jump to navigation

contracts archive 2018

Classes are on Mondays, Wednesdays and Thursdays from 3.30-4.50 pm in Room F 109.

Dean’s Fellow sessions with Daniel Horn are on Mondays at 2:00-2:50pm in F408 and on Thursdays at 5:00-5:50 PM in E352.

Week 15: Monday 19 November We will begin with a brief discussion of Margaret Jane Radin, The Fiduciary State and Private Ordering (February 19, 2016) (via SSRN) or here. Paul B. Miller and Andrew S. Gold, eds., Contract, Status, and Fiduciary Law, Oxford, 2016 and Jane K. Winn, The Secession of the Successful: The Rise of Amazon as Private Global Consumer Protection Regulator, 58 Ariz. L. Rev. 193 (2016). Then DK Arena v EB Acquisitions (Florida Supreme Court 2013) and Spring 2013 exam.

In class on Thursday I referred to Dye v Tamko Building Products Inc. (11TH CIR. NOV. 2, 2018). In that case Plaintiffs brought a range of claims with respect to roof shingles that fell apart ( breach of express and implied warranties, strict products liability, negligence, and violations of the Florida Deceptive and Unfair Trade Practices Act (FDUPTA). The 11th Circuit focused on the idea this was an easier case than ProCD because here the terms are on the outside:

“Tamko has emblazoned its entire purchase -agreement (complete with terms, warnings, and the all-important arbitration clause) in haec verba on the outside of every package of shingles”

The roofers were the homeowners’ agents for the purpose of purchasing and installing roof shingles, and because accepting the purchase terms is the kind of thing that should have been expected of the agents, the roofers bound the homeowners to the arbitration agreement (along with the rest of the terms):

“purchasing a product necessarily and by definition encompasses accepting the terms of that purchase. The homeowners here expressly delegated to their roofers the task of purchasing shingles, and yet they now contest terms—in particular, those requiring mandatory arbitration—that are part and parcel of that purchase.”

Contrast Hobbs v Tamko where a Missouri Court of Appeals found that Tamko had not established that there was a valid arbitration agreement in the context of a class action lawsuit involving these roof shingles. The US Supreme Court denied cert in this case in 2017. The Missouri Court said:

Tamko argues that Plaintiffs accepted the terms of the arbitration provision in the warranty because they “kept and used the shingles[.]” The cases upon which Tamko relies, however, are distinguishable from the case at bar. For example, Tamko relies on Hill v. Gateway 2000, Inc…. which held that the arbitration clause located inside the packaging of a computer was enforceable because, by keeping the computer beyond 30 days, the purchasers accepted the vendor’s offer, including the arbitration clause… In Hill, however, there was no dispute that the purchasers received the computer documentation, which included the arbitration agreement, and they had the opportunity to reject that condition by returning the computer… Based upon the facts presented to the trial court, that is not the case here. Unlike computer documentation, the packaging for shingles is not an item typically kept by a consumer after the shingles are unbundled and used. Plaintiffs’ affidavits stated unequivocally that they were not aware of the arbitration provision, and they dispute any assertion that they agreed to arbitrate their claims with Tamko. In fact, Plaintiffs dispute that they ever received the warranty that Tamko now wishes to enforce. Plaintiffs also maintain that, had they been aware of the arbitration provision, they would not have purchased the shingles. Plaintiffs’ retention and use of the shingles does not prove that they accepted the terms to arbitrate their disputes in this case.

Week 14: November 12-16 With respect to the material on capacity to contract in the Casebook, notice that capacity to contract may be defined by reference to a bright line rule (e.g. age under Restatement §14) or by reference to a more blurry rule (e.g. mental illness under Restatement § 15). As a general rule a person’s capacity to understand what the are agreeing to is not relevant (absent, e.g. mental illness or intoxication), and even with respect to mental illness and intoxication the knowledge of the other party plays a role.

