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contracts archive fall 2015

REVIEW SESSION: December 4 at 10.00 am in F109. I plan to discuss the Spring 2013 exam.

Here is an Appointments Calendar: Dec 3 & 4 which shows times I will be in my office to discuss your questions. I don’t think appointments shorter than 45 minutes work too well, but this schedule gives 22 time slots. Thus it makes sense for you to arrange to see me in groups of about 4 people. I am also available before December 3rd and will answer questions by email (not probably during the day on the 3rd and 4th!) including over the weekend but not after about 6pm on December 6th. Please email me if you would like to make an appointment to see me.

Week 15: November 23 and 24: On Monday we will finish considering the DK Arena case and then move on to consider these 2 cases:
Extendicare Homes v Whisman, Supreme Court of Kentucky (September 2015, corrected October 2015)
Tallman v District Court (CPS Security), Supreme Court of Nevada (September 2015).

On Tuesday we will complete discussion of these cases and spend some more time thinking about the themes we have been discussing and I will say a few words about the exam instructions for the final.

I previously provided a link to the Spring 2011 Contracts Exam (and here is the Exam Memo)

Here are the other final exams I have written based on the Casebook we have used:

Spring 2013 Contracts Exam (Memo on the Spring 2013 Contracts Exam)

Fall 2011 Contracts Exam (Exam Memo)

Here is a sample exam I provided the first time I taught the class.

I said I would give you an example of a good answer to the essay type questions. Here are two (note that the materials we used in this semester were different, so the essays cite cases we haven’t read, but I think it is useful for you to see the sort of answer that would get a good grade on the final):

1. Assess the role of good faith in contract law based on the materials you read for this class this semester (the duty of good faith essay at 8 pages long this is a bit shorter than I suggested when I mentioned the answer in class, but clearly a long answer to write in the time available.
2. We have seen that contract law sometimes seems to focus on promoting certainty through an emphasis on formalities, whereas at other times contract law seems to focus on fairness. Discuss whether the cases you have read this semester balance these interests appropriately (certainty essay)

What is going on in these answers is that the writers are addressing the question prompt, making an argument in response, and doing so bringing in cases to illustrate their argument. Sometimes students will react to questions like the ones posed here by saying something like: the duty of good faith is important in contract law. Here is a case where the duty of good faith was involved. Here are the facts, the court decided there had been a breach of the duty. Here is another case. Here are the facts. The court decided there had not been a breach of the duty…. So the duty of good faith is important. Notice how the two examples of good essays are different from this sort of outline.

Good answers don’t have to look exactly like these examples, however. I think a good answer to a question on the duty of good faith could be written focusing on the Market Street Associates case alone. And although we mentioned good faith a few times over the semester this is the case we have really read that focused on good faith (in the Fall of 2013 we had read a few cases in the casebook and an additional supplementary case looking at good faith).

What I am looking for is evidence that you have been thinking about the materials we have read.

Here is the list of statutes you should be familiar with:
UCC SECTIONS
2-105
2-201
2-313, 2-314, 2-315, 2-508, 2-601, 2-602, 2-606, 2-608, 2-703, 2-704, 2-706, 2-708, 2-709, 2-710, 2-711, 2-712, 2-713, 2-714, 2-715, 2-716, 2-718, 2-719

In reviewing for the exam you may find it useful to read the following sections of the Restatement:
22, 45, 71, 72, 73, 77, 81, 87, 90, 344, 346, 347, 348, 349, 350, 351, 352, 370, 371.

WEEK 14: November 16-20 The Fullerton Lumber case allows us to think about non-compete agreements. On the one hand ideas of freedom of contract might lead us to think that courts should generally enforce such agreements. On the other hand, the case shows us that courts have reservations about enforcing such agreements (or enforcing them exactly as agreed). This raises the more general issue of whether and, if so, to what extent, courts should rewrite the contracts that parties enter into. I asked you whether blue pencilling contract clauses (eliminating them) or changing them (e.g. changing 10 years to 3 years) is more problematic.

Here is Florida Statutes §542.335 (which you can also find here). Please be sure to read this – we will talk about it briefly on Monday. Also on Monday we will briefly discuss the capacity issue and then consider Mitchell v CC Sanitation and The Selmer Company v Blakeslee-Midwest. On Tuesday we will discuss Obde v Schlemeyer and Market Street Associates v Frey (Casebook pages 565-574).

For Thursday please read DK Arena Inc. V. EB Acquisitions I LLC (Supreme Court of Florida 2013) (here is a link to the Oral argument in DK Arena v EB Acquisitions) (it is long but useful).

