ContractsProf Blog

Here's a Nice Case to Use to Review Contract Formation, Conditions Precedent, and Promissory Estoppel

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As we reach the end of the semester, I keep trying to remind my students of what we learned at the beginning of the semester, which was only a few weeks ago but feels like several lifetimes ago. As we turn our attention to our last topic of third-party rights, I don't want the students to forget the basics of contract formation. I want them to realize that contracts law builds on itself and is self-referential and so they can't just forget about the stuff that came first. 

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Anyway, I say all of that to lead into this nice recent case out of the Eastern District of Pennsylvania, Killian v. Ricchetti, Civil Action No. 16-2874, that deals with issues of contract formation, and then turns to promissory estoppel. Exactly as I keep trying to remind my students to do! So I couldn't resist writing this case up for the blog. It serves as a nice review of a lot of what we've learned and I think I may actually use it in class. 

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The alleged contract was a series of e-mails exchanged between two friends. The first e-mail set out a bunch of terms and ended with "there are more little details...it's a start." The response to the e-mail added a few additional terms. This, the court found, did not form a contract, because the response was not an acceptance but rather a counteroffer, due to the fact that it added terms. There was never any reply to that particular e-mail, so the counteroffer was never accepted. 

After these initial e-mails, there were further e-mails between the two regarding the real estate transactions at the heart of the alleged agreement. Those e-mails were enough to form a contract as follows: The first e-mail read, "[W]hen the Pine [Street property] is clear title we form an LLC with an equal partnership of 50% . . . ." with some further details given. The reply to the e-mail was "OF COURSE," which constituted an acceptance. However, there was a condition precedent to this contract: that the parties receive clear title on the Pine Street property in question. Due to no fault of the parties themselves, they never received this clear title, so the condition precedent never occurred, so no duties to perform under the contract ever arose. 

The court then turns to the promissory estoppel question, though. The court found here there were genuine issues of material fact whether there was a promise made and whether the other party acted in reliance on that promise. Similar issues of material fact existed for the unjust enrichment and qunatium meruit claims. Therefore, although the court granted summary judgment on the breach of contract claims, it denied summary judgment on the remaining claims. 

Public outrage suspends the repayment of soldiers' bonuses.

            As we enter the week of Veteran’s Day, we should be thinking about the thousands of men, women, and families who sacrifice their lives to protect our county. Yet, what is the pentagon focusing on? Hunting down soldiers to make them payback bonuses they improperly received in 2006 to 2008 due to no fault of their own.   It wasn’t until the public outrage after the Los Angeles Times reported about the 9,700 California Guard members who were being forced to repay these bonuses that the Pentagon halted their efforts for further examination.

            These bonuses were given at the height of the Iraq war and were often distributed in the form of recruitment bonuses or student loan payments, many of which exceeded $15,000.   Many of the recipients of these bonuses served multiple tours in Iraq and Afghanistan, some who whom returned home badly wounded. Two thousand of these soldiers have been forced to repay their bonuses, and prior to the suspension, the Pentagon was going after the bonuses of another 7,700 soldiers due to paperwork errors, inadequate documentation, or other logistical problems. Consequently, many of these soldiers were having their paychecks garnished, were having to refinance their mortgages, or having to take other drastic steps to retain this money. These soldiers are also facing tax liens and harm to their credit scores because of debt collection actions. Yet, the problems don’t end there.

            While soldiers do have an appeals process available, the process is slow and the garnishment and financial demands are hitting these military families before the appeal process can be completed. The most troubling part is that the California National Guard informed Congress about this problem in 2014, yet no action was taken. Instead, it took a newspaper article raising these issues for Obama to step in and mandate the suspension of the repayment effort until more information can be gathered.

            The Pentagon rests on the notion that they owe a duty to the taxpayer, which I do not argue against. BUT, there should be a difference between people who accept a bonus KNOWING they should not have received it, and a soldier who accepts a bonus in good faith, carries out their duty, and then because of paper work is now being put in financial stress because of something entirely out of their control.

            The Pentagon is now reviewing each case “on its own merits” to determine criteria as to who should have to pay back their bonuses, or how much should be paid/forgiven. Really? Now they implement this procedure? This seems a little too late. Examining each case individually should be something done prior to going after someone’s financial livelihood – especially the soldiers of our county. For as Veteran’s Day approaches, perhaps we need to remember exactly what it means to be a veteran, and instead of turning the lives of these veterans upside down, the Pentagon should work to make these men and women – who acted in good faith – whole again and not force them into financial ruin.

