Category: Contract Law & Beyond


Claim of Unilateral Mistake Confers Right to Repossess Non-Financed Car?

A quick contracts/property/tort/consumer law hypothetical for incoming first-year law students (and their professors) to ponder over:

Car dealer sells a used pick-up truck to Buyer for $8,100 and a trade-in. Buyer pays the full amount by personal check and drives the truck off the lot. Dealer then calls Buyer at home and tells him that they looked up the wrong number in their book; the truck actually costs $10,000 more. Dealer tells Buyer that either he has to return the car and they’ll pay him $500 for his trouble, or he needs to cough up the extra $10,000. Buyer refuses.

In the middle of the night, the Dealer comes and “repossesses” the truck from Buyer’s driveway. Buyer’s trade-in is returned to him. Buyer’s check is not cashed.

Dealer claims that the contract was invalid because “one party ma[de] a mistake, and the other party knew or should have known that a mistake was made.” (See here for more details from WTVF-Nashville, and note the video link on the upper right. The file-dropping bit seems right off the Daily Show.) Assume that the Blue Book value of the truck is $21,240, and the trade-in was worth only a nominal amount.

Discuss; was there a valid contract? What claims does Buyer have, and even more important, what remedies should he get?

(HT: Consumerist)


What doctrinal facts drive scholarship?

law-books.jpgI recently had a conversation with an acquaintance about the predicament of con law scholars. He made the point that the decline in the Supreme Court’s docket has had a big impact on con law scholarship. It used to be the case, he said, that the Court was churning out enough new decisions that con law professors could keep busy working out doctrinal puzzles and fitting the new cases into their vision of the fabric of constitutional law. With fewer cases to work on, however, con law professor have to find something else to do.

It got me thinking about how the law influences legal scholarship. For example, right now I am working on a project in contract law. Here it seems to me that one of the main legal facts influencing scholarship is the sheer stability of contract doctrine. It wouldn’t do to over state this, of course. Contract law continues to evolve and new cases come out that try to fit new practices into old categories. Still, thanks I suspect to the success of the Restatements, much of contract law is fixed, and has been fairly fixed for quite some time. Hence, one of the main puzzles is working out why the particular shape that the law has might or might not be justified. There is less interest in figuring out how the Georgia Supreme Court’s latest consideration case fits into the law than in trying to figure out what the basis of consideration might be. Indeed, one of the striking things about contract is that you can read theoretical discussions of contract doctrine from the 1930s and 1940s and in many ways (although not all) the doctrinal discussion doesn’t seem especially dated. There aren’t all that many cases where you read something by Lon Fuller or Morris Cohen and think, “Well that is no longer the rule….”

If con law is characterized by a decreasing flow of cases to write about and contract is characterized by a (relatively) stable set of rules, I wonder what the doctrinal facts driving discussions in other fields might be.


Carving Up Contracts

butcher.jpgI’ve been spending the day carving up my Contracts course. This coming year, Temple, following in the footsteps of many law schools, is transitioning from a two-semester, six-credit, glorious romp through the law of contracts to a one-semester, four-credit, forced march.

This isn’t a data point, it’s a trend. There is an article to be written – perhaps it has been? – about the long, slow, decline of the year-long first year course. While a generation ago, most courses were taught in the year format, today only a few schools have as many as one course taught this way. [I myself had year-long civil procedure and criminal law classes, but we were the only section at school so blessed.] For some reason, until recently contracts had been the holdout. Why? My preferred theory is that the course is uniquely complicated and foundational. Or, you might believe that contracts is so doctrinally incoherent that it demands more attention. Or, perhaps, it was Kingsfield‘s ghost.

So I’m cutting away. First, the fat of the class: cases marbled through with neat applications to other classes, wonderful diversions of history and policy, but not totally dedicated to the project of determining when and how to enforce promises. Tortious interference and the Texaco case? Gone. The restitution interest? Mostly ignored. Farewell as well to agency, third-party bennies, assignment and delegation, duress, incompetency, and infancy.

But that wasn’t enough. So, with a heavy heart, I’ve started to trim closer to the bone. Less interpretation and parol evidence, (much) less consideration, and now barely a touch on relational theory and impracticability. A consolation prize: I get to cut most of my promissory estoppel unit in good conscience. Good riddance!

Of course, I realize that the entire first year curriculum has experienced this loss over time, and law students have reaped compensatory benefits: electives in various subjects, less focus on common law instruction, more skills courses, and a greater variety of teachers in the first year. All to the good. But I can’t help thinking that each of the grand old first year subjects has lost a case (or a facet of its subject matter) to shrinkage, and (as a result, hypothesizes Larry Solum?) some areas of law aren’t getting the scholarly focus they used to. I know it isn’t a big tragedy for law students to graduate without having learned a thing about the infancy defense to a breach of contract action, but just now, as I cut that concept from my notes, it feels like a small one. And I’ve only taught the course twice through. Imagine if I’d gotten really attached!