In week 15 we will read a couple of cases involving the arbitration issue I have mentioned before. In AT & T Mobility LLC v. Concepcion, 131 S.Ct. 1740, (2011) the US Supreme Court held that a doctrine of California contract law that treated arbitration agreements in consumer contracts with class action waivers as unconscionable and therefore unenforceable was pre-empted by the Federal Arbitration Act. In cases since this decision courts have had to deal with its application. Here are two very recent examples:

Extendicare Homes v Whisman, Supreme Court of Kentucky (September 2015, corrected October 2015)

Tallman v District Court (CPS Security), Supreme Court of Nevada (September 2015)

Here is my Spring 2011 Contracts Exam. You may find it helpful to look at this to help with your review.

As to the themes of the class which could be the subject of essay questions, this is what I suggested as themes in Spring 2013 (with a couple of adjustments), the last time I used the Casebook we are using:

Enforcing contracts versus rewriting contracts
Efficiency versus fairness (the Spring 2011 exam has an example of a question on this theme)
The importance of context (the Spring 2011 exam has an example of a question on this theme — here focusing on the domestic context but questions could ask about other contexts we have considered or be more general)
Interactions between contract law and legislative regimes (e.g. courts vs legislatures, courts reconciling contract doctrine and legislation, illegality)
Contracts versus relationships (one time deals and ongoing relationships, implications of the relationship for dispute settlement, formal versus informal dispute settlement)

Here’s a brief note on promissory estoppel:
We have seen promissory estoppel in some different circumstances-
1. a substitute for consideration (Ricketts v Scothorn)
2. a substitute for writing required by the Statute of Frauds (McIntosh v Murphy, but note not in Florida, see DK Arena)
3. a mechanism for precluding an offeror from withdrawing an offer (Restatement §87(2))
4. a means to a remedy in the context of pre-contractual negotiations (Hoffman v Red Owl)

Here is the list of statutes you should be familiar with:
UCC SECTIONS
2-105
2-201
2-313, 2-314, 2-315, 2-508, 2-601, 2-602, 2-606, 2-608, 2-703, 2-704, 2-706, 2-708, 2-709, 2-710, 2-711, 2-712, 2-713, 2-714, 2-715, 2-716, 2-718, 2-719

In reviewing for the exam you may find it useful to read the following sections of the Restatement:
22, 45, 71, 72, 73, 77, 81, 87, 90, 344, 346, 347, 348, 349, 350, 351, 352, 370, 371.

Week 13: November 9-13 On Monday we will need to begin by finishing up the employment related material in Chapter 3 – consider the Florida Statute set out below – how would this apply to the facts of Wagenseller?, but I hope to be able to move on to Chapter 4 on Monday too, so please read to page 511 for Monday, 541 for Tuesday and 565 for Thursday (this is quite an ambitious plan and I don’t know if we will in fact be able to cover all this material next week).

Note Florida Statutes §448.102:

Prohibitions.-An employer may not take any retaliatory personnel action against an employee because the employee has:
(1) Disclosed, or threatened to disclose, to any appropriate governmental agency, under oath, in writing, an activity, policy, or practice of the employer that is in violation of a law, rule, or regulation. However, this subsection does not apply unless the employee has, in writing, brought the activity, policy, or practice to the attention of a supervisor or the employer and has afforded the employer a reasonable opportunity to correct the activity, policy, or practice.
(2) Provided information to, or testified before, any appropriate governmental agency, person, or entity conducting an investigation, hearing, or inquiry into an alleged violation of a law, rule, or regulation by the employer.
(3) Objected to, or refused to participate in, any activity, policy, or practice of the employer which is in violation of a law, rule, or regulation.

November 10: On bribes. In November 2011, Kaushik Basu, at the time Chief Economic Adviser in India’s Ministry of Finance (and now Senior Vice President and Chief Economist, World Bank) wrote this paper arguing that the act of paying a harassment bribe (a bribe paid to get something you are legally entitled to) should not be treated as illegal (“should have full immunity from any punitive action by the state.”) The author argues:

Under the current law… once a bribe is given, the bribe giver and the bribe taker become partners in crime. It is in their joint interest to keep this fact hidden from the authorities and to be fugitives from the law, because, if caught, both expect to be punished. Under the kind of revised law that I am proposing here, once a bribe is given and the bribe giver collects whatever she is trying to acquire by giving the money, the interests of the bribe taker and bribe giver become completely orthogonal to each other. If caught, the bribe giver will go scot free and will be able to collect his bribe money back. The bribe taker, on the other hand, loses the booty of bribe and faces a hefty punishment.

Week 12: November 2-6 We’re moving on from the family oriented materials to the franchise and employment materials. On Monday we will begin where we left off on Thursday and please read to page 436. For Tuesday please read to page 464 and for Thursday to page 490 [note that we will be in F209 on Thursday].

November 3: Nicole Chipi drew to my attention that the New York Times has been focusing on arbitration in a series of articles, for example here (Part 1) and here (Part 2) (Part 3 deals with arbitration under religious principles).