New Contract Formation publication from Oxford Press

Second Edition

Michael Furmston and Gregory Tolhurst

• The most detailed work available on contract formation
• Provides practical insight into planning and drafting letters of intent, heads of agreement and similar pre-contractual documents
• Considers drafting devices available to avoid being legally bound
• Advises on the practical problems that may arise in the formation process and how to avoid these
• Incorporates discussion of cases from England, Australia, Canada, the USA, Singapore and New Zealand

Liberty Mutual's Ad Campaign Is a Call for Clearer Contracts

I was struck by this ad that Liberty Mutual Insurance is now running: 

Because what it boils down to is a call for greater clarity in contracts so that they can be more easily understood by consumers. (I appreciate the lawyer shout-out but not even all lawyers read all 22 pages!) But, in the midst of trying to simplify things, the small print on the commercial takes care to explain that "Not all of your coverages are shown in Coverage Compass(TM). For complete explanation of your coverages, please consult your Liberty Mutual sales representative and your policy" (emphasis added). You can try to streamline things, but there's no avoiding that 22-page policy in the end!

20% off new title from Hart Publishing

To order with your discount visit www.hartpub.co.uk and use the code CV7 at the checkout

 

 

Policyholder's Reasonable Expectations

Yong Qiang Han

Over the past two decades, protecting contractual parties’ reasonable expectations has incrementally gained judicial recognition in English contract law. In contrast, however, the similar ‘doctrine’ of ‘policyholder’s reasonable expectations’ has been largely rejected in English insurance law. This is injurious, firstly, to both the consumer and business policyholder’s reasonable expectations of coverage of particular risks, and, secondly, to consumer policyholder’s reasonable expectations of bonuses in with-profits life insurance. To remedy these problems, this book argues for an incremental but definite acceptance of the conception of policyholder’s reasonable expectations in English insurance law. It firstly discusses the homogeneity between insurance law and contract law, as well as the role of (reasonable) expectations and their relevance to the emerging duty of good faith in contract law. Secondly, following a review and re-characterisation of the American insurance law ‘doctrine’ of reasonable expectations, the book addresses the conventional English objections to the reasonable expectations approach in insurance law. In passing, it also rethinks the approach to the protection of policyholder’s reasonable expectations of bonuses in with-profits life insurance through a revisit to the (in)famous case Equitable Life Assurance Society v Hyman [2000] UKHL 39, particularly to its relevant business and regulatory background.

Yong Qiang Han is a post-doctoral Research Fellow at the Centre for Banking and Finance Law, Faculty of Law, of the National University of Singapore.

November 2016 |   9781509900763 |   280pp |   Hardback |   RSP: £70  

Discount Price: £56

Weekly Top Ten SSRN Contracts Downloads (November 3, 2016)

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	273	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
2	265	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
3	245	Inside Safe Assets Anna Gelpern and Erik F. Gerding Georgetown University Law Center and University of Colorado Law School
4	188	Online RPM and MFN Under Antitrust Law and Economics Pinar Akman and D. Daniel Sokol University of Leeds and University of Florida - Levin College of Law
5	158	Is Privacy Policy Language Irrelevant to Consumers? Lior Strahilevitz and Matthew B. Kugler University of Chicago Law School and Northwestern University - Pritzker School of Law
6	156	The Reform of the French Law of Obligations: Les Jeux Sont Faits Jan M. Smits and Caroline Calomme Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI) and Maastricht European Private Law Institute (M-EPLI)
7	154	Tort Reform through the Backdoor: A Critique of Law & Apologies Yonathan A. Arbel and Yotam Kaplan Harvard Law School and Hebrew University of Jerusalem
8	142	Optimal Fee-Shifting Bylaws Albert H. Choi University of Virginia School of Law
9	134	Engineering Humans with Contracts Brett M. Frischmann and Evan Selinger Yeshiva University - Benjamin N. Cardozo School of Law and Rochester Institute of Technology - Department of Philosophy
10	120	'All the World's a Stage': The Seven Ages of Unjust Enrichment Graham Virgo University of Cambridge - Faculty of Law

 

