Is This the Way Insurance Works?

No Consideration? Consider Promissory Estoppel

Click here or on the image below to be linked to a news report on an "Undercover Boss" who allegedly reneged on a promise.

The Great American Foreclosure Song

Nice!

To Avoid Misunderstandings, Write it Down!

What is one of the principal advantages of a written contract?  It reduces misunderstandings and conflicts arising from faulty recollections or even from intentional fraud. For example:

Victim of Racial Discrimination? You Take 'Em to . . . Arbitration?

The old People's Court with Judge Wapner featured commentator Doug Llewelyn coining a phrase that became iconic in American legal culture:  "If you're involved in a dispute such as this with another party and you just can't seem to work it out, don't take the law into your own hands - you take 'em to court."

See video below at :30:



When an African-American man sued Airbnb over racial discrimination, he discovered that he can't "take 'em to court."  His Airbnb account contract included an enforceable mandatory arbitration clause.  So instead of presenting his evidence to an impartial, competent judge or jury, he will have the opportunity to present his case to non-judicial decision-maker who makes a living out of deciding cases for Airbnb and similar parties.  Could such a decision-maker likely have some innate partiality toward a business or industry that provides his/her livelihood?

What do you think?

One Case, Three Law Lessons

Sexual assaults on college campuses are a matter of great concern. Changes in the way that colleges and universities handle campus disciplinary proceedings based on allegations of sexual assault have changed radically in the last few years.  Those teaching law in universities are likely well aware of the panoply of legal issues raised by lowering the evidentiary standards for proof of guilt, barring cross examination or witness confrontation and other issues. (Click here to read an article on the topic by ALSB member, Audrey Wolfson LaTourette.)

Brown student, John Doe, had been found "responsible" for sexual misconduct by a University tribunal and was suspended.  The case hinged on a factual dispute regarding consent. At the time of the incident, the University had no clearly defined definition of consent, although one was later adopted.  Doe was suspended based on the retroactive application of the definition.  Also, he was barred from presenting evidence in his defense.

Doe challenged the faulty procedure in federal court. Because Brown is a private university, Doe did not have a due process claim.  He filed suit for breach of contract. Recently, Chief Judge William E. Smith of the U.S. District Court for the District of Rhode Island, ruled in Doe's favor and ordered his reinstatement at Brown.

Lesson 1: Disputes must be resolved by a fair procedure of which both parties have had prior notice.

Sexual assaults on college campuses trigger deep emotions.  Victims deserve sympathy, support, validation and ultimately, justice. But the accused must also not be denied the legitimate opportunity to defend against the claims. The criminal justice system, with its Constitutional protections for the accused has been developed and fine tuned over the last two centuries. Finding and developing a completely different private adjudicatory system in colleges and universities that gives adequate consideration to the legitimate interests of victims and accused alike is a minefield of litigation.

Lesson 2: Federal judges cannot be lobbied like legislators.  They are appointed for life specifically to be less influenced by public opinion and passions.  The same principles may or may not apply to elected state court judges.

Judge Smith had been the target of a substantial e-mail lobbying campaign intended to affect his ruling.  In blasting the effort, Judge Smith explained: 

[T]he court is an independent body and must make a decision based solely on the evidence before it. It cannot be swayed by emotion or public opinion. After the preliminary injunction, this Court was deluged with emails resulting from an organized campaign to influence the outcome. These tactics, while perhaps appropriate and effective in influencing legislators or officials in the executive branch, have no place in the judicial process. This is basic civics, and one would think students and others affiliated with a prestigious Ivy League institution would know this. Moreover, having read a few of the emails, it is abundantly clear that the writers, while passionate, were woefully ignorant about the issues before the Court.

Before the court was only the issue of the procedural propriety of the tribunal - not the issue of guilt or innocence.

Lesson 3: The law is not just a set of predetermined rules that are mechanically applied to achieve justice. There is a lot of trial and error and experimentation and evolution. And in that process, real people's lives are affected.