Here are some Contracts Formation Questions I provided to my class last Fall (this is different from the version I have on my Fall 2014 materials page as I have omitted one question). They may help you think about the formation issues we have been talking about recently. In a week or two we will be in a position where it will make sense for you to look at one of my past final exams in this class. I will provide a link.

And here are some notes on promissory estoppel:
In Cosgrove v Bartolotta (7th Cir. 1998) (noted in the Casebook at pp 393-4) Judge Posner wrote:

If there is a promise of a kind likely to induce a costly change in position by the promisee in reliance on the promise being carried out, and it does induce such a change, he can enforce the promise even though there was no contract. … Buried in our capsule summary of the law of promissory estoppel is an important qualification: the reliance that makes the promise legally enforceable must be induced by a reasonable expectation that the promise will be carried out. A promise that is vague and hedged about with conditions may nevertheless have a sufficient expected value to induce a reasonable person to invest time and effort in trying to maximize the likelihood that the promise will be carried out. But if he does so knowing that he is investing for a chance, rather than relying on a firm promise that a reasonable person would expect to be carried out, he cannot plead promissory estoppel.

With respect to the issue of a cost to the promisee:

Cosgrove was a professional rendering professional services. And, if nothing else, the pledge put Cosgrove at risk, since he would have been bound-by the very doctrine of promissory estoppel that he invokes-had Bartolotta relied, and since, as the subsequent course of events proved, Bartolotta was likely to enforce the pledge only if he couldn’t get better terms elsewhere, which would be a sign that the venture might be riskier than it had appeared to be originally.

In Gordian Ndubizu v Drexel University et al (E.D. Penn. 2011) the court faced a claim by an accounting professor that he had been promised he would be appointed to an endowed chair, and that he suffered detrimental reliance on the promise. The court found that rejecting other opportunities of employment that would be available to the promisee could constitute detrimental reliance, but that working harder could not:

any action taken in reliance on a promise must be detrimental before a plaintiff can prevail on a promissory estoppel claim. Under the facts at hand, any increase in work was not to Plaintiff’s detriment. Plaintiff has stated that he published articles and engaged in scholarly activities at a voracious pace,.. increased his production, writing a steady stream of top-flight articles .. intensified, concentrated his entire life on generating high-powered research in top-tier journals .. did extraordinarily more work than he had ever done or will ever do .. and worked extraordinary long overtime with no immediate remuneration .. However, any detriment caused by these actions is not apparent. Rather, Plaintiff has introduced evidence revealing the extent to which he benefited from his efforts and publications; numerous professors congratulated him on his accomplishments and commented on his increased prestige.

In a recent case where an at will employee invoked promissory estoppel with respect to a claim for overtime payments, Nightingale v. Wal-Mart Stores, Inc. (SD Ohio 2015) the court said:

Plaintiff framed his claim for additional compensation as a cause of action pursuant to the doctrine of promissory estoppel. Such a claim requires four elements: (1) there must be a clear and unambiguous promise, (2) the party to whom the promise was made must rely on it, (3) the reliance is reasonable and foreseeable, and (4) the party relying on such promise must have been injured by the reliance….
Defendant contends Plaintiff’s promissory estoppel claim fails for two reasons .. First, Defendant argues there was no clear and unambiguous promise by Childers or anyone else that Plaintiff would be entitled to “overtime” in the “time and a half” sense. A review of the deposition testimony of both Childers and Plaintiff shows starkly different understandings of their discussions leading up to Plaintiff’s employment. Plaintiff contends he said to Childers regarding Plaintiff’s potential employment at South Point, “well, at time and a half, wages can add up on this,” to which Childers allegedly responded, “well, Wal-Mart’s got an open checkbook. Whatever it takes, whatever it costs, you’re the man for the job.”…
It is the province of the jury to make credibility determinations, and in the Court’s view, should a jury believe Plaintiff regarding the “open checkbook,” he will have established a clear and unambiguous promise made to him by Childers. In any event, taking all inferences in favor of the non-moving party, as the Court is required to do in evaluating a motion for summary judgment, Plaintiff has sufficiently established a “clear and unambiguous promise.”
The second reason Defendant contends Plaintiff’s promissory estoppel claim fails is based on Whisman v. Ford Motor Co., 157 Fed. Appx. 792 (6th Cir. 2005). Under Whisman, argues Defendant, a promissory estoppel claim is barred in an at-will employment situation where the employer changes the terms of the employment agreement and the employee accedes to such changes by not quitting… Here, however, taking all inferences in favor of Plaintiff, it is unclear that Defendant ever changed the terms of Plaintiff’s employment such that he had a chance to accept or reject such changes. At best, Plaintiff’s queries regarding overtime as he understood it were met with “we will get caught up,” and that his requested hours “would be reviewed.” Such ambiguity in response to his queries does not show that he and Defendant came to an understanding that Plaintiff was not entitled to the compensation he sought. Nor does it show Plaintiff decided to live with the different understanding. Indeed, from Plaintiff’s standpoint, he increasingly protested until he was fired. For this reason, the Court simply finds Whisman inapposite.
A review of the record shows that Plaintiff understood that Childers promised him he would be entitled to extra pay for overtime hours needed to address the problems at South Point, in exchange for Plaintiff’s agreement to move there. The Court has already addressed whether such alleged promise could be viewed as clear and unambiguous and answered in the affirmative. The Court finds that Plaintiff meets the remaining prongs of a promissory estoppel claim: a jury might find Plaintiff relied on the promise to be paid to fix South Point, that Plaintiff relied on such promise by moving to South Point and working long hours, that Plaintiff reasonably expected to be paid, and that he was ultimately injured when he lost both the additional pay and his job. As such, the Court finds Plaintiff’s claim for promissory estoppel survives Defendant’s challenge.

