contracts archive spring 2013
April 26. I will be out of town between this afternoon and the evening of May 2. After I return I will be happy to meet with you to discuss your questions. I am also happy to answer questions by email (preferably after May 2). On May 7 and 8 I will be available to meet with you in my office, staring at 10.30 am on Tuesday and 9 am on Wednesday. Please contact me by email to schedule an appointment time.
Themes:
Enforcing contracts versus rewriting contracts (the Fall 2011 exam has an example of a question on this theme)
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)
Contracts versus relationships (one time deals and ongoing relationships, implications of the relationship for dispute settlement, formal versus informal dispute settlement)
Statutes List:
UCC SECTIONS
2-105, 2-107
2-201, 2-204, 2-206
2-313, 2-314, 2-315, 2-316, 2-317, 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: April 22-26
On Monday we will begin with Hill v Gateway and then I would like to spend some time on warranties. Please read UCC sections 2-313, 2-314, 2-315, 2-316, 2-317 and the comments. I am not going to assign reading from the Casebook on warranties. But please read these HP Limited Warranties. For Tuesday please read pages 658-691 of the Casebook and AT&T Mobility v Concepcion.
Discussing this material make take us into Thursday. We will spend the rest of Thursday’s class and Friday’s class on review. If you look at the two past exams posted below we can discuss any questions you have about those exams in class. Over the weekend I will try to post here some thoughts on the themes you should focus on in preparing for the exam.
The exam will be a closed book exam. Here is a Statutes List to help with your review:
UCC SECTIONS
2-105, 2-107
2-201, 2-204, 2-206
2-313, 2-314, 2-315, 2-316, 2-317, 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.
As you can see from these past exams I provide some UCC provisions if I would like you to be specific in your use of the provisions in your answers:
Fall 2011 Contracts Exam (Exam Memo)
Spring 2011 Contracts Exam (Exam Memo)
Here is a complaint in John Singleton v Paramount. The complaint shows show how many different types of claim can be made based on one set of facts. Notice how the complaint begins with a claim of fraud and then moves on to claims to be able to rescind the contract and to damages for unjust enrichment. These are restitutionary claims and they come first in the complaint. The breach of contract claim, and the claim of breach of the implied covenant of good faith and fair dealing are included at the end.
WEEK 13: April 15-19: On Monday we will begin with note 3 on page 547. For Monday please also read to page 574. For Tuesday please read to page 599 and for Thursday to page 616.
Here is a Florida Real Property Disclosure Form. In Johnson v. Davis, 480 So. 2d 625, 628 (Fla. 1985) the Supreme Court of Florida stated:
..we hold that where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer. This duty is equally applicable to all forms of real property, new and used.
WEEK 12: April 8-12 On Monday we will begin by thinking about how Florida Statutes § 448.102 would apply to the facts of the hypothetical on pages 472-4 of the Casebook.
Florida Statutes § 448.102 provides:
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.
Please read to page 510 for Monday, to page 531 for Tuesday and to page 553 for Thursday.
In Van Buren v Grubb in November 2012 the Virginia Supreme Court held that a terminated employee could bring a wrongful termination in violation of public policy claim where her supervisor engaged in sexual harassment on the grounds that she was dismissed for refusing to engage in the criminal acts of adultery and lewd and lascivious cohabitation. The court held that both the employer and the supervisor could be liable on such a claim.
Have a good weekend.
April 8: Florida Statutes §542.18 states that “Every contract, combination, or conspiracy in restraint of trade or commerce in this state is unlawful.” But the Florida rules have evolved over time to take a more permissive approach.
Florida Statutes §542.33 states:
(1) Notwithstanding other provisions of this chapter to the contrary, each contract by which any person is restrained from exercising a lawful profession, trade, or business of any kind, as provided by subsections (2) and (3) hereof, is to that extent valid, and all other contracts in restraint of trade are void.
