Archive for the ‘Contract Law & Beyond’ Category

Symposium Next Week on “A Legal Theory for Autonomous Artificial Agents”

posted by Frank Pasquale

On February 14-16, we will host an online symposium on A Legal Theory for Autonomous Artificial Agents, by Samir Chopra and Laurence White. Given the great discussions at our previous symposiums for Tim Wu’s Master Switch  and Jonathan Zittrain’s Future of the Internet, I’m sure this one will be a treat.  Participants will include Ken Anderson, Ryan Calo, James Grimmelmann, Sonia Katyal, Ian Kerr, Andrea Matwyshyn, Deborah DeMott, Paul Ohm,  Ugo Pagallo, Lawrence Solum, Ramesh Subramanian and Harry Surden.  Chopra will be reading their posts and responding here, too.  I discussed the book with Chopra and Grimmelmann in Brooklyn a few months ago, and I believe the audience found fascinating the many present and future scenarios raised in it.  (If you’re interested in Google’s autonomous cars, drones, robots, or even the annoying little Microsoft paperclip guy, you’ll find something intriguing in the book.)

There is an introduction to the book below the fold.  (Chapter 2 of the book was published in the Illinois Journal of Law, Technology and Policy, and can be found online at SSRN).  We look forward to hosting the discussion!

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  February 8, 2012 at 10:43 am   Posted in: Contract Law & Beyond, Criminal Law, Current Events, Cyberlaw, Social Network Websites, Symposium (Autonomous Artificial Agents), Technology, Tort Law   Print This Post   10 Comments

The Psychology of Contract Precautions

posted by Dave Hoffman

Tess Wilkinson-Ryan (Penn) and I have a new draft paper up on SSRN: The Psychology of Contract Precautions.  From the abstract:

“This research tests the intuition that parties to a contract approach each other differently before the contract is formed than they do once it is finalized. We argue that one of the most important determinants of self-protective behavior is whether the promisee considers herself to be in negotiations or already in an ongoing contract relationship. That shift affects precaution-taking even when it has no practical bearing on the costs and benefits of self-protection: the moment of contracting is a reference point that frames the costs and benefits of taking precautions. We present the results of three questionnaire studies in which respondents indicate that they would be more likely to protect their own interests—by requesting a liquidated damages clause, by purchasing a warranty, or by shopping around to ensure the best deal—when the contract is not yet finalized than they would when they understand the agreement to be finalized. We discuss competing explanations for this phenomenon, including both prospect theory and cognitive dissonance. Finally, we explore some doctrinal implications for work on disclosure, modification, and promissory estoppel.”

The paper is a part of a new literature on the moral psychology of contracting — see, e.g., Suckers, Obligations, Liquidated Damages.  That said, it’s been quite a long time in production — I think we first started working on it in 2008 — and I’m thrilled to finally get it out in the open.  It’s in draft form, so any comments you might have would be most welcome.

  February 7, 2012 at 4:29 pm   Posted in: Contract Law & Beyond   Print This Post   4 Comments

Vassar’s Mistaken Acceptance Letters

posted by Lawrence Cunningham

Six dozen applicants for admission to Vassar College were thrown a boomerang over the weekend, first receiving electronic letters of acceptance only to be followed an hour later by electronic messages of apology saying the first batch were erroneous. At least some of the disappointed hopefuls object that the college is in breach of contract. They say Vassar’s first letter was binding because the deal was described as binding early admissions decision. As a matter of law, this is not a winning argument; but as a matter of public and student relations, the college may wish to do more than send what appear to be mere mass form apologies.

Ordinarily, the school’s letter would not constitute the formation of a contract. Contracts for college matriculation are formed after students first file an application for admission, which has zero contractual significance. The first step in the process with contractual significance is the letter of admission schools send. This would be considered to be an offer of admission. It creates in the student the power to accept, by following stated procedures, such as submitting a deposit by a stated deadline and committing to matriculating.

But offers to form contracts may be revoked at any time until the offeree has accepted or, in limited circumstances when the offeror seeks action in return, begun the requested action in reliance. Accordingly, Vassar’s letters of acceptance had no legal effect unless and until the students accepted, which none of the recipients over the weekend had done. It does not matter that the context involved early admission decisions described as binding. The decisions are binding only once the offer has been made and accepted.