Week 11: October 26-30 We started to discuss Hamer v Sidway and will continue on Monday. I asked you to think about who the parties to the litigation are (and think also about how they came to be parties). Does this perhaps affect how we think about the case? For Monday please also read to page 331, for Tuesday read to page 345, then please omit (do not read) section 7 from page 345-365 but do read pages 365-395. For Thursday please read to page 417.

October 26: I have just been informed that on Thursday, November 5 our class will meet in F209.

Here is a link to Florida Statutes §725.01 (the Florida Statute of Frauds equivalent to the bottom of page 316 of the Casebook) (the Florida Statutes have additional provisions about unenforceable contracts in Chapter 725). In addition there is the UCC Statute of Frauds provision in UCC §2-201 (here is the Florida version).
In Florida promissory estoppel may not be used to validate contracts which are unenforceable because of a lack of writing required by the Statute of Frauds. See DK Arena v EB Acquisitions, Florida Supreme Court 2013. Pert performance of contracts for the sale of land may allow an oral agreement to be enforced in Florida where the remedy sought is specific performance or other equitable remedy.

October 24: Here is my Memo on the Fall 2011 Contracts Midterm.

October 22: The Hewitt decision is being considered by the Illinois Supreme Court now in Blumenthal v Brewer (here is a link to the audio of the oral argument). The Appellate court said (in the judgment linked to above):

we find that the public policy to treat unmarried partnerships as illicit no longer exists, that Brewer’s suit is not an attempt to retroactively create a marriage, and that allowing her to proceed with her claims against her former domestic partner does not conflict with this jurisdiction’s abolishment of common law marriage…since Hewitt was decided, the courts have held that unmarried private sexual relationships, whether they be opposite-sex or same-sex relationships, are a form of intimate conduct that are protected by the federal constitution. Lawrence v. Texas, 539 U.S. 558 (2003) (holding that regardless of whether the participants are married, a private homosexual relationship is a form of intimate human conduct that is protected as a liberty interest against unreasonable public interference); Christensen v. County of Boone, Illinois, 483 F.3d 454 (7th Cir. 2007) (holding that an unmarried heterosexual couple in a long-term relationship was entitled to the same constitutional protection as the homosexual couple in Lawrence); Roberts v. United States Jaycees, 468 U.S. 609 (1984) (analyzing the right of individuals to engage in intimate associations, the first type of association being for the purpose of engaging in expression protected by the first amendment, and the second type being certain intimate human relationships which enable persons to independently define their identity, an ability that is central to liberty); Lehr v. Robertson, 463 U.S. 248, 258 (1983) (“the relationship of love and duty in a recognized family unit is an interest in liberty entitled to constitutional protection”). In other words, Illinois now respects and supports the relationships that Hewitt labeled as illicit or immoral. We acknowledge Hewitt’s statement that it is the legislature’s role to declare public policy in the domestic relations field.. After having reviewed the legislation that was enacted during the years that Brewer and Blumenthal were together, buying a house, having children, dividing up their domestic responsibilities and pursuing their legal and medical careers, we conclude that although Brewer and Blumenthal were not legally entitled to marry in this jurisdiction, the legislature no longer disfavors their 26-year cohabitation or Brewer’s claims against Blumenthal. Furthermore, Brewer did not allege an agreement with Blumenthal based on illicit consideration of sex, which was the primary historical rationale for rejecting cohabitation agreements. Instead, Brewer, who never had the option of marrying Blumenthal in Illinois, alleged that the couple intentionally comingled and shared their assets based on a mutual commitment and expectation of a lifelong relationship, that they divided their domestic and work responsibilities to best provide for the three children they had together, and that neither partner intended for their decisions and family roles to leave Brewer at a financial disadvantage later in life.

