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Tag Archives: Contract Law

Insurance Company Must Defend Contractor Regardless of CGL Policy’s Breach-of-Contract Exclusion.

29 Wednesday Aug 2018

Posted by Celia C. Elwell, RP in Construction General Liability, Contract Law, Duty to Defend, Insurance Law

≈ Comments Off on Insurance Company Must Defend Contractor Regardless of CGL Policy’s Breach-of-Contract Exclusion.

Tags

Construction General Liability, Contract Law, Duty to Defend, Insurance Law, Justia US Law

Normally, an insurance company has no duty to defend a contractor under a construction general liability (“CGL”) policy against breach-of-contract and negligence allegations. Not this time. This time, in the Western District of Texas, the insureds won against the insurance company. The court held the breach of contract exclusion did not apply because the contractor’s subcontractor, not the contractor, could be responsible for a construction defect.

A municipality hired the general contractor to construct a sports complex that included a swimming pool, baseball and softball fields, and parking lots. The contractor hired two subcontractors – one to design and build the swimming pool, and another to do all the dirt work, grading, and storm drainage for the entire complex.

At the beginning of 2017, a contractor employee saw cracks beginning the pool and parking lot after completion of the pool and most of the sports complex. The contractor put the pool subcontractor on notice to fix the cracks. About three months later, a contractor employee noticed the cracks were worse. The contractor and the pool subcontractor were unable to agree on how to fix the pool. By the end of the year, more cracks and other defects had appeared. The city, contractor, and subcontractors could not agree on how to solve these problems.

The city sued the contractor for breach of contract and negligence. The contractor notified its insurance company and, relying on its CGL policy, asked its insurance company to defend it against the city’s lawsuit. The insurance company refused. It sued the contractor requesting a judgment declaring that it had no duty to defend the contractor in the lawsuit filed by the city based on the CGL exclusion clause.

The insurance company relied on language in its policy that specifically denied coverage to the contractor for property damage caused by the contractor. In it its lawsuit against the contractor, the city had specifically alleged that work performed by the contractor and its subcontractors was defective. The insurance policy’s exclusion did not apply to work performed by a subcontractor. The court held that, because the city’s allegations included the possibility that subcontractor alone had created the defects at issue in the city’s lawsuit, the insurance company had a duty to defend the contractor.

Mt. Hawley Insurance Company v. Slay Engineering, Texas Multi-Chem and Huser Construction, LLC, No. 5:2018cv00252 – Document 19 (W.D. Tex. 2018). You can read the entire Memorandum and Order at Justia US Law here: https://bit.ly/2wul7ka. -CCE

 

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When Is An Offer of Employment Letter The Same As A Contract?

13 Thursday Aug 2015

Posted by Celia C. Elwell, RP in Breach, Contract Law, Employment Contracts, Employment Law, Intentional Promise, Religious Discrimination

≈ Comments Off on When Is An Offer of Employment Letter The Same As A Contract?

Tags

Breach of Contract, Contract Law, ContractsProf Blog, Employment Law, Jeremy Telman, Motion to Dismiss

Federal Judge Allows Stephen Salaita’s Suit Against the University of Illinois to Proceed, by Jeremy Telman, ContractsProf Blog

http://tinyurl.com/o7flplx

In a case we have been following for a year (here, here, and here, for example), Stephen Salaita is suing the University of Illinois for withdrawing its offer to hire him to teach in its American Indian Studies Program after discovering some intemperate anti-Zionist tweets Mr. Salaita had posted. . . .

Continue reading →

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Unique Contract Complaint – Disney Won’t Help Me Build An X-Wing.

29 Wednesday Jul 2015

Posted by Celia C. Elwell, RP in Breach, Contract Law, Humor

≈ Comments Off on Unique Contract Complaint – Disney Won’t Help Me Build An X-Wing.

Tags

Contract Law, Disney, Kevin Underhill, Lowering the Bar Blog, Motion to Dismiss, X-Wing

Plaintiff: Disney Promised to Help Me Build an X-Wing. Court: No It Didn’t, by Kevin Underhill, Lowering the Bar Blog

http://www.loweringthebar.net/2015/04/flying-car.html

There are no words. This is absolutely unique. -CCE

Many remarkable legal documents land in my inbox, and I try to mention as many as I can. Of that group, only a select few are remarkable enough to make it into the Hall(s) of Fame. I don’t think any other case has yielded both a Hall of Fame pleading and a Hall of Fame court order, but this is probably such a case. . . .