18th Century Venture Capitalists

dismal.jpgAs I posted earlier, of late I have been reading Virginia history. I have one title to suggest: Charles Royster, The Fabulous History of the Dismal Swamp Company. It is an tremendously detailed history of one of the great 18th century land speculations, the attempt to drain and sell the Great Dismal Swamp on the Virginia-North Carolina border. George Washington was one of the movers and shakers in the company, but other characters in the story include names like George Wythe, Richard Henry Lee, Patrick Henry, and a host of other luminaries from the American Revolution, as well as lesser known names like Christopher Gist, a Virginia merchant who helped to found Lloyd’s maritime insurance business.

Royster is a good writer and — for me at least — the narrative works nicely. The research represented by the book is awe-inspiring and the result is an enormous wealth of detail about everything from family politics (everyone who was anyone is colonial Virginia was related to everyone else) to imperial politics. At the center of the story, however, is what amounts to a venture capital deal.

To me one of the most fascinating parts of the story is the role that the events of the American Revolution play in it. The Dismal Swamp Company was founded as the Seven Years War (aka the French and Indian War) was coming to an end and its story twists through the years leading up to independence. Furthermore, given the vast scale of the project it inevitably became entangled in colonial and ultimately metropolitan politics. Hence, the events of the Revolution play out in the story, but in a new angle. They are not at center stage. Rather, the Stamp Act and Patrick Henry’s fiery speeches in the House of Burgesses are secondary characters who come on and off stage only as they impact the unfolding drama of the deal.

If one sees history in legal terms, the plots are often structured around public law stories in general and constitutional ones in particular. Royster’s book is, in a sense, the private law story of the American Revolution. He is not a legal historian, but the law is hardly a bit player in his story. The drama, however, centers less around constitutional arguments about rights and representation than around bills of exchange, maritime insurance contracts, mortgages, debts, collection actions, wrangles over title to land, corporate governance, and the like, all of which propel the characters in the story via various complicated paths to ruin or fortune.

Definitely worth reading.


The Foie Gras Wars and the Ideology of Contract

gras.jpgGenerally speaking debates in contract law get played out according to a well-worn ideological script. On one side are the heartless conservatives who think that a contract is a contract is a contract and that folks ought to be able to deal or not deal on whatever terms they wish and that the law should confine itself to enforcing the deal as written. On the other side are the bleeding-heart liberals who insist that the vision of the marketplace as an arena of free choice and personal autonomy is an illusion and that a host of supposedly “voluntary” associations are shot through with coercion that the law ought to be policing. Or at least that is the way that the discussion tends to play out in a first year contracts class. Which is why foie gras is so much fun.

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Contracts Revue

This year I decided to do a “musical revue” / “musical review” during the last session of my contracts class. I’d play a song and then students would try to guess the case or contracts concept illustrated by the song. Feel free to try your hand at it in the comments, and I will add answer any that are missed (N.B. I think this list is too easy for contractsprofs or those who were in my class 😉

1. Cab Calloway, A Chicken Ain’t Nothing But a Bird

2. Isaac Hayes, Theme from “Shaft”

3. Naked Eyes, Promises Promises

4. Marvin Gaye, Heard It Through the Grapevine

5. Depeche Mode, Everything Counts

6. Simon & Garfunkel, Bridge Over Troubled Waters (Hint: same case as 7)

7. Talking Heads, Road to Nowhere (Hint: same case as 6)

8. The Rolling Stones, You Can’t Always Get What You Want

[Hat-tip: the ever-awesome AALS contracts listserve]


Who Gets to Keep Trover?

A man has a dog, “Trover,” who suddenly becomes ill. Trover loses all interest in chasing tennis balls, running around the park, sniffing, and other normal doggy activities. A visit to the vet ensues, with the result that Trover needs a $7,500 operation or he will die. This is far beyond the owner’s means, so instead he pays the vet $250 to have her put Trover to sleep. The owner, depressed, signs the authorization forms, and leaves the vet’s office.

About six months later, the man visits the park, and there is a dog that looks just like Trover. In fact, it is Trover. Not a ghost dog, but a dog that is alive and well, and out for a romp with… the vet. Upon questioning, the vet admits that Trover was such a sweet dog that she’s couldn’t let him die, and she decided to perform the operation at her own expense. Trover lives at her house and plays with her kids.

The man demands Trover back. The vet refuses, and she claims Trover is her dog now.

In your opinion, who gets custody of the dog?

(p.s. I previously posted this hypo to the fabulous AALS Contracts listserve, but no definitive answer was reached despite a willingness to talk about the law of bailments. Similar facts were reported as part of this news story.)