SSRN Top Downloads For
Law & Society: Private Law - Contracts eJournal

Rank	Downloads	Paper Title
1	273	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
2	265	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
3	156	The Reform of the French Law of Obligations: Les Jeux Sont Faits Jan M. Smits and Caroline Calomme Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI) and Maastricht European Private Law Institute (M-EPLI)
4	142	Optimal Fee-Shifting Bylaws Albert H. Choi University of Virginia School of Law
5	124	Signing Without Reading Gerrit De Geest Washington University in Saint Louis - School of Law
6	120	'All the World's a Stage': The Seven Ages of Unjust Enrichment Graham Virgo University of Cambridge - Faculty of Law
7	106	The Expanding Circle of Contract Law Jan M. Smits Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
8	102	Crowdfunding Investment Contracts Jack Wroldsen Oklahoma State University Spears School of Business
9	98	The Illiberty of Contract Donald J. Smythe California Western School of Law
10	78	Promissory Estoppel and the Origins of Contract Law Eric Alden Northern Kentucky University, Chase College of Law

A Student Plagiarism Contract Case

Thanks to InsideHigherEd, I became aware of this recent case out of the First Circuit, Walker v. President and Fellows of Harvard College, No. 15-1154, and seeing as it involved JOLT, the Harvard Journal of Law and Technology that I was an executive editor of when I was in law school there, I couldn't resist digging into the case. 

And I'm glad I did, because it's a really interesting case about the lingering effect of honor code violations and the wording of school academic policies. 

The plaintiff graduated from Harvard Law School in 2009. During her time at Harvard, she was a member of JOLT. In that capacity, she drafted a student note. However, when she sent the note to senior editors at JOLT, they became concerned about plagiarism issues and referred the note to the HLS Administrative Board. The Board concluded that the plaintiff's note contained plagiarism that violated the school's Handbook of Academic Policies and a notation was placed on her transcript. The plaintiff still graduated from HLS but had a "lucrative" offer of employment withdrawn after the notation was placed on her transcript. So the plaintiff sued to have the notation on her transcript removed. HLS won summary judgment at the district court level and this appeal followed. 

The court affirmed the judgment of the district court. The parties agreed that the Student Handbook constituted a contract between the plaintiff and HLS. (The court noted that this was not actually obvious under Massachusetts law but that it would treat the handbook as a contract because the parties did not dispute it.) Therefore, the court focused its review on whether the plaintiff's behavior violated the stated plagiarism policy in a way that the plaintiff should have reasonably expected.

The Handbook stated: "All work submitted by a student for any academic or non-academic exercise is expected to be the student's own work." The plaintiff's main argument was that the student note she sent to the JOLT editors was just a draft that she planned to edit in the future, and the Handbook policy should be read as only applying to completed work that was not expected to undergo further editing. The court disagreed, however. The wording of the Handbook was extremely broad, referring to "all work." A student in the plaintiff's position should reasonably have expected that any student note submitted to the editors, whether a draft or in final form, would be held to the standards of the policy. Nothing about "all work" would make a student think that drafts were omitted from the definition, according to the court. 

A Tale of a University and a Football Coach

A recent case out of the Western District of Pennsylvania, Douglas v. University of Pittsburgh, Civil Action No. 15-938 (behind paywall), found that there were factual disputes precluding summary judgment regarding whether or not a contract was in place between the plaintiff, an assistant football coach, and the University. 

The plaintiff alleged that he was orally told by Pittsburgh's head football coach when he was offered the job that it would be a two-year-contract with $225,000 in the first year and $240,000 in the second year, with other perks. The plaintiff accepted the terms and began the job immediately upon receiving this alleged oral offer from the head coach. 

A little more than a week later, the plaintiff received a proposed Employment Contract. The contract had his second-year salary as $235,000 instead of $240,000 and also stated that the University could terminate the plaintiff's employment if the head coach left the school. The plaintiff had concerns about these clauses and other parts of the contract and brought these concerns to the head coach, who allegedly told the plaintiff that he would take care of the issues. 

A few months later, the plaintiff moved his wife and children to join him in Pittsburgh. Over the course of the next few months, the plaintiff claims to have periodically raised the issue that he had never signed a contract and was allegedly told by various people not to worry about it. 

Less than a year after the plaintiff started the assistant coach job, the head coach left Pittsburgh to take a job at the University of Wisconsin. Pittsburgh then subsequently terminated the plaintiff and all of the other assistant football coaches. The University informed the plaintiff that, because he had never signed the Employment Contract, he was an "at-will" employee. The plaintiff, in the wake of losing his job, took a job at Florida State for $40,000 per year, necessitating more moving costs. 

Not happy about how this all played out, the plaintiff sued the University of Pittsburgh. The plaintiff's allegation was that he was orally offered a contract for two years of employment that he accepted, and that the University breached that oral contract. The University responded that the conversation between the plaintiff and the head coach on which the plaintiff pins his hopes did not have enough essential terms to be considered a contract and that the essential terms were in the Employment Contract. Although the plaintiff refused to sign that written contract, the University maintained that he accepted the terms of the written contract when he continued to work for the University. The plaintiff, however, argued that the head coach's offer of employment was specific enough, giving job duties, term, and salary, to constitute a binding contract between the parties, and the plaintiff stated that he resigned from his job and moved his family in reliance on this. 

