Wednesday, January 22, 2025
Massachusetts Supreme Judicial Court Finds “Surface Water” Ambiguous
In May Yonathan Arbel (left) and David Hoffman (below, right) posted Generative Interpretation in the NYU Law Review. When we commented on a draft here, we noted a striking finding. Louisiana courts had ruled that references to“floods” in insurance contracts does not include floods caused by broken water mains. However, with the help of large language models, the Authors were able to show that ordinary language does connect floods with failed water mains. The use of generative AI would have changed the outcome of some cases.
A similar issue arose in an insurance dispute in Massachusetts, and the First Circuit, so flummoxed by the term “surface waters,” certified the following question to Massachusetts’s Supreme Judicial Court:
"Whether rainwater that lands and accumulates on either (i) a building's second-floor outdoor rooftop courtyard or (ii) a building's parapet roof and that subsequently inundates the interior of the building unambiguously constitutes 'surface waters' under Massachusetts law for the purposes of the insurance policies at issue in this case?"
The meaning of “surface waters” was of interest to the parties because the claimant, Medical Properties Trust, Inc. (Medical) had two insurance policies that limited recovery for damage caused by “flood” and defined “flood” as a "general and temporary condition of partial or complete inundation of normally dry land areas or structure(s) caused by[] [t]he unusual and rapid accumulation or runoff of surface waters."
In deciding Zurich American Insurance Company v. Medial Properties Trust, Inc., alas, Massachusetts’s Supreme Judicial Court did not rely on large language models. It nonetheless concluded that the phrase “surface waters” was ambiguous in this context. It’s method for so determining seems to have been what Hoffman and Arbel called "the most artisanal and articulated form of textualism available in late-stage capitalism;” that is, resort to dictionaries, treatises, case law and canons of construction.
Here, the Court quickly dispensed with extensive quoting of dictionaries in a footnote, indicating that the conflicting definitions found in dictionaries supported the finding of ambiguity. The court discusses the parties’ competing definitions of the scope of “surface waters,” both of which rely on case law. The bulk of the opinion is a summary of case law construing “surface waters.” Other courts’ conclusions are inconsistent, bolstering the Supreme Judicial Court’s conclusion that the term is ambiguous.
The Court answers the certified question as follows:
Rainwater that lands and accumulates on either a building's second-floor outdoor rooftop courtyard or a building's parapet roof does not unambiguously constitute "surface waters" under Massachusetts law for the purposes of the policies at issue in this case. We also report that any such ambiguity as to the intended meaning of the words must be resolved against the insurance company that employed them and in favor of the insured.
Late-stage capitalism at its finest.
January 22, 2025 in Commentary, Recent Cases, Recent Scholarship | Permalink | Comments (0)
Tuesday, January 21, 2025
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for January 21, 2025
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 22 Nov 2024 - 21 Jan 2025| Rank | Paper | Downloads |
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| 1. | 368 | |
| 2. | 226 | |
| 3. | 180 | |
| 4. | 154 | |
| 5. | 119 | |
| 6. | 109 | |
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| 9. | 72 | |
| 10. | 72 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 22 Nov 2024 - 21 Jan 2025| Rank | Paper | Downloads |
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| 1. | 226 | |
| 2. | 154 | |
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January 21, 2025 in Recent Scholarship | Permalink | Comments (0)
Monday, January 20, 2025
Reviewing Larry DiMatteo, Principles of Contract Law and Theory, Part VI
This is the sixth post in my series on Larry Di Matteo's Principles of Contract Law and Theory (Principles). The aim is to call some attention to this book while using it to stimulate my thinking as I once again consider how to teach contracts law to first-year students. Principles is a scholarly textbook addressing advanced topics at a very high level of sophistication.
Chapter Six of Principles continues its discussion of the substance of contracts law, covering remedies, excuse, and privity, with short sections on cessation (termination) and matters affecting third parties. Leaving aside those odds and ends, the chapter nicely mirrors a point Professor DiMatteo makes eloquently in its opening paragraph. Courts generally enforce valid contracts according to their terms. However, there are remedial doctrines that take justice and fairness into account. (134)
The discussion begins with a section on extraordinary remedies, with a brief reminder of their origins in Chancery courts. (135-36) In keeping with his comparative theme, Professor DiMatteo notes that specific performance is extraordinary in common-law jurisdictions but ordinary in civil law jurisdictions and also among the Scots. In a laconic parting shot, citing his own co-authored work on China, Professor DiMatteo notes that the difference may be more theoretical than practical, given the inconvenience of policing orders of specific performance. (137-38) The book sometimes teases us with the hidden depths of Professor DiMatteo’s expertise.
On the whole the section on damages is concise yet fairly comprehensive. Foreseeability (146-48), mitigation (148-49), and certainty (149-50) are illustrated with detailed summaries of cases. Those are useful, but as the doctrines are multi-faceted, it is hard to illustrate them using just a handful of cases.
The discussion of compensatory damages includes a tantalizing mention of a Lord Denning opinion from 1972 allowing for the recovery in contract for “disappointment and distress.” (140) Such recovery is at odds with the requirement that damages be calculable with reasonable certainty. Lord Denning thought that, if the calculations are possible for torts claims, why not also for contracts claims? I would like to know more of the post-1972 development of English law on the topic. The mention of Lord Denning comes in the context of a discussion of how contracts damages are often under-compensatory. True enough, but nothing prevents a plaintiff from claiming negligent or intentional infliction of emotional distress along with breach of contract. This might have been an opportunity to go back to a point that Professor DiMatteo made in Chapter 2: while different legal traditions part ways on matters of doctrine, they often arrive at very similar substantive conclusions.