(2)(a) One who sells the goodwill of a business, or any shareholder of a corporation selling or otherwise disposing of all of her or his shares in said corporation, may agree with the buyer, and one who is employed as an agent, independent contractor, or employee may agree with her or his employer, to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a reasonably limited time and area, so long as the buyer or any person deriving title to the goodwill from her or him, and so long as such employer, continues to carry on a like business therein. Said agreements may, in the discretion of a court of competent jurisdiction, be enforced by injunction. However, the court shall not enter an injunction contrary to the public health, safety, or welfare or in any case where the injunction enforces an unreasonable covenant not to compete or where there is no showing of irreparable injury. However, use of specific trade secrets, customer lists, or direct solicitation of existing customers shall be presumed to be an irreparable injury and may be specifically enjoined. In the event the seller of the goodwill of a business, or a shareholder selling or otherwise disposing of all her or his shares in a corporation breaches an agreement to refrain from carrying on or engaging in a similar business, irreparable injury shall be presumed.
(b) The licensee, or any person deriving title from the licensee, of the use of a trademark or service mark, and the business format or system identified by that trademark or service mark, may agree with the licensor to refrain from carrying on or engaging in a similar business and from soliciting old customers of such licensor within a reasonably limited time and area, so long as the licensor, or any person deriving title from the licensor, continues to carry on a like business therein. Said agreements may, in the discretion of a court of competent jurisdiction, be enforced by injunction…
And Florida Statutes §542.335 provides:
(1) Notwithstanding s. 542.18 and subsection (2), enforcement of contracts that restrict or prohibit competition during or after the term of restrictive covenants, so long as such contracts are reasonable in time, area, and line of business, is not prohibited. In any action concerning enforcement of a restrictive covenant:
(a) A court shall not enforce a restrictive covenant unless it is set forth in a writing signed by the person against whom enforcement is sought.
(b) The person seeking enforcement of a restrictive covenant shall plead and prove the existence of one or more legitimate business interests justifying the restrictive covenant. The term “legitimate business interest”includes, but is not limited to:
1. Trade secrets, as defined in s. 688.002(4).
2. Valuable confidential business or professional information that otherwise does not qualify as trade secrets.
3. Substantial relationships with specific prospective or existing customers, patients, or clients.
4. Customer, patient, or client goodwill associated with:
a. An ongoing business or professional practice, by way of trade name, trademark, service mark, or “trade dress”;
b. A specific geographic location; or
c. A specific marketing or trade area.
5. Extraordinary or specialized training.
Any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable.
(c) A person seeking enforcement of a restrictive covenant also shall plead and prove that the contractually specified restraint is reasonably necessary to protect the legitimate business interest or interests justifying the restriction. If a person seeking enforcement of the restrictive covenant establishes prima facie that the restraint is reasonably necessary, the person opposing enforcement has the burden of establishing that the contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest or interests. If a contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief reasonably necessary to protect such interest or interests.
(d) In determining the reasonableness in time of a postterm restrictive covenant not predicated upon the protection of trade secrets, a court shall apply the following rebuttable presumptions:
1. In the case of a restrictive covenant sought to be enforced against a former employee, agent, or independent contractor, and not associated with the sale of all or a part of:
a. The assets of a business or professional practice, or
b. The shares of a corporation, or
c. A partnership interest, or
d. A limited liability company membership, or
e. An equity interest, of any other type, in a business or professional practice,
a court shall presume reasonable in time any restraint 6 months or less in duration and shall presume unreasonable in time any restraint more than 2 years in duration.
2. In the case of a restrictive covenant sought to be enforced against a former distributor, dealer, franchisee, or licensee of a trademark or service mark and not associated with the sale of all or a part of:
a. The assets of a business or professional practice, or
b. The shares of a corporation, or
c. A partnership interest, or
d. A limited liability company membership, or
e. An equity interest, of any other type, in a business or professional practice,
a court shall presume reasonable in time any restraint 1 year or less in duration and shall presume unreasonable in time any restraint more than 3 years in duration.
