contracts archive fall 2016
Dean’s fellow sessions for this class will be held by Sukhmani Brar on Mondays and Wednesdays at 3.30-4.20pm in Room F309 starting on August 29th.
Week 16: November 29We will discuss Joaquin v Direct TV Group Holdings Inc (United States District Court, D. New Jersey. 2016). And we will talk about the Spring 2013 exam.
Week 15: November 22: For Tuesday please read DK Arena v EB Acquisitions (Florida Supreme Court 2013).
I also want to focus on arbitration agreements. In AT&T v Concepcion in 2011 the US Supreme Court addressed the interaction between state contract law and the federal Arbitration Act in an opinion written by Justice Scalia. The Concepcions were trying to bring a class action based on AT&T’s advertising of phones as free when the sales were subject to sales tax. Courts in California had used the doctrine of unconscionability in cases like this, recognizing that class actions could have a deterrent effect that bilateral arbitration would not have (the Discover Bank rule). Section 2 of the FAA states that arbitration agreements are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”
In the Supreme Court, Justice Scalia said:
When state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA… But the inquiry becomes more complex when a doctrine normally thought to be generally applicable, such as duress or, as relevant here, unconscionability, is alleged to have been applied in a fashion that disfavors arbitration. In Perry v. Thomas ..for example, we noted that the FAA’s preemptive effect might extend even to grounds traditionally thought to exist ” ‘at law or in equity for the revocation of any contract.’… We said that a court may not “rely on the uniqueness of an agreement to arbitrate as a basis for a state-law holding that enforcement would be unconscionable, for this would enable the court to effect what … the state legislature cannot.”.. An obvious illustration of this point would be a case finding unconscionable or unenforceable as against public policy consumer arbitration agreements that fail to provide for judicially monitored discovery… Other examples are easy to imagine. The same argument might apply to a rule classifying as unconscionable arbitration agreements that fail to abide by the Federal Rules of Evidence, or that disallow an ultimate disposition by a jury (perhaps termed “a panel of twelve lay arbitrators”to help avoid preemption). Such examples are not fanciful, since the judicial hostility towards arbitration that prompted the FAA had manifested itself in “a great variety”of “devices and formulas”declaring arbitration against public policy… it is worth noting that California’s courts have been more likely to hold contracts to arbitrate unconscionable than other contracts…Although §2’s saving clause preserves generally applicable contract defenses, nothing in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment of the FAA’s objectives.
The case suggests that state contract law has some relevance to arbitration agreements, but that it cannot be applied in a way that undermines the FAA. State contract law that applies to arbitration agreements as such would be a problem. What do you think about Meyer v Kalanick in the light of AT&T v Concepcion? It would seem that if the court applies state contract law with respect to issues of formation in the same way to arbitration agreements as to other types of contract this would not be pre-empted by AT&T v Concepcion.
What about nursing home contracts entered into by family members of the patient? The federal government (Center for Medicare and Medicaid Services) acted to ban mandatory arbitration agreements in nursing homes, but a Mississipi court has granted a preliminary injunction barring enforcement of the rule in American Health Care Association v. Burwell. The Consumer Financial Protection Bureau (CFPB) has proposed rules which would ban certain providers of consumer financial services from prohibiting class actions.
Extendicare Homes v Whisman (Supreme Court of Kentucky 2015) was a nursing home case involving claims relating to injuries to nursing home residents where the nursing homes tried to enforce arbitration agreements signed not by the residents themselves but by attorneys-in fact for the residents. The court said that in two of the cases:
the authority to enter into a pre-dispute arbitration agreement was not among the powers’granted to respective attorney-in-fact and, therefore the arbitration agreements were not formed with the assent of the party to be bound thereby. Lacking the essential element of assent, we conclude that the arbitration agreements in those cases were never validly formed. We further conclude that without a clear and convincing manifestation of the principal’s intention to do so, we will not infer the delegation to an agent of the authority to waive a fundamental personal right so constitutionally revered as the “ancient mode of trial by jury.” Consequently, because none of the
power-of-attorney instruments involved in these cases provide a manifestation of the principal’s intent to delegate that power to his agent, we conclude that the agent was not so authorized, and that the principal’s assent to the waiver was never validly obtained.
In addition the court said:
the decedent whose death becomes the basis of a wrongful death claim had no authority during his lifetime, directly or through the actions of his attorney-in-fact, to prospectively bind the beneficiaries of the wrongful death claim to an arbitration agreement.
Is this consistent with AT&T v Concepcion?
For Tuesday please also read Joaquin v Direct TV Group Holdings Inc (United States District Court, D. New Jersey. 2016).
The week after Thanksgiving we have a class on Tuesday. I plan to wrap up the class with some general comments about the course and the exam, to take questions and to go over a hypothetical.
I have put up a list of statutes and some links to past exams on the 2016 materials page (I know some of you have found these already looking at last year’s materials).
I have booked Room F309 for a Review Session on Monday, December 5, 2016 from 3:00 pm – 5:00 pm. And I will be available to meet with you on Monday 5 December and Tuesday 6 December. Here is an appointments schedule showing available times. The schedule gives 22 time slots so it makes sense for you to think about whether you could arrange to see me in groups. I am also available before December 5th and will answer questions by email (not probably during the day on the 5th and 6th!) including over the weekend but not after about 10pm on December 6th. Please email me if you would like to make an appointment to see me.