I get the sense that Professor DiMatteo is more sympathetic than I am to a blurring of the lines between the sorts of damages available for breach of contract and in tort. He writes that punitive damages are sometimes available for breach of contract where the party acted “willfully, maliciously, or fraudulently.” (143) I would say, at least as a matter of U.S. common law, punitive damages are available if a breach of contract is accompanied by an independent tort, such as the tortious interference claim in the notorious Pennzoil v. Texaco case, (143-44) but not as a remedy for breach of contract unless exemplary or punitive damages are made available through statute. The difference is technical, as there is a plethora of such statutes (and yes, by “plethora,” I do mean an unhealthy excess). Our retributive instincts have made U.S. criminal law a horror; I see no need to import such venom into commercial law, but legislators gonna legislate.
That interest in conflating (contorting?) contracts and tort is also evident in Professor DiMatteo’s explication of foreseeability in connection with consequential damages. He draws an analogy between Judge Cardozo’s famous elaboration of proximate cause in his Palsgraf opinion and the foreseeability analysis in Hadley v. Baxandale. (146-48) As is my wont, I resist the analogy. To my mind, the problem in Hadley is not foreseeability; it is notice. The mill owner told the delivery service that: 1) it needed its crankshaft replaced and 2) its mill was shut down. The causal connection was hardly unforeseeable, but it was unforeseen. The Hadley rule requires that the non-breaching party provide actual notice of the potential for consequential damages so that, as Professor DiMatteo appropriately points out, the breaching party can take necessary precautions. (148) By contrast, in Palsgraf, the likelihood that a porter’s negligence would cause an explosion that led to the collapse of scales on the other end of railway platform was so remote, there was no possibility of notice and thus no precautions that the railroad might have taken.
The section on excuses (150-55) makes for nice reading. Much of the doctrine, even as taught in U.S. schools, builds on fun old cases about cancelled coronations and surprise closings of the Suez Canal. Professor DiMatteo is an excellent guide through the material. He defers discussion of allocation of risk to the end of the section (154-55), as is appropriate, as the earlier English cases do not expressly address the topic. Nonetheless, one can make sense of the earlier cases in terms of allocation of risk, as does Judge Posner when he reviews the earlier cases in NIPSCO v. Carbon County Coal.
The brief discussion of privity (156-57) touches on some interesting contemporary challenges to the doctrine in the context of blockchain technology and network contracts. In my teaching, privity comes up mostly in connection with warranties and related discussions of strict liability under § 402A of the Torts Restatement. Professor DiMatteo addresses warranties in the next chapter, but the decision to discuss privity in this chapter makes sense because it provides a segue to the discussion of third-party beneficiaries and assignment and delegation with which Chapter 6 concludes. (157-59)
The first post in this series can be found here
Part II is here.
Part III is here.
Part IV is here.
Part V is here.
January 20, 2025 in Books, Contract Profs, Famous Cases, Recent Scholarship, Teaching | Permalink | Comments (0)
Reminder: Conference on Saturday on the Restatement of Consumer Contracts
The Harvard Business Law Review is sponsoring a one-day symposium on the new Restatement of Consumer Contracts, hosting several speakers (some of whom were among the most critical of the earlier drafts). The symposium will take place on Saturday, January 25, 9am – 4pm, at Harvard Law School. While the speakers slots have all been filled, the event is open to anyone interested in attending.
The program is the following:
- Steve Weiss, The Role of “Totality of the Circumstances” in the Restatement of the Law, Consumer Contracts
- Dave Hoffman, Consumers’ Unreasonable Expectations
- Dan Schwarcz, The Challenges of a Subject Matter Neutral Approach to Consumer Contract Law
- Tess Wilkinson-Ryan, The Psychology of Misleading and Disclaiming
- Rebecca Stone, A Duty to Set Terms in Good Faith
- Adam Levitin, The Death of Consumer Contract
- Patricia McCoy, Inflection Points in the Development of the Restatement of the Law, Consumer Contracts
- Ian Ayres and Greg Klass, How to Use the Restatement of Consumer Contracts: A Guide for Judges
- Oren Bar-Gill, Omri Ben-Shahar and Florencia Marotta-Wurgler, A Companion Guide to the Restatement of Consumer Contracts
January 20, 2025 in Conferences, Contract Profs, Recent Scholarship | Permalink | Comments (0)
Tuesday, January 14, 2025
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for January 14, 2025
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 15 Nov 2024 - 14 Jan 2025| Rank | Paper | Downloads |
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| 1. | 344 | |
| 2. | 181 | |
| 3. | 171 | |
| 4. | 147 | |
| 5. | 119 | |
| 6. | 105 | |
| 7. | 102 | |
| 8. | 74 | |
| 9. | 64 | |
| 10. | 64 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 15 Nov 2024 - 14 Jan 2025| Rank | Paper | Downloads |
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| 1. | 181 | |
| 2. | 147 | |
| 3. | 105 | |
| 4. | 90 | |
| 5. | 64 | |
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January 14, 2025 in Recent Scholarship | Permalink
Monday, January 13, 2025
Reviewing Larry DiMatteo, Principles of Contract Law and Theory, Part V
This is the fifth post in my series on Larry Di Matteo's Principles of Contract Law and Theory (Principles). The aim is to call some attention to this book while using it to stimulate my thinking as I once again consider how to teach contracts law to first-year students. Principles is a scholarly textbook addressing advanced topics at a very high level of sophistication.
A note of explanation is in order. When I started this project, I was reviewing two books side by side. As I got further along, I decided that I could not recommend the other book to readers and thus there was no point in continuing with the review. I had numerous points of disagreement with the views of the authors of the other book, both as to substantive matters and as to the organization of the material. This did not seem like the appropriate space to air those differences.