Continue reading →

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PayPal Has A New Agreement.

24 Wednesday Jun 2015

Posted by Celia C. Elwell, RP in Consumer Law, Contract Law, FCC, Finance and Banking Law, Government, Telemarketing, Telephone Consumer Protection Act

≈ Comments Off on PayPal Has A New Agreement.

Tags

Contract Law, ContractsProf Blog, D. A. Jeremy Telman Valparaiso, Do Not Call, FCC, PayPal, Telephone Consumer Protection Act, User Agreement

PayPal’s New Agreement and the FCC, Editor: D. A. Jeremy Telman Valparaiso Univ. Law School, ContractsProf Blog

http://tinyurl.com/odzogfg

Last week, the Federal Communications Commission acted to approve a number of proposals that update the TCPA (Telephone Consumer Protection Act), popularly known as the  “Do Not Call” law that prohibits companies from interrupting consumers’ dinner time conversations with pesky telemarketing calls. . . .

Continue reading →

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Bet You Can’t Guess Ken Adams’ Opinion of “Boilerplate” Contract Forms.

29 Monday Dec 2014

Posted by Celia C. Elwell, RP in Boilerplate Forms, Contract Law, Legal Writing

≈ Comments Off on Bet You Can’t Guess Ken Adams’ Opinion of “Boilerplate” Contract Forms.

Tags

Adams on Contract Drafting, Boilerplate Forms, Clio, Contract Law, EDGAR, Ken Adams, Legal Writing, LegalZoom, Rocket Lawyer

The Sad Truth About Promiscuous Copying of Contract Language, by Ken Adams, Adams on Contract Drafting

http://tinyurl.com/loyhwy6

I recently came across this blog post on Clio’s website. Clio is software that handles time and billing, calendaring, and collaboration, but this blog post is about something else—how law firms can use ‘commercial legal forms.’ It suggests three possible uses: You can copy them. You can resell them. Or you can create and sell your own. Here’s my take on the first of those suggestions.

The author says that if you’re looking to copy ‘boilerplate,’ you can get it from three sources:

  • from your own files
  • from ‘the same vast library of forms and templates that the public now enjoys,’ which ‘are often crafted by experienced lawyers’
  • from forms sold by the likes of LegalZoom and Rocket Lawyer, one advantage being that checking those forms would ‘take a fraction of the time that would have been spent of compiling a rough draft from scratch’

Regular readers will know that I find the latter two options depressing. Good luck relying on anything you find in, say, the great flea market that is the U.S. Securities and Exchange Commission’s EDGAR system. As for relying on the LegalZooms and Rocket Lawyers of the world, go here for my critique of a LegalZoom contract and go here for my critique of a Rocket Lawyer contract.

The sad fact is that plucking contract language from the random mass and then checking it and revising it appropriately requires serious skill and is time-consuming, despite what the Clio author says. Given the cold realities of quality control, the something-for-nothing appeal of promiscuous copying of contract language is an illusion.

Copying contract language without that sort of scrutiny requires a leap of faith; if you’re putting your faith in some contract you found in a few minutes of rooting around online, you’re screwed before you even start.

Incidentally, given that Clio is now offering advice about where to copy from, I’ll now start writing about time-management software! Not really.

 

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Antitrust Laws and Exclusive Contracts.

29 Monday Dec 2014

Posted by Celia C. Elwell, RP in Antitrust Law, Contract Law

≈ Comments Off on Antitrust Laws and Exclusive Contracts.

Tags

Antitrust Law, Contract Law, Jarod Bona, The Antitrust Attorney Blog

Does an Exclusive-Dealing Agreement Violate the Antitrust Laws?, by Jarod Bona, The Antitrust Attorney Blog

http://tinyurl.com/pgptsjo

Sometimes parties will enter a contract whereby one agrees to buy (or supply) all of its needs (or product) to the other. For example, maybe a supplier and retailer agree that only the supplier’s product will be sold in the retailer’s stores? This usually isn’t free as the supplier will offer something—better services, better prices, etc.—to obtain the exclusivity.