Here are the notes on course themes I gave you before:
1. Contract law and fairness: formal contract law and promissory estoppel; how do the cases we have studied fit with ideas of fairness: are the courts in the cases we have read trying to apply the law, or trying to do justice between the parties, or both? Is it always fair to enforce contracts, or not? Does emphasizing ideas of certainty (giving effect to contracts rather than rewriting contracts) increase fairness or not? Does the law you have been studying really give effect to freedom of contract?
2. Addressing social issues through court decisions versus through legislative action: which is preferable. We saw 2 contrasting views in Marvin v Marvin and Hewitt v Hewitt (and Blumenthal v Brewer), and the legislative history of the Wisconsin Fair Dealership Law suggests that legislatures aren’t necessarily better at evidence gathering and negotiating than courts are. I also invited you to think that even in the context of adversarial litigation there may be variations in how courts act: in some cases there may be more evidence about broader issues through expert evidence, amicus briefs etc than in others, and some cases seem to be more about figuring out the implications of a set of facts( e.g. promissory estoppel) whereas others present more in terms of the evolution of doctrinal rules (I suggested the duty of good faith could be an example of this).
3. We have seen some examples of courts manipulating legal doctrine, or choosing to see the facts in a way that fits their preferred result. In the Lake River case Posner, on the other hand, shows what his preferred approach to the issue of liquidated damages would be and then says but I have to apply Illinois law. David v Jacoby is presented in the book as an example of manipulating doctrine. To what extent do and should judges manipulate doctrine?
4. Are family cases really different from contracts for the “timely delivery of a crate of oranges”(Miller v Miller, CB p. 246). Are family disputes different from commercial disputes, or not? This is an invitation to think about the context of the cases.
WEEK 14: November 14-18 On Tuesday next week I would like to cover covenants not to compete(CB pages 501-512 and Florida Statutes §542.335) and duress (CB pages 522-545). We will not cover the material on capacity. On Thursday we will discuss the duty of good faith (CB pages 557-565), and please also read pages 565-574 and pages 590-607. For Friday please read DK Arena v EB Acquisitions (Florida Supreme Court 2013).
The rules relating to non-compete agreements vary. But employers do like to have their employees sign con-compete agreements. In the context of employment at will courts have been willing to see the employer’s refraining from firing the at will employee as consideration for the employee’s promises not to compete. The Wisconsin Supreme Court adopted this approach in 2015 in Runzheimer International Ltd. v. Friedlen (this ABA article refers to decisions in other state courts which have taken this approach).
I plan to assign a couple of other cases (not in the casebook) for class the following week and to spend time in our last class (Tuesday after Thanksgiving) answering questions you may have and perhaps going over a past exam.
Have a good weekend.
Themes:
I have begun to encourage you to think in terms of themes relating to the material we have been studying. Here are some notes about this:
1. Contract law and fairness: formal contract law and promissory estoppel; how do the cases we have studied fit with ideas of fairness: are the courts in the cases we have read trying to apply the law, or trying to do justice between the parties, or both? Is it always fair to enforce contracts, or not? Does emphasizing ideas of certainty (giving effect to contracts rather than rewriting contracts) increase fairness or not? Does the law you have been studying really give effect to freedom of contract?
2. Addressing social issues through court decisions versus through legislative action: which is preferable. We saw 2 contrasting views in Marvin v Marvin and Hewitt v Hewitt (and Blumenthal v Brewer), and the legislative history of the Wisconsin Fair Dealership Law suggests that legislatures aren’t necessarily better at evidence gathering and negotiating than courts are. I also invited you to think that even in the context of adversarial litigation there may be variations in how courts act: in some cases there may be more evidence about broader issues through expert evidence, amicus briefs etc than in others, and some cases seem to be more about figuring out the implications of a set of facts( e.g. promissory estoppel) whereas others present more in terms of the evolution of doctrinal rules (I suggested the duty of good faith could be an example of this).
3. We have seen some examples of courts manipulating legal doctrine, or choosing to see the facts in a way that fits their preferred result. In the Lake River case Posner, on the other hand, shows what his preferred approach to the issue of liquidated damages would be and then says but I have to apply Illinois law. David v Jacoby is presented in the book as an example of manipulating doctrine. To what extent do and should judges manipulate doctrine?
4. Are family cases really different from contracts for the “timely delivery of a crate of oranges” (Miller v Miller, CB p. 246). Are family disputes different from commercial disputes, or not? This is an invitation to think about the context of the cases.
November 2: Yesterday the District court for the District of Columbia upheld an arbitration clause with a class action waiver in an agreement with Airbnb in Selden v Airbnb. The plaintiff, Gregory Selden, was suing Airbnb for race discrimination:
Gregory Selden, who is African American, signed up with the popular residential rental service Airbnb in advance of a weekend getaway to Philadelphia. He created the required user profile, including his photograph, and contacted an Airbnb “host”about a promising listing. The host allegedly responded that the residence was not available. Smelling a rat, Selden created a second account under a pseudonym, with a photograph of a white person in the user profile, and contacted the same host about the same accommodation. This time, Selden claims, the host was only too happy to rent the residence. Selden filed suit against Airbnb for race discrimination on behalf of himself and fellow African-American travelers who have reported similar treatment on Airbnb.