Chapter five of Principles covers the substantive elements of contracts, and of the chapters discussed thus far, it reads the most like a traditional hornbook. The chapter concentrates much of contracts doctrine into a clear, straightforward, forty-page presentation, covering formation, capacity, illegality and public policy, conditions, and performance and breach. Principles treats capacity as an element of contract formation. It also considers legality an element. (90-91) I think most first year courses and casebooks treat incapacity and illegality as affirmative defenses to contract formation. Seeing them presented as elements of formation is jarring for me, but that is precisely why reading new takes on doctrine is rewarding.
I was disappointed that Principles’ discussion of agreement (94-96) omits any discussion of electronic contracting or contracts of adhesion. The book does not delve into these topics in any depth, and this would have been the place to do so. Most contracts are entered into through form contracting or electronic contracting, and establishing knowing assent to terms poses an important challenge to their enforceability. Many of the cases reviewed on this Blog feature courts’ careful consideration of whether consumers, small businesses, or employees were on inquiry notice of material terms. Professor DiMatteo could have discussed similar issues in his section on silence as assent. (109-10) Principles accurately states the general rule that silence is not assent, and it discusses some exceptions. But we all silently assent to new terms when we are parties to contracts of adhesion that permit the vendor to amend its terms with notice.
As he does frequently throughout the book Professor DiMatteo provides us with an enlightening comparative perspective, contrasting the common law’s objective approach to formation with civil law’s subjective approach and the CISG’s hybrid approach. (96-98) I suspect that a common-law court, attempting to parse the CISG’s careful modulation between objective and subjective modalities would satisfy itself that an objective approach settled the matter appropriately.
Professor DiMatteo subtitles his section on contract formation (99-111) “Rules, Rules, Rules.” True to his word, he dutifully lays them out, cheek by jowl, with sub-categories and a chart to help us sort them out and keep track. He illustrates the rules with quotations from treatises and brief discussions of cases, mostly from the UK and mostly either old or very, very old. There is nothing wrong with this, as it illustrates the stability of common-law rules of offer and acceptance. My students object when I give them old cases (which includes for them cases from the 20th century), but my students, for the most part, are not Professor DiMatteo’s target audience.
There follows a brief discussion of substantive components of consideration (111-15), which serves as a supplement to discussion of the formal aspects of the topic in other chapters. Professor DiMatteo discusses Lampleigh v. Braithwaite, a case from 1615 involving allegations of past consideration. Party A promised to pay Party B after the latter procured a pardon for Party A. There had been no discussion of payment prior to the pardon. The court found consideration based on reasonable expectations of payment at the time the services were tendered. (112) That seems a stretch to me, absent some discussion of the amount to be paid. I wonder if today the case would not be decided under the doctrine of moral consideration/promissory restitution.
The next section of the chapter discusses incapacity, including infancy, mental incapacity and intoxication. (115-19) Principles notes that concepts of capacity have evolved: Married women lacked capacity under the doctrine of coverture. (115-16) Although capacity is treated here as a requirement of contract formation, people lacking capacity can form contracts. However, those contracts are voidable at the election of the person lacking capacity. (116)
The last section on contract formation covered in the chapter is illegality and public policy (120-26). Illegality is fairly straightforward, but there is an interesting, brief section on inadequate licensing as a form of illegality. (120-21). I wonder about recovery in restitution in such cases. Professor DiMatteo elegantly sub-divides his discussion of public policy into four common contractual clauses to which courts give close scrutiny: covenants not-to-compete (121-22), exculpatory clauses (122-23), penalties (123-25), and commercial lease assignments. (125-26) I think this well captures most of the cases in this area. I would propose only one addition: sovereign immunity and the state secrets privilege, but I have written in the area, and perhaps that warps my judgment of the importance of these topics.
Professor DiMatteo rounds out the chapter with a brief discussion of conditions (126-27) and an introduction to the topic of performance and breach. (127-33) The discussion of the latter covers trivial versus material breach (127-28) and the evolution of the substantial performance doctrine as an evolution from the old common-law expectation of strict performance. (128-31) Finally, there is a very short discussion of the right to cure, which does not reference the UCC’s rules on the subject matter (131-32) and a discussion of anticipatory repudiation and adequate assurances, relying on UK cases.(132-33)
On the whole, Professor DiMatteo provides an extremely concentrated summary of the rules of contract formation and an introduction to problems of performance and breach. There are times when one would like more detail and more examples drawn from U.S. case law, but given the book’s ambitions and considerations of space, the chapter provides an admirably succinct yet comprehensive overview.
The first post in this series can be found here
Part II is here.
Part III is here.
Part IV is here.
January 13, 2025 in Books, Commentary, Contract Profs, Recent Scholarship | Permalink | Comments (0)
Tuesday, January 7, 2025
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for January 7, 2025
Happy New Year to all! Our happy includes a return of the Tuesday Top Ten after its holiday hiatus. Let's now resolve to see how the charts look for the start of 2025, shall we?
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 08 Nov 2024 - 07 Jan 2025| Rank | Paper | Downloads |
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| 1. | 314 | |
| 2. | 161 | |
| 3. | 149 | |
| 4. | 144 | |
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| 7. | 105 | |
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Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 08 Nov 2024 - 07 Jan 2025| Rank | Paper | Downloads |
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| 1. | 144 | |
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| 3. | 90 | |
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| 5. | 61 | |
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| 10. | 26 |
January 7, 2025 in Recent Scholarship | Permalink
Tuesday, December 17, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for December 17, 2024
In this gift-giving time of the year, ContractsProf Blog is happy to remind you that legal scholarship is always in season, and you can help yourself to the gift. Enjoy the holiday reading!
