Category: Contract Law & Beyond

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An Important New Paper on Veil Piercing Procedure

Sam Halabi (Tulsa) has written an important and interesting new paper on veil piercing, titled Veil-Piercing’s Procedure.

“With the lines between shareholders and corporations blurring over constitutional rights like free exercise of religion and political speech, questions as to how and under what circumstances the law respects or disregards the separation between shareholders and their corporations have never been more urgent. In the corporate law literature, these inquiries have overwhelmingly focused on the doctrine of piercing the corporate veil, a judicial mechanism normally applied to hold shareholders responsible for the obligations of corporations. The last twenty years of veil-piercing scholarship has been largely devoted to empirical analyses of veil-piercing cases collected from Lexis and Westlaw searches. Since 1991, scholars have been trying to mine cases for ever more variables that might predict when and under what circumstances judges disregard the separation between shareholders and their corporations. This Article argues that these scholars have focused on the substance of veil-piercing law to the detriment of another factor: civil procedure. This Article is the first to survey civil procedure and evidentiary rules that affect existing veil-piercing studies including pleading standards, threshold presumptions, burdens of proof, jury access and waiver. The Article ultimately argues that phenomena scholars now ascribe to the “incoherence” of veil-piercing law are explicable in the context of veil-piercing’s procedural fluidity.”
The paper breaks new ground on a very, very well trodden field.  (Full disclosure: Sam critiques my work with Christy Boyd on this topic, and we’re mostly guilty as charged.)  I continue to think that veil piercing is a vastly over-written topic, but this paper makes a real contribution and is worth reading. Check it out.

 

apparent-authority
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Does Salaita Have a Contract Claim?

As I’ve argued in pedantic detail, Prof. Salaita’s hypothetical promissory estoppel claim against the University of Illinois is weak. In the Illinois Court of Claims, even if one can assert  estoppel against a state instrumentality, the claim should fail unless the undiscovered facts are radically different from those publicly known. But what about an ordinary contract claim? On its face, most observers have discounted the possibility because the offer letter explicitly stated there was no contract before board approval. Prof. Nancy Kim argues to the contrary, in a thoughtful post here. The nub of her argument is one of contract interpretation:

“I think both parties intended a contract and a “reasonable person” standing in the shoes of Salaita would have believed there was an offer.  The offer was clearly accepted.  What about the issue regarding final Board approval? Does that make his belief there was an offer – which he accepted –  unreasonable?  I don’t think so given the norms surrounding this which essentially act as gap fillers and the way the parties acted both before and after the offer was accepted . . . There was, however, an implied term in the contract that Salaita would not do anything or that no information would come out that would change the nature of the bargain for the university.”

I read this to be making an argument about conditions – that is, Prof. Kim thinks that we shouldn’t interpret the language “This recommendation or appointment is subject to approval by the Board of Trustees of the University of Illinois” as an express condition, given the anti-forfeiture preference that many courts practice.  Rather, Kim argues that we should see the term a promise which is subject to a brake – the implied duty of good faith and fair dealing: the Board of Trustees could only withhold approval for good cause. Whether the tweets in question constitute good cause then becomes the real issue.  She admits the problem “caused me some angst,” but ends up coming out against a finding of a condition.

I’m not unsympathetic to Prof. Kim’s position.  But to evaluate it, I would prefer to talk about Illinois decisional law, rather than contract doctrine in general terms.  Just for those few readers of this post who don’t already think about contract law all day long, well, I’ll tell you a secret: there is no contract law.  Notwithstanding the Restatement’s certitude, the states diverge sharply on many matters, including those as seemingly trivial as the preference against forfeiture, and as general as the liability of principals for agents’ actions. I’ve done some research into this.  I original wrote a post that catalogued the absence of evidence in Illinois for contract recovery under circumstances anything like these. But rather than subject myself to a tl;dr comment, I’ll just post the following challenges to Prof. Kim and others who care to take them on.

