existed for the promise to pay a bonus” when such consideration was fairly clearly present from the outset, namely the promise to work for not much with a promise of a bonus upon completion of the work. Unknown

Is something else at play here?  I think so.  It strikes me as odd that, pardon me, a manual laborer would be promised a bonus of no less than $150,000 for nine months of work.  That is $16,999 per month or, working 40 hours a week, $104 per hour.  Skilled workers can and do demand high fees in some locales, and maybe in Ohio as well. But $150,000 does seem high.  Was the court simply trying to protect the defendant from what may have been an attempted fraud by Torrez?

The truth will probably never be known here. Regardless, this case nicely demonstrates how the consideration doctrine is still relevant and, as always, the importance of getting contracts in writing even though they do not haveto be.  Even if Torrez had been promised the asserted bonus, it is also wise to remember the old adage that if something seems too good to be true, it might be.  Maybe Torrez was the one fooled in this case.

The case is Jose Torrez v. Koray Ergur, et al., Case No. G-4801-CI-201604375-000 (Court of Common Pleas, Ohio, Aug. 31, 2018).

H/t to colleagues on Contracts listserv for bringing this case to the attention of all of us.

October 15, 2018 in Labor Contracts, True Contracts | Permalink | Comments (0)

Friday, October 12, 2018

If you're looking for a statute of frauds "cannot be performed within a year" case

I just gave a midterm in my contracts class, which is always so useful to crystallize the places where the students are having consistent understanding issues. For me this year, one of the tricky parts seems to be the statute of frauds, so it was nice to see this recent case out of the Eastern District of Wisconsin, Northern Group, Inc. v. Tech 4 Kids Inc., Case No. 17-C-1367 (behind paywall), that deals with a fairly straightforward statute of frauds issue. 

In the case, Northern Group alleged that the parties had an oral agreement for commissions for sales and brought causes of action related to the breach of this agreement. Tech 4 Kids argued that the claims should be dismissed, in part because the oral agreement should have been in writing under the statute of frauds. However, as the court noted, the statute of frauds does not require a contract to be in writing unless it cannot be performed within a year. While it was true that the sales agreements required to be formed to result in commissions under the contract could sometimes taje years to finalize, Northern Group could conceivably have arranged some sales agreements within a year. Moreover, the agreement was terminable at will by either party, so either party could have decided within a year not to continue with the arrangement. Therefore, the oral agreement was capable of being performed within one year and so was not void under the statute of frauds. 

October 12, 2018 in Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Monday, October 8, 2018

A little less Sixteen Candles, a little more duty to inspect (or not)

When you've been stuck in an airport for hours, boarded the plane, un-boarded the plane, and have several more hours of airport waiting time in front of you, you're allowed to randomly make a Fall Out Boy reference if your Fall Out Boy playlist is what's getting you through the delay. 

As far as the case goes: a recent case out of New Jersey, Gross v. Fotinos Enterprises, Docket No. A-2058-17T4, involved a dispute over a landlord's duty to inspect, which the court decided did not exist. The landlord rented to a pancake house restaurant (I have a habit of blogging about pancake houses, I happen to like pancakes) who used a cinder block to prop open an exterior door. The plaintiff was a restaurant employee who tripped over the cinder block and sued for injuries she sustained. 

The lease stated that the tenant should not obstruct the entrances, and the parties agreed that the lease imposed liability on the tenant for all charges associated with the property. The plaintiff argued, though, that the landlord had a duty to ensure the tenant's compliance with all terms of the lease.

The court disagreed. The lease explicitly delegated responsibility for maintenance of the premises to the tenant, and the landlord was not aware that the tenant was using the cinder block to prop open the door. The landlord therefore owed no duty to inspect the premises or enforce compliance with the lease. 