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 18 Oct 2024 - 17 Dec 2024| Rank | Paper | Downloads |
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| 1. | 297 | |
| 2. | 246 | |
| 3. | 140 | |
| 4. | 136 | |
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| 10. | 84 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 18 Oct 2024 - 17 Dec 2024| Rank | Paper | Downloads |
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| 1. | 246 | |
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| 10. | 28 |
December 17, 2024 in Recent Scholarship | Permalink | Comments (0)
Tuesday, December 10, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for December 10, 2024
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 11 Oct 2024 - 10 Dec 2024| Rank | Paper | Downloads |
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| 1. | 288 | |
| 2. | 241 | |
| 3. | 131 | |
| 4. | 125 | |
| 5. | 111 | |
| 6. | 105 | |
| 7. | 93 | |
| 8. | 87 | |
| 9. | 78 | |
| 10. | 73 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 11 Oct 2024 - 10 Dec 2024| Rank | Paper | Downloads |
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| 1. | 241 | |
| 2. | 178 | |
| 3. | 105 | |
| 4. | 102 | |
| 5. | 93 | |
| 6. | 81 | |
| 7. | 72 | |
| 8. |
The Underlying Conceptions of Fiduciary Law |
71 |
| 9. | 71 | |
| 10. | 56 |
December 10, 2024 in Recent Scholarship | Permalink
Friday, December 6, 2024
Harvard to Host Conference on the Restatement of Consumer Contracts
The Harvard Business Law Review is sponsoring a one-day symposium on the new Restatement of Consumer Contracts, hosting several speakers (some of whom were among the most critical of the earlier drafts). The symposium will take place on Saturday, January 25, 9am – 4pm, at Harvard Law School. While the speakers slots have all been filled, the event is open to anyone interested in attending.
The program is the following:
- Steve Weiss, The Role of “Totality of the Circumstances” in the Restatement of the Law, Consumer Contracts
- Dave Hoffman, Consumers’ Unreasonable Expectations
- Dan Schwarcz, The Challenges of a Subject Matter Neutral Approach to Consumer Contract Law
- Tess Wilkinson-Ryan, The Psychology of Misleading and Disclaiming
- Rebecca Stone, A Duty to Set Terms in Good Faith
- Adam Levitin, The Death of Consumer Contract
- Patricia McCoy, Inflection Points in the Development of the Restatement of the Law, Consumer Contracts
- Ian Ayres and Greg Klass, How to Use the Restatement of Consumer Contracts: A Guide for Judges
- Oren Bar-Gill, Omri Ben-Shahar and Florencia Marotta-Wurgler, A Companion Guide to the Restatement of Consumer Contracts
December 6, 2024 in Conferences, Contract Profs, Recent Scholarship | Permalink | Comments (0)
Tuesday, December 3, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for December 3, 2024
The Top Ten returns after a holiday hiatus, hoping that you and yours found much to be thankful for during the past week. Let's check out what has been happening in our favorite SSRN stats, shall we?
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 04 Oct 2024 - 03 Dec 2024| Rank | Paper | Downloads |
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| 1. | 224 | |
| 2. | 124 | |
| 3. | 109 | |
| 4. | 98 | |
| 5. | 85 | |
| 6. | 77 | |
| 7. | 74 | |
| 8. | 71 | |
| 9. | 69 | |
| 10. | 62 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 04 Oct 2024 - 03 Dec 2024| Rank | Paper | Downloads |
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| 1. | 224 | |
| 2. | 164 | |
| 3. | 100 | |
| 4. | 98 | |
| 5. | 85 | |
| 6. | 84 | |
| 7. | 76 | |
| 8. | 69 | |
| 9. | 69 | |
| 10. | 61 |
December 3, 2024 in Recent Scholarship | Permalink
Monday, December 2, 2024
Reviewing Larry DiMatteo and Irma Russell & Barbara K. Bucholtz, Part IV
After a long hiatus, I am back with more in my serial review of these two books. Lesson learned. Don’t try to review books during the semester. Too many other things going on. So the plan is to get it all drafted over the break to go up during the coming semester.
This is the fourth post in my series on Larry Di Matteo's Principles of Contract Law and Theory (Principles) and Irma Russell and Barbara K. Bucholtz's Mastering Contract Law (Mastering). The aim is to call some attention to these two books while using them to stimulate my thinking as I once again consider how to teach contracts law to first-year students. The two books are very different. Principles is a scholarly textbook addressing advanced topics at a very high level of sophistication. Mastering is a study-guide for first-year students. They both have their charms, but they are very different. Each entry in this series will cover a chapter in each book, with some splitting of chapters because the books don't have the same number of chapters. Most weeks, the chapters will not cover corresponding subject-matters. So be it.
Chapter four of Principles covers formalism, which Professor DiMatteo defines as “mandatory rules or requirements that apply without the need to provide substantive reasons or rationales for their application.” (77) The chapter covers topics ranging from seals, to the statute of frauds and the parol evidence rule, to formal elements of consideration and distinctions among specialized types of contracts. He begins, as he often does, with a brief but informative historical and comparative review of why formal mechanisms developed as they did. (77-78) In general, he is sensitive to the ways in which, formal elements of contract law, once established, tend to outlive their usefulness. (81)
For example, Professor DiMatteo takes note of the welcome development that many courts, favoring substance over form, “will go to great lengths to avoid the application of the statute of frauds.” (83) He uses the famous Nanakuli case to illustrate that modern rules on the admissibility of extrinsic evidence permit a court to avoid the formalism of holding parties to “plain meaning” while avoiding the need to find that a party has acted in bad faith. (85)
Professor DiMatteo addresses consideration as a formal element of contract formation, but he also discusses it as a means of protecting and promoting the intent of the parties. (86-87) He maintains that the statute of frauds and consideration are alike in this regard (87), and while I agree that they share a common goal, I regard the statute of frauds as an example of a legal formalism that has outlived its usefulness and is now as likely to frustrate the intentions of the parties as promote it. Sophisticated parties can use the statute of frauds to evade their legal obligations vis a vis parties who were not aware of the need to memorialize that agreement in a writing. Consideration is substantive in that there must be an actual bargain. A mere recitation of consideration does not suffice, with the frustrating exception of R.2d § 87(1)(a), which enforces options based on "purported consideration."