Week 10: October 19-23 On Monday we will begin with the problems on pages 243-5. Please also read to page 258. For Tuesday please read to page 285 and for Thursday to page 331.

On some of the issues raised by Balfour v Balfour (distinguishing between contracts and non-contractual promises) see this blog post critiquing a characterization of a writing stating “I, Taylor W., will allow Cora W. to dress me as a woman this Christmas” as a contract.

In Florida marriages may be dissolved on the grounds that they are “irretrievably broken” (a no-fault ground) under Florida Statutes § 61.052. For the Florida rules on equitable distribution of property on dissolution of marriage see Florida Statutes § 61.075:

in distributing the marital assets and liabilities between the parties, the court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors…

The Florida Uniform Premarital Agreement Act is at Florida Statutes § 61.079.

The Uniform Law Commission approved a Uniform Premarital and Marital Agreements Act in 2012 (which has been enacted in Colorado and North Dakota).

Here is my Fall 2011 Midterm.

Week 9: October 12-16: On Monday we will discuss Hawkins v McGee and Sullivan v Connor and then begin discussing the review questions. After the review problems we will start the contract and continuing relations material. Please read to page 250. This will be when we will focus on issues of contract formation.

Here is a link to the discussion of Hawkins v McGee in The Paper Chase:

And here is the Pepsi ad referred to in question 2 on page 244:


WEEK 8: October 5-9: Fall Break. Have a great break.

If you sent me an answer to the hypo I will get my comments to you as soon as I can. After the break we will finish the remedies material – on Monday after the break we will discuss the 2 next cases and then begin discussing the review questions. This will take a while but I am also going to ask you to read to page 250 of the book for the week after the break. I will post a more detailed assignment here towards the end of next week.

I said I would provide you with an example of a midterm exam. Here is my Fall 2011 Midterm.

WEEK 7: September 28-October2 On Monday we will start with Plante v Jacobs (p. 172). Please read to page 195. For Tuesday please read to page 219 and for Thursday to page 228 (although we may not in fact get to the review problems until after the break).

Week 6: September 21-25 I will leave the Week 5 materials on this page for a few more days. Meanwhile, on Monday we will begin with Evergreen Amusement Corporation and Chung and we will go over the Liquidated Damages Question before moving on to Reliance Damages. Please read to page 155 for Monday. Please read to page 172 for Tuesday and to page 187 for Thursday.

The Chung case raises the question whether/when contract damages are granted for emotional distress. What damages do you think the passengers on the Carnival cruise ship (Carnival Triumph) who spent five (smelly) days adrift in the Gulf of Mexico should get with respect to Carnival’s failure to deliver to them the cruise experience they expected? According to one news story:

Carnival’s ticket contract says the cruise line is not “liable to the passenger for damages for emotional distress, mental suffering/anguish or psychological injury of any kind under any circumstances, except when such damages were caused by the negligence of Carnival and resulted from the same passenger sustaining actual physical injury, or having been at risk of actual physical injury.”

Carnival offered the passengers:

a full refund of the cruise along with transportation expenses and reimbursement of all shipboard purchases during the voyage, with the exception of gift shop, art purchases and casino charges. All passengers will also receive a future cruise credit equal to the amount paid for this voyage.

Later Carnival said it would pay each passenger $500 on top of this.

David A. Hoffman and Alexander S. Radus, Instructing Juries on Noneconomic Contract Damages. 81 Fordham L. Rev. 1221 (2012) examined pattern jury instructions and the reactions of lay people to these instructions to discover how they might impact juries’ findings with respect to damages. They write:

The conventional story of noneconomic contract damages is too simple. In that story, almost no contract cases will end with an award of noneconomic damages….We accept that in most jurisdictions, judges will deny most forms of noneconomic damages, if the right motion is presented at the right moment in the life of the case. But litigations that result in considered appellate opinions are not just rare: they are exceptional. Most cases settle in the shadow of an expected jury verdict. And those expected jury verdicts relate to pattern instructions. As we have demonstrated, contract pattern instructions are significantly less restrictive of noneconomic losses than the treatises would have led us to believe. Controlled testing found that almost no experimental subjects awarded the promisee’s bare economic expectation. Rather, they usually awarded more when provided with information about emotional losses

September 20: Here is my Memo on the September 7-11 Hypo

Week 5: September 14-18 I will tape the classes on Monday and Tuesday because of Rosh Hashanah. For Monday please read to page 107, then for Tuesday read to page 119 (but do not read note 4 on pages 107-110). For Thursday please read to page 139.

September 15: Here is the link to the recording of class on September 14.

I moved the hypo to the archive page (it is also on the materials page).