3. In the case of a restrictive covenant sought to be enforced against the seller of all or a part of:
a. The assets of a business or professional practice, or
b. The shares of a corporation, or
c. A partnership interest, or
d. A limited liability company membership, or
e. An equity interest, of any other type, in a business or professional practice,
a court shall presume reasonable in time any restraint 3 years or less in duration and shall presume unreasonable in time any restraint more than 7 years in duration.
(e) In determining the reasonableness in time of a postterm restrictive covenant predicated upon the protection of trade secrets, a court shall presume reasonable in time any restraint of 5 years or less and shall presume unreasonable in time any restraint of more than 10 years. All such presumptions shall be rebuttable presumptions.
(f) The court shall not refuse enforcement of a restrictive covenant on the ground that the person seeking enforcement is a third-party beneficiary of such contract or is an assignee or successor to a party to such contract, provided:
1. In the case of a third-party beneficiary, the restrictive covenant expressly identified the person as a third-party beneficiary of the contract and expressly stated that the restrictive covenant was intended for the benefit of such person.
2. In the case of an assignee or successor, the restrictive covenant expressly authorized enforcement by a party’s assignee or successor.
(g) In determining the enforceability of a restrictive covenant, a court:
1. Shall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought.
2. May consider as a defense the fact that the person seeking enforcement no longer continues in business in the area or line of business that is the subject of the action to enforce the restrictive covenant only if such discontinuance of business is not the result of a violation of the restriction.
3. Shall consider all other pertinent legal and equitable defenses.
4. Shall consider the effect of enforcement upon the public health, safety, and welfare.
(h) A court shall construe a restrictive covenant in favor of providing reasonable protection to all legitimate business interests established by the person seeking enforcement. A court shall not employ any rule of contract construction that requires the court to construe a restrictive covenant narrowly, against the restraint, or against the drafter of the contract.
(i) No court may refuse enforcement of an otherwise enforceable restrictive covenant on the ground that the contract violates public policy unless such public policy is articulated specifically by the court and the court finds that the specified public policy requirements substantially outweigh the need to protect the legitimate business interest or interests established by the person seeking enforcement of the restraint.
(j) A court shall enforce a restrictive covenant by any appropriate and effective remedy, including, but not limited to, temporary and permanent injunctions. The violation of an enforceable restrictive covenant creates a presumption of irreparable injury to the person seeking enforcement of a restrictive covenant. No temporary injunction shall be entered unless the person seeking enforcement of a restrictive covenant gives a proper bond, and the court shall not enforce any contractual provision waiving the requirement of an injunction bond or limiting the amount of such bond.
(k) In the absence of a contractual provision authorizing an award of attorney’s fees and costs to the prevailing party, a court may award attorney’s fees and costs to the prevailing party in any action seeking enforcement of, or challenging the enforceability of, a restrictive covenant. A court shall not enforce any contractual provision limiting the court’s authority under this section.
(2) Nothing in this section shall be construed or interpreted to legalize or make enforceable any restraint of trade or commerce otherwise illegal or unenforceable under the laws of the United States or of this state.
April 10: NPR has a story today on undocumented construction workers in Texas (relevant to the Coma Corp. case we discussed this week). The NPR piece is based on a more detailed report by the Workers Defense Project (you’re not required to read this). In addition to noting the dangers of working construction in Texas the article addresses the issue of the extent to which undocumented workers will seek redress if employers deny them their pay:
Just how cheap is the cheap labor in Texas? Sometimes, it’s free. Guillermo Perez, 41, is undocumented and has been working commercial construction jobs in Austin for 13 years.
“[The employer] said he didn’t have the money to pay me and he owed me $1,200,” Perez says of one job. “I told him that I’m going to the Texas Workforce Commission, which I did. Then after that, he came back two weeks later and paid me.”