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Disclaimers & Promissory Estoppel

Imagine that, rather than because of his speech, but for no reason at all, University of Illinois Chancellor Wise decided not to present Prof. Salaita’s appointment to the Board of Trustees. Also assume that the facts are as they’ve been publicly described – there is no documented backchannel communication assuring that the appointment was a “rubber stamp,” and the Board had no knowledge of the offer’s existence before the summer. Finally, assume that the Illinois Chancellor has not failed to forward on a hiring proposal to the Trustees since, say, 2010.

These assumptions strip away the political and constitutional questions,* and leave us with a clean problem: does an express reservation of authority in an offer of employment make it unreasonable to rely on it, where the current institutional practice is for such authority to be confirmed later? Dorf thinks “no.” I, and Steven Lubet, think “yes.”

In my first post, I cited a number of cases in which promissory estoppel claims by prospective faculty members under circumstances like these were denied, including some that rested on the conclusion that the ultimate authority lay with the Board of Trustees.  This post continues that research.  I have found no cases directly on point in Illinois. Nor have I found a single case outside of Haviland v. Simmons where a plaintiff successfully asserted a PE claim under these circumstances.  In addition to the cases I cited in the original post, see also Drake v. Medical College of Ohio, 120 Ohio App.3d 493 (1997) (representation by college president that a faculty member would be hired and trustees would be a “rubber stamp” didn’t give rise to PE Claim);  Broderick v. Catholic University, 365 F. Supp. 147 (D.D.C. 1973) (representation of prospective wage equality in president’s letter not reasonably reliable in light of several factors, including reservation of power to Trustees).  Of the dozen or so cases I have found in this vein, Oja v. Blue Mountain Community College, 2004 WL 1119886 (D. Ore. 1994) comes closest to the Salaita facts:

 

“Defendants argue that McCarrell, the interim president, stated in the June 18, 2002 letter to plaintiff that McCarrell would recommend that the Board agree to employ plaintiff. I agree with defendants that a close reading of the letter and the contract show that McCarrell did not agree to employ plaintiff but rather stated that he would recommend that the Board employ plaintiff. This is indicated by contract’s blank signature line for the Chair of the Board.
Plaintiff knew that Board approval was legally required, but argues that this as a mere formality. Plaintiff cites alleged statements by Shea to the effect that the job was secure, which Shea denies. Assuming Shea did make such statements, casual or unauthorized comments cannot create a binding employment agreement. See Butler v. Portland General Elec. Co., 748 F.Supp. 783, 792 (D.Or.1990)aff’d sub nom. Flynn v. Portland General Elec. Co.,958 F.2d 377 (9th Cir.1992) (table, text in Westlaw). The promissory estoppel claim fails because it was not reasonable for plaintiff to believe that he had a binding contract with Blue Mountain based on McCarrell’s statement that McCarrell would recommend plaintiff’s employment to the Board.”

Now this isn’t precisely on point. The letter to Salaita did offer employment, subject to the condition listed.  So it’s a better case for reliance than Oja. But the similarities are otherwise striking, including the alleged side representations of security. There is also a line of cases in which  general disclaimers of intent to contract in university policies defeat promissory estoppel claims.  See Ishibashi v. Gonzaga University, 101 Wash. App. 1078 (2000). That said, contract authorities (like Farnsworth and Perillo) state that some courts have given promissory estoppel relief notwithstanding disclaimers of intent to be bound, especially where the disclaimers are general (in an employment manual) and the promises specific. There’s a case like this in every casebook, and they tend to turn on how unjust the conduct ends up feeling.  See, e.g., Spooner v. Reserve Life Ins. Co., 47 Wash. 2d 454, 287 P.2d 735 (Wash. 1955) (denying relief).