The casebook describes a conventional view in common law systems that specific performance is a common remedy in civil law jurisdictions. This view may not be completely accurate. One study found that specific performance was rare in Denmark, Germany and France and in contracts to which the CISG applies. The authors applied the term specific performance to cases where the sanction for non-performance was greater than the amount of damages for the cost of non-performance. For example, in Denmark, where a judge orders specific performance by one party who does not comply with the order, the other party has the right to bring a private criminal suit. In practice such suits do not happen. In the one (at the time recent) case the authors found the plaintiff lost. They wrote:

We argue that for specific performance to be an attractive remedy to the conforming party, a costly system of enforcement must be set in place, which authorities have been reluctant to do. The costs have been regarded as out of proportion to the gain of applying specific performance rather than damages. Our main argument is that as a consequence of less than fully rigorous and effective enforcement, specific performance has (when available) become an unattractive remedy for plaintiffs.

(Henrik Lando & Caspar Rose, The Enforcement of Specific Performance in Civil Law Countries, 24 International Review of Law and Economics 473-487 (2004))

Whereas the authors of our casebook are sensitive to the facts on the ground in the US (rather than just focusing on the law in the books) they are perhaps not so sensitive to the facts on the ground in other jurisdictions.

Franchise agreements often contain liquidated damages provisions. Here is a liquidated damages provision from a Showbiz Pizza Time Inc. Franchise Agreement:

14.2 Liquidated Damages Franchisee acknowledges that its uncured breach of any of the terms of this Agreement will materially and adversely affect Franchisor and that the quantum of such damages may not be easily ascertainable. Accordingly, Franchisee agrees that, as liquidated damages for the non-performance of its obligations under this Agreement, in addition to any other remedy available to Franchisor, Franchisee shall pay to Franchisor US$— initially and US$— per month per violation for so long as each such violation remains uncured; provided, however, that this provision will only be operative upon material breaches of this Agreement which are in Franchisee’s or Franchisee’s Principals’ control.

Here are provisions from the Radisson Franchise Agreement:

Article 5.2 — Royalty Fee: During Agreement Years 1 and 2, Licensee will pay Radisson a Royalty Fee equal to the greater of 3.75% of daily Gross Room Revenues or $ 150,000 Minimum Royalty Fee per Agreement Year.
Article 17.4 — Liquidated Damages: If Radisson terminates this Agreement for Licensee’s fault, the actual damages that Radisson would suffer for the loss of prospective fees and other amounts payable to Radisson under Article 5 would be difficult if not impossible to ascertain. . . . [Liquidated damages] is calculated as the lesser of two times the amount payable to Radisson under Section 5.2 for the immediately preceding 12 months, or the number of months remaining until the commencement date of a Termination Window provided herein or expiration of the Term, whichever is sooner, times the average monthly Royalty Fees payable to Radisson under Section 5.2 for the immediately preceding 12 months….

The Radisson provision was found to be a valid liquidated damages provision in Radisson Hotels v. Majestic Towers, Inc., 488 F. Supp. 2d 953 (2007) and Radisson Hotels v. Kaanam, LLC 2011 U.S. Dist. LEXIS 3208 (2011).

Notice how these clauses recite the likely difficulty of ascertaining damages and include a formula for calculating liquidated damages. Think about these provisions as you read the next two cases.

The Florida rule on liquidated damages, set out in Lefemine v Baron (Florida Supreme Court, 1991) is as follows:

First, the damages consequent upon a breach must not be readily ascertainable. Second, the sum stipulated to be forfeited must not be so grossly disproportionate to any damages that might reasonably be expected to follow from a breach as to show that the parties could have intended only to induce full performance, rather than to liquidate their damages.

Here is a Liquidated Damages Question to help you to review the issues.

September 17: Here is the link to the recording of Class on September 15 [September 16: The link to a recording of the class on September 15 seemed to have some problems]

WEEK 4: September 7-11: No classes. You may find this Note on Neri helpful (it outlines what I was saying in class).

Please think about the following hypothetical which you should answer based on the material we have studied so far. I would be happy to read your one page answers to the hypothetical, and you can send me your answers by email, but please do not send the answers to me before September 12. I will read and respond to your answers as quickly as I can.