The chapter concludes with a discussion of specialized rules for different types of contract. The UCC, for example, creates special rules a variety of sub-categories of contracts. The common law recognizes special rules for exclusive distribution agreements, as well as for franchise agreements and employment contracts. (87-89) This discussion is interesting and thought-provoking, but I am not sure whether to characterize these specialized rules as formal or substantive developments of the law.
I have a quibble about Professor DiMatteo’s handling of extrinsic evidence. He quotes UCC § 2-202 for the proposition that "outside evidence" is barred only if it contradicts the written agreement. (84) I think it is important to distinguish among types of extrinsic evidence. “Parol” evidence is evidence of words — written or oral. The language to which Professor DiMatteo refers is from UCC § 2-202(b), which is addressed to parol. Other types of extrinsic evidence, that is course of performance, course of dealing, and usage of trade evidence (what the authors of Corbin on Contracts call “invisible evidence”), are addressed in § 2-202(a) and are admissible unless “carefully negated.” As Professor DiMatteo’s discussion of Nanakuli illustrates (84-85), invisible evidence comes in so long as it can be “reconciled” with the text, even if, on its face, it seems to contradict that text. It will depend on the court, of course, but I don’t think it is quite right to say that “invisible” intrinsic evidence is barred if it contradicts the written agreement. It comes in, but a court will give it no weight if it cannot find a way to reconcile text and invisible evidence.
Chapter four of Mastering, on formation, covers a lot of material, so this post will just summarize its first half, up to options.
The chapter begins with a discussion of capacity to contract. (35-42) I organize the material differently when I teach, grouping incapacity with defenses, but I can see the appeal of introducing capacity here as a necessary pre-requisite to formation. Professors Russell and Bucholtz (the Authors) begin by helpfully noting that incapacity can be incapacitating for the beneficiary of the doctrine. Married women long lacked the capacity to contract (35), a major impediment to their enjoyment of the rights of citizenship.
The coverage of infancy includes a lengthy exploration of exceptions for necessaries, for emancipated minors, as well as a handy list of carve-outs for contracts relating to enlistment in the armed forces, student loans, and child support. (38-39) The section on mental incapacity begins with the oft-ignored distinction between those adjudicated incompetent and non-adjudicated incompetents. The former get overlooked because their condition rarely leads to litigation, as potential counterparties tend to be on notice of adjudicated incapacity. (40-41)
The Authors then move on to a discussion of formation. They present it in the form of a formula O + A + C = K (offer, acceptance, and consideration = contract). They then provide a detailed discussion with illustrative examples of our objective approach to contract formation, and on the way they highlight the difference between voluntary contractual obligations and those imposed automatically in the world of tort. (43-45)
There follows a discussion of offer and acceptance, including an unpacking of the significance of the slogan “the offeror is the master of the offer” (47), and a refreshingly brief discussion of the mailbox rule. (47-48) I say "refreshingly brief” because, in our era of instantaneous communications, the rule is of vanishingly small significance in the real world. Alas, last I checked, the bar is still obsessed with the mailbox rule. The Authors note that silence is not ordinarily acceptance (48), and they provide an example of when silence might be treated as acceptance. (49) In our world, in which transactions are often governed by terms of service that vendors can change with notice, I would have liked to see more emphasis on how frequently employees and consumers are bound by their silence or inaction.
Finally, the Authors provide a very clear discussion of the five ways of terminating offers: rejection/counter-offer, lapse of time, revocation by the offeror, death or incapacity of either party, and acceptance. The section is fleshed out with numerous helpful illustrations, including examples of borderline cases. (49-55) The Authors' fifth mode of termination, acceptance, is not included in the Restatement's list of modes of termination (54-55). The Authors have a point. Once the offer is accepted, we no longer have an offer; we have a contract, and the power of termination ends. However, it is not always the case that acceptance terminates an offer. If there are multiple offerees, acceptance only terminates the offer with respect to one offeree. The others can still accept the offer until they receive notice of its revocation.
The first post in this series can be found here
Part II is here.
Part III is here.
December 2, 2024 in Books, Commentary, Contract Profs, Recent Scholarship | Permalink | Comments (0)
Friday, November 29, 2024
Friday Frivolity: The Unalloyed Joy of Having One's Priors Confirmed!!!
Last year, I was vexed to have been characterized as a "proponent of tested contract language" by one of the leading advocates for the "plain language" movement in contracts drafting. I objected to my characterization because, while I have nothing against clear drafting, I don't think complexity in language is the biggest problem that we face in contracts drafting, and I don't think plain language does anything to alleviate the major problems. I reviewed the terms and conditions of the blog on which I was pilloried, and I noted that they amounted to ten clearly-worded pages, including links to the privacy policies of there "trusted partners." The terms also provided that they could be changed with or without notice. I commented that if a reader got through all ten pages of the policy, they would likely conclude that "ease of understanding the contract's language is not its biggest problem."
Shawn Bayern (right) recently posted on JOTWELL his review of recent draft article by Yonathan Arbel (left), The Readability of Contracts: Big Data Analysis, 21 J. Empirical Legal Stud. __ (forthcoming, 2024), available on SSRN. You should read Shawn's review and Yonathan's work. But I am struck by his conclusion (at least in the draft), which Shawn cites in his review:
[T]he resources devoted to simplifying contract language could have been directed towards addressing more fundamental issues in consumer markets, such as improving market competition to give consumers more meaningful choices; addressing information asymmetries through targeted disclosure requirements; strengthening enforcement mechanisms against unfair or deceptive practices; or removing regulatory barriers to entry to markets.