Perez is brave. Undocumented workers are usually too afraid to complain to Texas authorities, even when they go home with empty pockets. And they almost never talk to reporters.
WEEK 11: April 1-5
Dean’s Fellow sessions will be held at their regularly scheduled times this week, notwithstanding Professor Sundby’s make-up class this Wednesday, April 3rd, at 2pm. For those of you in Professor Sundby’s class who normally attend the Wednesday sessions, please attend the Monday evening Dean’s Fellow session in Room E352 at 5pm.
This week my aim is to get to page 490. For Monday please read to p. 436, for Tuesday to p. 464 and for Thursday to p. 490. On Monday we will begin with the question I asked at the end of Thursday’s class: would focusing on the idea of good faith during contract negotiations be a better approach to the issues in Hoffmann v Red Owl than the promissory estoppel approach (see question/note 10 on CB p 394)?
In Florida the sale and lease of business opportunities are regulated by statute (the statute does not apply to franchises regulated under the FTC’s business opportunity rule.). The statute requires (§ 559.803) that the offeror of a business opportunity make disclosures to prospective purchasers which include the following language:
The State of Florida has not reviewed and does not approve, recommend, endorse, or sponsor any business opportunity. The information contained in this disclosure has not been verified by the state. If you have any questions about this investment, see an attorney before you sign a contract or agreement.
FL. Stats. § 559.811 provides:
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.
Does the requirement of writing exclude promissory estoppel?
Look at the Florida Statute of Frauds
In City of Orlando v West Orange Country Club (Fl. 5th DCA 2009) the West Orange Country Club tried to enforce rights to receive reclaimed water for no charge for 20 years. No contract was signed by the City:
Here, it is undisputed that Plaintiff seeks to enforce a contract that called for performance for more than a year, and which was not signed by or on behalf of either party which Plaintiff seeks to hold liable for performance. Therefore, the statute of frauds plainly bars enforcement of the contract. With respect to the trial court’s determination that the Defendants can be held liable for performance of the contract under an estoppel theory, the law is well-settled that “[t]he doctrine of promissory estoppel cannot be used to circumvent the statute of frauds.”
After discussing whether partial performance could help the Court said:
As explained in Collier, “If Florida is to move toward enforcing oral promises intended to be performed beyond one year, or towards compensating those who enter into such agreements, it is the proper function of the Florida Legislature to announce that public policy change, not the function of a district court of appeal.”
Here’s some more 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.
And, 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.
Florida Statutes § 448.102 provides:
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.
WEEK 10: March 25-29 On Monday we will begin with a brief discussion of consideration and please read to page 331. For Tuesday please read to page 395 and for Thursday to page 417.
Update: I should have reminded you that we are not reading pages 345-365.
Here is an example of a Statute of Frauds case you may find interesting. In Jenack v Rabizadeh an auctioneer attempted to recover the $400,000 a participant in an auction agreed to pay for an antique Russian box. The purchaser said that the contract was unenforceable because of a lack of required written documentation for a contract for the sale of goods over $500. The New York General Obligations law has a provision relating to auctions which states:
Notwithstanding section 2-201 of the uniform commercial code, if the goods be sold at public auction, and the auctioneer at the time of the sale, enters in a sale book, a memorandum specifying the nature and price of the property sold, the terms of the sale, the name of the purchaser, and the name of the person on whose account the sale was made, such memorandum is equivalent in effect to a note of the contract or sale, subscribed by the party to be charged therewith”
On appeal the Court held that the failure to follow the requirements of the statute prevented the auctioneer from holding the purchaser to his promise as the documentation did not name the consignor, but referred to the consignor by a reference number:
To the extent that the requirement in General Obligations Law § 5-701 (a) (6) that the memorandum contain the name of, rather than an assigned number for, the “person on whose account the sale was made” may be at odds with the general industry practice, and may be burdensome to consignors or auction houses or both, a change in the law to eliminate that requirement may be warranted. However, consideration of the propriety of that change is not for the courts, but rests with the legislature.