Hypo: (also here in pdf format:September 7-11 hypo)
Alpha is a very successful artist who produces a range of different types of art in her studio in Bella City (which is the state capital of Ruritania, a state in the US) and in the homes and business premises of her clients. Her work has recently begun to be considered a valuable investment. She has a number of occasional employees whom she hires to manufacture high quality limited edition prints and to help with managing her schedule, driving her to and from the locations where she will work and buying her supplies and delivering Alpha’s work to her customers. She employs Gamma as a full-time employee to manage the gallery attached to the studio.
Delta and Alpha signed a contract whereby during the week of September 7-11 Alpha would work at Delta’s office on a conceptual work of art reflecting the mission of Delta’s business. The week would allow Alpha to focus on understanding the mission in order to reflect it properly in the art work which would be completed at a later stage. The contract provided that Delta would pay Alpha $20,000 for the week, and set out a schedule for subsequent payments. On September 1 Delta told Alpha that she had changed her mind and had decided that a different artist would be a better fit for the image of the business.
Alpha planned that during the week of September 7-11 her occasional employees would be at work on a couple of new series of prints.
When Delta cancels the arrangement for the week of September 7-11 Alpha calls Epsilon and tells her that a cancellation means that she could work that week on a project with Epsilon that they had tentatively planned for later in the Fall. Epsilon is happy about moving the work forward and they agree that Epsilon will pay Alpha $20,000 for the week’s work.
Alpha agreed to sell one of her prints to Zeta for $2000 for delivery and full payment on September 1. Zeta paid a deposit of $500 but after she lost a lot of money in the recent turmoil in the stock market she cannot afford to pay the rest of the money for the print. Zeta called Alpha’s studio and explained that she would be unable to buy the print. Gamma quickly found another purchaser who agreed to and did pay $2000 for the print.
Assume that Delta and Zeta have both breached their contracts with Alpha. Explaining your reasoning, consider what damages Alpha may claim from Delta and Zeta for their breaches of contract.

WEEK 3: August 31-September 4:
On Monday we will begin with any questions you have about the questions on page 50 of the Casebook. The last hypothetical we looked at on Thursday involved a resale arguably not in compliance with § 2-706, and the question was whether the seller should be able to recover damages based on market price, which would allow for higher recovery than if the seller’s damages would be fixed by reference to the resale price. In Coast Trading Company v Cudahy Company (9th Cir. 1979) the Court said:

..as noted in White and Summers’ treatise, the plaintiff-seller should not be allowed to obtain a greater amount in Section 2-708 damages than the seller actually lost..

In contrast, in Peace River Seed Co-op v Proseeds Marketing (Supreme Court of Oregon 2014) the court said that the plaintiff seller was entitled to recover damages based on market price even if those damages exceeded damages based on its resale price. The court’s analysis was based on the statutory text, the context and legislative history and the court referred to the official comment to UCC §2-703 which rejects the doctrine of election of remedies.

The hypotheticals allowed us to begin to think about expectation damages and to notice that the UCC emphasizes compensation to the disappointed seller (whose expectation interest in the contract is protected) but that this does not necessarily mean that the breaching buyer has to be put in the position he/she would have been in had the contract been performed. As we move through the material on remedies we will see that variations in circumstances make a difference to how we think about the remedies.

Think about this hypothetical (which we can discuss on Monday):

Alpha, a painter, contracts to sell a painting to Beta for $10,000. The painting is to be delivered to Beta on September 30th and Alpha has hired Deltaco, a firm which specializes in fine art deliveries, to carry out the delivery for $500 (the terms of the delivery contract allow Alpha to cancel delivery on 48 hours’ notice). On September 20th Beta calls Alpha and says that the client who had been intending to buy the painting from Beta had changed her mind because she was getting divorced. Beta did not have any other clients who would be interested in buying Alpha’s painting and therefore did not want Alpha to deliver the painting. Alpha cancels the delivery contract. On September 22nd Gamma offers to pay Alpha $9,500 for the painting. If Alpha accepts Gamma’s offer what damages can Alpha obtain from Beta?

For Monday’s class please also prepare to discuss Parker v Twentieth Century Fox (read to page 64). And I am reproducing here what I wrote with respect to this case last week:
Here is a link to the wikipedia page for Shirley Maclaine. And at this point I would like to encourage you to think about the Casebook. The authors spend a lot of time explaining their perspective on contract law. Here is another take on why the perspective a casebook adopts matters. It is from Mary Joe Frug, Re-Reading Contracts: A Feminist Analysis of a Contracts Casebook, 34 Am. U. L. Rev 1065 (1984-5) at p. 1069:

I do not believe that a casebook is simply a neutral reflection of what students need to know to practice law, to pass the bar, to think like lawyers, or to become law teachers. I maintain that, even within the constraints of professional necessity,’ editors have a wide range of choice in their case selections, their comments, their notes, their problems, and their questions, and the choices they make are not inevitable. The choices could be different and, indeed, choices about content do differ among casebooks within particular subject areas. I also believe that a casebook is a powerful document. The editorial choices within a casebook determine how many readers think about the law of a doctrinal area, about lawyering in that field, about clients, and about legal reasoning… Because a casebook has such power, and because its contents are subject to editorial choice, analyzing the biases of a particular casebook could challenge the effect of the casebook on its readers.

