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Author: Miriam Cherry

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Pirates of Cyberspace

There are so many compelling ideas and stories about globalization and technology packed into Anupam Chander’s The Electronic Silk Road that it is difficult to select an appropriately blog-sized piece to discuss. Other commentators have noted the apt portmanteau “glocalization,” citing Chander’s insights into how harmonization of international trade principles must take into account both the global reach and local effects of technology and the trade in services. A difficult regulatory challenge to be sure, but one that provides Chander with rich intellectual material to analyze.

In the interest of covering as much of the book as possible, I wanted to use this blog post to discuss glocalization within Chapter Four, “Pirates of Cyberspace.” Here Chander discusses instances where a firm or organization may be frustrated with the law of its nation or a set of nations; and as a result decides to engage in regulatory arbitrage by moving offshore.

Traditionally the issue has been framed in the negative; as a jurisdictional “race to the bottom.” Local regulation is found to be “too burdensome” and some number of firms respond by moving offshore. Whether it is labor standards or corporate compliance, this leads critics to complain that these arbitrageurs are eroding hard-won rights – and opening the door to exploitation of workers, investors, or customers.

Implied in this chapter, however, is that while some sort of race may be inevitable, given competing regulatory regimes, it may not necessarily always be part of a race to the bottom. In fact, it may be that some forms of regulatory arbitrage may promote values that have grown in tandem with the Internet, such as free speech or the exchange of free information. For example, media and journalists are flocking to Iceland for favorable speech and blogging laws; Sweden has allowed Pirate Bay a refuge. These individuals or organizations may in some sense be “scofflaws,” but they may be promoting values that are at the very least be worthy of debate. (Of course one cannot help but wonder whether the “race to the bottom” or “race to the top” is somehow bound up with one’s ultimate feeling about the substantive regulations involved).

As Chander points out, if we are not careful, one jurisdiction’s laxity on some regulatory issue may end up deciding the rules globally. If regulation is determined by where services are rendered, local regulation may stamp out trade through its complexity. The challenge, then, of glocalization in the face of piracy or any type of regulatory arbitrage is to, in the words of Depeche Mode – “get the balance right.

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A Law Student’s Viewpoint on Contracts in the Real World

As promised, the following is contributed by my student, Umo O. Ironbar:

As a 1L student at Saint Louis University, reading the conditions materials in Professor Lawrence Cunningham’s Contracts in the Real World Stories of Popular Contracts was refreshing.

We looked at a deal that Kevin Costner went into for the creation of massive bronze bison sculptures which would be put in place in his luxury resort in South Dakota named The Dunbar (a tribute to his successful production of his 1990 movie “Dancing With Wolves). Another case we looked at was Charlie Sheen’s “play-or-pay” contract with Warner Brothers.

These cases are still so vivid in my mind because I actually knew who the parties were. Unlike other cases that could have been found in my regular contracts textbook, I did not have to wait until the notes and questions sections after the cases to know why these cases were so important or infamous, or why they made the selection into the textbook out of the hundreds of thousands of cases that have been tried. Read More

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Using Contracts in the Real World in the Classroom

Aside from the deeper theoretical questions that Prof. Cunningham raises about contract theory in Contracts in the Real World,  the heart of the book is in its fun, rollicking, and thoroughly modern examples.

Every contracts professor should take a look at this book to glean ideas for real-world examples and hypotheticals.  Even if your textbook is stuck in the world of itinerant homesteaders, ships using astrolabes for navigation, and delayed industrial components (shout out to Kirksey, Raffles, and Hadley v. Baxendale!), your students will appreciate the use of some fun celebrity stories to liven up the classroom discussion.

The last time that I taught Contracts, for example, I did a series of hypotheticals based on Charlie Sheen’s contractual troubles.  Based on Prof. Cunningham’s materials, I was able to structure some hypotheticals based on Sheen for my unit on conditions.    The students seemed to appreciate it, and in fact, I have asked a student from my class last year to share her impressions with our blog readers. It appears here

 

Miriam Cherry is Professor of Law at Saint Louis University School of Law.  Some of her scholarship can be found at this link on SSRN.

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Modern Technology: A Disruptive Influence on Contract Doctrine?

In my view, modern technology has exacerbated the doctrinal tensions within contract law.  Currently, clickwraps and browsewraps stretch the notion of mutual assent to its extreme, perhaps warping it in the process.

The recent literature on form contracting online has been substantial.  While some of this literature sees online contracting as a natural inheritance to traditional contract law doctrine, other commentators have argued that contracting online has distorted the doctrine.

In Contracts in the Real World, Prof. Cunningham attempts to reconcile two recent cases, Specht v. Netscape and Pro-CD v. Zeidenberg, as part of his treatment of the theme of contract formation and mutual assent.  As much as he tries, to me the cases still seem to be in conflict.

And if that weren’t enough, two well-known additional cases that dealt with late-arriving terms inside a computer box, Hill v. Gateway and Klocek v. Gateway, blatantly contradict each other, with contrary holdings on virtually identical facts.

In my mind, these contradictions reveal a mismatch in the doctrine and the reality on the ground.  If there is no way for consumers to read or understand, or perhaps even see these clickwrap agreements, it hardly seems fair to bind consumers to them.  As seen above, however, this leads to contradictory rulings.

Inconsistent holdings create the appearance of an arbitrary justice system, and these disputes, which are governed by the Uniform Commercial Code, should turn out in a uniform manner.  When they do not, it only intensifies the debate about how to deal with online contracting and adhesion contracts online.

As we all continue to click our way through countless EULAs and are told that we are subject to “terms and conditions” that no reasonable consumer has had the time to read,  I do not believe that it is enough to hope that antiquated laws will handle new situations.

Instead, I would suggest that we need to continue to build on the wisdom of contract law.  While there is much to celebrate in the received wisdom of ancient doctrines, we must also recognize that it is the common law’s dynamism and adaptability that have led to its genius.

 

Miriam Cherry is Professor of Law at Saint Louis University School of Law.  Some of her scholarship can be found at this link on SSRN.

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Dichotomies in Contract Theory and Doctrine

In this blog post, I would like to examine some of the dichotomies in contract theory and doctrine that are noted in Professor Cunningham’s Contracts in the Real World.  Some would claim that contract law is revolutionary; others would argue that it is reactionary.  Compared to the status relationships of the Middle Ages, in which economic power was primarily determined through feudal or family relationships, contract and market relations promised a more egalitarian alternative.

In the classic text Ancient Law, Sir Henry Maine described the radical transformation from a feudal society governed by custom and hierarchy to one transformed by the industrial revolution, in which socio-economic mobility was not only possible, but which was expected.  On the other hand, many today would argue that contract acts as a reactionary force, for enforcing bargains strictly as written could result in reinforcing the power imbalances that already exist in society.

Contracts in the Real World notes these dichotomies and strikes a middle ground between them.  Prof. Cunningham characterizes the schism in contract law as a dispute between formalists and realists.  This schism, he posits, applies even to foundational matters, such as the question of whether a contract has been formed.  Prof. Cunningham notes that extreme formalists would champion a return to the days of the seal and enforce only those deals that meet the strict definitions of offer, acceptance, and consideration.

Realists, on the other hand, favor scrutinizing the context of every bargain, accepting the most informal of deals and even enforcing promises to make gifts as contracts.  Thus the dichotomy between formalists and realists turns into a debate over the extent of government or court involvement in private ordering.

Throughout the book, Prof. Cunningham walks a tightrope between these positions, often making reference to contract law’s “sensible center,” and noting that with many common problems, the rules that have evolved over the years make a good deal of sense.  In essence, he makes a case for the status quo, eschewing reform in either the direction of more government interference in contract, or government withdrawal from contract.

Prof. Cunningham suggests that current law strikes the proper balance between two rather extreme positions.  The book extols the earthy pragmatism of old precedents and wise judges, and suggests that these doctrines will ultimately win out and reach a balance.  In my next blog post, I will question whether this assertion holds true in the context of technological change.

Miriam Cherry is Professor of Law at Saint Louis University School of Law.  Some of her scholarship can be found at this link on SSRN.

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Blogging Hiatus and Events at SLU

Last week, I filmed a reality show for HGtv about my search for a house.   Then, unfortunately, came a different kind of drama (at work).  By now you’ve probably seen the exchange between our former Dean Annette Clark and SLU President Lawrence Biondi on this or other blogs.   I wanted to take a moment to thank everyone who called, emailed, or sent Facebook messages.  I do appreciate my wonderful friends in the legal academy and your concern.   I know that my hardworking SLU Law colleagues and talented students value that support and goodwill.  Further, I greatly appreciate my colleague Marcia McCormick’s interesting thoughts over at Workplace Prof about the value and importance of legal scholarship

That said, I haven’t felt up to commenting or discussing much of anything lately, so I apologize to pretty much anyone and everyone if you’ve emailed me or called me in the past week and I haven’t responded to your message.  Further, I’ve been AWOL on the blog because I’ve been distracted.  Normally I would write two or three blog posts a week about the same kind of subjects I wrote about this summer – using technology (yes, even reality TV) to teach law, my research on virtual work, and the intersection of law and technology.  Therefore, Concurring Opinions has granted me a blogging hiatus, with me to resume posting in about two to three weeks to finish my visit here. 

To quote the words of a Howard Jones song, “things can only get better.”  Yesterday our interim dean, Thomas Keefe, wrote the faculty and students a nice note and informed us that he will (very generously) donate his salary to help the law school.  In a few weeks I plan to return to my regularly scheduled posting about teaching and research.  Hopefully, in the interim SLU students, alumni, and faculty will receive some answers from the central administration.  Again, thank you to my virtual academic legal community for being supportive and you’ll be hearing from me again in a few weeks.

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The Best (Modern) Contracts Cases

Today I received an interesting note from Caprice Roberts (Savannah), who is re-designing and updating her contracts syllabus.  She uses a fairly traditional textbook that contains many of the old common law chestnuts (See e.g. Peerless).   Caprice would like to know what are the best cases that she’s not teaching?  In other words, what are your top five favorite (modern) contracts cases to teach?   For these purposes, “cases” could include something ripped from a recent case or a newsworthy sports or entertainment contract dispute.  I am sure that one of the suggestions will be Leonard v. Pepsico, and Prof. Lawrence Cunningham’s Contracts in the Real World Stories of Popular Contracts and Why They Matter is chock full of them.  Readers?

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(My) Housing Crisis

This past spring, I almost found myself homeless.  Yes, I have a Harvard Law degree, a stable career, savings, and credit.  What’s the stereotype, oh, yeah, that I must have substance abuse or mental health issues.  I have neither.  After leaving school, I never would have thought in a million years that I would experience such stress or instability in my life or my housing situation.  But when a landlord is entering your apartment without notice, turning off your heat, harassing you at work, and putting down rat poison where your dogs might eat it, any educational or financial advantages you might have rapidly fly out the window.  I couldn’t move immediately – it was the middle of the semester – but friends helped and I found a convenient hotel.  Within a month and a half I had cobbled together a rental arrangement with a colleague, and in the meantime had shipped the dogs off to a dogsitter to keep them safe.

I didn’t think to look up my landlords on any of the legal databases before signing my lease – seemed like overkill.  After all, the apartment seemed to be well-maintained, and that, the location, and the price were what I was looking at, mostly.  After the abusive behavior started, I learned that the landlords had been sued close to a dozen times by their tenants – and they lost every time.

Unfortunately, my experience leads me now to believe that for those who rent, housing instability is just one bad landlord away.  This is not necessarily based on the tenant’s financial situation, although slumlords and conditions of disrepair typically tend to go hand in hand.  (Of course there are plenty of people who live in very modest situations, but who have good landlords).  It’s common to bash landlord-tenant law as being over-protective of tenants, and you hear people complain about tenants who don’t pay and how difficult it is to evict a tenant.  Let me tell you that I was grateful and appreciative of every single one of those legal protections when my housing troubles began.  It’s the abuses, the hard cases, that the system is designed for – because housing is a necessity - and that was exactly what I was up against.    

My housing story has a happy ending.  But I was lucky – to have the support network and resources to fall back on that others might not.  What I learned is that housing instability can happen to anyone, and that our “safety net” is made of gossamer.

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Raising Money from the Crowd (Version 2.0)

I’m interested in how the “power of the crowd” can be harnessed not only in terms of work (crowdsourcing), or predicting the future (prediction markets), but also how crowds could help businesses and investors.  Enter crowdfunding.  Benefits: entrepreneurs are able to communicate information about their businesses and endeavors to a wide audience, and investors with small amounts can get involved.  According to Lawton and Marom, crowdfunding covers a multitude of activities:

Crowfunding describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations . . . The crowdfunding space is quite diverse, comprised of many niches, and shares a lot of social networking’s energy.  Whether to solicit donations and create a fan base for an around-the-world sailing adventure, to pre-sell copies of a book, or to finance a startup in return for equity, some form of crowdfunding is available.

Pooling their money allows individuals with only small amounts to invest the ability to join in the market, often helping artists and musicians produce their work and or to help charitable organizations get off the ground. 

Traditionally, there was no exemption from the securities laws for crowdfunding, and advertising on a website was tantamount to a violation of the 1933 Securities and Exchange Act rules against unregistered public offerings.   Rather than promote traditional equity investments, which would run afoul of the Securities and Exchange Commission, crowfunding websites turned to alternate and creative investment forms.  For example, some crowdfunding websites followed the model of the website Kiva, which promotes microfinance, and which promises no return or interest on the amount, just a return of the capital.  In these ways people can put up small amounts of money for a good cause.  Other websites, like Kickstarter and IndieGoGo provide those who put up money a return in the form of discounted products or free merchandise, but not the traditional monetary dividend traditionally associated with stock. 

In a recent article, Professor Steven Bradford was in favor of such an exemption to the federal securities laws, provided that the equity offerings are small in size and the amount of investment were to be limited to a small amount.  The prolific and creative Professor Joan Heminway seemed less sanguine, perhaps because she was concerned about the possibility of fraud and less-savvy investors being duped by a swindle. 

With the passage of the JOBS Act in April, the regulatory atmosphere for crowdfunding has changed significantly.  The new law allows for a limited exemption for crowdfunding (up to $1 million/year, certain limits on amounts per each investor according to annual income/net worth), with particular requirements that crowdsourcing websites and companies on these websites must meet.

I’ll be interested to see what happens with crowdfunding in the upcoming years – will this idea catch on, or is it another Internet fad?  Discuss.

Version 1.0 of this post appeared yesterday (a small portion of a forthcoming article titled “CyberCommodication”).  I had inadvertently posted an outdated excerpt from the article from March.  Thank you to the astute reader who caught the issue, and my apologies for the mistake.

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Working the Crowd

I’ve written before about crowdsourcing and its accompanying employment law issues.  And so when I saw this recent article from the Economist, I thought that it encapsulated both the potential of virtual work as well as its downside.   The article notes that psychologists are using the Mechanical Turk to broaden their psychological experiments so that they are truly global and representative of more than the perspectives of western college students.  Sounds great!  Er, well.  Knowing how hard it is to earn minimum wage on the Mechanical Turk (because my research assistant and I have tried to earn it, and failed to do so on numerous occasions), it becomes a darker story.  Here are some excerpts from the article:

Crowdsourcing is a way to get jobs like deciphering images, ranking websites and answering surveys done for money by online workers. Several firms offer the service, including oDesk, CrowdFlower and Elance. But by far the most popular for scientific purposes is Mechanical Turk, which is run by Amazon and is named after an 18th-century chess-playing machine in which a human secretly moved the pieces.  Mechanical Turk has more than 500,000 people, known as Turkers, in its workforce. For the hard-pressed, cash-strapped psychologist, this is a godsend. Turkers, despite the fact that half of them have at least one degree, are willing to work for peanuts. (Their median wage is about $1.40 an hour.) Most, indeed, seem to regard the tasks they are set as more like a paying hobby than an actual job. And, crucially, they are growing more cosmopolitan with each passing year. Though 40% are still from America, a third are Indian and the rest come from about 100 other countries. . . .using Turkers instead of undergrads does offer some genuine diversity.

One researcher who has taken advantage of that diversity is David Rand, a lecturer in psychology at Harvard University. He is using Mechanical Turk to reconsider the results of several experiments originally conducted mainly on students. In a recent study of moral decision-making, for example, he recruited hundreds of Turkers to repeat a classic thought experiment known as the trolley problem. This confronts its participants with a dilemma—a runaway railway trolley will kill a group of people unless the subject of the study chooses to push a single individual in front of it, in order to slow it down. Doing so will kill that individual, so the dilemma is whether to kill one person deliberately, or several through inaction.… Dr Rand is re-running Dr Herrmann’s experiments on Mechanical Turk—at a tenth of the cost of the original work….

Questions of ethics have also arisen. Some people think research projects which pay wages of less than $2 an hour are exploitative—even though that is the going rate for other Turker activities. Conversely, according to Karen Fort, of France’s Institute of Scientific and Technical Information, at least one university has already prohibited the use of grant funds for this sort of study, for fear that Turkers could claim status as employees.  For many researchers, though, the appeals of crowdsourcing—bargain prices, vast supply and enormous scale—are too attractive to ignore. Indeed, the new methodology might democratise the very practice of psychology, allowing those without a laboratory or university behind them to join in as well.

I have a very strong view on this.  I believe that in its current form, the relations between workers and the psychologists described here are exploitative.  Beyond that, there is a strong argument that employment on these terms violates the Fair Labor Standards Act.  Researchers and their universities should be ashamed.  It is ironic that someone ostensibly investigating ethics around the world cannot do a better job when designing his own experiment.  Further questions: How is this getting past university IRBs?  Has anyone at the Department of Labor taken notice of this?  And where are the enterprising wage-and-hour labor attorneys?  (The spokewoman for France’s Institute of Scientific and Technical Information has a point, in my view).

[Hat-tip: Jeffrey Harrison]