October 8, 2018 in Recent Cases, True Contracts | Permalink | Comments (0)

Duty of Good Faith, Tortious Interference, and Statutes of Limitation

A new Seventh Circuit Court of Appeals case demonstrates the importance of filing suit in a timely manner in order to retain one’s contractual rights.  It also shows just how nasty contractual parties may act towards each other in violation of the duty of good faith and fair dealing. Unknown

JTE distributed products in Chicago for Bimbo Foods Bakeries Distribution Company (“Bimbo”) for over a decade.  The contract had no duration, but stipulated that it could be terminated in cases of non-curable breaches by one of the parties.  Bimbo sought to force JTE to forfeit its contractual rights so that Bimbo could start working with a new distributor that would accept a smaller slice of the pie: 18% instead of 20%.  But because JTE had performed the contract as required, Bimbo

"began fabricating curable breaches in the spring of 2008 as part of a scheme to force JTE out as its distributor. Bimbo Foods employees filed false reports of poor customer service and out-of-stock products at stores in JTE’s distribution area. Even more egregiously, Bimbo employees would sometimes remove JTE-delivered products from grocery store shelves, photograph the empty shelves as “proof” of a breach, and then return the products to their initial location. On one occasion, in 2008, a distributor caught a Bimbo Foods manager in the act of fabricating a photograph and reported him. Bimbo assured JTE that this misconduct would never happen again. Nevertheless, unbeknownst to JTE, Bimbo Foods continued these scurrilous tactics … When JTE refused to sell its distribution rights in January 2011, Bimbo Foods breached the distribution agreement and unilaterally terminated JTE’s agreement, citing the fabricated breaches as cause. Several months later ... Bimbo Foods forced JTE to sell its rights to new distributors."

JTE filed suit in 2017.  Under the Illinois law, the statute of limitations for breaches of common law contracts is ten years whereas under the UCC, it is four years.  The question thus became whether the parties had entered a contract for sale of goods. They had.  Said the court: “Under the primary-purpose test, the distribution agreement between JTE and Bimbo Foods easily qualifies as a contract for the sale of goods. We have previously pointed out that ‘virtually every jurisdiction that has addressed this issue’ has concluded that dealership and distributorship agreements are predominantly for the sale of goods.”  The suit was thus untimely filed. Unknown-1

JTE’s additional claim for tortious interference with contract fared no better as a five-year statute of limitation governed that.  The court did, however, comment on the merits of the alleged tort.  It found that “a party cannot tortiously interfere with its own contract, nor can it tortiously interfere with any business expectancies created by that contract. As the Illinois courts have noted, ‘[t]o allow such claims to be litigated would invite tort law to absorb contract law.’”  Thus, because JTE was one of the parties to the suit, it could not assert that claim even thought it was Bimbo, not JTE, that had acted in a highly unwarranted manner.

None of the parties asserted the duty of good faith and fair dealing under UCC §1-304 which states that “[e]very contract or duty within [the Uniform Commercial Code] imposes an obligation of good faith in its performance and enforcement.”  “Good faith” is defined as “honesty in fact and the observance of reasonable commercial standards of fair dealing.”  UCC § 1-201. 

What Bimbo allegedly did clearly did not meet this standard. However, because the four-year statute of limitations had run, JTE could still not have asserted that argument. The moral of this story is for your clients to monitor the contractual performance by the other party closely and, if anything seems awry, bring this up and resolve the issue as soon as possible.

The case is Heiman v. Bimbo Foods Bakeries Distribution Co., 902 F.3d 714 (7th Cir. 2018).

October 8, 2018 in Miscellaneous, Recent Cases, True Contracts | Permalink

Sunday, October 7, 2018

Banksy keeps things interesting

Here's me poking my head out from a weekend of midterm grading to thank Banksy for a situation right out of a contracts hypothetical

Thank you to Eric Chiappinelli and Jennifer Taub for the heads-up!

October 7, 2018 in Celebrity Contracts, Current Affairs, Film Clips, In the News, Law Schools, Teaching, True Contracts | Permalink | Comments (0)

Tuesday, October 2, 2018

The (Somewhat) Weekly Top Ten SSRN Contracts & Commercial Law Downloads (October 2, 2018)

Top10-Granite

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 03 Aug 2018 - 02 Oct 2018

Rank Paper Downloads
1.

Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society

University of Idaho, Indiana University Maurer School of Law, University of Illinois College of Law and University of California - Irvine School of Law
3,099
2.

The SAFE, the KISS, and the Note: A Survey of Startup Seed Financing Contracts

University of North Carolina School of Law and Thomson Reuters Practical Law
364
3.

Requiem for a Paradox: The Dubious Rise and Inevitable Fall of Hipster Antitrust

George Mason University - Antonin Scalia Law School, Faculty, Government of the United States of America - Federal Trade Commission, Freshfields Bruckhaus Deringer LLP and University of Pennsylvania Law School
319
4.

Will the Sharing Economy Increase Inequality?

University of Tennessee College of Law
238
5.

Demystifying Technology. Do Smart Contracts Require a New Legal Framework? Regulatory Fragmentation, Self-Regulation, Public Regulation.

New York University School of Law
237
6.

The New Law of Penalties: Mapping the Terrain

The University of Sydney Law School
195
7.

Bankruptcy Claims Trading

University of California, Hastings
174
8.

The Private Law Critique of International Investment Law

Brooklyn Law School
165
9.

Blockchain Bills of Lading

National University of Singapore (NUS) - Centre for Maritime Law
150
10.

Poor Consumer(s) Law: The Case of High-Cost Credit and Payday Loans

Victoria University of Wellington, Bar-Ilan University - Faculty of Law and University of San Diego School of Law
125
 
 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 03 Aug 2018 - 02 Oct 2018
Rank Paper Downloads
1.

The SAFE, the KISS, and the Note: A Survey of Startup Seed Financing Contracts

University of North Carolina School of Law and Thomson Reuters Practical Law
364
2.

Will the Sharing Economy Increase Inequality?

University of Tennessee College of Law
238
3.

Demystifying Technology. Do Smart Contracts Require a New Legal Framework? Regulatory Fragmentation, Self-Regulation, Public Regulation.

New York University School of Law
237
4.

The New Law of Penalties: Mapping the Terrain

The University of Sydney Law School
195
5.

The Impact of the Hague Principles on Choice of Law in International Commercial Contracts

The University of Western Australia Law School and Clayton Utz
114
6.

Arbitration Nation: Data from Four Providers

University of California, Davis - School of Law and University of California, Davis - School of Law
109
7.

The Chilling Effect of Governance-by-Data on Data Markets

University of Haifa - Faculty of Law and University of Haifa - Faculty of Law
91
8.

Split Derivatives: Inside the World's Most Misunderstood Contract

University of Oxford, Faculty of Law
91
9.

Foundationalism About Contract Law: A Sceptical View

University College London - Faculty of Laws and University College London - Faculty of Laws
64
10.

Transactional Skills Education: Mandated by the ABA Standards

Independent
60
 

October 2, 2018 in Recent Scholarship | Permalink

Monday, October 1, 2018

How to draft a forum selection clause

A recent decision out of the District of Oregon, Summit Foods, Inc. v. Viking Packaging Technologies, Inc., Case No. 3:18-cv-1470-SI, debated whether a forum selection clause was mandatory or permissive, and so provides some lessons if you're trying to draft one of these. 

The defendant was arguing that the forum selection clause was mandatory, but the court found that was reading the clause "through rose-colored glasses." The clause said that "[t]he courts of Sheboygan County Wisconsin will have jurisdiction." The court, however, noted that the clause was silent as to whether any other jurisdiction might also have jurisdiction. There was no language indicating that Sheboygan County would have exclusive jurisdiction. A mandatory forum selection one is one that contains such language of exclusivity. The forum selection clause in this case was therefore held to be permissive. 