In the article, Frug critiques the treatment of the Parker case in the casebook she is discussing (not the one we are using) because it does not encourage the reader to think about the issues the authors of our casebook raise with respect to Shirley Maclaine’s likely preference for the Bloomer Girl project. At p. 1125 of the article, Frug writes:

Understanding MacLaine as a powerful actress whose feminist politics are respected by the California Supreme Court could also stimulate readers to draw connections between social contexts and legal decisions, between the experiences of parties in a case and the experiences of readers themselves.

In A Theory of Self-help Remedies in Contract (89 B.U.L. Rev. 1397 (2009)), Mark Gergen writes (at page 1403):

The interest in remedial simplicity explains why the law tolerates waste and windfall in this situation. There is reason to believe that MacLaine genuinely preferred the role in Bloomer Girl to the role in Big Country, Big Man. To protect MacLaine from a loss in performing the less desired role, while avoiding waste, the law might require her to take the role in the Western while giving her damages for her loss. This the law does not do. Had MacLaine taken the role, she would have been denied damages for her artistic, political, or reputational loss, as any estimate of the loss would be speculative. The only way MacLaine could avoid suffering an uncompensated loss was to do what she did, which was to reject the role in Big Country, Big Man and get a judgment for the contract price.

For Tuesday’s class please read Neri v Retail Marine Corporation (to page 77) and for Thursday please read In Re Worldcom (to page 89). In thinking about Neri you should focus on the interaction of UCC §2-718 and §2-708. How these provisions fit together is not obvious so please read the provisions very carefully.

Have a good weekend!

WEEK 2: August 24-28:
I have moved the material which was previously on this page to the archive page.
You have read to page 49 so far. Now please read to page 64 – please be sure to read the notes after the case carefully.

For class on Monday be prepared to discuss the problems on pages 46-8 of the Casebook. Be sure to look at the UCC provisions referred to on these pages. Be sure to look at UCC § 1-103 and note the reference to Judge Posner’s comments on page 38 of the Casebook.

On Tuesday we will discuss the questions on page 50 – again, please be sure to read the relevant provisions of the UCC. I hope that we will be able to begin discussing Parker v Twentieth Century Fox on Tuesday, but we will discuss the case on Thursday anyway.

Here is a link to the wikipedia page for Shirley Maclaine. And at this point I would like to encourage you to think about the Casebook. The authors spend a lot of time explaining their perspective on contract law. Here is another take on why the perspective a casebook adopts matters. It is from Mary Joe Frug, Re-Reading Contracts: A Feminist Analysis of a Contracts Casebook, 34 Am. U. L. Rev 1065 (1984-5) at p. 1069:

I do not believe that a casebook is simply a neutral reflection of what students need to know to practice law, to pass the bar, to think like lawyers, or to become law teachers. I maintain that, even within the constraints of professional necessity,’ editors have a wide range of choice in their case selections, their comments, their notes, their problems, and their questions, and the choices they make are not inevitable. The choices could be different and, indeed, choices about content do differ among casebooks within particular subject areas. I also believe that a casebook is a powerful document. The editorial choices within a casebook determine how many readers think about the law of a doctrinal area, about lawyering in that field, about clients, and about legal reasoning… Because a casebook has such power, and because its contents are subject to editorial choice, analyzing the biases of a particular casebook could challenge the effect of the casebook on its readers.

In the article, Frug critiques the treatment of the Parker case in the casebook she is discussing (not the one we are using) because it does not encourage the reader to think about the issues the authors of our casebook raise with respect to Shirley Maclaine’s likely preference for the Bloomer Girl project. At p. 1125 of the article, Frug writes:

Understanding MacLaine as a powerful actress whose feminist politics are respected by the California Supreme Court could also stimulate readers to draw connections between social contexts and legal decisions, between the experiences of parties in a case and the experiences of readers themselves.

Have a good weekend!

First class assignment (Wednesday August 19, 2.00pm):

1. Read the Class Policies
2. Read this Introduction to Contracts, and think about the questions, which we will discuss in class.
3. Read pages 1-29 of the Casebook and think about the following questions:
a. Why do you think the authors of the case book began the book this way?
b. Did you find anything surprising in this section of the book?
4. By close of business (for the avoidance of doubt, this is 5.00pm eastern time) on Monday August 17 please send an email (subject line: Bradley Contracts Class) to my assistant, Adoracion Carrillo, at acarrillo@law.miami.edu describing two facts you would like me to know about you.

For class on Thursday August 20 please read to page 49 of the Casebook. Please note that on page 46 the authors say you should read UCC §§ 2-102, 2-105(1) and 2-107(1) and (2) and the related Comments (you can find these provisions in the Selected Source Materials book). Be sure to follow this instruction. Notice that the questions on pages 46-7 refer to additional provisions of the UCC, which you should also read.