The University moved for summary judgment but the court found that there was enough evidence that a jury could conclude that the plaintiff and the University had agreed to enough essential terms to form a contract. However, the court dismissed the plaintiff's claims for fraud in the inducement and negligent misrepresentation as merely duplicating the surviving breach of contract claim. I'll keep you posted on what happens!

Law360 has an article about the filing of this lawsuit here. 

 

Auto Leases and Contract Defenses

The New York Times ran this article today about car leases and how difficult it is to get out of them.  The article discusses one auto lessee who found that she had a medical condition that prevented her from driving.  When she tried to get out of her lease with Ford, she was told that there was no way that she could escape her obligations unless she joined the military or died.

Which brings me to contract defenses.  It would seem that being informed of a rare medical condition that prevents you from driving would constitute a classic changed circumstances situation that would allow a successful frustration of purpose defense.  But alas, most car leases allocate the risk of these unlikely events onto the consumer. In other words, although this specific medical condition may have been unforeseeable, the contract probably shifts the risk onto the consumer of all events which would prevent the consumer from making payments or from driving. 

Just another example of the interplay between contract clauses and doctrine.

 

 

 

 

 

 

 

 

 

Weekly Top Ten SSRN Contracts Downloads (October 27, 2016)

SSRN Top Downloads For
Contracts & Commercial Law eJournal

Rank	Downloads	Paper Title
1	374	Choice of Forum Agreements Under the Brussels I Recast and Under the Hague Convention: Coherences and Clashes Matthias Weller EBS Universität für Wirtschaft und Recht
2	285	The Myth of Free John M. Newman University of Memphis - Cecil C. Humphreys School of Law
3	240	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
4	240	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
5	235	Inside Safe Assets Anna Gelpern and Erik F. Gerding Georgetown University Law Center and University of Colorado Law School
6	172	Online RPM and MFN Under Antitrust Law and Economics Pinar Akman and D. Daniel Sokol University of Leeds and University of Florida - Levin College of Law
7	136	The Reform of the French Law of Obligations: Les Jeux Sont Faits Jan M. Smits and Caroline Calomme Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI) and Maastricht European Private Law Institute (M-EPLI)
8	133	Tort Reform through the Backdoor: A Critique of Law & Apologies Yonathan A. Arbel and Yotam Kaplan Harvard Law School and Hebrew University of Jerusalem
9	126	Engineering Humans with Contracts Brett M. Frischmann and Evan Selinger Yeshiva University - Benjamin N. Cardozo School of Law and Rochester Institute of Technology - Department of Philosophy
10	150	Is Privacy Policy Language Irrelevant to Consumers? Lior Strahilevitz and Matthew B. Kugler University of Chicago Law School and Northwestern University - Pritzker School of Law

 

SSRN Top Downloads For
Law & Society: Private Law - Contracts eJournal

Rank	Downloads	Paper Title
1	374	Choice of Forum Agreements Under the Brussels I Recast and Under the Hague Convention: Coherences and Clashes Matthias Weller EBS Universität für Wirtschaft und Recht
2	285	The Myth of Free John M. Newman University of Memphis - Cecil C. Humphreys School of Law
3	240	The Law of Smart Contracts Max Raskin New York University (NYU), School of Law
4	240	The Role of the State in Contract Law: The Common-Civil Law Divide Mariana Pargendler Fundação Getulio Vargas Law School at São Paulo
5	136	The Reform of the French Law of Obligations: Les Jeux Sont Faits Jan M. Smits and Caroline Calomme Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI) and Maastricht European Private Law Institute (M-EPLI)
6	125	Optimal Fee-Shifting Bylaws Albert H. Choi University of Virginia School of Law
7	121	Evolution or Intelligent Design? The Variation in Pari Passu Clauses Stephen J. Choi, G. Mitu Gulati and Robert E. Scott New York University School of Law, Duke University School of Law and Columbia University - Law School
8	111	'All the World's a Stage': The Seven Ages of Unjust Enrichment Graham Virgo University of Cambridge - Faculty of Law
9	104	The Expanding Circle of Contract Law Jan M. Smits Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
10	100	Signing Without Reading Gerrit De Geest Washington University in Saint Louis - School of Law

Scholarship Spotlight: "Trust and Enforcement in Banking, Bitcoin, and the Blockchain" (Catherine Christopher - Texas Tech)

 

Bitcoin and other alternative currencies have been of particular interest in the contracts scholarly community for many reasons, including the potential elimination of intermediaries in electronic financial transactions and also the possibility of self-enforcing "smart contracts." In both cases, the major touted feature of the blockchain technology underlying bitcoin is that it allows for transactions to be "trustless." Catherine (Cassie) Christopher (Texas Tech) suggests in a new article, however, that the purported lack of need for trust is overblown and that intermediaries still have an important role to play.

Here is Professor Christopher's abstract:

Bitcoin has long been touted as a currency and a payment system that relies on cryptography and mathematics rather than trust. But is Bitcoin really trustless? And if so, would that be a good thing? This article under-takes a critical deconstruction of Bitcoin and the blockchain, their themes of democracy and transparency, and the idea that they are trustless. The article then proposes a new conceptualization of the role of trust in business and contracting: the bridging model, which allows for a more nuanced understanding of the interplay between enforcement and trust in contract formation. The bridging model is applied first to traditional banking, to illustrate and analyze the enforcement mechanisms underpinning the U.S. dollar as currency and the banking system as a whole, and to demonstrate that the enforcement mechanisms (government backing and regulation) are not as robust as generally believed. The bridging model is then applied to Bitcoin, to show not only that the system requires more trust than is generally understood, but also that both currency and payment systems benefit from the involvement of trusted intermediaries in response to problems and crises.

"The Bridging Model: Exploring the Roles of Trust and Enforcement in Banking, Bitcoin, and the Blockchain" is published in the Nevada Law Review at 17 Nev. L. Rev. 1 (2016), and is available for SSRN download here.

Judicial Disagreement Over Contract Ambiguity: When Are Things OBVIOUS?

We've been talking about contract interpretation in my Contracts class lately and I'm always struck by how many cases involve a lower court ruling of ambiguity and then an appellate court reversal of that ruling, because it always strikes me as such a funny thing. The very definition of ambiguity would seem to be "multiple people disagreeing on the meaning of the word," but the appellate court decisions in those cases necessarily have to dismiss the reasonableness of the lower court's understanding of the meaning in order to assert that the meaning is SO OBVIOUS. This always makes these cases feel a little more...condescending? Than the typical reversal. Like, "We don't know what you were so confused about, lower court, this is OBVIOUS." 

A recent case out of California, Borgwat v. Shasta Union Elementary School District, No. C078692, is another example of this. The plaintiff, upon retiring from the defendant, was entitled to a monthly post-retirement contribution toward her "medical insurance coverage." For a couple of years, the defendant paid the contribution toward the plaintiff's dental and vision coverage. But then the defendant concluded that dental and vision insurance was not included in "medical insurance coverage" and ceased paying the contribution. This lawsuit resulted. 

The lower court found the phrase "medical insurance coverage" to be ambiguous and allowed extrinsic evidence to illuminate its definition, including the fact that the defendant had initially paid the plaintiff the contribution for a few years. Therefore, the lower court endorsed the plaintiff's interpretation that "medical insurance coverage" included dental and vision insurance. 

The appellate court here reversed, though, saying that "medical insurance coverage" was not an ambiguous term. The relevant section of the contract was Section 5.7 but the appellate court looked to Section 5.2, which dealt with benefits during the course of employment. In that section, the defendant had agreed to pay sums "toward the cost of medical, dental and vision benefit coverage." The fact that dental and vision were considered independent from medical insurance in Section 5.2 rendered the use of "medical insurance" in Section 5.7 unambiguous: It can't include dental and vision insurance, because the parties in Section 5.2 revealed that they didn't understand medical to include dental and vision insurance when they felt it necessary to list all three. For this reason, the appellate court refused to allow any extrinsic evidence, because the defendant's mistake in paying for the dental and vision insurance could not change the unambiguous terms of the contract. 

So there you have it. OBVIOUSLY. :-)

New 'Comparative Law In Practice' publication offered at discounted rate

‘Comparative Law in Practice’ By Duncan Fairgrieve

We are pleased to offer you 20% discount on the book!

RSP: £70

Discount Price: £56

To order with your discount visit www.hartpub.co.uk and use the code CV7 at the checkout

Comparative Law in Practice Contract Law in a Mid-Channel Jurisdiction Duncan Fairgrieve This book provides a comparative study of contract law, examining the interaction of common law and civil law approaches to contract law. Drawing extensively upon English, French and European law, the book explores how the law of contract of Jersey, Channel Islands, has been influenced by both civil law and common law sources. It is argued that this jurisdiction is a striking example of comparative law in action, given that Jersey contract law is made up of a blend of common law and civil law approaches. Jersey law is premised upon a subjective approach to contracts, in which civil law concepts such as cause (rather than consideration) and vices de consentement are the foundational aspects, but is nonetheless highly influenced by the common law in areas such as remedies (damages, termination, etc).

The book analyses a series of key issues from a comparative and European perspective, including the principles underlying contract law (comparing and contrasting civil and common law approaches), the formation of contract, requirements of reciprocity (cause vs consideration), the structure and approach of precontractual liability, the role of good faith in a mixed system, the architecture of remedies, and more.

Duncan Fairgrieve is Senior Research Fellow in Comparative Law at the British Institute of International and Comparative Law and Professeur Associé at Université Paris Dauphine PSL, France. Oct 2016 9781782257219 208pp

Hbk RSP: £70

Discount Price: £56

Use discount code CV7 at the checkout to obtain your discount

Whistleblower lawsuit begins against Penn State in Sandusky case

            In 2011, when charges were first brought against assistant Penn State football coach, Jerry Sandusky, for sexually preying on children, fellow assistant coach Mike McQueary was consequently suspended with pay. However, after Sandusky was found guilty of abusing 10 boys in 2012, Penn State terminated McQueary’s $140,000-a-year-job because of what he believes was retaliation by the University for helping prosecutors. These allegations arose after claims that that prosecutors were purposely misled by high-ranking university administrators.

            In McQueary’s “whistleblower lawsuit,” he seeks more than $4 million in damages because he claims he can no longer find work as a football coach since he is now associated with being part of a cover-up. McQueary testified that he was even turned down for a job at RiteAid because of his association with Sandusky. He alleges that the University’s president defamed him personally on the day Sandusky was formally charged. McQueary, who personally witnessed Sandusky sexually assaulting a boy in the university’s locker room, reported the incident to the head coach a the time, Joe Paterno, and then later met with the university’s athletic director and vice-president.   Yet because McQueary never reported the allegations directly to the police, his conduct is also under investigation in a separate suit.

            In this case, we are therefore left with the question of whether the Penn State has adequate grounds to not renew McQueary’s contract. McQueary claims that the University knew about the abuse for almost eleven years, but failed to act on it. When two administrators were charged with perjury and failing to report suspected child abuse, McQueary stated knew his job was in trouble. The United States Supreme Court in Lawson v. FMR LLC, outlined the prohibition of retaliatory actions based on whistleblowing, including discharge, demotion, suspension, or discrimination. However, the Court limited its analysis federal contractors and those working within the financial markets. Yet should we extend the protections of this whistleblower rule if, in essence, the person did not take the appropriate steps to ensure that the improper actions were stopped? McQueary witnessed Sandusky’s abuse in 2001, but charges were not brought against him until 2009. Eight years went by. Eight years filled with approximately 45 more incidents of abuse.   Does eight years of no action warrant these types of monetary damages? Or, on the other hand, should someone be punished for not being able to find a job because they were simply guilty by association? McQueary reported the incident to many of his supervisors and were reassured they were going to take care of it. Should he be punished because of their apathy or decision to turn a blind eye? These are the questions that a jury of nine women and three men will have to decide at the end of this trial.

Nobel Prize for contracts research awarded to Harvard and MIT professors

            The Royal Swedish Academy of Sciences announced that Oliver Hart and Bengt Holmstrom have been awarded the Nobel Prize in economics based on their understanding of how to best design contracts. Hart, a British professor at Harvard, and Holmstrom, a Finnish professor at MIT, have worked independently in the area of contract theory.

            Both Hart and Holmstrom have studied how contracts work, focusing specifically on the need for trade-offs when setting the terms of a contract. Holmstrom applied his analysis to insurance contracts and performance pay. His work proposed that performance-based pay should be closely linked to managerial performance. Yet, if it is difficult to measure performance, then the pay package ought to be a fixed salary.

            Hart’s work analyzed instances where contracts were deemed incomplete because not all of the outcomes could be specified. In these cases, Hart suggested that the rights to make a decision becomes critical to the parties because decision rights are closely associated to ownership rights. Hart’s work is therefore could impact the day-to-day operations of businesses as people may learn how to contract to increase their decision-making power. According to the Academy, both Hart and Holmstrom “have helped us understand many of the contracts we observe in real life. They have also given us new ways of thinking about how contracts should be designed, both in private markets and in the realm of public policy.”

Upcoming Symposium: Divergence and Reform in the Common Law of Contracts (November 19, 2016)

From the symposium website, which you can also access here:

 

 

Symposium 2016 | Divergence and Reform in the Common Law of Contracts

With our co-hosts Dean Blake Morant of The George Washington University Law School and Professors Larry DiMatteo of the University of Florida and Martin Hogg of the University of Edinburgh, The George Washington Law Review is proud to present its Fall 2016 Symposium, Divergence and Reform in the Common Law of Contracts.  

This Symposium continues a tradition of biennial conferences that began at the University of Sheffield, UK in 2011, followed by a conference held at the University of Edinburgh in 2013.  But this 2016 Symposium is not your grandfather’s contract law.  Instead, this conference takes a 21st Century approach to comparative issues in contract law, examining the most pressing controversies, debates, and challenges currently shaping the United States and United Kingdom’s shared legal tradition in the area of common law contracts.

We are also honored to welcome Rt. Hon. Lord Hodge, a Justice on the Supreme Court of the United Kingdom, as our keynote speaker.  Lord Hodge’s extensive experience on the bench steeped in the common law tradition will provide unique insight and an in-depth understanding of the role of American and English courts in shaping contract law doctrine.  

Click here to RSVP for the November 19 panel discussions.  If you are interested in obtaining CLE credit for this event, please indicate on the RSVP form.* 

*Upon request, the law school will submit applications to state bar associations for continuing legal education credits.  Please note that CLE approval is ultimately at the discretion of individual states and no advance assurance can be given that credit will be granted in all cases.  Please contact [email protected] for CLE-specific questions.

 

Schedule of Events: Saturday, November 19, 2016:

 

8:00-8:45 AM: Breakfast and Registration

8:45–10:45 AM: Opening Address and Keynote Speaker

• Dean Blake Morant, The George Washington University Law School, “Importance of Comparative Law for Law Reform”
• Hon. Lord Hodge, Justice on the U.K. Supreme Court, Keynote Address

11:00 AM: Panel 1 – Share Economy and the Edges of Contract Law

• Moderator: Judge Barbara Keenan, U.S. Court of Appeals for the Fourth Circuit
• Miriam Cherry, Director, William C. Wefel Center for Employment Law and Professor of Law, St. Louis University Law School
• Rolf Weber, Faculty of Law, University of Zurich
• Matthias Storme, Professor of Law, KU Leuven

12:30 PM: Panel 2 – Contractual Remedies

• Larry DiMatteo, Huber Hurst Professor of Contract Law, University of Florida Levin College of Law

1:30 PM: Lunch

2:45 PM: Panel 3 – Contract Interpretation and Good Faith

• Robert Stevens, Herbert Smith Freehills Professor of English Private Law, University of Oxford
• Lawrence Cunningham, Henry St. George Tucker III Research Professor, The George Washington University Law School
• Professor Martin Hogg, Professor of the Law of Obligations, Edinburgh Law School

4:50 PM: Panel 4 – Consumer Contract Law

• Moderator: Judge Carlos Lucero, U.S. Court of Appeals for the Tenth Circuit
• Geraint Howells, Chair Professor of Commercial Law and Dean of the Law School, City University of Hong Kong
• James Nehf, Professor of Law and Cleon H. Foust Fellow, Indiana University Robert H. McKinney School of Law

5:45 PM: Closing Reception

Subject to revision. All events to be held at The George Washington University Law School.  For more information, please contact Carla Graff, Law Review Senior Projects Editor, at [email protected].

H/T: Miriam Cherry

Welcoming guest bloggers

It is a huge honor and joy for me to be able to announce the fact that the ContractsProf Blog will benefit greatly from upcoming guest blogs written by Professor Peter Linzer and Ms. Ashley Brost, respectively.  I will be overseas for a Fulbright research visit soon and, subsequently, be addressing elder care issues, so I might be inactive for a month or two myself.

Professor Linzer is, as everyone is well aware, one of the nation's leading Contract Law scholars.  I am humbled as I am sure we all are that such a very prominent professor should choose to enlighten us further with his wisdom and insight.  In order to not leave out anything important and because of Professor Linzer's fame, I will simply let this function as his introduction.

Welcoming also bright, new voices in our industry, I am happy to say that I am working with one of my very best 3L law students and research assistant, Ashley Brost, on her assistance in helping me generate timely, interesting, and thought-provoking blogs.  Although she has not quite yet graduated from law school, I am fully confident that she is able to bring up issues of much relevance and interest to you.  I have trained her to do so.  The responsibility for the blog is, of course, fully mine as its editor-in-chief.  Ms. Brost is, as mentioned, one of our very brightest law students who will be clerking on the Eight Circuit Court of Appeals after her graduation.  She already has landed a job with a prominent law firm after that.