In sum, since the defendant demonstrated, prima facie, that the memorandum failed to include “the name of the person on whose account the sale was made,” and since the plaintiff failed to raise a triable issue of fact in that regard, the Supreme Court should have granted the defendant’s motion for summary judgment dismissing the complaint, and, for the same reason, should have denied the plaintiff’s cross motion for summary judgment on the issue of liability.
Note on franchise investment: Here is a link to information on becoming a Subway franchisee (and information about the investment required). Subway states:
The total investment can range from $114,800 to $258,300 for traditional locations and $84,300 to $200,100 for non-traditional locations. This includes your franchise fee, construction and equipment costs as well as operating capital. Figures do not include extensive exterior renovations. These amounts represent the net investment required if you are eligible for the company’s equipment leasing program. If you do not select the equipment leasing program or it is not available, you should substitute the costs for Equipment Lease Security Deposit with $49,500 to $72,000. We suggest that franchisees have half of the amount in cash and finance the other half. We prefer that a franchisee does not carry a large debt service.
and
… We do not furnish or authorize our employees, salespeople, or Development Agents to furnish any oral or written information concerning the actual or potential sales. Actual results vary from restaurant to restaurant and we cannot estimate the results of any particular franchise. We encourage you to call SUBWAY® restaurant owners from the Franchise Disclosure Document to learn firsthand why they decided to acquire additional franchises.
WEEK 9: March 18-22 I hope you are all enjoying Spring Break. I said I would provide links to last Fall’s midterm exam: Contracts Midterm (2011) (Memo on the Fall 2011 Contracts Midterm). The Memo should be most helpful if you read it after trying to answer the test. I am happy to answer questions about this.
Next week we will begin with Balfour v Balfour. Please read to page 280 for Monday, 294 for Tuesday and 315 for Thursday. If you are reading ahead remember that we will not be reading pages 345-365.
Note: The outline syllabus said we would not be having class on March 21, but the conference I was going to that day was cancelled. So we are having class on Thursday this week – which saves us having to make up the class at some other time.
March 18th: 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. It has not yet been enacted anywhere although it has been introduced in Colorado, Nevada and North Dakota. The Act Summary states:
The general approach of this act is that parties should be free, within broad limits, to choose the financial terms of their marriage. This act chooses to treat premarital agreements and marital agreements under the same set of principles and requirements. The limits are those of due process in formation, on the one hand, and certain minimal standards of substantive fairness, on the other. Because a significant minority of states authorize some form of fairness review based on the parties’ circumstances at the time the agreement is to be enforced, states can choose to insert an option refusing enforcement based on a finding of substantial hardship at the time of enforcement. And because some states put the burden of proof on the party seeking enforcement of some or all of these sorts of agreements, the act also presents alternative language to reflect that burden of proof….. Section 6 declares that both premarital agreements and marital agreements are enforceable without consideration. This may depart from the existing law for marital agreements in some states, but it reflects the modern approach that the concerns generally policed indirectly by a consideration requirement are better policed directly through procedural requirements and tests of unconscionability.
WEEK 7: March 4-8 On Monday we will go over the review problems on pages 224-8. For Tuesday please read to page 246 and for Thursday to page 258.
Update Saturday 6.30 pm: There will be a Dean’s Fellow session on Monday at 9:30am in Room F200.
Have a good weekend.
The Pepsi commercial:
Comment: Frank LoGrippo – March 7, 2013 In the spirit of today’s class discussion. Here is some food for thought from USA Today. A lawsuit alleging breach of contract and fraudulent misrepresentation for a “joke”that ended a contest with a play on words.
http://usatoday30.usatoday.com/news/nation/2002/05/09/toy-yoda.htm
WEEK 6: February 25-March 1 On Monday we will begin with the Plante v Jacobs questions on pages 173-4 and please also prepare to page 187. For Tuesday read to page 210 and for Thursday to page 224. Please also look over the review problems on pages 224-228, although I think it is likely we won’t get to these until the following week.