Given this caselaw, and the general trend against promissory estoppel I earlier identified, the best thing that Salaita would have going for him – in the unlikely event that he were to litigated in federal or state court** – are the side representations and academic custom. The question of whether parol evidence is barred in PE cases is notoriously complex. In Illinois, PE can’t defeat the statute of frauds, and it would be a further complex issue to decide whether the writing – which is not signed by the ultimate authority to be charged – satisfies the statute, as Larry Cunningham has pointed out.  My own gestalt is that the side representations would not be admissible,though if they were in writing they might be more likely to color the court’s analysis.

As for custom and practice, I agree with everyone who has said it is relevant.  But, as a district court stated in dismissing evidence of custom of providing a six year tenure clock,

Custom is an area of contract law through which the courts must travel prudently. Only upon a clear showing of custom, nigh universally understood, should a court impose obligations based on custom . . . This Court will not enforce contractual obligations based on a custom which at best finds only tenuous support in the facts.” Marwill v. Baker, 499 F.Supp. 560 (D. Mich. 1980).

*As I originally wrote, I think that there are serious constitutional infirmities in the University’s position, as well as substantial academic freedom arguments. Rescinding the offer was a bad decision.

**Mike Dorf’s assumption that federal courts will exercise supplemental jurisdiction over the promissory estoppel claim assumes that the University of Illinois isn’t immune under sovereign immunity.  Cf. Kaimowitz v. Board of Trustees of Univ. of Illinois, 951 F.2d 765 (7th Cir.1991) (holding that it is immune unless certain exceptions are met). I think this issue would turn on whether the PE recovery is seen as a “present claim” or not, but I’m not an expert.

 

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Steven Salaita’s Promissory Estoppel Claim is Weak

Not a good fact for PE claim: Salaita's tween that "Zionists: transforming 'anti-semitism' from something horrible into something honorable since 1948"

Not a good fact for PE claim: Salaita’s tweet “Zionists: transforming ‘anti-semitism’ from something horrible into something honorable since 1948″

Mike Dorf has written something about the Steven Salaita case which I can’t agree with. Acknowledging that Professor Salaita had no actual contract with the University of Illinois, Dorf turns to promissory estoppel:

“Like many other states, Illinois law offers protection to people who, in reasonable reliance on an offer that falls short of a fully enforceable contract, take actions to their detriment. The Illinois Supreme Court affirmed this principle of “promissory estoppel” as recently as 2009, in the case of Newton Tractor Sales v. Kubota Tractor Corp.

Salaita has an almost-classic case of promissory estoppel. He was told by Illinois that trustee approval was essentially a rubber stamp, and in reliance on that representation he resigned from his prior position on the faculty of Virginia Tech.

To be sure, a party who sues for promissory estoppel rather than suing under a formal contract typically only recovers to the extent of his reliance, rather than in strict accordance with what he expected to gain under the contract. But here, there is no real difference between what contract law calls the reliance interest and the expectancy interest: By giving up his position at Virginia Tech, Salaita gave up a job in which he had academic freedom; thus, recognition of his promissory estoppel claim should mean that Illinois must afford him academic freedom.”

Mike is an enormously decent person, and he knows more about constitutional law (and debate!) than I ever will. But if Mike really believes that Salaita has a strong case for promissory estoppel recovery, well, he’s wrong.

 The Illinois Supreme Court’s last statement on promissory estoppel is Newtonwhich endorses the Restatement (2nd) of Contracts Section 90.  (Notably, Newton recognized that there a live cause of action for PE in Illinois, but the case strongly suggests that the issue had been in doubt — as of 2009!) The elements of promissory estoppel are consequently familiar:

 “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.”

Let’s take them one by one, as if this were a law school exam.

1.  There was a promise, but it didn’t unambiguously assure employment. It did so contingent on board approval. There are tons of cases out there (including some from Illinois, e.g., Board of Education South Stickney School District No. 111, Cook County v. Murphy, 56 Ill.App.3d 981 (1978)) holding that under the Rst.2d, a promisee can’t estop a promisor’s denial of obligation when the promisor lacked legal authority to conclude a bargain. Under the facts as they’ve been reported, the offer letter was sent by Brian Ross, U. of I.’s interim dean of the College of Liberal Arts and Sciences, and explicitly stated that it was contingent on final board approval.