For Monday’s class please read pages 522-542 and pages 557-565.

For Wednesday’s class please read pages 590-607 and Kindred Nursing Centers v Clark (US Supreme Court 2017).

With respect to arbitration, 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.

State contract law has some relevance to arbitration agreements, but it cannot be applied in a way that undermines the FAA.

For Thursday’s class please read these articles: Margaret Jane Radin, The Fiduciary State and Private Ordering (February 19, 2016) (via SSRN) or here. Paul B. Miller and Andrew S. Gold, eds., Contract, Status, and Fiduciary Law, Oxford, 2016 and Jane K. Winn, The Secession of the Successful: The Rise of Amazon as Private Global Consumer Protection Regulator, 58 Ariz. L. Rev. 193 (2016).

News story November 9: Google ends mandatory arbitration for sexual misconduct claims.

The following Monday (November 19) we will discuss DK Arena v EB Acquisitions (Florida Supreme Court 2013) and Spring 2013 exam.

I have added past exams to the Materials page.

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

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

And here are some themes to think about:

1. Contract law and fairness: how should contract law balance questions of fairness between contracting parties with more general systemic issues. Do the cases you have read suggest that contract law is about fairness or something else? In what cases do you think the results were unfair? And is this explained by some other operative principle? Would it be fair if contract law were more predictable and less uncertain so people could easily know how they should behave when making promises? The idea of a distinction between the idea of the result in a particular case and the rule the case establishes could be relevant to this set of questions. A court that focuses on doing justice in a particular case might reach different results than a court that focuses on establishing a rule that will work in all similar cases. In one sense this theme relates to the courts versus legislatures issues we have been thinking about: should courts behave more like legislatures in thinking that their role is to establish rules?

2. Freedom of contract. Do the materials you have read suggest that contract law really reflects the principle of freedom of contract or not? Freedom of contract is taken to mean freedom to contract and freedom from contract. What sorts of limits on these freedoms have you seen in the materials you have studied? Are there cases where you think that there is too much freedom of contract? Too little?

3. Courts and legislatures: to what extent should courts defer to legislatures? Deference might apply to the question whether courts should decline to develop the law in deference to the legislature. Marvin v Marvin and Hewitt v Hewitt (and Blumenthal v Brewer) illustrate different attitudes to this question. The legislative history of the Wisconsin Fair Dealership Law suggests that legislatures aren’t necessarily better at evidence gathering and negotiating than courts are. Deference might also refer to how courts should go about interpreting and applying statutes (e.g. illegality, regulation of non-competes in Wisconsin).

4. Context: Do you think, based on your reading that there is one contract law or many different sets of rules relating to contracts? Are family cases really different from contracts for the “timely delivery of a crate of oranges”(CB p. 246). Are family disputes different from commercial disputes, or not? What about employment? Are employment contract issues like commercial contracts or like family contracts? Are the rules that apply to contracts between sophisticated parties very different from contracts involving unsophisticated parties? Should they be?

Week 13: November 5-9 On Monday we will begin by thinking some more about Wagenseller, then discuss the hypothetical on pages 462-3. And please also read to page 497.

You might note that Arizona now has statutory rules regulating retaliatory firings: Wagenseller is still interesting because it illustrates a court figuring out the limits to employment at will, but the public policy issue is now controlled by statute (the statute refers to the “refusal by the employee to commit an act or omission that would violate the Constitution of Arizona or the statutes of this state”). The statute also provides:

The public policy of this state is that: 1. The employment relationship is contractual in nature. 2. The employment relationship is severable at the pleasure of either the employee or the employer unless both the employee and the employer have signed a written contract to the contrary setting forth that the employment relationship shall remain in effect for a specified duration of time or otherwise expressly restricting the right of either party to terminate the employment relationship. Both the employee and the employer must sign this written contract, or this written contract must be set forth in the employment handbook or manual or any similar document distributed to the employee, if that document expresses the intent that it is a contract of employment, or this written contract must be set forth in a writing signed by the party to be charged. Partial performance of employment shall not be deemed sufficient to eliminate the requirements set forth in this paragraph. Nothing in this paragraph shall be construed to affect the rights of public employees under the Constitution of Arizona and state and local laws of this state or the rights of employees and employers as defined by a collective bargaining agreement.