I am grateful to Yonathan for his work, elevating my priors, which were based on anecdote and hence might be dismissed as unwarranted, to the level of empirically-justified social scientific conclusions.
November 29, 2024 in About this Blog, Contract Profs, Recent Scholarship, Weblogs | Permalink | Comments (0)
Tuesday, November 19, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for November 19, 2024
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 20 Sep 2024 - 19 Nov 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 439 | |
| 2. | 206 | |
| 3. | 119 | |
| 4. | 94 | |
| 5. | 92 | |
| 6. | 77 | |
| 7. | 69 | |
| 8. | 59 | |
| 9. | 56 | |
| 10. | 44 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 20 Sep 2024 - 19 Nov 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 206 | |
| 2. | 151 | |
| 3. | 119 | |
| 4. | 98 | |
| 5. | 94 | |
| 6. | 75 | |
| 7. | 66 | |
| 8. | 59 | |
| 9. | 59 | |
| 10. | 56 |
November 19, 2024 in Recent Scholarship | Permalink | Comments (0)
North Carolina Supreme Court Approves Unilateral Modification of Agreement to Add Arbitration Clause
A consumer or customer signs up with a service provider. The provider might be a bank, as it is in this case. It may be a credit card company. It may be a utility or a cell-phone service provider. It may be your employer. You agree to terms and conditions when you first enter into a relationship, and those terms give the service provider or employer the right to change the terms at will, so long as they provide "notice," which comes in the form of updated terms of service that the service provider or employer know you will not read. The situation is fairly common, and we should expect to see more of this (if that is even possible) as courts continue to see “objective manifestations of assent” when well-resourced parties impose terms on consumers and employees that the latter will only see and understand after the trap door has slammed shut behind them.
In 2014, Pamela Phillips opened an account with the Charlotte Metro Credit Union (the Credit Union). When she did so, her membership agreement (the Agreement) included the following clause:
Except as prohibited by applicable law, [defendant] may change the terms of this Agreement. We will notify you of any change in the terms, rates, or fees as required by law.
In 2021, the Credit Union added an arbitration clause to the Agreement, and it sent Ms. Phillips notice of this change through three separate electronic notices. The notice also included an opt-out option, which Ms. Phillips did not exercise. In March 2021, she filed a class-action complaint relating to alleged overdraft fees charged to accounts that were not overdrawn.
The Credit Union filed a motion to compel arbitration. The trial court denied the motion, both because it did not think the Credit Union had the right to unilaterally add an arbitration clause to the Agreement and because, even if it did, doing so was inconsistent with the duty of good faith and fair dealing. By a two-to-one vote, a North Carolina court of appeals reversed this decision. The dissenting judge would have upheld the trial court’s decision based on the duty of good faith and fair dealing.
In Canteen v. Charlotte Metro Credit Union, the Supreme Court of North Carolina sided with the court of appeals majority. The Court begins by setting out basic principles. Common-law contracts cannot be modified without new consideration. However, where parties agree to unilateral modifications with notice, courts should honor their agreement. That leaves only the question of whether adding an arbitration clause through unilateral modification violates the duty of good faith and fair dealing.
After reviewing the relevant case law, the Court determined that it is permissible to alter terms if the new terms “relate to subjects discussed and reasonably anticipated in the original agreement.” [Note to the Court: it would be less gas-lighty if you said “addressed” rather than “discussed.” No terms in this form contract were discussed. Bank customers have no idea about choice of law provisions. These terms are dictated by the vendor, not discussed.] Be that as it may, the Agreement had a provision on “Governing Law,” which included a choice of forum. Under the announced standard, changing the forum does not violate the duty of good faith and fair dealing. Moreover, because that duty is a limitation on the Credit Union’s power to unilaterally change the terms of the Agreement, the contract is not illusory.
Ms. Phillips’ final argument was that her inaction or silence should not count as consent. This argument is a clear loser in the eyes of the Court given her agreement to unilateral modification with notice and her inaction upon receiving notice of such modification. The Court thus concluded that the arbitration agreement in the Agreement as modified is binding and enforceable against Ms. Phillips.
Justice Riggs, joined by Justice Earls, dissented, finding that the unilateral modification mechanism rendered the Agreement illusory. In marked contrast to the majority, the dissenting opinion is rich in citations to law school and scholarship. Among other things, Justice Riggs cites to Jeff Sovern, the late Elayne E. Greenberg, Paul F. Kirgis, & Yuxiang Liu, Whimsy Little Contracts' with Unexpected Consequences: An Empirical Analysis of Consumer Understanding of Arbitration Agreements, discussed on the Blog here.
November 19, 2024 in Recent Cases, Recent Scholarship | Permalink | Comments (1)
Thursday, November 14, 2024
Marc Edelman Discusses College Athletes as Employees on the Taboo Trades Podcast
Kim Krawiec (right), joined by guest hosts UVA Law 3Ls Olivia King and Alyssa Marshall, interviewed Marc Edelman (below left) about his recent publication (with Michael A. McCann and John T. Holden), The Collegiate Employee Athlete in the Illinois Law Review. Professor Krawiec's podcast operates like a live seminar, with well-prepared students, who have read the guest's work, posing well-crafted questions to which the guest responds.
Professor Edelman began the discussion by identifying three movements coalescing in the college athletes' rights movement. The first is the name, image, and likeness movement that is now permitting college athletes to promote products for money. Second, there are various strategies involving antitrust litigation to lift restraints that the NCAA and member schools impose to prevent college athletes from being compensated. Finally, there is the subject matter that Professor Edelman and his co-authors address in their work, which is labor law.
Professor Edelman starts with the simple proposition that college athletes meet the legal definition of employees. That means that they should be entitled to the protections afforded to other workers, including a minimum wage and workman's comp, but also that they should get the benefits of unionization, including collective bargaining. The students, many of whom were themselves collegiate athletes, seem to have drunk the cool-aid on the employee argument, but they press Professor Edelman on the status of college athletes who are not revenu- generating.
This podcast episode was a revelation for me. I was prepared to hate it. My posts on the subject of college athletics generally take the position that college athletics are a bizarre accident of history, unique to the United States, which undercuts the already rotting foundations of U.S. support for higher education. Professor Edelman comes at the topic from a different direction. And yet, o my surprise, Professor Edelman and I have very similar views up to a point. If he were writing on a blank slate, he says towards the end of the interview, he would de-couple the development sports leagues from higher education, as they do in other countries. That's my solution.
However, given that the cake has already been baked, Professor Edelman doesn't think we can separate the eggs from the flour. College athletics are already thoroughly commercialized, and students are exploited to benefit the universities. He thinks they ought to be treated as employees and have their right to organize recognized. Let the market for their services dictate the ways in which they are compensated for their labor and for the contributions they make to their colleges and universities. I have to admit that his approach is far more realistic than mine.
That said, while I am under no illusion that we will see college athletics dismantled in the near future, I do think we should nonetheless resist exacerbating the commercialization of college sports as well as the disconnect between the educational purpose of the universities and elite athletics programs. Professor Edelman is most eloquent on the ways in which educational institutions shamefully prioritize revenue from college sports over the overall welfare of college athletes. Universities switch conferences, forcing athletes to travel across the country. Everything is done with football in mind. Those games are at least played on the weekends. Basketball games can be played during the week, not to mention all of the non-revenue sports teams whose massive carbon footprints generate expenses well in excess of revenues. Universities give lip service to their educational missions but forget their purposes entirely when pursuing the broadcast revenues associated with the favored conferences. Based on the experience of friends who teach at the University of Oklahoma, I see no evidence that the immense revenues generated from joining the SEC have not benefitted university faculty and staff not affiliated with athletics.
I think Professor Edelman downplays the possibility for negative externalities associated with the gestalt switch for which he advocates from student-athlete to athlete-employee. I do not share his optimism that making college athletes employees will have a dramatic impact on the economic well-being of the typical college athlete. His focus is on "revenue-generating athletes," and I do not think it will be as easy to determine which athletes are revenue-generating as Professor Edelman assumes. Very few individual athletes generate net revenue. Although they may play a key role, nobody other than family and close friends come to a college football game to see the offensive linemen or the long snapper. What will it do to team morale if some players are employees and some are students. More likely, the decision would be made on the team level. Treating athletes differently based on what sports they play will change behaviors in myriad ways. Professor Edelman has written elsewhere that Title IX is a red herring, and the subject did not come up in the podcast. I'm pretty sure it would come up from day one if a school has some male employee athletes and no female employee athletes.
I also think Professor Edelman downplays the benefits that students athletes enjoy. He grudgingly grants tuition as a benefit. One of the students raises the idea that for some sports, college athletics is the only path towards professional sports. Well, when I played in a recreational softball league, I paid for the privilege of playing. My team had no coaching staff, and certainly not a professional-level coaching staff. We had no trainers, nutritionists, fitness experts, physical therapists, or tutors. We did not have a bespoke sports facility to which only we had access, nor was there a stadium or training facility built to meet our needs. The team did not pay for my travel. All these factors should be counted as benefits that students receive in exchange for performance. This is why the math becomes challenging on the question of which athletes are "revenue-generating."
Overall, only a handful of university athletics programs generate income over expenses. Those that do tend to reinvest the surplus into athletics programs. That's why I would unbake the cake as much as possible. The finances of college athletics are already decoupled from those of higher education. There would be a lot of psychic boundaries to overcome, but universities are not dependent on income from sports. Their fuel is tuition and, for some, endowments. The sports programs are financially siloed off.
A note on terminology: Professor Edelman treats the term "student athlete" as an ideologically tainted neologism created by the NCAA to facilitate its exploitation of students. His preferred term is "collegiate employee-athlete." I have referred to "college athletes" in this post because it makes sense in the context of his scholarship. However, notwithstanding the origins of the term, I think it has lasting value to think of college athletes as "student-athletes." Most college athletes are not revenue-generating athletes. Most of them think of themselves as students first. They enjoy athletics, and it might help pay for school, but they are in school for the education. Students first; athletes second, hence student-athletes. Very few collegiate athletes become professional athletes, and so most athletes, including most in revenue-generating sports, would be better off thinking of themselves as student-athletes. As a result, I do not think it promotes the best interests of student athletes to get them to think of their main purpose as athletics.
Notwithstanding that disagreement on the level of student-athlete consciousness, Professor Edelman has persuaded me that at least some collegiate athletes are entitled to be considered employees and thus are entitled to unionize and to enjoy the benefits of collective bargaining. I regard this as a second-best solution. It is certainly an improvement over the current state of affairs, which benefits mostly adults -- university administrators and coaches -- exploits collegiate athletes, and massively detracts from the purpose of universities.