2.  Would the promisor reasonably expect the promise to induce action? Salaita knew the Interim Dean lacked the authority to make a promise that could be relied upon. Dorf argues that Salaita was told by “Illinois” that Board approval was a rubber stamp. But that’s a figure of speech: Salaita was told by the same person who wrote the letter, who, again, lacked decisional authority. (At least, based on what’s been reported.) If an agent tells you that he doesn’t have authority but that his principal will surely back him up, is it reasonable to rely on that representation? I think probably not.  In the classic PE case of Hoffman v. Red Owl, the promisor is bound by an agent’s promises in part because the principal knew about them. What did the relevant University executives know about the hire before the letter was sent out? It’s my impression that at most universities, Department chairs are approved to hire someone, and the President/Board don’t know who until the final package arrives on their desks.  The only winning case that I can find on facts remotely like this one is Haviland v. Simmons, 45 A.3d 1246 (Rhode Island 2012). In Haviland, “upper echelon of Brown’s administration—including the Dean, the Provost, and the Interim President” made promises, and Brown was thus “precluded from denying that its administrators had the authority to provide plaintiff with employment security because the University has failed to produce any probative evidence establishing that those officers lacked such authority.” Is that the case here? 

3.  Can injustice be avoided only by enforcement of the promise? I teach this provision as a catchall – a way for courts to avoid enforcement if they dislike plaintiffs and permit it if they do. Here, I think a court would focus heavily on the language in the letter and inquire about relevant practices at the University. How many times have job offers been extended only to have met board resistance? How much does the court think that a university’s right to control who works for it is trumped by the benefits of academic freedom. (This obviously ties the injustice prong into a first amendment analysis.) My gut feeling is that unlike many liberal law professors, who increasingly treat Israel as a pariah, and who think that there’s “clearly only one defensible side to take on this case,” elected state court judges in Illinois might not think that justice requires enforcement of this non-contract claim. Those tweets would make mighty fine campaign fodder. 

Why am I so skeptical when Mike Dorf is not? I think it’s largely because I’ve read alot of promissory estoppel cases, and a lot of promissory estoppel articles. And the consensus is that over the last generation, promissory estoppel has waned as a theory of recovery. As Bob Hillman famously concluded, it’s a “remarkably unsuccessful” cause of action, which, in my experience, is brought largely in weak cases as a last-ditch shot to push through to discovery and thus motivate settlement.  I think that most contracts professors spend time on the doctrine these days largely because it’s so darn fun — the facts are wonderful! — but not because it’s a regular part of the business lawyer’s arsenal. Promissory estoppel cases are losers. This case would be a loser.  See, e.g., Awada v. University of Cincinnati, 3 Ohio Misc.2d. 100 (1997) (particle group promises of employment not binding); Daniel v. University of Cincinatti, 116 Ohio Misc. 2d 1 (2001) (reliance on faculty promises not reasonable given final trustee approval);Suddith v. Univ. of S. Miss., 977 So.2d 1158  (Miss.Ct.App.2007) (no injustice when after-acquired information about candidate changed president’s mind).

Now, nothing said here in any way suggests I know a thing about the first amendment claim’s merits.  I don’t.  Professor Salaita might have a good constitutional claim, or under some other regime of law. And I agree with Steven Lubet that a settlement is the modal outcome. But, to be snarky, Dorf is right: it’s “an almost-classic case of promissory estoppel.” A weak one.