Cases are not just academic thought exercises. They are the legal outcomes of real, often tragic, events affecting real people. Courts do not have the advantage of legislators who can pass a law and send it out into society to  see what happens.  Judicial rulings apply immediately to affect the lives of the litigants in often profound ways.

Sheldon Cooper Seeks Circumvention of the Parol Evidence Rule

On the popular CBS sitcom, The Big Bang Theory, neurotic physicist Dr. Sheldon Cooper negotiates a "relationship agreement" with his girlfriend, neurobiologist Amy Farrah Fowler.  However, when Amy seeks to enforce one of its unambiguous provisions, Sheldon claims the "intent" of the clause was to achieve a result contrary to the plain meaning.

See the scene, below:

Guest Blogger: Haskell Murray - Van Halen on Reading Contracts!

Today's post is submitted by J. Haskell Murray at Belmont University.

Van Halen on Reading Contracts

This is a video clip I use near the beginning of our unit on contracts in my Business Law and Legal Environment class.  The clip is light, relatively short, and is an industry (music) that many Belmont University students understand.  Through a story about a buried contractual clause prohibiting brown M&M’s in the back stage area, David Lee Roth (Van Halen) highlights the important point that everyone should read contracts carefully before they sign. I sometimes couple this with directions like “skip question 4; if you answer question 4 you will lose 5 points” in the middle of my normal directions on a quiz or test, just to drive the point home.  Many of my students expect to have lawyers to rely on in business, but I hope to communicate to my students that clients need to read and understand contracts they sign.  I also share examples of lawyers making drafting mistakes and how much lawyers charge for their time.   

Click here or here for additional links to this video in case the embedded video should be removed.

Those Pesky Terms of Use Provisions - How Bad Can They Be?

In conducting an experiment in the dangers of public Wi-Fi use, a security agency in London set up a free Wi-Fi hotspot.  Customers who signed on were prompted to agree to the terms of use.  One of the terms included was a so called "Herod Clause" where the user agrees to turn over to the Wi-Fi company their first born child for the duration of eternity.  According to the article in the Guardian, six people signed up for the child assignment.

While such a term is obviously not enforceable, this article raises awareness of the types of terms often contained in these contracts that may be enforceable despite being significantly detrimental to the consumer.

Snarky Facebook Gloat Costs Papa Cash

Yesterday's post was about an arrogant snarky franchise manager taking advantage of an employee and getting whacked for a big settlement.  Today's is about the arrogant snarky daughter of a successful plaintiff who likely cost her dad his compensation in an age discrimination claim by posting about it on facebook - proving her dad had violated the confidentiality agreement.

According to the report in the Miami Herald, a 69 year old headmaster at a private preparatory school was denied contract renewal and sued claiming age discrimination.  The case eventually settled with the plaintiff receiving approximately $90,000 and with a confidentiality clause.  However, the plaintiff's college aged daughter posted the following on her facebook page:

“Mama and Papa Snay won the case against [the prep school],” Dana Snay posted days later to her 1,200 Facebook friends. “[The school] is now officially paying for my vacation to Europe this summer. SUCK IT.”

When her former prep-mates/facebook friends saw it, word got back to the school. The Florida Appellate Court has set aside the settlement.

According to Yahoo Shine, this is an image from the daughter's facebook page:

Read more here: http://www.miamiherald.com/2014/02/26/3961605/daughters-facebook-boast-costs.html#storylink=cpyfacebook page:

Contest Winner Gets Toy Yoda Instead of Toyota

Here's one from the archives.  Back in 2002 a Hooters franchise in Panama City Beach, Florida ran a beer selling promotion contest for their employees.  The prize? From USA Today:

Jodee Berry, 27, won a beer sales contest last May at the Panama City Beach Hooters. She believed she had won a new Toyota and happily was escorted to the restaurant's parking lot in a blindfold.

But when the blindfold was removed, she found she had won a new toy Yoda — the little green character from the Star Wars movies.