Big (Business) Love Is a Bust

biglove.jpgLarry Ribstein, Ann Althouse, and Christine Hurt all have recently commented on HBO’s new series “Big Love.” To one degree or another, each has focused especially on the business-law themes in the show, which they see variously as a source of weakness (Althouse), social commentary (Ribstein), or tremendous fun (Hurt).

For what it is worth, I’m mostly with A.A. here. The show’s evil character, Roman Grant, and its main hero, Bill Henrickson, are engaged in a long-running conflict which nominally regards the scope of profit-sharing clause in a loan agreement. Does the clause cover only the first store Bill built, or later stores as well? I like these issues well enough when I teach them, but as conflict fodder on a nighttime-soap, this is weak gruel. Compare the contract problems in B.L. to the simmering fight between Swearengen and Bullock and Wolcott (and others) on Deadwood about the proper role of law in constraining business, sex, and violence: the better show stands out by a mile. Plus, the writing on Deadwood is better – product, no doubt, of series creator David Milch’s golden pen. I’d give an example, but they are all profane. Notwithstanding Filler’s example, this is a family-friendly blog. Oh, ok, one link.

However, in the last B.L. episode, there was a hint that the conflict between the protagonists will soon move from accounting tricks to religion, as a character suggested that Bill was forced to leave his home at an early age because of Roman’s worry that he was a true prophet. In my view, this would be a good dramatic move. Contract interpretation, even including a neat parole evidence issue or two, simply isn’t sexy enough to compete with T.V.’s other offerings.


Empirical Studies at ALEA

Bill Henderson (at the ELS Blog) has a very useful round-up of empirical papers presented at the recent ALEA conference. Blog-traveller Kate Litvak comes in for special praise:

Kate Litvak [presented] “The Effect of the Sarbanes-Oxley Act on Non-US Companies Listed in the U.S.,” which was an extremely well-done event study that used a natural experiment approach to capture the market reaction to SOX (it was generally negative). In the last couple of years, Kate, who does not have a PhD, has spent a lot of time learning sophisticated econometric techniques. It really showed. Very impressive (and easy to follow) presentation.

To be frank, I’ve been quite skeptical of studies showing a negative relationship between SOX and equity prices, on several grounds: (1) my practice experience managing the creation of event studies that dealt with changing legal regimes suggested that results are rarely as robust as one might hope; (2)) the passage and eventual implementation of SOX were so attenuated that event studies would seem hard to perform; and (3) the debate is quite politicized, with folks already disposed to dislike federalization of corporate law leading the charge on the empirical front as well. But, having read Kate’s paper, I’m inclined to rethink my position. It is well-worth a read.


A T-Rex Named Sue


As Dan S. correctly pointed out here, there are three law review articles that have “Tyrannosaurus” in the title, and all three deal with various aspects of the legal battle for a particular dinosaur named “Sue.” Sue has also been the subject of a Nova documentary and at least two full-length books (one entitled Rex Appeal).

Here is the brief version of Sue’s story. In August 1990, commercial fossil hunters from the Black Hills Institute discovered Sue on a parcel of land within a Sioux reservation in South Dakota. The land was ostensibly owned by a rancher named Maurice Williams. The fossil hunters provided Williams with a check for $5,000, but Sue’s fair market value was later established at over $8,000,000. The fossil hunters, the landowner, the tribe, and the federal government went to court claiming ownership.

The Eighth Circuit eventually ruled that because the land had been held in Native American trust, and because the dinosaur was part of the “land,” Sue could not be sold without government permission, and that the federal government held Sue in trust for Williams. The fossil was eventually put up for auction, with a combination of corporate and non-profit interests joining together in their purchase. Sue now holds court at the Chicago field museum.

With that set of facts, you can take numerous angles on the case. In my article, I chose to describe how I use this case in class to teach contract defenses. In short, the Tyrannosaurus Sue article occupies the intersection of my interest in contract law, teaching theory, and terrible puns:

1) Contract law. Although the Court based its decision on principles of property law and statutory interpretation, it would have been fascinating if the court had examined the case from a contract perspective. Think of all the great contract defenses that could be raised to challenge the transaction, i.e. unconscionability, mistake, misrepresentation, duty to disclose. If you change the facts around slightly in a hypo, you can get into the discussion of defenses even more.

2) Teaching theory. I show my class the Nova Special on the discovery of the dinosaur, and spend a class exploring various theories of the case and talking about the defenses. It’s multimedia, it’s problem-based, it promotes active learning. You know, all the good stuff.

3) Terrible puns. Where to start digging on this one? The article contains numerous puns, the quality of which, er, kept degenerating. As a condition to my contract to publish the article, I insisted that footnote 23 remain:

An arm’s-length transaction with a T-Rex would be an interesting arrangement, given their tiny forelimbs.

So there you have it. Dinosaur law.