 

Update: Mike Dorf responds.  My reply follows after the jump:

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north island tomtit fledgling-09
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The Tomtit Theory of Consideration

I’ve been teaching contracts for a decade, and I thought I’d heard of everything.  Then I came across this squib from Corbin on the adequacy of consideration:

“The rule that market equivalence of consideration is . . . to be left solely to the free bargaining process of the parties, leads in extreme cases to seeming absurdities. When consideration is only a “peppercorn” or a “tomtit” or a worthless piece of paper, the requirement of a consideration appeared to Holmes to be as much of a mere formality as a seal…”

A peppercorn or a tomtit?  I know what the peppercorn theory of consideration is. Basically, consideration can be something of trivial value, so long as that value isn’t easily reducible to a certain sum, giving rise to the problem of inadequacy of exchange.  Some years I’ve brought in a peppercorn, suggesting that it could – in some law school hypothetical universe – have subjective value to a particular student.  (Perhaps a deity’s face is carved  on it?  Really.) Most law students have their semesters spiced up by reading about peppercorns in contracts.  It’s like the Erie doctrine: apparently iconic, mysterious, deeply bizarre law.

But has anyone else ever taught that consideration can be a tomtit?  A tomtit!  In case you were wondering, a tomtit is a small New Zealand bird. Where did Corbin come to rely on this small bird to illustrate the point?  An older (still) English case, Couldery v. Bartrum, 19 Ch. D. 394, 399 (1881), held that a creditor could take “a horse or a canary or a tomtit.”  Couldery was in turn cited and popularized by Ames in his 1899 HLR article, “Two Theories of Consideration.” But, excepting a few stray references in the law reviews in the last two generations, no one refers to tomtits anymore.  Peppercorns have replaced them in law school classrooms, though they are demonstrably less visually interesting, and wouldn’t give rise to the opportunity for a double lesson in tomtit gender identification.It’s time to bring tomtits back.

 

 

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Article Stub: Finding Offerors under 2-207

Boxing-Winner

[I’m planning to write a series of posts I’ll call article stubs – the germs of papers I’ll likely never write. Dan Markel might – or more likely might not - approve. I used to talk about these pre-draft ideas with him, and he mercifully steered me off most of them before they saw the light of day. In his honor, here’s a bad idea. Feel free to tell me so.]


 

UCC 2-207, the battle-of-the-forms provision, is famously a mess.  White and Summers describe it as “an amphibious tank that was originally designed to fight in swamps, but was sent to fight in the desert.” That’d be even more accurate if you replaced “tank” with “Ford Pinto.”  Complexities about.  (Check out this fabulous flowchart produced by one of my students, which provides one path through the maze.) But even if you work  your way through the various intricacies of the provision, resolving debates about the meaning of “expressly made conditional,” and the “knock-out rule,” a deep policy problem lurks: who, exactly, is the offeror?

The question is important because, although the provision was designed to account for a flurry of forms, it clearly privileges those forms which come first-in-time, typically finding the first mover to be an offeror. Unfortunately for the second mover (which can be a nano-second slower online) the merchant offeree’s additional terms are incorporated into the contract only if they are immaterial. Most terms that you’d care to litigate about are material. Summers and White point out that avoiding first form favoritism is an important policy goal, but proceed by privileging that first form as the offer anyway.  (See the 4th edition of their Hornbook, p. 32, n.3)  We can see the importance of the choice clearly by pairing Hill (offeror is the firm) with Klocek (offeror is the consumer). But the cases stand uneasily against each other, because the key analytic move (who goes first and why) is buried — to be fair, less so in Klocek than in Hill. (I’m sweeping broadly here, and avoiding knock-out complications.)

At some level, this confusion is unavoidable — 2-207 is a badly drafted mess.  But in particular here, the problem is that although important consequences flow from making one or the other party the offeror, the Code provides no guidance in making that choice – it doesn’t even use the word offeror in the section.  Doctrine would be marginally  more clear if we made the decision as to who is the offeror explicitly a policy choice. Courts might, for example, make sellers offerors because they bear default liability burdens (warranty, nondelivery) under the UCC. Or courts could empower buyers because they typically initiate transactions, thereby spurring commerce.  Or make the choice depend on some kind of rough information-forcing default allocation.  The key realization is that 2-207 buries the lede, and that courts which simply follow the provision leave us in the dark.