Here’s the Florida Statute I mentioned in class (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.

Under Florida Statutes §448.103 remedies can include injunctions, reinstatement, compensation for lost wages, benefits and other remuneration and other compensatory damages allowable at law.

For Wednesday please read to page 512, and also read Florida Statutes §542.335.

For Thursday please read to page 542 (we will note the material on capacity but not spend much time on it – we will look at the duress cases in more detail).

In class mentioned Cynthia Estlund, The Black Hole of Mandatory Arbitration, 96 N.C.L. Rev. 679 (2018) (reviewed here on Jotwell) (arguing employees are less likely to bring claims when claims have to be brought in arbitration than when they can be brought in court) (you are not required to read this).

I have mentioned in class a few times that Florida does not adopt the estoppel approach we saw in McIntosh v Murphy. 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.

After this material I propose to cover Market Street Associates v Frey, ProCD v Zeidenberg and Hill v Gateway, plus some additional material not in the casebook.

Week 12: October 29-November 2 On Monday we will begin by finishing consideration of Hoffmann v Red Owl. Then we will move on to think about franchise terminations. Please read to page 405.

With respect to business opportunities, please note Florida Statutes § 559.811:

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.

For Wednesday please read to page 454. We won’t be able to cover all this material in class on Wednesday but there is a large quantity of material I think needs to be read together. For Thursday please read to page 463. We will discuss the hypo at page 462. We will not spend class time on pages 464-480.

A couple of years ago I wrote some fairytale themed questions about contract formation you may fine helpful: Cinderella Questions

The questions make more sense if you have done the reading for the coming week.

Week 11: October 22-26 On Monday we will begin with Hamer v Sidway. Please read to page 306. For Wednesday please read to page 335. For Thursday please read pages 335-345. We will not cover pages 346-363 in any detail. But please read pages 364-383.

Week 10: October 15-19 For Monday please read to page 237.

Here is the Pepsi ad referred to in question 2 on page 236:

For Wednesday, please read to page 276.

Please note that the material in the casebook on Blumenthal v Brewer at pages 272-3 has been superseded by the decision of the Illinois Supreme Court in 2016 (you are not required to read the full judgment). The Court held that the appellate court did not have the jurisdiction it claimed and could not overrule Hewitt. So Hewitt is still good law in Illinois. Here is an excerpt from the judgment – please read this: Blumenthal v Brewer) The Illinois Supreme Court again emphasized in Manago v Cook County (I give the link here in case you are interested and not because you are required to read the judgment) that the Court “is not tasked with evaluating and setting public policy” because that is a matter for the legislature. The Court said:

Our duty in this case is properly limited to determining the intent of the legislature based on the plain and unambiguous statutory language and construing the relevant statutes consistent with that intent.

Marriage rates in the US have declined in recent years, and people of higher socio-economic status are more likely to be married than people who are less well educated and less well off. (e.g. As U.S. marriage rate hovers at 50%, education gap in marital status widens).

In a recent article, Emily J. Stolzenberg, (The New Family Freedom, 59 B.C.L. Rev.1983 (2018)) writes:

Recent Supreme Court pronouncements suggest that family relationships help individuals to achieve freedom. Obergefell v. Hodges recognized the right of same-sex couples to marry in part because “choices concerning . . . family relationships” “define personal identity and beliefs.” Calling such “intimate choices” “central to” and “inherent in the concept of individual autonomy,” the opinion forged a tight positive link between family relationships and freedom. But the link need not be positive. Against Obergefell, modern family law increasingly understands autonomy also to require freedom from other family members. This “new family freedom” rejects as illegitimate any attempt to redistribute resources between intimates unless the richer party “chose” to take on family obligations ex ante by ceremonially marrying or formally contracting. But as more people conduct their intimate lives outside legal institutions, this libertarian vision collides with another, more fundamental, family law principle: the imperative to “privatize dependency,” i.e., to redistribute resources between intimates in lieu of the state providing resources to meet dependents’ needs. The new family freedom and privatized dependency both pervade modern family law, and yet.. they are often mutually exclusive (footnotes omitted).

Hewitt is one of the cases used in the article.

If you are interested in the question of whether and when courts should make social policy you may be interested in reading this Discussion from 2008 (not required reading but interesting).

For Thursday’s class please read to page 296.

Please note for later that I do not propose to cover pages 346-363 in any detail.

I mentioned Professor Widen’s recent paper which addresses the issues in Neri. If you are interested here is the information: Widen, William H., Social Justice and Deposit Return Calculations: A Study of Success and Failure in Commercial Law Reform (September 19, 2018). University of Miami Legal Studies Research Paper No. 18-30. Available at SSRN: https://ssrn.com/abstract=3252083 or http://dx.doi.org/10.2139/ssrn.3252083

Week 9: October 8-12 I think that finishing the remedies chapter will likely take us through this week. For Monday please read Hawkins and Sullivan.

On Wednesday we will begin with the problems at the end of the chapter. For Thursday I am going to ask you to read to page 237.

Here is the Pepsi ad referred to in question 2 on page 236:

Week 8: October 1- 5: Fall Break I hope you have a good break. Here is my Labor Day Hypo Memo 2018.

And here are links to two past midterms:

Contracts Midterm 2017 (Memo on 2017 Contracts Midterm)

Fall 2011 Midterm (Memo on the Fall 2011 Contracts Midterm)

Week 7: September 24-28 On Monday we will pick up where we left off on Thursday. Please read to page 180 for Monday. For Wednesday to page 202 (I do not usually spend much time on De Leon v Aldrete, but Peevyhouse does take up time). For Thursday please read to page 216, After Fall Break we will discuss the problems at the end of the Chapter.

Recording of class on September 19

I am providing a link to this Damages Diagram in case you find it helpful.

Have a good weekend.

Week 6: September 27-21: For Monday’s class, please read to page 133.

In discussing the question whether courts should rewrite contracts, I mentioned that boilerplate terms (terms in a written contract that are generally not specifically negotiated) often include severability provisions. Here’s an example:

If any provision of these Terms is held to be invalid or unenforceable, such provision shall be struck and the remaining provisions shall be enforced to the fullest extent under law.

We will begin Monday’s class with the issue of distinguishing between consequential and direct or general damages. This is important because of contractual exclusions of consequential damages – they do not exclude direct or general damages. Last week I gave the example of In Re Rust-oleum Restore Marketing, Sales Practices and Products Liability Litigation (N. D. Ill. 2016) (the case settled in 2017). Plaintiffs claimed that a paint product was defective, and that they should be able to recover damages, for example for costs of removing the paint or replacing damaged structures. Rust-Oleum argued that they had limited liability to customers to either a refund of the original purchase price or replacement with a product of equal value (the exclusive remedy provision) and that they had specified that they would not be liable for consequential damages. The court said that the damages might be able to be characterized as direct, rather than consequential, damages:

Taking all the reasonable inferences in Plaintiffs’ favor, they have alleged factual support for a finding that the damages resulting from application of Restore to surfaces following the instructions, constitute direct damages which were bargained for as expressly embodied in Rust-Oleum’s own warranty provision. Accordingly, Plaintiffs have sufficiently alleged a factual basis supporting a finding of direct damages which precludes dismissal of their claim at this early stage.