October 1, 2018 in Recent Cases, True Contracts | Permalink | Comments (0)

Friday, September 28, 2018

Uber fails to establish an accord and satisfaction on a motion to dismiss

If you're looking for a recent accord and satisfaction case, look no further! I've got one for you out of the Northern District of California, TSI USA LLC v. Uber Technologies, Inc., Case No. 17-cv-03536-HSG (behind paywall). In the case, Uber and TSI had a contract that Uber terminated. TSI received a termination notice and a check for a little over $200,000. TSI responded to Uber with outstanding invoices Uber owed payment on, amounting to more than $1.4 million. TSI eventually sued Uber for, inter alia, breach of contract, and Uber moved to dismiss the claim, arguing that that TSI's cashing of the $200,000 check operated as an accord and satisfaction, prohibiting TSI's breach of contract claim. 

The court disagreed. Accord and satisfaction requires that the check be presented in good faith and with a conspicuous statement that it is meant to satisfy the entire debt. Construing the facts in the light most favorable to TSI, Uber could not establish that its check of $200,000 met "reasonable commercial standards of fair dealing," given that TSI alleged Uber owed over $1.4 million. In addition, while the termination notice stated "by executing below you acknowledge and agree that such payment constitutes full and final payment," it was followed by a line for signature labeled "Chief Executive Officer." TSI asserted that it thought the signature of the CEO was required for the payment to constitute full and final payment, not that the cashing of the check by itself. The court agreed with TSI that the language was not so "explicit and unequivocal as a matter of law so as to preclude TSI from asserting its breach of contract claim." Therefore, the breach of contract claim survived. 

September 28, 2018 in Law Schools, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (1)

Wednesday, September 26, 2018

Deciding insubordination isn't the same as judging spiritual leadership

I just blogged about the ministerial exception of the First Amendment, and now here's another case discussing it! This recent case out of California, Sumner v. Simpson University, C077302, was a dispute over Sumner's dismissal for insubordination. Sumner sued for breach of her employment contract. Simpson argued that the ministerial exception of the First Amendment protected its contractual decision from judicial examination. The court agreed that Simpson was a religious group and also found that Sumner was a ministerial employee even though she wasn't technically titled a minister. Her job duties at the university required her to have a doctorate in ministry or a related field and included promoting the university through preaching appearances. 

However, the court still permitted Sumner's breach of contract claim to go forward, based on the fact that the ministerial exception should not bar all contract actions involving a religious group and its ministerial employees. Rather, it should only operate to bar those causes of action that would require the court to decide religious matters. Sumner was purportedly terminated for insubordination, which was defined by the faculty handbook incorporated into Sumner's contract. The alleged insubordination involved Sumner's violation of the university's written protocol. Sumner, however, alleged that she was never provided with the written protocol and so her conduct could not be found to be insubordinate. Resolving this dispute would not require "wad[ing] into doctrinal waters," because Sumner's religious qualifications weren't at issue and the dispute didn't concern Simpson's religious autonomy. 

September 26, 2018 in Labor Contracts, Recent Cases, Religion, True Contracts | Permalink | Comments (0)

Saturday, September 22, 2018

Sometimes you've just got to shrug and live with the precedent you've got

There comes a time in every teaching semester (usually very early on...) where you have to coax your students to be comfortable with courts contradicting each other. You have to teach them to distinguish the cases, to make sense of it, but sometimes I feel like the answer to the contradictions is "the parties didn't argue that point and it just got missed and now we just have to deal."

I was thinking about this as I read a recent case out of the Third Circuit, Cook v. General Nutrition Corp., No. 17-3216 (behind paywall), which affirmed a failed lawsuit against GNC for, among other things, breach of contract. The appellants made several arguments for why their claims should not have been dismissed, one of them that GNC's termination of the contract was a breach. But the Third Circuit noted that termination was permitted by the contract: "[The contract] expressly permit[ted] GNC to unilaterally modify or cancel the agreement at any time, with or without notice."

That was the line that gave me pause, because I only recently taught Harris v. Blockbuster, which holds a contractual provision illusory precisely because it permitted Blockbuster to unilaterally change the contract at any time without even having to provide any notice. Other courts have definitely agreed with Harris, and  while it's been distinguished I didn't really see any courts disagreeing with the conclusion. Third Circuit courts do seem to apply the illusory promise doctrine, so it doesn't seem like they've just decided to do without this doctrine in the Third Circuit. 

It does seem like Harris can be read as only applying in the context of agreements to arbitrate and not all agreements (although there was apparently an arbitration clause in the GNC contract). Unfortunately, this is just me guessing as to how you can distinguish Harris, because there is zero discussion of illusory promises in the Third Circuit's very brief opinion. The court asserts that the contract gave GNC this right, and that while it might be "unfortunate," it was permissible and therefore not a breach. 

September 22, 2018 in Commentary, Famous Cases, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Thursday, September 20, 2018

A Showdown Involving the NFL, the AP, and Professional Photographers

Above the Law has a write-up of a case involving charges of copyright infringement against the NFL for using photographs without permission, but the case has a very strong contract angle, as the allegations involve the scope and validity of the license that the AP granted to the NFL for the photos. The Second Circuit has a contract-interpretation-focused analysis that permits the photographers' lawsuit to go forward (the district court had dismissed the complaint). You can read the full decision here.

September 20, 2018 in Current Affairs, In the News, Recent Cases, Sports, True Contracts | Permalink | Comments (0)

(Ostensibly) Weekly Top Ten SSRN Contracts & Commercial Law Downloads (September 20, 2018)

Top-10-wArrowUp

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 22 Jul 2018 - 20 Sep 2018

Rank Paper Downloads
1.

Coin-Operated Capitalism

University of Pennsylvania, School of Engineering & Applied Science, University of Pennsylvania Law School, University of Pennsylvania Law School - Student/Alumni/Adjunct and University of Pennsylvania - Center for Technology, Innovation & Competition
4,565
2.

Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society

University of Idaho, Indiana University Maurer School of Law, University of Illinois College of Law and University of California - Irvine School of Law
3,033
3.

Online Contracts (2018)

Santa Clara University - School of Law
434
4.

The SAFE, the KISS, and the Note: A Survey of Startup Seed Financing Contracts

University of North Carolina School of Law and Thomson Reuters Practical Law
328
5.

Will the Sharing Economy Increase Inequality?

University of Tennessee College of Law
217
6.

Demystifying Technology. Do Smart Contracts Require a New Legal Framework? Regulatory Fragmentation, Self-Regulation, Public Regulation.

New York University School of Law
191
7.

Bankruptcy Claims Trading

University of California, Hastings
148
8.

Blockchain Bills of Lading

National University of Singapore (NUS) - Centre for Maritime Law
129
9.

New Frontiers in Private Fiduciary Law

Notre Dame Law School
126
10.

Poor Consumer(s) Law: The Case of High-Cost Credit and Payday Loans

Victoria University of Wellington, Bar-Ilan University - Faculty of Law and University of San Diego School of Law
115

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 22 Jul 2018 - 20 Sep 2018

Rank Paper Downloads
1.

Online Contracts (2018)

Santa Clara University - School of Law
434
2.

The SAFE, the KISS, and the Note: A Survey of Startup Seed Financing Contracts

University of North Carolina School of Law and Thomson Reuters Practical Law
328
3.

Will the Sharing Economy Increase Inequality?

University of Tennessee College of Law
217
4.

Demystifying Technology. Do Smart Contracts Require a New Legal Framework? Regulatory Fragmentation, Self-Regulation, Public Regulation.

New York University School of Law
191
5.

The Impact of the Hague Principles on Choice of Law in International Commercial Contracts

The University of Western Australia Law School and Clayton Utz
100
6.

Arbitration Nation: Data from Four Providers

University of California, Davis - School of Law and University of California, Davis - School of Law
96
7.

Purposive Contractual Interpretation

The University of Melbourne - Law School
92
8.

The Chilling Effect of Governance-by-Data on Data Markets

University of Haifa - Faculty of Law and University of Haifa - Faculty of Law
66
9.

Split Derivatives: Inside the World's Most Misunderstood Contract

University of Oxford, Faculty of Law
64
10.

Foundationalism About Contract Law: A Sceptical View

University College London - Faculty of Laws and University College London - Faculty of Laws
60

September 20, 2018 in Recent Scholarship | Permalink

Deadline TODAY for CSLSA Conference Registration and Hotel Block

CSLSA 2018 TAMU ConfFor any of you considering attending and presenting your work (at any stage) at the Central States Law Schools Association’s 2018 Annual Scholarship Conference next month, TODAY (September 20) is your last chance to register and reserve a room in the hotel block (Sheraton - Downtown Fort Worth, which is literally next door to the law school and is offering $159/night)!

 

If you have already registered but held off on booking your hotel accommodations, well... you should take care of that today!

 

The conference will be Friday, October 12 and Saturday, October 13 at Texas A&M University School of Law in Fort Worth. Those who have attended in the past can attest to the fact that CSLSA provides a friendly and constructive environment for promoting legal scholarship across the board, including strong showings in areas beloved to readers of this blog, like contracts, commercial law, teaching methods, and more.

 

All the conference and hotel information you need is accessible here: http://www.cslsa.us/

 

I (Mark, that is) hope to see many of you in Fort Worth next month. But today is your last chance!

September 20, 2018 in Conferences | Permalink

Wednesday, September 19, 2018

Executives and Sexual Harassment Allegations

Rachel Arnow-Richman (Denver Law) has an op-ed today in the San Francisco Chronicle about CBS’s ouster of CEO Les Moonves and companies’ contractual obligations to their highest executives in the midst of severe sexual harassment allegations:

“If #MeToo is to have lasting impact, companies must consistently take a hard line against high-level harassment, not just when it aligns with their other interests. This means abandoning contracts that insulate executives from accountability in favor of those that preserve employers’ ability to respond swiftly and nimbly to alleged violations of law.” 

September 19, 2018 | Permalink

Wednesday, September 12, 2018

Court refuses to judge what adequate spiritual leadership looks like

A recent case out of the Third Circuit, Lee v. Sixth Mount Zion Baptist Church of Pittsburgh, No. 17-3086, applies the ministerial exception of the First Amendment and refuses to entangle the court in a breach of contract dispute between a pastor and his former church. The parties had entered into a contract providing that Lee would serve as the Church's pastor for a twenty-year term. The contract provided for termination if its terms were breached. The Church terminated Lee's employment and alleged that he had failed to provide adequate spiritual leadership, as he was required to do by the terms of the contract. Lee disputed this, but the court refused to get involved, citing the ministerial exception. Courts aren't supposed to get entangled in "religious governance and doctrine," and asking the court to judge the quality of Lee's spiritual leadership under the contract would be just such an entanglement. 

 

You can listen to the oral arguments here. Some press coverage of the district court's decision can be found here

September 12, 2018 in Current Affairs, In the News, Labor Contracts, Recent Cases, Religion, True Contracts | Permalink | Comments (0)

Monday, September 10, 2018

Here's one for the "house renovations gone wrong" file

If you're turning to teaching damages in your semester, here's a recent case out of Florida for you, Forbes v. Prime General Contractors, Inc., Case No. 2D17-353. This is one of those cases where the homeowners and the contractor had a contract where the homeowners would pay periodically, as milestones for the work were reached. After completion of the scheduled demolition, though, the contractor told the homeowners that the cost to complete the project had almost doubled. The homeowners refused to pay the extra money, insisting on enforcement of the cost in the contract. The contractor walked off the job at that point. The home, having been in the demolition stage of the project, was uninhabitable. The homeowners rented another house and looked in vain for another contractor to finish the job. Finally, they bought a new house and let the old house go into foreclosure. They also sued the contractor for breach of contract. 

The homeowners won their beach of contract case, but the lower court only awarded them their cost of renting the alternative house as damages, stating that the homeowners had failed to prove any other damages and also had failed to mitigate damages. The appellate court disagreed. The appellate court permitted the homeowners to treat the breach of contract as total and found that they should be awarded damages to place them in the position they would have been in had they never signed the contract. This could include reimbursement of the amount they had paid the contractor and the equity they lost in their home when they had to let it lapse into foreclosure, as well as the rent they had paid. 

The appellate court also found that the homeowners had taken reasonable steps to mitigate damages. They rented while they searched for someone to finish the renovations. When that search failed, they bought a new house rather than continuing to make rent payments. Even if they hadn't bought the new house, they would not have been able to afford continuing to pay rent and the mortgage on the uninhabitable house, so whether they were renting or owning that house would have lapsed into foreclosure either way. The appellate court found that there was nothing else the homeowners could have done to avoid further damages. 

September 10, 2018 in Labor Contracts, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Sunday, September 9, 2018

Intersection between Animal Law and Contracts law - new book

From our friends at Animal Legal Defense Funds:

Animal Law – New Perspectives on Teaching Traditional Law presents a fresh perspective on the courses that law professors are already teaching, all while introducing law students to the relevance of animal issues in a variety of areas, including:·         Contract Law

·         Constitutional Law

·         Criminal Law

·         Environmental Law

·         Property Law

·         Tort Law

·         Wills and Trusts Law

Due to the ubiquitous presence and use of animals in our society, animal law overlaps with most other areas of the law and provides an engaging lens through which to explore core legal concepts. Analyzing animal law cases within traditional areas of law encourages critical thinking about the function of certain legal constructs and tests the law’s ability to respond to new information and evolving social norms.

It’s a crucial time for academics to begin making and discussing these important connections. Animal law is a rapidly growing field and an increasing number of students are attending law school to study it full-time, or at least incorporate it into their practice after graduation.

Professors can purchase the book through the publisher Carolina Academic Press or through RedShelf, buying only the chapters relevant to their area of expertise.

Webinar

The authors of the book will be hosting a free webinar Friday, September 28, 2018 from 12:00 – 1:30 p.m. PT. This webinar will give professors and law students an opportunity to hear from the authors as they discuss the inspiration behind the book and why it’s important for law professors to include animal law in their discussions. They will also detail substantive features in every chapter, and review ways in which they can be incorporated into pre-existing courses.

For more information, please visit aldf.org/casebook

Course Guides

Finally, for those professors interested in teaching an entire course on animal law, the Animal Legal Defense Fund, the nation’s preeminent legal advocacy for animals, has developed three curriculum resources to provide tangible support and guidance to those who wish to offer new classes but may not have the time to design them from scratch. Each guide serves as a comprehensive sample syllabus with a suggested course outline, textbooks, topics, reading and writing assignments, student objectives, and teaching notes. For anyone wishing to expand the animal law offerings at their school by offering an elective in one of these areas, the guides will be an invaluable resource.

The three course guides, and memos in support of adding such a class to the curriculum, are now available on our animal law instructor site and are linked here:

·         Companion Animal Law Course Guide and Supporting Memo

·         Farmed Animal Law Course Guide and Supporting Memo

·         Wildlife Law Course Guide and Supporting Memo

September 9, 2018 in Books | Permalink

Thursday, September 6, 2018

UCC statute of limitations dooms claim

Here at the beginning of the semester, I've just been going over determining whether the UCC or common law applies to contract claims, and here's a recent case out of the Seventh Circuit, Heiman v. Bimbo Foods Bakeries Distribution Co., No. 17-3366, that illustrates why that question can be important. 

The case involves some pretty eyebrow-raising allegations, as, according to the complaint, the defendant began "fabricating" breaches of the contract between the parties, so that it could terminate the contract based on these allegedly faked breaches. Pretty dramatic stuff, but the case falls apart on a statute of limitations issue. The UCC statute of limitations is four years; the relevant common law statute of limitations was ten years. All parties agreed that the cause of action accrued in 2011, so the statute of limitations would have already run if the UCC applied; not so if the common law statute of limitations was applied. 

The court looked at the primary purpose of the agreement. The agreement at issue was a distribution agreement, and the court noted that jurisdictions overwhelmingly interpret distributorship agreements to be about the sale of goods. While the agreement certainly also covered "a significant amount of services," those serves were all "incidental to the larger purpose of the contract, which [was] to sell goods to consumers." Therefore, the contract was governed by the UCC and barred as untimely. 

There was also a tortious interference claim that likewise failed because the complaint admitted that the plaintiff was aware of the possibility of its tortious interference claim in 2011, and so therefore this claim was also untimely under the relevant statute of limitations. The court also added that a party cannot tortiously interfere with its own contract, so the claim failed on the merits as well. 

September 6, 2018 in Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (2)

Tuesday, September 4, 2018

Weekly Top Ten SSRN Contracts & Commercial Law Downloads (September 4, 2018)

Top-10 Glass

 

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 09 Jun 2018 - 08 Aug 2018
 
Rank Paper Downloads
1.

Online Contracts (2018)

Santa Clara University - School of Law
371
2.

Data Pollution

University of Chicago Law School
250
3.

The Persistence of 'Dumb' Contracts

Suffolk University Law School
200
4.

Cash America and the Structure of Bondholder Remedies

Duke University School of Law and New York University School of Law
153
5.

Not-So-Smart Blockchain Contracts and Artificial Responsibility

Brooklyn Law School
131
6.

Behavioral Law and Economics - Introduction

Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem - Faculty of Law
131
7.

Force Majeure and Excuses in Smart Contracts

Tilburg Law School
120
8.

New Frontiers in Private Fiduciary Law

Notre Dame Law School
109
9.

Personalizing Mandatory Rules in Contract Law

University of Chicago Law School and Tel Aviv University
98
10.

Freedom, Choice, and Contracts

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
95

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 09 Jun 2018 - 08 Aug 2018
 
Rank Paper Downloads
1.

Online Contracts (2018)

Santa Clara University - School of Law
371
2.

Data Pollution

University of Chicago Law School
250
3.

The Persistence of 'Dumb' Contracts

Suffolk University Law School
200
4.

Force Majeure and Excuses in Smart Contracts

Tilburg Law School
120
5.

Personalizing Mandatory Rules in Contract Law

University of Chicago Law School and Tel Aviv University
98
6.

Freedom, Choice, and Contracts

Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School
95
7.

The Impact of the French Doctrine of Significant Imbalance on International Business Transactions

HEC Paris - Tax & Law, Université Côte d'Azur and HEC Paris
83
8.

Purposive Contractual Interpretation

The University of Melbourne - Law School
75
9.

Why the Equity of Redemption?

Harvard Law School
69
10.

Breach of Contract: A Plea for Clarity and Discipline

University of Cambridge - Faculty of Law
66

September 4, 2018 in Recent Scholarship | Permalink

Reminder that punitive damagers are not typically available for breach of contract claims

I don't blog a lot about contracts damages, but a recent opinion out of New York, St. Stephen Community A.M.E. Church v. 2131 8th Avenue LLC, 650558/11, had a discussion of the damages which it would allow the plaintiff to try to prove at trial. Specifically, the defendant was complaining about the plaintiff's seeking of lost income and punitive damages. The court found that the lost income damages would be permitted to survive to give the plaintiff an opportunity to prove them at trial with sufficient certainty. The plaintiff claimed that its board members would be able to testify at trial about the loss of revenue it suffered, and so the court did not think these were too speculative not to allow such testimony.

The plaintiff's punitive damages claim was a different story, however. The plaintiff argued that punitive damages were appropriate because a breach of fiduciary duty was at stake, but the court found that that was so only when the breach was "an outrageous public wrong," and there was nothing in this case that involved the "moral culpability" the court needed to award punitive damages. Likewise, punitive damages are normally recoverable from a breach of contract action only when there is a public right at issue or when an independent tort justifies such an award. Neither was relevant here, and so the court precluded the plaintiff from recovering punitive damages in connection with its breach of contract claims. 

September 4, 2018 in Recent Cases, True Contracts | Permalink | Comments (0)