The judge, Christopher Cooper, held that the arbitration agreement and class action waiver were binding terms of the agreement between Selden and Airbnb:
No matter one’s opinion of the widespread and controversial practice of requiring consumers to relinquish their fundamental right to a jury trial-and to forego class actions-as a condition of simply participating in today’s digital economy, the applicable law is clear: Mutual arbitration provisions in electronic contracts-so long as their existence is made reasonably known to consumers-are enforceable, in commercial disputes and discrimination cases alike. And Airbnb’s sign-up procedures were sufficiently clear to place Mr. Selden on notice that he was agreeing to the company’s Terms of Service when he created an account. While that result might seem inequitable to some, this Court is not the proper forum for policy objections to mandatory arbitration clauses in online adhesion contracts. Such objections should be taken up with the appropriate regulators or with Congress.
The sign-up process was a bit different from the process described in Uber v Kalanick (although the dispute resolution provision was on page 15 of the terms of service):
Airbnb’s mobile sign-up screen … presented Selden with three options in descending order: “Sign up with Facebook,””Sign up with Google,”and “Sign up with Email.”.. Below the “Sign up with Email”button was text that read: “By signing up, I agree to Airbnb’s Terms of Service, Privacy Policy, Guest Refund Policy, and Host Guarantee Terms.”.. The text contained hyperlinks to these various agreements…Airbnb’s Terms of Service include, among other provisions, a mandatory arbitration clause… Selden clicked “Sign up with Facebook”at the top of the page, and proceeded to create his Airbnb profile in order to use the service.
The judge described the approach of courts to such cases as follows:
First, the agreements tend to be enforced if “the hyperlinked `terms and conditions’ is next to the only button that will allow the user to continue use of the website.”…Second, courts tend touphold sign-in-wrap agreements if “the user `signed up’ to the website and was presented with hyperlinks to the terms of use on subsequent visits.”…And third, sign-in-wrap agreements are usually upheld if “notice of the hyperlinked terms and conditions is present on multiple successive webpages of the site.”… Finally, courts that have assessed the validity of sign-in-wrap agreements.. have cited factors such as the size of the font, the possibility that other visual elements on the screen might obscure the “terms and onditions”statement, and whether the user signed up for the agreement using a mobile device. Compare Meyer v. Kalanick… with Cullinane… The Court finds that Airbnb’s mobile sign-up screen adequately placed Selden on notice of Airbnb’s Terms of Service, and that he assented to those terms by clicking he sign-up box and using the service. The text “By signing up, I agree to Airbnb’s Terms of Service”is conspicuous… It is placed in roughly the middle of the page, in close proximity to all three sign-up uttons. The text also appears in dark font, in sharp contrast to the white background. It is, moreover, clearly legible, appropriately sized, and unobscured by other visual elements. Although the text is not directly under the first or second alternative sign-up buttons, any reasonably-observant user would notice the text and accompanying hyperlinks. So even if Selden only clicked “Sign up with facebook”at the top of the page, he would have seen the relevant text from a quick glance down the rest of the page. Thus, by choosing to sign up for Airbnb, Selden manifested his assent to the Terms of Service… There is also a wider point to be made… The act of contracting for consumer services online is now commonplace in the American economy. Any reasonably–active adult consumer will almost certainly appreciate that by signing up for a particular service, he or she is accepting the terms and conditions of the provider. Notifications to that effect-be they check boxes or hyperlinks-abound. To be sure, few people may take time to actually read the user agreements. But ignorance of the precise terms does not mean that consumers are unaware they are entering contracts by signing up for internet-based services. So, while the record is silent as to Mr. Selden’s particular history with e-commerce, the prevalence of online contracting in contemporary society lends general support to the Court’s conclusion
that Selden was on notice that he was entering a contract with Airbnb in this case.
The court also held that the claim of race discrimination was within the scope of the arbitration agreement (the claims’ “arise out of or relate to”his use of the Airbnb service”), that federal civil rights claims could be subject to arbitration and that the agreement was not unconscionable.
These excerpts from the judgment provide some perspective on our discussion of Meyer v Kalanick at the beginning of the semester- the different facts in the 2 cases help us to think about when contract terms will be treated as binding. But there’s also a difference in perspective of the two judges: Judge Cooper accepts the idea that consumers can be bound by contract terms they don’t have much say about and don’t even read. And he also thinks that the public policy issue should be resolved by regulators or legislators rather than by the courts (cf Hewitt v Hewitt).
November 3: Florida Statutes § 559.811:
Contracts to be in writing; form; provisions.-
(1) Every business opportunity contract shall be in writing, and a copy shall be given to the purchaser at least 3 working days before signing the contract.
(2) Every contract for a business opportunity shall include the following:
(a) The terms and conditions of payment, including the total financial obligation of the purchaser to the seller.
(b) A full and detailed description of the acts or services that the business opportunity seller undertakes to perform for the purchaser.
(c) The seller’s principal business address and the name and address of its agent in the state authorized to receive service of process.
(d) The approximate delivery date of products, equipment, or supplies which the business opportunity seller is to deliver to the purchaser.