In a 2014 case, Biotronik, A.G. v. Conor Medsystems Ireland, Ltd, which involved a distributorship agreement the New York Court of Appeals said that damages that flow directly from the agreement are general or direct damages and not consequential damages. In some cases lost profits would be seen as flowing directly from the agreement. There’s a distinction between lost profits from collateral agreements and lost profits from the contract itself. In this case the contract did not specifically preclude recovery for lost profits, or explicitly define lost profits as consequential damages (it excluded liability for consequential damages).

From the aftermath of Chung (note 1 on page 123) we learn that you don’t generally get non-economic damages for breach of contract. And see Restatement §353. But 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

We have so far thought of damages being awarded to reflect the non-breaching party’s expectation interest. But we are going to see that contract damages can also be based on reliance, or can be designed for restitution. See Restatement §344 which defines these different conceptions of damages. We will begin with reliance, so for Wednesday please read to page 155. I am going to ask you to read to page 165 for Thursday, but it is possible we won’t in fact get that far.

Week 5: September 10-14Please 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.

The casebook describes Denning as one of the most famous judges of his day. Hasson’s comment is useful for us as it invites us to think about what makes a judge a good judge or even a great judge. It surely isn’t just about fame, but something else. A good judge might be someone whose opinions are respected and followed many years after they are given. Might there be other characteristics that would make a judge a good judge?

For Monday’s class please read to page 108. After Lake River we will discuss this Liquidated Damages Question (this won’t be before Wednesday).

Here is a note on liquidated damages:
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.

For Wednesday please read to page 115.

Uber’s US Terms of Use provide:

UBER SHALL NOT BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, LOST DATA, PERSONAL INJURY, OR PROPERTY DAMAGE RELATED TO, IN CONNECTION WITH, OR OTHERWISE RESULTING FROM ANY USE OF THE SERVICES, REGARDLESS OF THE NEGLIGENCE (EITHER ACTIVE, AFFIRMATIVE, SOLE, OR CONCURRENT) OF UBER, EVEN IF UBER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
UBER SHALL NOT BE LIABLE FOR ANY DAMAGES, LIABILITY OR LOSSES ARISING OUT OF: (i) YOUR USE OF OR RELIANCE ON THE SERVICES OR YOUR INABILITY TO ACCESS OR USE THE SERVICES; OR (ii) ANY TRANSACTION OR RELATIONSHIP BETWEEN YOU AND ANY THIRD PARTY PROVIDER, EVEN IF UBER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. UBER SHALL NOT BE LIABLE FOR DELAY OR FAILURE IN PERFORMANCE RESULTING FROM CAUSES BEYOND UBER’S REASONABLE CONTROL. YOU ACKNOWLEDGE THAT THIRD PARTY PROVIDERS PROVIDING TRANSPORTATION SERVICES REQUESTED THROUGH SOME REQUEST PRODUCTS MAY OFFER RIDESHARING OR PEER-TO-PEER TRANSPORTATION SERVICES AND MAY NOT BE PROFESSIONALLY LICENSED OR PERMITTED.
THE SERVICES MAY BE USED BY YOU TO REQUEST AND SCHEDULE TRANSPORTATION, GOODS, OR LOGISTICS SERVICES WITH THIRD PARTY PROVIDERS, BUT YOU AGREE THAT UBER HAS NO RESPONSIBILITY OR LIABILITY TO YOU RELATED TO ANY TRANSPORTATION, GOODS OR LOGISTICS SERVICES PROVIDED TO YOU BY THIRD PARTY PROVIDERS OTHER THAN AS EXPRESSLY SET FORTH IN THESE TERMS.
THE LIMITATIONS AND DISCLAIMER IN THIS SECTION DO NOT PURPORT TO LIMIT LIABILITY OR ALTER YOUR RIGHTS AS A CONSUMER THAT CANNOT BE EXCLUDED UNDER APPLICABLE LAW. BECAUSE SOME STATES OR JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF OR THE LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, IN SUCH STATES OR JURISDICTIONS, UBER’S LIABILITY SHALL BE LIMITED TO THE EXTENT PERMITTED BY LAW. THIS PROVISION SHALL HAVE NO EFFECT ON UBER’S CHOICE OF LAW PROVISION SET FORTH BELOW.

Provisions like this invite courts to think about how to distinguish between direct and consequential damages. For example, consider the example of In Re Rust-oleum Restore Marketing, Sales Practices and Products Liability Litigation (N. D. Ill. 2016) (the case settled in 2017). Plaintiffs claimed that a paint product was defective, and that they should be able to recover damages, for example for costs of removing the paint or replacing damaged structures. Rust-Oleum argued that they had limited liability to customers to either a refund of the original purchase price or replacement with a product of equal value (the exclusive remedy provision) and that they had specified that they would not be liable for consequential damages. The court said that the damages might be able to be characterized as direct, rather than consequential, damages:

Taking all the reasonable inferences in Plaintiffs’ favor, they have alleged factual support for a finding that the damages resulting from application of Restore to surfaces following the instructions, constitute direct damages which were bargained for as expressly embodied in Rust-Oleum’s own warranty provision. Accordingly, Plaintiffs have sufficiently alleged a factual basis supporting a finding of direct damages which precludes dismissal of their claim at this early stage.

I am not assigning any additional reading for Thursday’s class.

September 10: Recording of Class on September 10.
Week 4: September 3-7 No classes. Have a good Labor Day weekend, and week and I will see you on September 10.

Here is my Note on Neri

At this time I think it is useful to begin thinking about answering hypotheticals. I have added two past questions to the materials page, together with memos I wrote about the questions. I think it should be useful to look at the questions first and then use the memos to see how well you identified and analyzed the issues. As we progress through the semester I will give you other questions to think about.

Here is a new question which doesn’t yet have a memo: Labor Day Hypo 2018.

I would be happy to read your one page answers to the question if you email them to me. I will read and respond to your answers as quickly as I can. How quickly that is depends on how many of you choose to take up this offer!

Week 3: August 27-31 On Monday we will finish the hypo we were discussing on Thursday. As I wrte last week there are two different approaches to the issue raised in part 4 of 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 look at 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?

Also please read to page 61. Notice that the actor in this case is Shirley MacLaine. Parker is her husband’s family name.

The authors of the Casebook we are using 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.

You may be interested in this list of Fierce Female Roles in Westerns.

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 Wednesday’s class please read to page 74. In thinking about Neri you should focus on the interaction of UCC §2-718 and §2-708. Please read the provisions very carefully. It’s a more complicated interaction than you may expect (and this is where we can think in more detail about incidental damages and overhead). 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?

For Thursday’s class please read to page 85.

Here is the audiorecording of class on August 23

The following week we would miss class on Monday because of Labor Day. But we will also miss the other classes that week because I will be out of town. I will give you a hypothetical question to work on instead of classes that week but will also arrange to make up the time we miss.

August 29: Here is my Note on Neri

Have a good weekend!

Week 2: August 20-24I moved the material that was previously on this page to the archive page.
On Monday we will begin with fraud, where we left off on Thursday. Here are the 3 fraud hypos we began to discuss. We will discuss the third one on Monday. Although I have asked you to read pages 1-29 of the Casebook I also said that I would not go over these pages in detail in class at this point. I have already asked you to read pages 31-44, and to read provisions of UCC Article 2 or of the Restatement referred to in the Casebook (e.g. at the top of page 43) in your Source Materials book. Be prepared to discuss the questions on pages 43-44.

[Audiorecording of class on August 20]
[Audiorecording of class on August 22]

For Wednesday’s class please read pages 45-47 (and focus on the hypothetical on page 47).

Here are two different approaches to the issue raised in part 4 of 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.

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?

For Thursday’s class please read to page 61. Notice that the actor in this case is Shirley MacLaine. Parker is her husband’s family name.

The authors of the Casebook we are using 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.

You may be interested in this list of Fierce Female Roles in Westerns.

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.

First Class Assignment: Please read the Introduction to Contracts (2018) and Cullinane v Uber (1st Cir. 2018). You will need to read these materials very carefully.

We will need at least 2 classes to cover this material. The basic plan for the semester is to read and discuss the casebook in the casebook order. Sometimes I will provide additional materials or questions on this blog, and I will also use the blog to provide guidance on how quickly we are likely to cover the material.

Please also read the Class Policies before the first class.

And, by close of business (for the avoidance of doubt, this is 5.00 pm eastern time) on Monday August 13 please send an email (subject line: Bradley Contracts Class) to my assistant, Caridad Dalama, at cdalama@law.miami.edu describing two facts you would like me to know about you.

On Wednesday August 15 we will continue working through the materials we begin with on Monday. After discussing the 2 cases we will focus on note 4 of the Introduction to Contracts document. We won’t be spending much time on fraud during this semester, but I’d like to think a bit about this legal test. If you want to sue someone for fraud you need to establish all of these elements.

Before class on Thursday please read pages 1-29 of the Casebook. 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 Thursday 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.

Note added August 14: You may be interested to look at the current version of the Uber Terms of Use (US version). Towards the beginning there is a prominent reference to arbitration being the mechanism for dispute resolution. This is part of what the document says about the relevant rules for the arbitration:

The arbitration will be administered by the American Arbitration Association (“AAA”) in accordance with the AAA’s Consumer Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes (the “AAA Rules”) then in effect, except as modified by this Arbitration Agreement. The AAA Rules are available at www.adr.org/arb_med or by calling the AAA at 1-800-778-7879….The Arbitrator will be either (1) a retired judge or (2) an attorney specifically licensed to practice law in the state of California and will be selected by the parties from the AAA’s roster of consumer dispute arbitrators. If the parties are unable to agree upon an Arbitrator within seven (7) days of delivery of the Demand for Arbitration, then the AAA will appoint the Arbitrator in accordance with the AAA Rules….Unless you and Uber otherwise agree, the arbitration will be conducted in the county where you reside… Your responsibility to pay any AAA filing, administrative and arbitrator fees will be solely as set forth in the AAA Rules. However, if your claim for damages does not exceed $75,000, Uber will pay all such fees, unless the Arbitrator finds that either the substance of your claim or the relief sought in your Demand for Arbitration was frivolous or was brought for an improper purpose (as measured by the standards set forth in Federal Rule of Civil Procedure 11(b)).

When I go to the URL specified above I get a page not found message. But at https://www.adr.org/Rules there is a link to the AAA’s Consumer Arbitration Rules.

This looks reasonably favorable to Users of Uber’s services. The proceedings won’t be expensive, many claims are resolved on documents and the arbitration does not require the User to travel far. The AAA is a well established organization. One empirical study of consumer arbitrations carried out under AAA rules found that there probably was not a repeat player effect, or to the extent there might be it could be because the repeat players were better at screening cases (Christopher R. Drahozal and Samantha Zyontz, An Empirical Study of AAA Consumer Arbitrations, 25 Ohio St. J. on Disp. Res. 843 (2010).) But Cynthia Estlund in The Black Hole of Mandatory Arbitration ( 96 North Carolina Law Review 679 (2017 ) has argued that not only does arbitration involve less transparency than litigation in courts, but (at p. 682):

the great bulk of disputes that are subject to mandatory arbitration agreements… simply evaporate before they are even filed. It is one thing to know that mandatory arbitration draws a thick veil of secrecy over cases that are subject to that process. It is quite another to find that almost nothing lies behind that veil. Mandatory arbitration is less of an “alternative dispute resolution” mechanism than it is a magician’s disappearing trick or a mirage.