Those cutups at Hooters are always good for a few laughs!  Hooter's defense?  It was an April fool's joke!  Of course, a contract offer must be evaluated from the standpoint of a reasonable person based on manifestations of intent, not from the subjective, unexpressed intent of the offeror.

What was the settlement worth?

David Noll, her attorney, said Wednesday that he could not disclose the settlement's details, although he said Berry can now go to a local car dealership and "pick out whatever type of Toyota she wants."

Good for her.

Topless Deep Sea Fishing Trip Contract?

There's a post title that will draw attention!  Does the pictured written memorandum memorialize a contractual obligation?

What are the issues?

1. Consideration: Was a ride on the topless deep sea fishing trip provided in exchange for the I.O.U. promise?  Or is this a promise to provide a gift to a friend in the future?

2. Condition and Performance: "When I graduate" and "when I have money" appear to be conditions precedent to performance.  What if he never graduates, yet acquires money?  What if he graduates but never has money? How much money is enough to be considered "having money"?

3. Sufficiently Certain and Definite: How much money is to be paid for the described event? Why not simply state the amount to be paid?  Or is the amount to be determined in reference to price of the trip on the future day of payment?  Who goes topless?

4. Legality: Did this trip originate in a place where topless-ness is legal? Or was the topless part of the activity to take place outside of the territorial waters of the US?

5. Capacity:  Was there any intoxication issue? Does it appear to be sufficient to affect contractual capacity?

Maybe it should be an exam question.

Source of image: Total Frat Move

Dam**ed Contracts, Again!

We've been experiencing a horrible winter in the Northeast, as well as elsewhere, with snowfall accumulations far exceeding normal ranges.  Last week on a day when the all the schools in Connecticut closed and the governor told state employee to stay home from work (except those whose job included cleaning up the snow) and urged all other people to stay off the roads, one important social institution braved the elements  - the mall was open.  The Buckland Hills Mall in Manchester Connecticut was open, and because tenants have clauses in their leases that they are subject to "heavy fines" if the stores are closed when the mall is open, all the stores required their employees to defy the governor's request and risk life, limb, and property damage to open their stores. Thankfully, most people resisted the normally overwhelming impulse to buy overpriced handbags or trendy clothing in a blizzard and stayed home.  The mall closed early sending the intrepid employees back out to brave the elements in order to get home.

It's a good thing that contract law imposes the "reasonable person" standard on the interpretation of contracts because left to their own devices, we apparently can't count on people to act reasonably.

Click here or on the image below to see the video news report:

Dam**d Contracts!

A college student participating in a half-time promotion sunk an incredible one handed half-court shot as time expired on the contest. However, he won't collect the $10,000 prize money. The contest required the contestant to sink a layup, a free throw, a three point shot and a half-court shot in the allotted time to win the prize. But the contract said that while the contestant could have as many attempts as time allowed for the first three shots, he was allowed only one attempt at the half court shot. Unfortunately for the contestant, the one handed fall away banker came after he missed his first attempt at the half court shot.  The school bought an insurance policy for the contest and they say the insurer will not pay.  Dam**d Contracts!

Click on the image below to watch the drama unfold:



This video has been on and off the internet several times already, so here is another link just in case. And another.

Read the contract:

SLAPPed With a Fine

Thank you to my UConn colleague, Robert Bird, for sending in this news item.

Well, it is not quite a SLAPP suit, but it employs the same principle.  You order a product online and get bad service. You write an online review expressing your opinion of the service.  Then the Seller informs you of a "fine" in the thousands of dollars because your "contract" contained a "non-disparagement" provision.  Don't pay the "fine" and the Seller reports the charge to credit agencies as if it were a debt. Watch the video for the whole story.