WEEK 5: February 18-22, 2013 On Monday we will begin with the issue of contract damages and 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.
A recent article, 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
For Monday please also read to page 155. Then read to page 172 for Tuesday and 195 for Thursday.
Have a good weekend.
WEEK 4: February 11-15, 2013
For Monday next week please read to page 107, for Tuesday to page 119 and for Thursday to page 148.
With respect to specific performance, the Casebook suggests that specific performance is the normal remedy in civil law countries in contrast to the situation in the US where traditionally it has been an extraordinary remedy. However, a 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 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))
February 12: Liquidated Damages Question
WEEK 3: February 4-8, 2013
There will be no class on Thursday next week. On Monday we will begin with Neri. I said in class that we would focus on the numbers in the case. The Court says that Neri should receive $4250 less $3253 or $997. But in this calculation the Court seems to be ignoring the $500 that Retail Marine is allowed under UCC §2-718(2). There’s an argument Neri should only receive $447. Reading §§ 2-708 and 2-718, is it clear how they fit together? Please also read Worldcom for Monday. For Tuesday please read to CB page 107 (we may not get this far….).
Some of you have asked me about UCC Art. 2 and the exam. Towards the end of the semester I will provide you with a list of the UCC provisions and Restatement provisions you should be responsible for for the purposes of the exam. You can see the list from the last time I taught this course here. It is a good idea to read the UCC provisions carefully a number of times as we study them. If I expect you to address specific wording of a UCC provision on the exam I will provide it (see, e.g., here (although it’s really too early to be looking at exams)).
Dean’s Fellow Sessions with Freddi Mack: Mondays 5:00-5:50pm in Room E352, Wednesdays from 2:00-2:50pm in Room F209. Please note that on Monday February 4th there will be no session because Geoffrey Stone will be delivering the John Hart Ely lecture on “The Supreme Court & Conservative Judicial Activism” at that time in E352.
February 3rd: Margaret Jane Radin a law professor and author of a recent book, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law, has written an Op_ed in the LA Times that addresses the issues raised by contracts like some of the ones we have read. She writes:
When businesses deploy boilerplate this way, it doesn’t just undermine our individual rights; it undermines democracy. Our legislative representatives engage in political debate and work out compromises. They are supposed to listen to us, their constituents, and we can “vote ’em out” if we don’t like what they do. But when what the legislature has enacted can be deleted by the simple expedient of boilerplate, all of that is made into playacting. Moreover, well-funded interests that participate in the legislative arena may agree to compromises with their fingers crossed, knowing their “concessions” can be rescinded with boilerplate.
What is to be done? First, it’s important to demand that legislatures, if they have granted a right to consumers, also make it explicitly non-waivable. Judges should find a way to take account of the fact that even though there is only one consumer against the firm before the court, massive numbers of people are having their rights deleted. As long as courts treat boilerplate as a contract – a single “deal” between two parties – it is hard to take account of the widespread effects.
Meanwhile, the next time you’re confronted with “terms and conditions” that seek to take away your right to redress, delete and initial the clause before you sign the form. If the business continues to serve you, a court might consider that it accepted your amendment. Besides, you will at least have lodged a protest. If enough of us do it, firms that want our patronage may change their forms. (Or their competitors may.)
Unfortunately, deleting the clause doesn’t work when you are required to click “I agree” online. But you can use and support online warning systems for lurking bad clauses (see the site Terms of Service; Didn’t Read).
Note with respect to the discussion of question 4 on CB page 50. In Peace River Seed Cooperative v. Proseeds Marketing (253 Ore. App. 704 (2012)) the Court of Appeals of Oregon wrote:
In the absence of a restriction within the UCC that precludes an aggrieved seller from seeking its remedy pursuant to [UCC §2-708] if the seller has resold, we would decline to impose such a restriction.
And there’s a footnote:
As part of its analysis, Proseeds refers to a discussion found in James J. White and Robert S. Summers, Uniform Commercial Code 223 (1972), in which the authors state that whether the drafters of the UCC “intended a seller who has resold to recover more in damages under 2-708(1) than he could under 2-706 is not clear” but conclude that “he should not be permitted to” do so. We note that other states have come down on both sides of the issue….
In their discussion, White and Summers “admit we are swimming upstream against a heavy current of implication which flows from the comments and the Code history.”…However, they rely on section 1-106, which they characterize as stating “that Code remedies are to put the aggrieved party in as good a position as performance would have, but no better.” The policy regarding remedies set forth in the UCC is that the “remedies provided by the Uniform Commercial Code must be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed.” … In our view, the text of the statutory sections, together with the relevant comments, demonstrates the intent to permit an aggrieved seller to choose to seek damages under [UCC §2-708] even where it has resold.
Here is a Note on Neri which outlines what we discussed today. I hope it helps!
WEEK 2: January 28-31, 2013
On Monday January 28 we will discuss the Physician-Patient Arbitration Agreement. For Monday please also read to page 50 and prepare to discuss the questions on pp 46-48 and 50 (NB. look at UCC § 1-103 and the reference to Judge Posner’s comments on page 38). For Tuesday please read to page 64 and for Thursday to page 89.
Monday Jan 28th: The Legal Geeks discussed Firefly & Lessons in Contract Law in September.
Dean’s Fellow Sessions with Freddi Mack: Mondays 5:00-5:50pm in Room E352, Wednesdays from 2:00-2:50pm in Room F209. Please note that on Monday February 4th there will be no session because Geoffrey Stone will be delivering the John Hart Ely lecture on “The Supreme Court & Conservative Judicial Activism” at that time in E352
First class assignment, for Tuesday January 22, 2013 (please complete all 3 parts of the assignment before the beginning of class, although discussion of no. 2 will likely take us into Thursday’s class):
1. The Treadmill Problem
We will begin the semester by studying issues relating to remedies. Before we read any cases, we will consider the set of events described in the following blog posts. The posts describe a consumer’s interaction with Sears relating to an attempt to get delivery of a functional treadmill. Please read the following posts:
Why I Do Not Have A Treadmill (Sears Can’t Deliver)
Monday Treadmill Update
Tuesday Sears Update: Important Information About Your Treadmill
On the Treadmill Treadmill
Sears Treadmill Saga Notes
Sears Feels the Power of the Press
The Grand Finale (Probably)
Then think about the following questions:
i. have you had consumer experiences like this? experiences like this from the perspective of the seller?
ii. what do you think the proper resolution of this issue should have been, and why?
iii. what does the story tell us about contracts? about contract law?
iv. is law relevant to this story?
2. Please 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?
c. Do the first 29 pages of the casebook explain why we began the course by reading about the Treadmill Problem, rather than by reading a case?
3. Before the beginning of class on January 22 please send an email to my assistant, Adoracion Carrillo, at acarrillo@law.miami.edu with the subject line “Bradley Contracts Class” describing two facts you would like me to know about you.
Comment: Tera Bias – January 12, 2013: My part-time job a few years ago was with Sears in the electronics department. This sort of stuff happens all the time. It’s to the point where we as sales staff didn’t relay on Sears.com
Added Jan 21, 2013:Contracts Class Policies Spring 2013
For Thursday January 24, please read:
facebook Statement of Rights and Responsibilities
University of Miami School of Law Student Handbook and Honor Code 2012-13
Physician-Patient Arbitration Agreement
What effect do you think these documents have on the rights and obligations of the parties? What effects do you think the documents are designed to produce? Are the documents designed to produce legal effects, or are they designed to affect behavior apart from enforcement by the courts?
NB: Here is a link to Florida UCC Art. 2