November 14, 2024 in Commentary, Contract Profs, Current Affairs, Recent Cases, Recent Scholarship, Sports, Web/Tech | Permalink | Comments (0)
Wednesday, November 13, 2024
"Constructive-Tuesday" Top Ten - Contracts & Commercial Law Top SSRN Downloads for November 13, 2024
Due to force majeure, we are a day late this week. Alas. But do not fear, as we are never a dollar short! Feast your eyes upon the scholarship roaming this week's charts:
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 14 Sep 2024 - 13 Nov 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 417 | |
| 2. | 190 | |
| 3. | 117 | |
| 4. | 89 | |
| 5. | 78 | |
| 6. | 75 | |
| 7. | 70 | |
| 8. | 64 | |
| 9. | 54 | |
| 10. | 51 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 14 Sep 2024 - 13 Nov 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 190 | |
| 2. | 132 | |
| 3. | 117 | |
| 4. | 93 | |
| 5. | 78 | |
| 6. |
Date Posted: 17 Sep 2024 |
75 |
| 7. | 73 | |
| 8. | 63 | |
| 9. | 57 | |
| 10. | 54 |
November 13, 2024 in Recent Scholarship | Permalink
Tuesday, November 5, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for November 5, 2024
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 06 Sep 2024 - 05 Nov 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 389 | |
| 2. | 176 | |
| 3. | 149 | |
| 4. | 112 | |
| 5. | 108 | |
| 6. | 100 | |
| 7. | 83 | |
| 8. | 65 | |
| 9. | 65 | |
| 10. | 62 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 06 Sep 2024 - 05 Nov 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 176 | |
| 2. | 149 | |
| 3. | 115 | |
| 4. | 112 | |
| 5. | 108 | |
| 6. | 89 | |
| 7. | 69 | |
| 8. | 65 | |
| 9. | 62 | |
| 10. | 56 |
November 5, 2024 in Recent Scholarship | Permalink
Tuesday, October 29, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for October 29, 2024
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 30 Aug 2024 - 29 Oct 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 336 | |
| 2. | 183 | |
| 3. | 143 | |
| 4. |
The Conceptual Foundation of Cross-Class Cramdown |
130 |
| 5. | 112 | |
| 6. | 103 | |
| 7. | 81 | |
| 8. | 80 | |
| 9. | 63 | |
| 10. | 63 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 30 Aug 2024 - 29 Oct 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 143 | |
| 2. |
The Conceptual Foundation of Cross-Class Cramdown |
130 |
| 3. | 112 | |
| 4. | 106 | |
| 5. | 103 | |
| 6. | 63 | |
| 7. | 62 | |
| 8. | 59 | |
| 9. | 44 | |
| 10. | 43 |
October 29, 2024 in Recent Scholarship | Permalink
Monday, October 28, 2024
Announcing the 2024 Leet Symposium at Case Western Reserve School of Law
George A. Leet Business Law Symposium on 11/08/2024
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The Center for Business Law at Case Western Reserve University School of Law will host the George A. Leet Business Law full day, in-person symposium on 11/8/2024 entitled: Relational Contracting in the New Industrial Policy. |
Symposium Topic Background:
The 20th century has witnessed the de-verticalization of production and the rise of collaborative agreements in both the biopharma and manufacturing sectors. Prior scholarship has led to a rich inquiry into these collaborations with many different explanations for their governance and contracts. Some highlight the agreements for their ability to build trust. Others emphasize the ability of these agreements to bring the efficient benefits of a hierarchy to agreements between firms. Still, others rationalize the agreements as a mechanism for institutionalizing learning. This symposium will bring together many of the key scholars in the field to address network contracts and new governance strategies for the innovation sphere. The symposium will also provide an examination into network failures.
Keynote speaker:
Professor Matthew Jennejohn will be the keynote speaker this year. Professor Jennejohn’s scholarship focuses on the impact of institutions on economic growth, with particular attention to “building equitable institutions for a complex economy.” He is currently the Deputy Director of Strategy in the Office of Strategic Capital at the U.S. Department of Defense, an analyst at Johns Hopkins University’s Applied Physics Laboratory, and the Marion and Rulon Earl Professor of Law at BYU Law School. Previously, he has served as the Justin W. D'Atri Visiting Professor of Law, Business & Society at Columbia Law School (Autumn 2019), practiced for five years at Shearman & Sterling in New York, and clerked for (then) Vice Chancellor Leo Strine of the Delaware Court of Chancery. He is a graduate of Columbia Law School, the London School of Economics, and Brigham Young University, and grew up attending public schools in Dousman, Wisconsin.
Invited Speakers Include:
Prof. Susan Helper, Case Western Reserve University Economics ([email protected])
Prof. Liza Vertinsky, University of Maryland Law School ([email protected])
Prof. Lisa Bernstein, University of Chicago Law School ([email protected])
Prof. Peter Lee, UC Davis School of Law ([email protected])
Geerte Hessen, Amsterdam General Counsel—Ferrovial Amsterdam
Professor Jorge Contreras, University of Utah School of Law ([email protected])
John Murray, Counsel at Abbvie ([email protected])
Josh Whitford, Professor Columbia University, Sociology Department ([email protected])
Juliet Kostritsky, Professor CWRU School of Law ([email protected])
Symposium Logistics:
The 2024 Leet Symposium will be an in-person, all-day symposium for all of the speakers. This will be a wonderful opportunity for collegial exchanges over these papers and other intellectual ideas, and to continue our discussions over dinner. Non-speakers may be able to attend in person or by remote participation.'
People who want to join need to pre-register at this link:
https://case.edu/law/our-school/events-lectures/relational-contracting-new-industrial-policy
Moderators:
In addition to planning the symposium, Professors Anat Alon-Beck, Eric Chaffee, Charles Korsmo, Juliet P. Kostritsky, and Robert Rapp from the Case Western Reserve University Law School Faculty will be moderating at the symposium.
CLE Credit and IT Information:
Patty Harbold (email: [email protected]), Director of our Academic Centers, and Martin Raska, of our IT department, will be contacting you about your presentation. Patty will handle the CLE process through the Ohio Supreme Court and Martin will handle any IT-related concerns and other information you may need.
Symposium Publication:
The Case Western Law Review often publishes the Leet symposium as an issue. You are not required to present a paper or to publish in our law review but it would be wonderful if you would be willing to consider that as a possibility.
October 28, 2024 in Conferences, Contract Profs, Current Affairs, Recent Scholarship | Permalink | Comments (0)