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Evolving Contract Schemas

A Meeting of the Minds

A Meeting of the Minds?

With co-authors, I’ve been working on a series of experimental papers about contract law that appear to be converging on a theme: what individuals think “contract” means has purchase in the real-world, and that contractual schema is evolving.

A schema is nothing more than a mental model – a framework – to help us organize and process information. A contract schema is the set of background assumptions that we fill in when we think about a legally operative bargain. For those of us who grew up in a largely off-line world, our contract schema involve “doing the paperwork,” “getting it in writing,” and “signing on the dotted line.” (See this article for details). Indeed although most contracts law professors make fun of the metaphor of the meeting of the minds, it captures a real heuristic for a certain segment of society. That so even though form contracts have been part of modern life since the 50s, and almost none of us ever actually negotiate contracts that could end up in court. Indeed, when I started teaching in 2004, students routinely would say “she signed it, she must be bound to it,” even in cases like Specht.  Since this mental model is quite a ways from the reality of online contract, consumers may think they are in contracts when they aren’t, and visa versa.

But what happens when contracts widely explored in pop culture – and presented to you in your formative years – were never signed, never reduced to writing, never negotiated.  The cheerios arbitration debacle, facebook’s demystified terms, your cellphone contract, your cable company’s impossible-to-escape relationship.  What happens when every time you think “contract,” you don’t call up the mental image of a “signature on vellum” but instead “loki on steroids.”  And when companies, realizing this, increasingly pushed “no contract” plans that were actually contracts, just without penalty clauses attached.

Perhaps citizens born after 1980 will have dramatically different attitudes toward contract than those born before. If that’s true, we’ll increasingly find cohort effects in contracting behavior online, as lay intuitions about how to respond to “contract” increasingly turn on the age of the promisee. For those coming of age offline, “click to agree” calls up memories of signature, and consequently infuses bargains with personal honor; for those born digital, “click to agree” means “nothing good is about to happen to me.” Those attitudes toward contract will play out in behavior – in likelihood to breach, to shirk, and to behave opportunistically.

At some point we expect to have direct evidence worth sharing in support of this argument! For now, I thought start discussion by fast forwarding fifteen years, when many judges born in the digital age will have assumed the bench. What changes in contract doctrine follow from changes in contract’s schema? Then again, will there be any contract cases left to decide, or will they all been sucked into arbitration’s black hole?

 

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On National Ice Cream Day, Thanks Dairy Queen

DQIn honor of National Ice Cream Day (July 20), here is a brief celebration of Dairy Queen, an institution of American culture—entrepreneurial, legal, literary, and familial—that helped put this cold concoction on the national calendar. I developed these reflections when researching my upcoming book, Berkshire Beyond Buffett: The Enduring Value of Values (Columbia U. Press 2014), which provides deep looks at the corporate culture of Berkshire Hathaway’s fifty-plus subsidiaries, including Dairy Queen.

While full treatment must await publication of the book (which can be pre-ordered now), here are a few passages along with many outtakes—i.e., sections that did not make it into the final book because they are too technical, but may appeal to readers of this blog interested in the history of franchising businesses and intellectual property rights.

Dairy Queen’s roots date to 1927’s founding of Homemade Ice Cream Company by John F. (“Grandpa”) McCullough (1871‒1963) and his son Alex near the Iowa-Illinois border. Innovative ice cream makers, they experimented with temperatures and textures and eventually pioneered soft ice creams. One discovery: ice cream was frozen for the convenience of manufacturers and merchants, not for the delight of consumers.

At first, the McCulloughs were unable to interest any manufacturer in building the necessary freezers and dispensers to serve soft ice cream. Luckily, however, Grandpa happened to see a newspaper ad in the Chicago Tribune describing a newly-patented continuous freezer that could dispense soft ice cream. Grandpa answered the inventor/manufacturer, Harry M. Oltz, and the two made a deal in the summer of 1939.

The McCullough-Oltz agreement entitled Oltz to patent royalties equal to two cents per gallon of soft ice cream run through the freezer; the agreement also granted the McCulloughs patent licensing rights in the Western U.S., while Oltz retained them for the Eastern part of the country. The agreements that McCullough and Oltz made with licensees seemed to cover only the patent, rather than the DQ trademark, and contained few quality controls.

After World War II, DQ stores hit their stride, drawing lengthy lines of increasingly loyal customers enjoying the cooling effects of soft ice cream all sultry-summer long. The customer throngs at one store in Moline, Illinois caught the attention of Harry Axene. An entrepreneurial farm equipment salesman for Allis-Chalmers, Axene wanted to invest in the business. He contacted the McCulloughs and acquired both the rights to sell the ice cream in Illinois and Iowa as well as an interest in the McCullough’s ice cream manufacturing facility. Read More

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Maya Angelou’s Multi-Million Dollar Bout with Butch Lewis

Maya cardThe number one best-selling book on in this week’s New York Times best seller list is one first published in 1969: “I Know Why the Caged Bird Sings,” by Maya Angelou, the renowned poet and professor at Wake Forest University who passed away three weeks ago. Since she published that autobiography, Angelou’s acclaimed poetry has been published widely by Random House and initially reached a distinguished, though small, audience.

How that audience grew to a multi-million dollar phenomenon, and how her book is again number one, includes a fascinating story of entrepreneurship and law of general interest and especially for those interested in contract law. As a tribute to the distinguished author for literary, commercial and spiritual success, herewith an account of that saga, from my book, Contracts in the Real World: Stories of Popular Contracts and Why They Matter.

In 1994, Butch Lewis, the former prize fighter and promoter of famous boxers such as Muhammad Ali and Joe Frazier, conceived the idea of popularizing Angelou’s poetry by including it in Hallmark greeting cards and similar media. Lewis first met Angelou in early 1994 when the scrappy fighter asked the elegant poet to take a trip to Indiana with him to visit his boxing client, Mike Tyson, in prison. During the trip, Angelou and Lewis discussed how she might expand her readership by publishing her works in greeting cards. After negotiations, the two signed an informal letter agreement on November 22, 1994.

Angelou promised to contribute poetry exclusively to Lewis and he promised to promote its publication in greeting cards. The exclusivity feature was important, since it meant Angelou could not market her poetry without Lewis and Lewis need not fear that his efforts would be undercut by a last-minute switch to a competing promoter.  Aside from exclusivity, the letter recited only basic terms, such as how they would later agree on what poetry to include, that Lewis would fund promotion, and how revenues would be shared—first to reimburse Lewis’ investment and expenses, then to split the rest equally. The letter said it would be binding until the two drew up a formal contract. Though Lewis prepared one in March 1997, it was never signed.

Lewis began marketing efforts immediately, though it took until March 1997 for Lewis and Hallmark to finalize terms—a three-year deal, covering any new poem Angelou produced during that time. In exchange, Hallmark would pay Angelou and Lewis a $50,000 advance against royalties, which would be paid at a flat 9% rate of total sales, with a guaranteed minimum of $100,000. Angelou’s greeting cards would be administered through Hallmark’s Ethnic Business Center, targeted to an African-American audience.

Lewis sent Angelou the proposed Hallmark agreement. By then, however, Angelou’s views of Lewis had curdled. For the Hallmark pitch, Lewis prepared sample cards and brought these for Angelou’s approval. Angelou found the display of caricatures of African-Americans distasteful and unreflective of her poetry’s meaning. Her impression of Lewis worsened when the two crossed paths in Las Vegas in 1997, where Angelou was appalled by Lewis’s behavior, which included punctuating his conversations by “grabbing his crotch.” Read More