Welcome, both!

Warning: Don't Bury Your Arbitration Clause in a Hodge-Podge Paragraph (my official legal term)

I have never been to a trampoline park but doing this blog has given me the impression that they're dangerous! I've already blogged about one in New York, in which the court refused to enforce a waiver of liability for negligence. Now, in this recent case out of Louisiana, Duhon v. Activelaf, No. 2016-CC-0818, a court again finds against another trampoline park's enforceability of its contract terms. This time the term at issue is the contract's arbitration provision. 

The plaintiff was injured at the trampoline park and filed suit seeking damages. The trampoline park responded seeking to compel arbitration pursuant to the agreement that the plaintiff was required to sign before entering the trampoline park.

However, the Louisiana Supreme Court found that the plaintiff did not consent to the arbitration clause. It noted that the clause was buried in the rest of the fairly lengthy agreement in such a way as to be concealed from the plaintiff. Specifically, it was found in the eleventh line of the third paragraph, a paragraph that also meandered through topics such as: the customer's physical ability to partake of the trampoline park, assumption of risks, agreement to follow the trampoline park's rules, and certification that customers would explain those rules to any children accompanying them. To the court, this hodge-podge, catch-all paragraph drowned the arbitration clause in the middle of unrelated information. This was extra-noteworthy because the rest of the agreement was divided into short one-topic paragraphs, save the relevant one containing the arbitration language. The court refers to it as being "camouflaged" within an eleven-sentence paragraph, nine sentences of which had nothing to do with arbitration. Because of this, the court found that the plaintiff did not truly consent to the arbitration provision. 

This was reinforced by a lack of mutuality in the provision. The clause required all customers of the trampoline park to submit to arbitration, but there was no corresponding requirement on the trampoline park's part. In conclusion, the court found the arbitration clause to be unenforceable. 

KCON XII Call for Participation Now Live: Get Those Cards and Letters Coming!

Donald Trump's Many Confidentiality Provisions

A friend of mine asked me the other day about the ongoing controversy over all of that unaired Apprentice footage that is apparently sitting around somewhere. MGM and Mark Burnett have both claimed that they are not allowed to release the tapes due to confidentiality provisions in their contracts with Donald Trump. (Fortune has an article about this here, as does the New York Times.) My friend's question basically boiled down to this: Yeah, sure, maybe that deal made sense when the contract was signed with a New York self-professed billionaire but now he's running for President of the United States, and shouldn't that mean something? 

Other people have raised this issue. What seems to me unique about the Donald Trump situation isn't necessarily the confidentiality provisions over the Apprentice tape, but how often, during this political campaign, we've been debating the secrecy Trump requires from all of those around him. The Apprentice contract is just the latest example of this. Over the summer, several news outlets reported on the unusually broad terms of the NDA Trump required his staffers to sign. To be fair, NDAs are not unusual during a Presidential campaign and Hillary Clinton has allegedly had her staffers sign them as well. But Trump's apparently are unusually broad, and he requires them even of volunteers who show up to make calls for Trump's campaign and presumably never even really meet Trump? What confidential information could these volunteers even know? Well, Trump is the one who gets to tell them that. And he's not afraid to sue on the NDAs: We know of at least one arbitration filed against a former staffer, alleging damages of $10 million. 

Two things I take away from this: 

(1) Donald Trump seems to be obsessed with controlling his image, which makes total sense, as he's made an entire career out of Being Donald Trump and it could even make him President. Trump is so fond of restricting what those around him can say about him that he's even said he'll make his federal employees sign NDAs if he does become President. At the same time, of course, Trump himself doesn't appear to feel restrained in any way to say any thought that comes into his head. So we seem to have a situation where part of the advantage of being rich is being able to say absolutely anything you want and also control to some degree what the people around you get to say, even once your relationship with them has been terminated.  

(2) Despite this, however, we all know more about Donald Trump than I think he wants us to know. In the relentless glare of a Presidential campaign, no matter how many NDAs you leave in your wake, is it just impossible to keep secrets forever? And, maybe, is there something comforting about that? My friend wants to see the Apprentice tapes, but we don't know what's in the Apprentice tapes, and we don't know who even has time to review them. But we do know a great deal, maybe not Apprentice-related, but maybe enough? 

P.S. This is not the first time I've blogged about Donald Trump's contracts. If you're curious, that case hasn't really progressed since that blog entry.