You can read the "non-disparagement" provision here: http://web.archive.org/web/20130817144417/http://www.kleargear.com/termsofuse.html
Thanks to Terence Lau at Univ. of Dayton, for providing the link

Here are only a few of the issues that come to mind for me:
1. You can't be fined for breaching a contract.  There can be a liquidated damages provision, but that is enforceable only if the provision is NOT a fine and IS a fair attempt at estimating damages.
2. If the Seller materially breaches the contract by not performing its obligations, then the Buyer's obligations under the contract are excused.
3. No court would enforce the contract provision as to do so would be government censorship of speech.
4. This is an attempt at SCOBUF (Strategic Censorship of Opinion by Unilateral Fine) (I just made that up.  Do you think it will stick?) It is along the same lines as SLAPP which is outlawed by legislation in many states.
5.  Perhaps the Buyers cannot get a lawyer to take their case, but where are the state regulatory agencies?  Is this not a classic "Unfair and Deceptive Acts and Practices" case?

The company seems to be attempting to name itself as both judge and jury in a defamation claim without bothering to actually file one.  See post on internet defamation.

Statute of Frauds Song

For the next several Fridays LSCB will be re-posting a series of Law Lessongs to be used as a classroom resource on some otherwise difficult or mundane topics.  The Statute of Frauds Song recently passed the milestone of over 20,000 hits on Youtube.  I hope that you can make use of it in your curriculum.

A Case of Contractual Capacity

A Marine who served in Afghanistan and was discharged for PTSD and TBI has sued a Harley Davidson Dealership that refused to take back the motorcycle sold to him while he was suffering form the symptoms of his condition.  Did the dealership know or have reason to know that the Marine buyer could not act reasonably under the circumstances?  ABC News reports: :

Smith, who is unemployed, entered the Harley-Davidson dealership on a whim to buy a motorcycle, according to the lawsuit filed on Oct. 30. While there, he told the employees that he had PTSD, while pacing, sweating profusely and acting jittery.

"At one point, the salesperson even gave him water so that he could take his Xanax," said Gilleon. "He took three while he was there."

According to the Marine: "I know I was sweating fast. I was talking fast. I know I was jittery, and I kept misplacing personal items like my wallet all over the dealership," said Smith.

Failing to take back the motorcycle also resulted in a claim for unfair business practices.  Seems like the dealership manager should have taken a BLAW course.

Click on the image below to see a video news report:

WalMart's Unilateral Mistake

For one day last week, WalMart was giving new meaning to "Always Low Prices." Due to a technological glitch, WalMart's website was advertising a video projector for sale for a price of $8.95 that should have been listed for $588.95. A 24" computer monitor that retails elsewhere for about $150 was likewise listed for $8.95.  A Fischer Price Power Wheels battery operated car for kids that retails for about $260 was listed for $29.97.

Luckily for WalMart, an advertisement is not an offer to sell, but merely an invitation to customers to make offers to buy.  That protects the merchant from having to have an unlimited inventory of every item. The merchant is always free to reject the customers entreaty to deal. But in the internet world, customers placed orders online for the advertised prices and their credit cards were charged for the shockingly low prices.

But, once again, WalMart is saved by the law.  WalMart relied on its "terms of use" for its website which states in part: "We reserve the right to refuse or cancel an order for any reason including limitations on quantities available for purchase, inaccuracies, or errors in product or pricing information, or problems identified by our credit and fraud avoidance department."

Is this disclaimer unconscionable?  Does it violate relevant state consumer protection statutes about advertised prices? Is WalMart cancelling "orders" or consummated sales (cancelling contracts as opposed to rejecting offers?)

Even without their internet disclaimer, WalMart may still have been protected by the rule of unilateral mistake.  If a non-mistaken party knew, or should have known, that the other party was mistaken about a circumstance affecting the agreed upon exchange, then the contract is voidable and may be rescinded by the mistaken party.  According to news reports,  many customers were upset with WalMart.  

There is so much legal ground to be covered to adjust to an internet world.

Contract Assignments: Flipping Houses Like Pancakes

Entrepreneur Antonio "Hitman" Edwards tells our students how assignment of contracts works as a business model. At his blog, he promises, "I’ll show u how to flip these houses like pancakes on a regular basis."

Litigation Procedure in Two and a Half Minutes

From breach of contract to settlement on the courthouse steps, all recited in a concise video package: