Category: Contract Law & Beyond


Spelman College, Bill Cosby, and Mutual Intent in Pledges

Spelman College’s decision to terminate a $20 million program supported by Bill Cosby, embroiled in allegations of drug-related seduction, reminds us that donors and recipients mutually depend on good behavior  and shared intentions, which are imperiled about once a decade for most charitable organizations.

The problem can originate on either side, as where a recipient wishes to disaffiliate because a donor’s behavior or reputation becomes objectionable–as in the Spelman-Cosby case–or where a donor objects that a recipient is not using funds as intended–as in the 1995 case of  Yale University returning $20 million after alumnus Lee M. Bass complained that the school had not used the donation to create classes in Western civilization the donation called for.

Litigation does not often result, but when it does, it can be ugly. Negotiations and structured solutions are usually preferred. Take an example of each: Princeton University’s acrimonious litigation with the Robertson family and Lincoln Center’s friendly accord with the Fisher family over renaming Avery Fisher Hall at Lincoln Center.

22222Princeton U. and the Robertson Family: Pyrrhic Victories for Each

In 1961, Charles and Marie Robertson made a $35 million endowment gift to Princeton for the purpose of educating graduate students for government careers. They embraced the spirit of the times, captured in President John F. Kennedy’s call to “Ask not what your country can do for you, but what you can do for your country.” Establishing the Robertson Foundation, Princeton invested the $35 million and used the rising investment income to fund such programs—along with many others outside the Wilson School. Indeed, the Robertsons’ gift—which grew to nearly $1 billion today—become a sizable component of Princeton’s overall endowment—about $15 billion today.

While Princeton administrators loved the large and seemingly flexible funding, the Robertsons’ children, who retained a role in overseeing the use of funds, objected. They insisted that Charles and Marie intended a specific and limited use of the funds, solely for training in government careers at the Wilson School. Unable to resolve the disagreement amicably, the Robertsons sued the University in 2002, seeking to terminate the gift and recover the principal.

In the acrimonious litigation, the Robertson family said the university allocated $250 million of foundation funds to non-foundation pursuits, including a new sociology department facility, international affairs programs, and public policy studies—none of which focused solely on training for careers in public service at the Wilson School. The family contended that the University commingled foundation funds with general university funds with the result of disguising how foundation funds were used.

Princeton countered that the University was a complex institution with multiple interconnected missions that result in overlap between Wilson School government careers and broader programming on public and international affairs. It argued that the narrow literal and historical reading of the donor’s intent should yield to a contextual, flexible and evolving understanding of donor intent in relation to the University’s needs.

After six years of legal wrangling during which the two sides incurred legal fees exceeding $40 million each, they settled. The Robertson Foundation was dissolved, with $50 million going to fund a new “Robertson Foundation for Government” independent of Princeton and under the family’s auspices. The University also agreed to pay the Robertsons’ legal fees.

While both sides claimed victory, informed observers saw mostly mutual defeat, a pair of Pyrrhic victories. After all, while the Robertsons wrested control of a foundation from Princeton rededicated to their perception of their ancestors’ vision, it was far smaller than what the original endowment had become, and the bruising litigation did not entirely promote family unity. While Princeton retained control over most of the funds along with an expanded authority over allocation, the philanthropic community saw a bald assertion of power over donor intent that is likely to make some donors unwilling to trust the school with their beneficence.

11111Lincoln Center and the Fisher Family: Mutual Gains 

In 1973, Avery Fisher, founder of Fisher Electronics Co., donated $10.5 million to support the renovation of New York City’s Philharmonic Hall, the music house built in 1962 on Manhattan’s upper West side.  The pledge agreement provided that the Hall would be renamed Avery Fisher Hall and called for that title to “appear on tickets, brochures, program announcements and the like . . . in perpetuity.” The site has hosted innumerable grand classical musical performances over the decades, and the name is etched in the consciousness of many a New Yorker, and gave Mr. Fisher, who died in 1994, a bid to immortality. Read More


Contract Law’s Majesty Over Digital Deals

11111On September 25, 2012, Adam Berkson was on a Delta Airlines flight from New York City to Indianapolis. Needing the internet to conduct important business, he flipped open his lap top and followed the log-on instructions on Gogo’s in-flight Wi-Fi service. Between options of $10 for the day or $35 for the month, he clicked the sign-up button for the month, entered his American Express payment information, and was surfing the web within one minute.

A few months later, however, Berkson discovered that Gogo was billing his AmEx card every month—as if he had subscribed—and when he requested a refund, Gogo refused. While AmEx reversed the charges as a customer courtesy, in 2014 Berkson nevertheless banded together with other aggrieved Gogo customers to file a federal class action lawsuit for additional damages. Gogo moved to dismiss the case by citing yet another surprising term on its web site, one providing that all disputes go to arbitration, not litigation.

This case is one of scores of disputes arising from electronic contracts formed on the internet, mostly between consumers and merchants. While billions of dollars change hands amid trillions of Internet transactions, most raising no issue, the novelty, dynamism, and ingenuity surrounding e-commerce and technology produces disagreements about how offers to contract are made, how they may be accepted, and what terms they contain. And while there is ongoing contention about how electronic contracting is or should proceed, the setting vividly shows the remarkable durability and capaciousness of venerable contract doctrine.

Most fundamentally, mutual manifestation of assent is the touchstone of contract formation and an essential element. When there is clearly an offeror and clearly an offeree, then the acceptance of the offer must be unequivocal.  Such principles signify that asset and acceptance on line must stimulate a degree of intentionality that many website formation devices lack.

Next, it is common in contemporary commerce to offer and form contracts without negotiation—standard terms on take-it-or-leave bases which are generally referred to as adhesion contracts. In order for traditional principles of assent and acceptance to work, law must assure that offerees at least have an opportunity to review terms if not negotiate them.

Finally, when assent is largely passive, as with electronic adhesion contracts, it becomes more important to probe whether the offeree had notice of the term at issue. Actual notice certainly suffices but inquiry notice would suffice too—that is the offeree need not know the specifics of the term but be on notice to inquiry about it.

Carnival Cruise

A prominent pre-internet illustration is Carnival Cruise Lines, Inc. v. Shute, whre the U.S. Supreme Court held that the terms of adhesion contracts are “subject to judicial scrutiny for fundamental fairness”. In Carnival Cruise, vacationers bought cruise tickets through a travel agent it later received by mail. A legend on the front read, in bold type and all capital letters: “SUBJECT TO CONDITIONS OF CONTRACT ON LAST PAGES IMPORTANT! PLEASE READ CONTRACT ON LAST PAGES 1, 2, 3.” Read More


When Love’s Promises Are Fulfilled By the U.S. Supreme Court

Today, in a 5-4 decision, the United States Supreme recognized the fundamental nature of love’s promises. In Obergefell et al. v. Hodges, the Court held,  “the Fourteenth Amendment requires a State to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-State.”  Referring to marriage as a “keystone” of the U.S.’s “social order,” Justice Kennedy declared same-sex marriage bans unconstitutional. Importantly, the case makes clear that forcing gay couples to go across state lines to marry only to deny them the franchise after returning home undermines fundamental principles of liberty.

It’s no surprise that Professor Martha Ertman’s powerful book: Love’s Promises: How Formal and Informal Contracts Shape All Kinds of Families on which she copiously and beautifully toiled while rearing her son debuts the summer that equality in marriage becomes a fundamental right for gay men and women. Nor should anyone be surprised if the book, along with the decision itself, becomes a central text at universities and beyond. In what David Corn calls a “love letter to marriage,” from the pen of Justice Kennedy, the Court reasoned:

“No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law. The Constitution grants them that right.“

With that, the Supreme Court overruled the prior judgement of the Court of Appeals for the Sixth Circuit and set in gear the reversal of centuries’ worth of stigma, shame and inequality, which may not erase overnight, but overtime will ease. Professor Ertman might also suggest that by the decision, the Court resituates contracts too. That is to say, if viewed from the lens of contracts, which serves as the core, theoretical foundation of Love’s Promises, this decision recognizes a fundamental right in contract for gay men and women. Further, the case expands the “contract” franchise to include gay women and men.

Some scholars approach gay marriage primarily from the constitutional liberties encapsulated in the 14th Amendment, upholding equal protection for U.S. citizens regardless of their status, others approach the issue as a matter of privacy. For Professor Ertman, contracts offer an additional lens and much to deliberate about on matters of marriage, parenting, and familial intimacy. Professor Ertman’s writings on contract (The Business of Intimacy,  What’s Wrong With a Parenthood Market?, and Reconstructing Marriage to name a few) precede the book, and presaged its birth.

Here for example, in a passage from Chapter Eight, she explains that “[i]t takes two more trips to the lawyer’s office to hammer out terms that satisfy Karen, Victor, the attorney, and me, from lawyerly technicalities to the emotional terms we call “mush.” From what started out as an addendum to Victor’s and my coparenting agreement has blossomed into a bouquet of wills and powers of attorney, alongside the amended parenting agreement.” She tells readers, “On the way downstairs, clutching documents still warm from the copying machine, Karen squeezes my hand, as if she too feels that signing all those dotted lines brought a family into being every bit as much as vows of forever that we plan to recite…” As she explains, “if you scratch the surface of marriage—straight or gay—you’ll find contracts there, too.”

Professor Ertman urges us to remember time and again that what builds relationships and sustains them are the formal and informal contracting that take place daily in marriage; they establish the foundation for marriage and what comes after. She works diligently in the book to demonstrate love too undergirds contracts. That is to say, she wants readers to reimagine contracts—not as the products of cold, calculated bargaining or business arrangements—though one must acknowledge contracts can be that too—even in marriage.  Often marriage is the product of love, intimacy, and warm innocence.  At other times, it is the product of business arrangements.  It was that too in the U.S. chattel system: contracts that gave legal sufficiency to the buying, selling, bartering, and even destroying of slaves, including children (among them the Black biological offspring of slave owners). In light of that history yet to be fully explored and appreciated in law, it is a formidable task to resituate or reintroduce contract in the space of families and intimacy. However, Professor Ertman rises to that challenge.

Like it or not, contracts pervade marriage and suffuse premarital agreements. Sometimes contracting in this regard attempts to resituate power and status expost marriage, providing the economically weaker spouse economic stability after the breakup. Martha highlights cases from that of Catherine Simeone who received a “raw deal,” to those of celebrities, including Michael Douglas and Beyonce. Who knew that Beyonce would receive $5 million for “each of their children,” if she and Shawn Carter (otherwise known as Jay-Z) divorced? Professor Ertman might argue that despite the businesslike nature of contracts, these legal arrangements and agreements make most matters clearer for everybody. Professor Ertman explains that contracts and even verbal agreements provide information, they can provide context, and they offer choice.

In Ertman’s life, it was a contract that bestowed her wife, Karen, parenthood of their child—not something biological, legislative, or derived from courts. And she offers multiple reasons for readers to consider the salience of contracts in intimacy, including voluntariness, reciprocal promises, and equal status. She offers an additional reason: love’s promises.


As Yanks Fail to Pay A-Rod When Due, Is Settlement On Brew?

aaaa Alex Rodriquez roamed Washington DC’s power corridors Wednesday (pictured), while his agents back home in New York drafted grievance papers against the Yankees for nonpayment of $6 million, due Friday.[i] A-Rod claims the sum as an agreed bonus for hitting his 660th home run on May 1, tying Willie Mays for fourth place on the all-time list. The Yanks say the bonus isn’t due unless achieving the milestone is commercially marketable, which they signal it isn’t, without saying why. A-Rod’s advisors will challenge that conclusion as well as whether the team reached it in good faith, or as a pretext to avoid a sizable payday.[ii]

The outcome is uncertain. While both sides seem to agree that the sole test is whether the Yankees hold a good faith belief that the milestone is not commercially marketable, they may disagree about what those two concepts entail in this particular setting. When contract fights boil down to such disagreements over the contextual meaning of an abstract phrase, a good bet is that both sides will seek to settle rather than fight, as Michael McCann suggests might happen here.