Here is a link to the National Federation of Independent Business Model Employee Handbook for Small Business. The document states:
2.3 Drug-Free / Alcohol-Free Environment. Employees are prohibited from unlawfully consuming, distributing, possessing, selling, or using controlled substances while on duty. In addition, employees may not be under the influence of any controlled substance, such as drugs or alcohol, while at work, on company premises or engaged in company business. Prescription drugs or over-the-counter medications, taken as prescribed, are an exception to this policy. Anyone violating this policy may be subject to disciplinary action, up to and including termination.
3.1 Professional Conduct. This company expects its employees to adhere to a standard of professional conduct and integrity. This ensures that the work environment is safe, comfortable and productive. Employees should be respectful, courteous, and mindful of others’ feelings and needs. General cooperation between coworkers and supervisors is expected. Individuals who act in an unprofessional manner may be subject to disciplinary action.
5.1 General Attendance. The company maintains normal working hours of [enter hours]. Hours may vary depending on work location and job responsibilities. Supervisors will provide employees with their work schedule. Should an employee have any questions regarding his/her work schedule, the employee should contact the supervisor. The company does not tolerate absenteeism without excuse. Employees who will be late to or absent from work should notify a supervisor in advance, or as soon as practicable in the event of an emergency. Chronic absenteeism may result in disciplinary action. Employees who need to leave early, for illness or otherwise, should inform a supervisor before departure. Unauthorized departures may result in disciplinary action.
Week 13: November 7-11 On Tuesday we will begin by finishing up consideration of the Collins Drug case and then move on to the TWA case. Please read to page 425 for Tuesday. Note that the approach in McIntosh v Murphy is not followed in Florida. In Tanenbaum v. Biscayne Osteopathic Hospital, Inc. (FL. Sup. 1966) the Court refused to apply promissory estoppel in the context of an oral agreement for employment for 5 years (“The question that emerges for resolution by us is whether or not we will adopt by judicial action the doctrine of promissory estoppel as a sort of counteraction to the legislatively created Statute of Frauds. This we decline to do.”) This approach was endorsed by the Florida Supreme Court in DK Arena v EB Acquisitions in 2013.
For Thursday please read to page 480 (for class you do not need to focus as much attention on pages 464-480 as on the earlier pages). With respect to the issues raised by Wagenseller, consider 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.
For Friday at 11 am please read to page 500. We will also have a 2pm make-up session on Friday in room F109. At that session we will finish the assigned reading for the week and later today I will post another item for us to consider in the make-up time.
November 8: Here are two Contracts Formation Questions (for next week’s Deans’ Fellow session)
And here are some Cinderella Questions for Friday afternoon.
Week 12: October 31- November 4I am posting this assignment on Wednesday October 26 before our Thursday class and am not sure quite how far we will get on Thursday. So, for Tuesday November 1, please read to page 345. We will not cover pages 346-363 in any detail. For Thursday please read to page 383, and for Friday please read to page 417.
Week 11: October 25 and 27 (No class on October 28) On Tuesday we will begin with Hamer v Sidway and then I hope to get to page 306. For Thursday please read to page 345.
Here is a link to the recording of the make-up session on Friday October 21.
Here is a link to a recording of class on Tuesday October 18.
Have a good weekend.
The New York Times today (Monday October 24) has a story which is relevant to what we are studying: A Brownstone and the Bitter Fight to Inherit it:
Bill Cornwell and Tom Doyle lived in a brownstone in the West Village for over five decades. They were artists, neighborhood fixtures and committed partners. Their enduring love never seemed to them to need codification – not to mention that for most of their relationship, gay marriage was illegal.
Mr. Cornwell died two years ago at age 88. Now, his will, in which he bequeathed the small apartment building to Mr. Doyle, is in dispute, leaving his partner with no clear claim to his home of 55 years. The property, on Horatio Street, is an extremely valuable asset, and several of Mr. Cornwell’s nieces and nephews have claimed it as their inheritance”
The story illustrates problems arising on a failure to comply with formalities. In this case the will only had one witness rather than the 2 required. The title to the property was in Mr Cornwell’s name.
Week 10: October 17-21On Tuesday we will pick up where we leave off on Friday October 14. And we will begin to think about contract formation. Please read pages 221-237 of the book for Tuesday. Then read this Complaint in Trump v Maher (the case was later abandoned) and think about how good the claim expressed in the complaint was. We probably won’t get this far but please also read to page 242. For Thursday please read to page 276 (although there’s a lot of material to cover in the notes after Marvin which we won’t be able to cover on Thursday even if we do begin discussing Marvin on Thursday). For Friday please read to page 306 (we have our usual session and the make-up from 2-4pm on Friday).