Even if the college’s letters were somehow seen to form a binding contract, another basic contract law doctrine comes into play: mistake. In most cases, excuse from contractual obligation on the basis of mistake is granted only when both parties are mistaken (mutual mistake) and then only when it is evident that some risk existed that the parties did not intend to exchange or allocate. Classic examples are mistakes about the attributes of an animal (such as whether a cow was a breeder or barren) or provenance of a coin or instrument (such as whether a dime was minted in 1916 at Denver or whether a violin was made by Stradivari or not).  [I analyzed those in the pending case about a Madoff Ponzi scheme account.]

But there is also a class of cases allowing rescission of a contract based merely on unilateral mistake–mistake by one side only. Excuse based on unilateral mistake requires that the mistake be made honestly not with any whiff of bad faith; involve a clerical matter rather than a matter of judgment; be reported to the other side promptly upon discovery; and not prejudice the other side as a result of its reliance. The case favoring the excuse is strengthened when insisting on enforcement of the contract would result in a windfall to the other party.

All those elements are present in the Vassar case: college officials made an honest computer mistake to which it alerted students within an hour after they had done nothing in reliance. To enforce the letters as contracts would create a windfall–a spot at Vassar that the school’s admissions office had declined to award.

On the other hand, the school’s response to its error seems both glib and insensitive. It sounds as if the school is treating these students as the clinical subjects of the type that appear in the kind of legal analysis I just offered. The school should not forget the human dimension of its error. Perhaps it can could offer something more substantive to these students for its mistake. At minimum, the school should refund any application fee students paid, since the school botched the application process that those fees pay for.

  January 29, 2012 at 9:17 am   Posted in: Contract Law & Beyond, Current Events   Print This Post   16 Comments

Contracts in the Real World: Ready for Pre-Ordering

posted by Lawrence Cunningham

This new book on contracts, regaling readers with stories ripped from the headlines, will be published soon and can be pre-ordered now on amazon.com and other fine booksellers.  

Contracts in the Real World: Stories of Popular Contracts is intended to be a fun, fast, reliable read. It is very useful for 1Ls struggling with the subject, perfect for anyone thinking about going to law school, and designed to entertain devotees of pop culture. It will also captivate experts in contract law by connecting current events with venerable principles and classic cases.

Stories feature such notables as Eminem, Lady Gaga, Charlie Sheen, Donald Trump, and Sandra Bullock, as well as examples such as your cell phone contract, lottery sharing partnership, and on-line privacy policy.

List price is $33. The table of contents follows. 

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  January 28, 2012 at 6:08 am   Posted in: Amazon, Articles and Books, Contract Law & Beyond   Print This Post   4 Comments

Nondisclosure, Non-disparagement, and Contract Law

posted by Dave Hoffman

In light of some of my previous posts on nondisclosure clauses and their enforceability, I thought readers might enjoy the following story:

“Robert Lee visited a dentist, Stacy Makhnevich, because he was suffering from a severe toothache, caused by a painful infected cavity.  She refused to treat him until he signed a so-called “privacy” contract, which included a clause preventing him from posting negative reviews of her online.  [The clause read: "Patient will not denigrate, defame, disparage, or cast aspersions upon the Physician; and (ii) will use all reasonable efforts to prevent any member of their immediate family or acquaintance from engaging in any such activity."]

More specifically, the contract stated that Lee would not publish adverse comments about Makhnevich’s performance online, and that he would assign the copyright of any online commentary that he did make to her (presumably so that she could have such commentary quickly and directly taken down if she found it objectionable).

Lee signed the contract.  But later—after receiving a hefty bill for service that he viewed as problematic—he posted negative reviews of the dentist on Yelp.com and DoctorBase.com, despite the contract’s ban on such postings.

The Yelp.com review said:  “Avoid at all cost! Scamming their customers!”  The DoctorBase.com review was similar.

Lee claims that Makhnevich then– in an attempt to enforce the contract—tried to get Lee’s negative reviews taken down from the review sites.  He alleges that she also started billing him $100, as a fine, for every day the reviews remained on the Internet.  Moreover, Lee alleges, she refused to send copies of his billing records to him so that he could seek reimbursement from his insurer.  Makhnevich also sent Lee a notice threatening a lawsuit.  In response, Lee filed a lawsuit of his own.

Lee’s lawsuit calls the contract he signed invalid under state law as an unconscionable contract.  The lawsuit also alleges that posting one’s own commentary on a website such as Yelp.com or DoctorBase.com constitutes “fair use” under the copyright laws.

In the suit, Lee asks that the agreement that he and other patients signed with his dentist be declared void and unenforceable, and that she be barred from requiring assent to these agreements by future patients.”

So many great issues here — the penalty/liquidated clause damage term; the privacy/nondisclosure nexus; the unenforceability argument coupled with a lurking first amendment claim.  The story claims there’s even a consideration defense, though I can’t see how that’s really present on these facts.

As I’ve expressed before, I think these kinds of nondisclosure agreements are more difficult to enforce and obtain damages from than most conventional accounts would have it, and that they often function, like liquidated damages in general, to compel parties to engage in behavior that a court would not actually order.  This case seems like a good test of my theory.  I’m very glad that the Center for Democracy and Technology has taken up the battle.

 

(H/T: Reader T.G.)

  December 6, 2011 at 1:52 pm   Posted in: Contract Law & Beyond, First Amendment   Print This Post   2 Comments

Does the Secured Transactions Course Make Sense?

posted by Dave Hoffman

I’ve never taught Secured Transactions, so I’ll start by saying that the following is purely speculative and subject to correction.

We had a job candidate come through at some point this Fall who generally is interested in the field of commercial law.  That person mentioned in passing that although they were more than willing to teach the traditional secured transactions course, in their opinion it wasn’t well structured.  Why? Not, as the navel-gazer might imagine, because the field of commercial law is supposedly intellectually dead.  Rather because the traditional secured transaction course is too narrowly conceived — it usually is limited in coverage to personal property security interests under Article 9.  But many security interests that matter to lawyers aren’t held on movable property.  Since secured is ordinarily the foundational course for the commercial curriculum, students are left starting on too narrow a footing in understanding bankruptcy and bank regulation.  It’s even worse than having a corporations course that excludes LLCs.  Because of its technicality, ST is traditionally so difficult to teach that many students are turned off to the idea of commercial law practice at all.

Again, I don’t know much about this area of law.  I never took ST in law school, I haven’t taught it, and (worse) I haven’t even read a ST syllabus at my current institution.  But it struck me as an interesting thought, at least worth airing.  It’s related to concerns I have about the general corporate curriculum — is “corporations” really a subject that ought to be taught in a single course, or is it really a merger of too many (or too few) legal principles that have glommed together over time.  It’s also related to concerns that one might have about continuing to use the increasingly outdated, purportedly uniform, UCC to teach when States’ adopted versions are moving ever-further-away from that ideal.

  December 2, 2011 at 11:54 pm   Posted in: Bankruptcy, Contract Law & Beyond, Corporate Finance, Corporate Law, Law School (Teaching)   Print This Post   15 Comments

“Mentoring” versus “Scamming”

posted by Dave Hoffman

Today in Contracts, I taught Vokes v. Arthur Murray, 212 So. 2d 906 (1968).  In Vokes, a “widow of 51 years”¹ sought to be relieved from her obligation to pay for dance lessons purchased from an Arthur Murray franchise.  She claimed that the defendant had lied to her about her abilities as a dancer – and, significantly, exaggerated her improvement.  She had an account with almost 2,000 hours of unused lessons outstanding, and she owed more than $200,000 (in 2010 dollars). Surprisingly, the court permitted that argument to go to a jury, reasoning that the studio’s superior knowledge, coupled with the defendant’s bad faith as illustrated by the facts, made this the kind of exceptional misleading “opinion” which might be actionable.

It’s a good teaching case.  But it got me to wondering about an issue tangentially raised by David Segal’s embarrassingly error-ridden and ideologically charged series in the Times about legal education, and more forcefully by the equally thoughtful Paul Campos. Both argue (ironically) that law schools are contributing to the problems of the legal profession by not raising higher barriers to entry.  Those barriers might be incidentally related to other worthy goals — experiential education, a single tenure system, and a more rigorous disclosure regime are all popular reforms that are very, very expensive.²  But sometimes reformers make a more direct claim: like the Texas lawyers of the 1930s, they claim that “Our bar, already overcrowded, is held out as an asylum for the lame, and the halt, and the blind from the law schools of this country.”  Law schools are failing students by encouraging them to apply (it’s a “scam”), taking their money (it’s really a “scam!”), not preparing them to practice (“scam! scam! scam!”), and then not supporting them in getting jobs (“SCAM!”)