The concept of commercial marketability is inherently elastic. Its meaning has ranged from simple readiness of an economic good or service for public sale or distribution to some reasonable prospect of achieving meaningful levels of sales or profits. In baseball, a player and his achievements have been recognized as such an economic entity whose identity and record translate into revenue and gain for players and teams alike. Broad standards like these leave a wide range of discretion in the party who gets to make the determination of commercial marketability. In this case, that party is the Yankees.

To constrain that discretion, the A-Rod/Yanks contract and general principles of contract law require that the Yankees exercise it in good faith. That means the team must make a determination based on information, experience and judgment about the prospects. They may weigh fan and media interest in home run races generally—the effects when number one Barry Bonds overtook number two Hank Aaron say—and probably would be constrained to consider other races A-Rod has been in, including his current quest for 3,000 hits. The team will heavily weight A-Rod’s poor reputation among fans, given drug abuse and other blemishes; many baseball fans detest the tarnished player’s run for records held by revered titans, like Willie Mays, the beloved “say-hey kid,” or his Godson, Bonds.

Bob MacManaman argues that it is also relevant how A-Rod’s recent performance contributes to the team’s commercial success. The team is in first place thanks in part to A-Rod. But helping the team win does not automatically mean that home run milestones are commercially marketable. Yet the Yankees muffled the marketing by downplaying the quest. They omitted the home run derby from the list media should watch for, as Billy Witz reported for the New York Times. They have not explained why. In contrast, they stoke other A-Rod quests, including his impending 3,000th hit. To raise doubt about good faith, A-Rod will stress that he and the Yankees have no bonus agreement about 3000 hits and other A-Rod targets they are promoting while ignoring the one that triggers bonuses.

It remains a close call and both sides will thus appeal to the equities—as they have been in the media and on the field. The Yankees must worry about perceptions of even handedness. They do not want to alienate other current or prospective players, which is why owner Hal Steinbrenner stresses that the Yanks honor all their contracts.

A-Rod has to improve his profile to reinforce arguments about commercial marketability. That’s why he has been so well-behaved during this episode. It may help explain why he spent Wednesday visiting with the Georgetown Hoyas in DC, though his enemies, like Phillip Bump, find it characteristically distasteful for A-Rod to be hanging out with DC’s pols in the afternoon.  All of this points to the prudence of settlement rather than arbitration, which is wasteful and risky.


Lawrence A. Cunningham, a professor at George Washington University, is working on a new edition of his book, Contracts in the Real World: Stories of Popular Contracts and Why They Matter, likely including analysis of the A-Rod v. Yankees case.  He is not jealous that A-Rod visited the campus of Georgetown University today. 


[i] The due date appears to be “15 business days after reaching the milestone”, which was met on May 1, translating into this Friday May 22. A-Rod would have 30 days to file a grievance for nonpayment.

[ii] To the Yankees, the payout would include another $6 million to Major League Baseball, under its rules taxing luxurious player compensation in the name of equity across baseball teams.



What Do Contract Formalities Do?

In 1941, Lon Fuller published his classic Consideration and Form. Among other things, the article articulated three famous functional claims for consideration: it evidences bargains, channels parties’ behavior, and cautions signers by “check[ing] against inconsiderate action,” and “induc[ing] the circumspective frame of mind appropriate in one pledging his future.”  How? By signaling to prospective signers of contracts that the law was drawing near.  Thus, he hypothesized that seals (“symbol[s] in the popular mind of legalism and weightiness”), the “requirement of a writing,” “attestation, notarization,” and recitals of consideration all induce individuals to feel and behave in a more committed way to the underlying term supported by the formal recitation.

I’ve been studying what individuals think about contract formalities in a series of papers.  That work, combined with other recent scholarship about contracting behavior, made me skeptical that contract language reciting obligation — or disclaiming it — had the straightforward effects that Fuller proposed.  So, with Zev Eigen (Northwestern/visiting Yale), I decided to test Fuller’s foundational & empirical intuition.  In A Fuller Understanding of Contractual Commitment, Zev and I suggest that the conventional account is unrealistic:

“Contract recitals are ubiquitous. Yet, we have a thin understanding of how individuals behave with respect to these doctrinally important relics. Most jurists follow Lon Fuller in concluding that when read, contract recitals accomplish their purpose: to caution against inconsiderate contractual obligation. Notwithstanding the foundational role that this assumption has played in doctrinal and theoretical debates, it has not been tested. This Article offers what we believe to be the first experimental evidence of the effects of formal recitals of contract obligation — and, importantly too, disclaimers of contractual obligation — on individual behavior. In a series of online experiments, we found that participants were less likely to back out of an agreement, forgoing personal gain, when they were endowed with a small extra sum of money at the time of contracting, and when they acknowledged that they were not forming a contract. They were more likely to back out of their original commitment when their agreeing was accompanied by a recital of consideration, and in a control condition in which the natural consideration of bargained-for exchange prevailed. Younger, male respondents were generally more likely to back out of their agreements across all conditions than were women and older participants. The reported experimental results suggest both the descriptive weakness of theorized accounts of private control over contract enforceability and the general value of experimental work about contracting behavior.”
The paper suggests that to the extent that we think formal devices permitting private party control over enforceability are useful, we might want to think carefully about developing ones that signal “law” more clearly to 21st century eyes.  I’d love to get your comments — the paper is still in draft form.



Million Dollar Reward Case Over

aaa millionA claim to $1 million for meeting a lawyer’s dare made on Dateline NBC is now dead. The case is over thanks to an opinion, by Judge Wilson for the 11th Circuit, that will be in the next editions of all Contracts casebooks: it  provides a comprehensive, careful and contestable treatment of unilateral contracts.

Former law student Dustin Kolodziej filed the case in 2009 against high-profile Florida defense lawyer, James Cheney Mason.  Prosecutors said Mason’s client, a wealthy businessman on trial for  murdering his business partner and others, manufactured an alibi putting him in a La Quinta hotel in Atlanta on the day of the Central Florida murders.

On Dateline NBC, Mason explained his defense, that the state could not show that the trip they imagined the defendant took was possible within the time frame.  A vital leg of the journey involved getting off a plane at Atlanta’s busy airport to the hotel five miles away, in less than 30 minutes, where the defendant was seen in security tape early and late in the day.

Mason said he’d pay $1 million if proven wrong.  Kolodziej did just that,  reenacting the full trip, capturing it on his camcorder, and making the final leg in less than 30 minutes.    Kolodziej claimed a valid contract, formed by Mason making an offer of a reward for an act and Kolodziej accepting it by performing the act.   Mason called the claim ridiculous.

The case raises a classic issue in contract law, about whether dares to be proven wrong like this are recognized as offers or mere bluffs and jests.  The 11th Circuit, affirming a grant of summary judgment, sided with Mason.  Stressing context,  not only was his bluster about the million a joke, the full text of what he said makes clear he was daring the prosecutors to prove the point, not the general public.

Dave Hoffman correctly predicted this outcome–nice job Dave (here and here)! I thought the case a closer call, as I explained  here and in my book, Contracts in the Real World: Stories of Popular Contracts and Why They Matter (Cambridge U Press 2012).

While I am persuaded by Dave and the 11th Circuit’s opinion, I remain convinced that Mason was wrong to call the claim ridiculous.  The court takes the claim more seriously, to its credit, though I wish they had engaged more with the arguments  put forth in my book (which, alas, the court does not cite).

Hat tip to Jim Gross, currently clerking for the 9th Circuit, who wrote to remind me that we discussed this case on his first day of Contracts class at GW back in 2011.  Hat tip also to David George, the lawyer for Kolodziej, who also sent me a copy.


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.



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.

Read More


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.