here is the Pepsi ad referred to in question 2 on page 236:
The casebook refers to Blumenthal v Brewer at pages 272-3. The Illinois Supreme Court decided this case in 2016, held that the appellate court did not have the jurisdiction it claimed and could not overrule Hewitt. The Illinois Supreme Court said that Hewitt remains good law (I am sorry this is such a long excerpt, but I think it is useful and you can access the text in pdf format here: Blumenthal v Brewer):
To understand Illinois’s public policy concerning the common-law rights of unmarried, cohabiting couples, we must begin with a review of the history in Illinois concerning the matter-a history the parties and amici have extensively outlined in their briefs…. Common-law marriages are invalid in Illinois and have been since the early part of the last century. The prohibition is statutory and unequivocal. Section 214 of the Marriage and Dissolution Act … expressly provides that “[c]ommon law marriages contracted in this State after June 30, 1905 are invalid.”.. Prior to this legislative enactment, the doctrine of common-law marriage was a judicially sanctioned alternative to formal marriage… In Hewitt, decided in 1979, this court undertook an extensive and in-depth public policy analysis with respect to the statutory change by which common-law marriages were abolished….The facts of the present case are almost indistinguishable from Hewitt, except, in this case, the parties were in a same-sex relationship. During the course of their long-term, domestic relationship, Brewer alleges that she and Blumenthal had a relationship that was “identical in every essential way to that of a married couple.” Although the parties were not legally married, they acted like a married couple and held themselves out as such. For example, the former domestic partners exchanged rings as a symbol of their commitment to each other, executed wills and trusts, each naming the other as the sole beneficiary of her assets, and appointed each other as fiduciary for financial and medical decision making. Blumenthal and Brewer also began to commingle their personal and financial assets, which allowed them to purchase investment property as well as the Chicago home where they raised their three children. Much like in Hewitt, Brewer alleges that she contributed to Blumenthal’s purchase of an ownership interest in the medical group GSN, helping Blumenthal earn the majority of income for the parties and “thereby guaranteeing the family’s financial security.” Because Blumenthal was able to earn a high income, Brewer was able to devote more time to raising the couple’s children and to attend to other domestic duties. Once Blumenthal’s and Brewer’s relationship ended, Brewer, like Victoria Hewitt, brought suit seeking various common-law remedies to equalize their assets and receive an interest in Blumenthal’s business…. our decision in Hewitt did no more than follow the statutory provision abolishing common-law marriage, which embodied the public policy of Illinois that individuals acting privately by themselves, without the involvement of the State, cannot create marriage-like benefits….When considering the property rights of unmarried cohabitants, our view of Hewitt’s holding has not changed. As in Hewitt, the issue before this court cannot appropriately be characterized solely in terms of contract law, nor is it limited to considerations of equity or fairness as between the parties in such marriage-like relationships. .. These questions undoubtedly involve some of the most fundamental policy concerns in our society. Permitting such claims, as sought by Brewer, would not only impact the institution of marriage but also raise questions pertaining to other family-related issues… Moreover, Brewer’s argument that her relationship with Blumenthal should not be viewed differently from others who cohabit, like roommates or siblings living together, ignores the
fact that their relationship – which lasted almost three decades and involved raising three children
– was different from other forms of cohabitation. Brewer herself identified in her counterclaim that her relationship with Blumenthal was not that of roommates or siblings living together but was “identical in every essential way to that of a married couple.” …Since this court’s decision in Hewitt, the General Assembly has enacted, repealed, and amended numerous family-related statutes. …These post-Hewitt amendments demonstrate that the legislature knows how to alter family-related statutes and does not hesitate to do so when and if it believes public policy so requires. Nothing in these post-Hewitt changes, however, can be interpreted as evincing an intention by the legislature to change the public policy concerning the situation presently before this court. To the contrary, the claim that our legislature is moving toward granting additional property rights to unmarried cohabitants in derogation of the prohibition against common-law marriage is flatly contradicted by the undeniable fact that for almost four decades since Hewitt, and despite all of these numerous changes to other family-related statutes, the statutory prohibition against common-law marriage set forth in section 214 of the Marriage and Dissolution Act … has remained completely untouched and unqualified. That is so even though this court in Hewitt explicitly deferred any policy change to the legislature. ..It is well-understood that when the legislature chooses not to amend a statute
to reverse a judicial construction, it is presumed that the legislature has acquiesced in the court’s statement of the legislative intent…Based on this principle, we can presume that the legislature has acquiesced in Hewitt’s judicial interpretation of the statute prohibiting marriage-like rights to those outside of marriage. If this court were to recognize the legal status desired by Brewer, we would infringe on the duty of the legislature to set policy in the area of domestic relations. As mentioned in Hewitt, the legislative branch is far better suited to declare public policy in the domestic relations field due to its superior investigative and fact-finding facilities, as declaring public policy requires evaluation of sociological data and alternatives Therefore, we do not find a compelling reason to reverse course now and depart from our earlier legislative interpretation, especially in light of almost two score years of legislative inaction on the matter….
We also reject Brewer’s argument that changes in law since Hewitt demonstrate that the “legislature no longer considers withholding protection from nonmarital families to be a legitimate means of advancing the state’s interest in marriage.” To the contrary, this court finds that the current legislative and judicial trend is to uphold the institution of marriage. Most notably, within the past year, the United States Supreme Court in Obergefell v. Hodges… held that same-sex couples cannot be denied the right to marry. In doing so, the Court found that “new insights [from the developments in the institution of marriage over the past centuries] have strengthened, not weakened, the institution of marriage… For the institution of marriage has been a keystone of our social order and “remains a building block of our national community.” … Accordingly, the Court invalidated any state legislation prohibiting same-sex marriage because excluding same-sex couples from marriage would be excluding them “from one of civilization’s oldest institutions.” ..While the United States Supreme Court has made clear that “[t]he Constitution does not permit the State to bar same-sex couples from marriage on the same terms as accorded to couples of the opposite sex”… nothing in that holding can fairly be construed as requiring states to confer on non-married, same-sex couples common-law rights or remedies not shared by similarly situated non-married couples of the opposite sex. Legislatures may, of course, decide that matters of public policy do warrant special consideration for non-married, same-sex couples under certain circumstances, notwithstanding the fact that the institution of marriage is available to all couples equally. What is important for the purposes of this discussion is that the balancing of the relevant public policy considerations is for the legislature, not the courts. Indeed, now that the centrality of the marriage has been recognized as a fundamental right for all, it is perhaps more imperative than before that we leave it to the legislative branch to determine whether and under what circumstances a change in the public policy governing the rights of parties in nonmarital relationships is necessary.
Week 9: October 10-14 I hope you had a great break. On Tuesday this week we will begin with DeLeon v Aldrete, but I don’t intend to spend much time on this case so we can move on to Pevvyhouse. Please read to page 202 for Tuesday. For Thursday please read to page 220. We won’t get that far on Thursday. But just in case we finish with the cases on Thursday we can start on the problems.
Here is a link to the discussion of Hawkins v McGee in The Paper Chase:
Make-up sessions:
Friday October 21st from 2-4pm in Room F309 (note this is a 2 hour session).
Friday November 11th from 2-4pm in Room F 109 (2 hour session, but we will finish at 3.50 pm).
Here is my Memo on the Fall 2011 Contracts Midterm.
Week 8: October 3-7 Fall Break. Have a great break. After we get back we will be finishing the remedies material, so if you want to read ahead over the break I will be assigning the rest of the current chapter, including the problems at the end for week 9.
Here is an example of a midterm exam I wrote at this stage of the semester based on the last edition of the Casebook (the major difference between the editions is that Paffhausen and Coastal Steel Erectors are new cases and the treatment of the restitution material is different, and also that on the profits of a new business issue we have one case whereas previously there were 2): Fall 2011 Midterm
Week 7: September 26-30 Next week we will have class on Tuesday and Thursday, but not on Friday. I scheduled two make-up class sessions in October.
The session I arranged for Friday October 14th will need to be rescheduled due to an LComm conflict (I am investigating whether November 4th will work). I believe the other session can take place on Friday October 21st from 2-4pm in Room F309 (note this is a 2 hour session). We will be doing intense contracts that day!
On Tuesday next week we will begin with Colonial Dodge v Miller. Please also read to page 174. For Thursday please read to page 202. There is a risk here that we may get to the point of beginning, but not finishing, discussion of Peevyhouse and have to wait to finish the discussion until after the break. We will see how it goes. By the end of next week we will be slightly (but only slightly) behind where I was with the class last year – the make-ups will help with that.
Here is the Memo on the September hypo.
Week 6: September 19-23 Here is a liquidated damages question I provided last year. Next week we will begin to move beyond expectation damages and start thinking about reliance as an alternative theory for calculating damages.
On Tuesday next week we will begin with Chung v Kaonohi Center Co and please also read to page 142. Please read to page 155 for Thursday and to page 168 for Friday.
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
Have a good weekend.
September 15: Liquidated damages note:
In construction contracts a clause may specify an amount to be paid per day where completion of construction is delayed. In Boone Coleman Construction, inc. v. Village of Piketon in 2016 the Ohio Supreme Court wrote:
the benefits of liquidated-damages provisions in building and construction contracts are well documented…. The provisions create firm expectations and allow the parties to allocate damages caused by delays in completing construction.. The ability to agree about damages is particularly important in public-works-construction contracts because “[i]t is uniquely difficult to calculate damages to the general public interest caused by a contractor’s breach of its agreement to provide public improvements.”
The Court noted that cases suggest that a per diem amount seems more like liquidated damages than a lump sum (which might look like a penalty).
In franchise agreements it is common to have a liquidated damages provision for payment of some multiple of the franchsie fees. For example in La Quinta Corp. v. Heartland Props. LLC (6th Cir. 2010) the clause stated:
[i]f the inn ceases to be operated under the system for any reason … Licensee shall pay [Baymont] within 30 days following the effectiveness of such event, as “liquidated damages” (to compensate [Baymont] for lost revenues in an amount difficult to ascertain, and not as a penalty) an amount equal to 100% of the aggregate recurring fees which accrued with respect to inn operations during the immediately preceding 36 full calendar months.
The Court stated that the thirty-six-month formula, based on recurring fees that actually accrued, was at the time of contracting not an arbitrary calculation, but a “reasonable forecast” of the damages Baymont would sustain in the event of Heartland’s breach. The formula was based on common business practices and the parties’ recent historical performance under the license agreement, resulting in ascertainable losses in the event of breach.
In Days Inn Worldwide, Inc. V. Yamuma Kunj LLC (District of New Jersey, 2015) the Court refused to enforce a provision for 8 years of recurring fees:
Calling a figure “actual damages” does not make it so…I find that the $199,808.15 sum claimed by DIX is grossly disproportionate to the actual damages resulting from Yamuna’s breach. DIW has not established that Recurring Fees would have been similar for the next eight years. DIW has not established that it made any efforts to, for example, find a replacement licensee, or otherwise mitigate its projected “actual damages.”… To enforce Section 4 for the unexpired eight years of a fifteen year agreement would be excessive. It amounts to a license for DIW to sit on its hands and extract its full measure of profit from a failed business…. DIW’s calculation is excessive for another reason. In accelerating eight years of future payments, Days Inn does not discount them to present value. And on top of that, it actually seeks interest, running from November 2, 2011, on future payments, which, but for the default, would not have even come due until years in the future. That does not line up with any reasonable expectation of profit that DIW may have had when it entered into the agreement.
Consider this approach to the liquidated damages issue by the Utah Supreme Court in Commercial Real Estate v Comcast of Utah 285 P. 3d 1193 (2012):
We now hold that liquidated damages clauses should be reviewed in the same manner as other contractual provisions. “Persons dealing at arm’s length are entitled to contract on their own terms without the intervention of the courts for the purpose of relieving one side or the other from the effects of a bad bargain.”… “It is not our prerogative to step in and renegotiate the contract of the parties.” … Instead, unless enforcement of a liquidated damages clause would be unconscionable, “we should recognize and honor the right of persons to contract freely and to make real and genuine mistakes when the dealings are at arms’ length.”… liquidated damages clauses are not subject to any form of heightened judicial scrutiny. Instead, courts should begin with the longstanding presumption that liquidated damages clauses are enforceable… A party may challenge the enforceability of a liquidated damages clause only by pursuing one of the general contractual remedies, such as mistake, fraud, duress, or unconscionability.
Week 5: September 12-16: Please read to page 103 for Tuesday, to page 115 for Thursday and to page 131 for Friday.
Note this comment of Reuben Hasson on Lord Denning (cf. Note 5 on page 84 of the Casebook):
The attempts made over the years to thrust greatness on Lord Denning fail. From 1970 until his retirement in 1982, I do not think he deserved even to be called a good judge.”
September 15: Liquidated damages note:
In construction contracts a clause may specify an amount to be paid per day where completion of construction is delayed. In Boone Coleman Construction, inc. v. Village of Piketon in 2016 the Ohio Supreme Court wrote:
the benefits of liquidated-damages provisions in building and construction contracts are well documented…. The provisions create firm expectations and allow the parties to allocate damages caused by delays in completing construction.. The ability to agree about damages is particularly important in public-works-construction contracts because “[i]t is uniquely difficult to calculate damages to the general public interest caused by a contractor’s breach of its agreement to provide public improvements.”
The Court noted that cases suggest that a per diem amount seems more like liquidated damages than a lump sum (which might look like a penalty).
In franchise agreements it is common to have a liquidated damages provision for payment of some multiple of the franchsie fees. For example in La Quinta Corp. v. Heartland Props. LLC (6th Cir. 2010) the clause stated:
[i]f the inn ceases to be operated under the system for any reason … Licensee shall pay [Baymont] within 30 days following the effectiveness of such event, as “liquidated damages” (to compensate [Baymont] for lost revenues in an amount difficult to ascertain, and not as a penalty) an amount equal to 100% of the aggregate recurring fees which accrued with respect to inn operations during the immediately preceding 36 full calendar months.
The Court stated that the thirty-six-month formula, based on recurring fees that actually accrued, was at the time of contracting not an arbitrary calculation, but a “reasonable forecast” of the damages Baymont would sustain in the event of Heartland’s breach. The formula was based on common business practices and the parties’ recent historical performance under the license agreement, resulting in ascertainable losses in the event of breach.
In Days Inn Worldwide, Inc. V. Yamuma Kunj LLC (District of New Jersey, 2015) the Court refused to enforce a provision for 8 years of recurring fees:
Calling a figure “actual damages” does not make it so…I find that the $199,808.15 sum claimed by DIX is grossly disproportionate to the actual damages resulting from Yamuna’s breach. DIW has not established that Recurring Fees would have been similar for the next eight years. DIW has not established that it made any efforts to, for example, find a replacement licensee, or otherwise mitigate its projected “actual damages.”… To enforce Section 4 for the unexpired eight years of a fifteen year agreement would be excessive. It amounts to a license for DIW to sit on its hands and extract its full measure of profit from a failed business…. DIW’s calculation is excessive for another reason. In accelerating eight years of future payments, Days Inn does not discount them to present value. And on top of that, it actually seeks interest, running from November 2, 2011, on future payments, which, but for the default, would not have even come due until years in the future. That does not line up with any reasonable expectation of profit that DIW may have had when it entered into the agreement.
Consider this approach to the liquidated damages issue by the Utah Supreme Court in Commercial Real Estate v Comcast of Utah 285 P. 3d 1193 (2012):
We now hold that liquidated damages clauses should be reviewed in the same manner as other contractual provisions. “Persons dealing at arm’s length are entitled to contract on their own terms without the intervention of the courts for the purpose of relieving one side or the other from the effects of a bad bargain.”… “It is not our prerogative to step in and renegotiate the contract of the parties.” … Instead, unless enforcement of a liquidated damages clause would be unconscionable, “we should recognize and honor the right of persons to contract freely and to make real and genuine mistakes when the dealings are at arms’ length.”… liquidated damages clauses are not subject to any form of heightened judicial scrutiny. Instead, courts should begin with the longstanding presumption that liquidated damages clauses are enforceable… A party may challenge the enforceability of a liquidated damages clause only by pursuing one of the general contractual remedies, such as mistake, fraud, duress, or unconscionability.
Week 4: September 5-9 No classes. You may find this Note on Neri helpful (it outlines what I said in class). I am giving you links here to the question I wrote for last fall’s class at this time , together with a memo I wrote on that question. I think that looking at the question and then looking at the memo may be helpful for you in thinking about the hypo I set out below which I am inviting you to write about. So here is last year’s September 7-11 hypo and the Memo on the September 7-11 Hypo.
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. If you would like to email your answers please send them to Adoracion Carrillo, at acarrillo@law.miami.edu (subject line: Bradley Contracts question). I will read and respond to your answers as quickly as I can.
Hypo (and in pdf format: Labor Day Hypo)
Zco is a developer of multiplayer games, which are mostly played online. However, Zco’s most recent game uses a combination of real world and virtual experiences to enhance the game and to combat arguments that playing online games is anti-social and unhealthy. One component of the game is that players are invited to look for specific items in the real world and upload pictures of those items to Zco’s database. Some of the specified items are relatively easy to find, but others are much harder. A game player who succeeds in finding the hard to find items and uploading pictures of them gains large numbers of points in the game.
Website W operates a market in items for the game. Game players can buy items through the website or they can buy digital pictures of items or lease items or even ask W to search for specific items. Game players must become members of the W marketplace in order to buy items and benefit from W’s services, and they become members by clicking a tab on the website which states: “I apply for W membership.”The website shows prominently testimonials from happy customers. Right at the bottom of the front page of the website in the corner of the page the word “Terms”appears. This is meant to be a hyperlink to the W marketplace terms and conditions, which include a requirement to pay a set monthly membership fee, a requirement that members give 3 moths’ notice of their intention to terminate their membership, and an arbitration agreement with a class action waiver. For the first 6 months of 2016 the hyperlink to the terms and conditions was not functional. Once people become members of the W marketplace they sign in to use the market. On the sign in page and also on the pages where the members order items there are links to the Terms which have at all times been functional.
Victor became a member of W in January 2016. He is an avid player of the game and sometimes live streams his sessions in the game (he has a number of fans who enjoy watching these sessions). He has bought and leased a number of items through the W marketplace. Two days ago Victor placed an order with W for a very expensive item, a very rare book for which he expects to pay $1000 plus W’s search costs. At the time of placing the order Victor paid a deposit of $300. Yesterday (August 31) he discovered that he could obtain the same item at a very much lower cost from another marketplace,. He thinks he has been a fool and has been overpaying W for months. He immediately canceled the order and terminated his W membership. He has not paid the September membership fee, although W informed him that he was required under the W terms and conditions to pay the membership fee for three months because of the requirement to give three months’ notice of termination of his membership. W also says that when they find the book Victor will have to pay for it.
For week 5 (September 12-16) please read to page 103 for Tuesday, to page 115 for Thursday and to page 131 for Friday.
Week 3: August 29-September 2 We will begin with the last UCC buyer’s remedy problem on page 47 of the Casebook. Here are two different approaches to the issue raised in the question:
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 Mktg. (Oregon Supreme Court 2014), the court said that the plaintiff was entitled to recover its market price damages, even if those damages exceeded plaintiff’s resale price damages.
Then we will discuss this hypo:
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?
Next we will study Parker v Twentieth Century Fox. Here is what I put up here last week with respect to this case: Notice that the actor in this case is Shirley MacLaine. Parker is her husband’s family name.
I would like to encourage you (now and generally) 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 Thursday please read to page 74 and for Friday to page 85. In thinking about Neri you should focus on the interaction of UCC §2-718 and §2-708. Please read the provisions very carefully. Think about how the court calculates the dollar number for damages. Would there be a different calculation that would make sense given the drafting of the relevant UCC provisions?
Have a good weekend.
September 1: Here is a Note on Neri
Week 2: August 22-26 You may be interested to read this discussion of Meyer v Kalanick.
Please read pages 1-29 of the Casebook before next Tuesday. I will comment on this section briefly in class, but we will not go over these pages in detail in class at this point. For class on Tuesday please read pages 31-44. When the Casebook refers to provisions of UCC Article 2 (e.g. at the top of page 43) or to the Restatement you should look at the relevant provisions (by look at I mean read carefully). Be prepared to discuss the questions on pages 43-44.
For Thursday please read pages 45-47. Also think about this hypothetical:
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?
We may be able to begin thinking about Parker v Twentieth Century Fox on Thursday (and whether or not we do we will think about the case on Friday), so please also read to page 61.
Notice that the actor in this case is Shirley MacLaine. Parker is her husband’s family name.
I would like to encourage you (now and generally) 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.
August 24: You may be interested to read this post by Mark Weidemaier on the Uber case (Meyer v Kalanick)
Monday August 22: I moved last week’s assignments to the archive page.
Before the first class please:
1. Listen to this:
2. Read the Class Policies
3. By close of business (for the avoidance of doubt, this is 5.00pm eastern time) on Monday August 15 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.
Assignment for the first class on Thursday 18 August:
Read the Introduction to Contracts and Uber Terms and Conditions
These are also the relevant materials for the second class.