But how far, I mused outloud in class, does this argument run?  Let’s say a student comes to your office hours early in the Fall semester.  They are lost.  Really, desperately, lost.  They are working all the time, but they can’t see the forest, the trees, the continent, the planet.  Law’s greek to them. What to do?  One view – let’s call this the Segal/Campos view – is that the morally right thing to do at that very moment is to 1) recognize that my livelihood depends on the students; 2) this puts me, like every provider of services, in a slightly compromised position when talking to a student about whether they ought to be in school; 3) realizing this, decide pretty quickly if I think that the student is a candidate for Bar passage and employment; 4) if not, tell the student that they’d be better off leaving school and pursuing other opportunities in today’s job market, or to take the Ayes-refund offer if it comes.

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  November 22, 2011 at 11:27 pm   Posted in: Contract Law & Beyond, Law School, Law School (Scholarship), Law School (Teaching), Law Student Discussions   Print This Post   40 Comments

Headlines for Contracts Book

posted by Lawrence Cunningham

Contracts in the Real World is the title of my next book, which Cambridge University Press will publish in the spring of 2012.  It rips stories from the headlines about contracts disputes, showing how old-fashioned cases and doctrines still taught in law schools apply to cases arising every day in this country. (Contra the absurd claim made by David Segal’s infamous NYT piece denigrating the teaching of such old cases as Hadley v. Baxendale.) 

I’ve written about the book’s purpose and apppeal elsewhere, including on this blog and at Conglomerate. We are now designing the cover and the creative folks at CUP imagine a headline collage, using actual or adapted headlines to indicate some of the stories and issues in the book.  They invited me to make a list for the team to consider as they do this work.  A draft follows.  I’d welcome suggestions for improvement!

Mistaken Madoff Victim Wants Divorce Contract Do-Over

Donald Trump Says Recession Excuses Bank Loan Deal

Scrivener’s Error in Case of Who Owns the Los Angeles Dodgers

NBC Pays Conan $45M To Go

Charlie Sheen Settles Suit in “Two and a Half Men” Firing Read the rest of this post »

  November 22, 2011 at 6:48 am   Posted in: Book Reviews, Contract Law & Beyond   Print This Post   6 Comments

Nondisclosure Agreements and Herman Cain

posted by Dave Hoffman

Let’s pretend for a moment that Herman Cain had a legitimate chance of becoming the Republican nominee for President.  Now imagine that he actually engaged in unlawful behavior toward at least one female employee of the National Restaurant Association.  That employee would like to talk about what happened, but she is worried that she’ll breach a 1998 severance and nondisclosure agreement if she talks to the press.

Now, let our imagination run wild. The accuser – angered by Cain’s denials of bad conduct- decides to throw caution to the wind and go public.  Her allegations are salacious & they portray Cain in the worst possible light.  Notwithstanding her claims, Herman Cain actually gets a bump in the polling and becomes the nominee.  During the general election campaign, other women come forward – sparked by the original accuser’s courage.  Nevertheless, given the dominance of deterministic macro-economic factors over political strategy and common sense, Cain wins a tight election to become the next President of the United States.  At that point, emboldened, he decides to sue the woman who released the information about him for breach of contract, on a theory that he was a third-party beneficiary of the nondisclosure agreement.  (Let’s pretend that this is a doctrinal possibility.)

Last year, in a discussion with Larry Cunningham and Dan Solove, I argued that it’s exceedingly unlikely that any state court in the Union would award damages for breach of a nondisclosure agreement under circumstances like these, where (i) the information to be protected relates to sexual misconduct; (ii) the information is of immense value to the public at large; and (iii) it’s basically impossible for the promisee to prove damages with any certainty.  I am still convinced this is true, and that the media too uncritically reports that parties are “bound” by NDAs that would have almost no effect if tested in Court.

This line of thinking makes me doubt that fear of a breach of contract lawsuit is playing any role at all in the refusal of Cain’s accuser to come forward.  Rather, as her lawyer said today, she is afraid of the reputational damage that disclosure would bring, even if she’s entirely in the right.

  November 3, 2011 at 11:32 pm   Posted in: Contract Law & Beyond, Politics   Print This Post   10 Comments

Public Service Reminder: Baby Selling is Illegal.

posted by Dave Hoffman

Yikes.

For less than the price of a new car, police said, Bridget Wismer, 33, of Brookside Park, Del., sold her month-old son to John Gavaghan, of Old Newtown Road near Tremont in Bustleton.

The transaction is believed to have occurred between Sept. 28 and Sept. 30, when police executed a search warrant on Gavaghan’s home and found him with the child, said Cpl. John Weglarz of the New Castle County, Del., police.

Police there said they began their investigation on Sept. 4, when members of Wismer’s family expressed concerns that she might be trying to sell the newborn to a man from Philadelphia.

Despite investigations and interviews, police were initially unable to confirm the allegations. Then Gavaghan was caught on video filling out papers about the sordid transaction while at Delaware Park and Casino in Wilmington, Weglarz said.

“It sounds ridiculous . . . but he was on video surveillance seen completing documents regarding the sale of a baby,” Weglarz said. “It was clearly visible.”

This kind of illicit and unregulated sale of children is, of course, exactly what Posner said results from the current adoption regime.

 

(H/T:  Law student A.D.)

  October 5, 2011 at 11:33 am   Posted in: Contract Law & Beyond, Weird   Print This Post   No Comments

What is a treaty? Is that the right question?

posted by Matthew Lister

(Thanks to Danielle and the Co-Op crowed for letting me stick around a bit longer.)

I am interested in how we should think about treaties.  More specifically, I am interested in different ways we might think about treaties, and why different ways might be appropriate in different circumstances.  At one extreme we might think of treaties as establishing sacred duties, as being based on oaths with deep religious implications.  (Jeremy Waldon has a very interesting discussion of the history of this idea in his recent Charles E. Test lectures, “A Religious View of the Foundations of International Law”.)  I think that there’s a case to be made that supposed principle of international law (or of natural law, depending on one’s account), pacta sunt servanda, depends on this understanding, though I won’t try to make that case here.  (If so, this would be interesting in light of fact that Hans Kelsen at one point held, I believe, pacta sunt servanda to be the “basic norm” of international law, though he later abandoned this.) Read the rest of this post »

  September 8, 2011 at 6:02 am   Posted in: Contract Law & Beyond, History of Law, International & Comparative Law, Jurisprudence, Legal Theory, Trade, Uncategorized   Print This Post   4 Comments

Murdoch’s Illegal Contracts

posted by Lawrence Cunningham

Can you sell your silence, under English (or American) law?  Rupert and James Murdoch’s News Corp. tried to buy the silence of victims of their phone hacking ring.  To insulate their tabloid newspapers from reputational harm, the company signed what James calls “out of court settlements.”

Hush contracts were made with the English acttress, Sienna Miller, for £100,000 ($161,000) , and with the soccer union leader Gordon Taylor for £725,000 ($1.1 million).  There are likely many such others , in which the paper paid cash in exchange for a victim promising to stay quiet. But are these contracts legal? 

English (and American) law give a broad space for freedom of contract, and both give wide latitude for people to buy and sell silence. Confidentiality clauses are common in settlement agreements as well as a wide range of settings, from employment contracts and prenups to severance and separation agreements.  Bill Gates even put one in his home builder’s contract!  There is nothing about silence as such that makes them invalid.

But the law classifies some bargains as illegal and therefore invalid. In the case of contracts for silence, it draws the line at promises to hush up problems that threaten the public interest. In the United States, the law is quite clear that contracts to conceal criminal behavior are illegal and invalid. Read the rest of this post »

  July 20, 2011 at 7:59 am   Posted in: Contract Law & Beyond   Print This Post   9 Comments

Losing the Wall St. Journal

posted by Lawrence Cunningham

My friend Rob Cox of Breaking News offers an interesting perspective in today’s New York Times on the Rupert/James Murdoch scandal. It addresses The Wall Street Journal and an integrity clause in an agreement governing it.

The once-venerable Journal, long privately owned by the Bancroft family’s Dow Jones & Co., was revered for excellent reporting and astute coverage of business and world affairs. In 2007, the Bancrofts sold Dow Jones and the paper to the Murdoch tabloid empire, News Corporation, for $5 billion.

The sale was controversial among readers, journalists and editors of the Wall Street Journal. Murdoch’s raunchy and pugnacious style did not mix well with the high standards at the Journal of integrity in reporting and general refinement in opinion making.

To ease the concern, the merger agreement between Dow Jones and News Corporation required execution of an Editorial Agreement. It created a watchdog committee to uphold the Journal’s traditional “principles of integrity” and maintain its longstanding Code of Conduct.

Cox wonders whether that committee has contractual powers to address any violations at the paper and other Dow entities committed by the Murdochs, News Corporation, current managers of Dow, or editors or writers at the Journal.  Cox says the phone-hacking crimes the News Corporation papers committed in the U.K. “arguably violate” those principles. If so, the committee ought to get cracking.

But I’m not sure that criminal violations of the phone-hacking sort are what the provisions of the Editorial Agreement were intended to address. Rather, they seem to address journalistic valor of the sort the Journal has gradually and steadily been sacrificing since 2007.

The committee has had clear authority to assert itself in those matters but has not corrected the slide. It is not obvious why it would rise now when its authority to act is far less certain. Put another way, it may be too late to save the Wall Street Journal from the effects of Murdoch ownership. Read the rest of this post »

  July 15, 2011 at 10:34 am   Posted in: Contract Law & Beyond, Culture, Current Events   Print This Post   No Comments

Kevin Costner’s Bison

posted by Lawrence Cunningham

The movie star, Kevin Costner, who is also a hospitality entrepreneur, won a round last week in a lawsuit disputing what’s to be done with an elaborate ensemble of sculptures he commissioned years ago for a luxury resort he has fantasized about but never built.  The court made the issue sound simpler than the parties thought it was and the opposing lawyer promises an appeal.

Costner’s fantasy, inspired by his heroic 1990 film “Dances With Wolves,” in which he starred as Lt. John J. Dunbar, imagined a 5-star hotel in the Black Mountains near Deadwood, South Dakota. For the centerpiece of the resort, to be called The Dunbar, Costner commissioned 17 massive bronze sculptures, assembled as the “Lakota Bison Jump,” from the noted local artist Peggy Detmers.

They depict 14 bison and three Native Americans hunting them on horseback, at 125% of life-scale. Costner initially commissioned the sculptures in 1994 under an oral agreement, paying Detmers $250,000. The two agreed to share royalties from sales of reproductions of the sculptures, which they expected would generate millions more.

By 2000, however, the Dunbar resort was not yet underway, and Detmers became anxious about whether her sculptures would be displayed and royalties on sales begin to flow. Costner reassured her in a two-page letter of May 2000, which included the following language whose meaning the parties have been disputing:

Although I do not anticipate this will ever arise, if the Dunbar is not built [by 2010] or the sculptures are not agreeably displayed elsewhere, I will give you 50% of the profits from the sale of the sculptures. Read the rest of this post »

  July 10, 2011 at 9:46 am   Posted in: Contract Law & Beyond, Current Events   Print This Post   2 Comments

Divorce Law Beats Fraud, Maybe Contract

posted by Lawrence Cunningham

We’ve debated whether mutual mistake is a ground to rescind divorce settlements dividing marital property based on an account held with Madoff. The New York Court of Appeals will soon decide in the case of Simkin v. Blank.

As a matter of contract law, in my opinion, they should be rescindable, when people cannot reasonably be supposed to have allocated the risk that an account was fraudulent.

As I noted in Peter Lattman’s N.Y. Times story on the pending Simkin case, the real policy debate pits principles of contract law, about protecting party risk allocation, against principles of domestic relations law, where the finality of divorce settlements might warrant upholding even such mutually mistaken contracts.

The New York Court of Appeals today issued an opinion, CFTC v. Walsh, with clues about this balance. Today’s divorce settlement case involves an innocent spouse who received millions of dollars from an ex who allegedly committed a spectacular securities fraud (amounting to some $550 million).

Federal agencies want to recover the property from the innocent spouse. The defense: the millions counted as marital property and the settlement agreement makes it hers, even if fraudulently obtained and once belonging to innocent victims.

The Court thus weighed whether to privilege the public policy intended to restore stolen property to rightful owners or the one favoring finality of divorce settlement agreements. Read the rest of this post »

  June 23, 2011 at 6:12 pm   Posted in: Contract Law & Beyond, Family Law   Print This Post   No Comments

Treasury’s AIG Gag Order

posted by Lawrence Cunningham

Top business executives in the United States regularly contact Members of Congress to lobby on legislation and other matters of public policy. But since the September 2008 government takeover of AIG, executives of that company have been forbidden to do so, unless they first get the Treasury Department’s permission, and the Treasury Department refuses to grant it.

Since AIG executives are afraid to speak out, disclosure of this un-American provision was left to Maurice (“Hank”) Greenberg, former chair and until 2008 the largest shareholder of AIG. He disclosed it yesterday on CNBC.

This is yet another example of the dubious tactics used in Sept. 2008 by Hank Paulson and Tim Geithner when they wrested control of AIG for the U.S. government. Besides having scant legal authority for their takeover actions, the successive Treasury Secretaries tried to keep from the public how the government funds injected into AIG did not support it or its shareholders or employees but were funneled as a backdoor bailout of Goldman Sachs and other Wall Street firms.

It is thus par for the course—but equally outrageous—that we now learn that when Paulson and Geithner imposed this straightjacket on AIG, they also made the company (a) adopt a policy suspending all lobbying and then (b) sign a loan agreement prohibiting it from changing that policy without Treasury’s consent—which apparently may be withheld for any reason or no reason. Read the rest of this post »

  June 21, 2011 at 2:37 pm   Posted in: Administrative Law, Civil Rights, Contract Law & Beyond, Corporate Finance, Corruption, Current Events, Politics   Print This Post   No Comments

Transactional Lawyering at the Movies

posted by Dave Hoffman

I’m looking for some good examples of movie clips from recent films in which the presence (or absence) of transactional lawyering is key to the action.  The best example I’ve got so far is from the Social Network.  Recognizing that showing clips of business lawyering isn’t for everyone, I’d still appreciate your tips.  Negotiation scenes, drafting discussions, closings — anything that would motivate student excitement about transactional practice.

  June 2, 2011 at 2:12 pm   Posted in: Contract Law & Beyond, Corporate Finance, Corporate Law   Print This Post   5 Comments

Analysis of Simkin v. Blank

posted by Lawrence Cunningham

The front page of the New York Times (May 31, 2011) contains a great story by Peter Lattman, quoting me, on the pending case of Simkin v. Blank.   The question is whether a divorce agreement based on the assumed existence of an invstment account with Bernie Madoff’s firm can be rescinded due to mutual mistake. 

A few of the many comments on Mr. Lattman’s article disagree with my quote in the article that the case is strong for mutual mistake.  Absent space in the New York Times to explain, following is an elaboration of this position.  It is one of the 45 stories about recent contracts disputes in my forthcoming book, Contracts in the Real World: Stories of Popular Contracts and Why They Matter (Cambridge University Press 2012). Read the rest of this post »

  May 31, 2011 at 6:17 pm   Posted in: Contract Law & Beyond, Current Events   Print This Post   10 Comments

Pareto in Practice

posted by Andrew Sutter

It’s not everyday that textbook law and economics concepts have a practical application. But a nice little object lesson came up recently in my practice. It’s a classic case of Pareto inefficiency, or suboptimality – arising entirely from the way lawyers chose to draft a contract. The true life case study is after the fold.
Read the rest of this post »

  May 18, 2011 at 12:48 pm   Posted in: Contract Law & Beyond, Corporate Law, Uncategorized   Print This Post   4 Comments

Help Wanted: Editing Contracts Monograph

posted by Lawrence Cunningham

I’m seeking editorial assistance from a few good Contracts scholars to provide a substantive review of the manuscript for my newest book, provisionally entitled Contracts in the Real World: Stories of Popular Contracts and Why They Matter (noted here).

The manuscript, now nearly complete to become a 240-page book, has been professionally edited for content and style, is trimmed to scale, and earlier chapter drafts have been read by a half dozen colleagues and several anonymous peer-reviewers. At this near-final stage, I’m looking for overall substantive evaluation, including not only correcting errors and minimizing unnecessary quibbling, but promoting the work’s utility to teachers of contracts and their students.

I would be delighted by anyone volunteering to read a few chapters to provide feedback, but am also prepared to pay a stipend (from my advance) for a more rigorous read of the full manuscript giving specific corrections, observations and suggestions. Any Contracts professor interested in either role, please email me: lacunningham@law.gwu.edu, letting me know.

  May 16, 2011 at 6:10 pm   Posted in: Administrative Announcements, Book Reviews, Contract Law & Beyond, Law School (Scholarship)   Print This Post   2 Comments

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