If you compete with the party that receives the benefit of the exclusive deal, this sort of contract can seem quite aggravating. After all, you have a great product, you offer a competitive price, and you know that your service is better. Then why is the retailer only buying from your competitor? Shouldn’t you deserve at least a chance? Isn’t that what the antitrust laws are for?

Maybe. But most exclusive-dealing agreements are both pro-competitive and legal under the antitrust laws. That doesn’t mean that you can’t bring an antitrust action and it doesn’t mean you won’t win. But, percentage-wise, most exclusive-dealing arrangements don’t implicate the antitrust laws. . . .

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Contracts Must Be Drafted With Specific Language To Enforce Arbitration.

01 Monday Dec 2014

Posted by Celia C. Elwell, RP in 5th Circuit Court of Appeals, 8th Circuit Court of Appeals, Appellate Law, Arbitration, Arbitration, Breach, Contract Law, Employment Law, Legal Analysis, Legal Writing, Precedent

≈ Comments Off on Contracts Must Be Drafted With Specific Language To Enforce Arbitration.

Tags

Arbitration, Breach of Contract, Contract Law, Legal Writing, Lexology, Liz Kramer, Stinson Leonard Street LLP

“Harmonizing” Contract Language Leads Two Circuit Courts To Deny Arbitration, by Arbitration Nation Blog, posted at Lexology Blog

http://tinyurl.com/mh3y6z3

Two parties recently convinced federal circuit courts that the language of their arbitration agreements was not sufficient to compel arbitration of their disputes. Both cases turned on how courts ‘harmonize’ language from different parts of an agreement or from multiple agreements.

The decision from the Eighth Circuit was a pretty easy one. The parties’ contract required them to mediate any dispute. Then it said: ‘if the dispute is not resolved through mediation, the parties may submit the controversy or claim to Arbitration. If the parties agree to arbitration, the following will apply…’ The party fighting arbitration (a city in South Dakota) argued the quoted language does not mandate arbitration, it makes arbitration an option for the parties, so the case should remain in court. [Emphasis in original.]

The party seeking arbitration emphasized a sentence at the end of the arbitration paragraph saying that the arbitrator’s ‘decision shall be a condition precedent to any right of legal action.’ It argued that the only way to harmonize that language is to conclude that arbitration is required. The court disagreed, finding that a reasonable interpretation is simply that if the parties decided to arbitrate, the arbitration decision is a condition precedent to further legal action. Quam Construction Co., Inc. v. City of Redfield, ___ F.3d___, 2014 WL 5334781 (8th Cir. Oct. 21, 2014). Therefore, the Eighth Circuit affirmed the district court’s denial of the motion to compel arbitration.

The Fifth Circuit had a harder case in Sharpe v. AmeriPlan Corp., __ F.3d__, 2014 WL 5293707 (5th Cir. Oct. 16, 2014). In that case, three former sales directors of a company sued for breach of contract after they were terminated. The company moved to compel arbitration and the district court granted the motion.

Their original employment agreements with the company did not call for arbitration, in fact they set the venue for legal proceedings exclusively in Texas courts. The employment agreements also incorporated a ‘Policies and Procedures Manual.’ The employment agreements could only be modified with written consent of all parties, but the Manual could be unilaterally modified by the company. Years later, the company amended its Manual to provide for mandatory arbitration.

The Fifth Circuit reversed the district court, finding that the new arbitration clause was unenforceable. First, the court concluded that the jurisdiction and venue clauses in the original employment agreements survived the amendment to the Manual, because there was no written and signed change to the employment agreements themselves and because the company had affirmatively relied on the venue clause (calling for Texas courts) when it transferred the case from California to Texas. And second, the court found that the old and new provisions “cannot be harmonized” without rendering the original agreement meaningless.

There are drafting lessons from these cases: if you want to have mandatory arbitration of disputes, the contract must consistently say that, and if you want to modify existing agreements to add arbitration, make sure to honor any language in the original agreement about how that agreement can be amended or modified and be clear what clauses are replaced or superseded.

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Compilation of Ken Adams’ Articles on Contract Drafting.

25 Saturday Oct 2014

Posted by Celia C. Elwell, RP in Contract Law, Legal Writing, Recent Links and Articles

≈ Comments Off on Compilation of Ken Adams’ Articles on Contract Drafting.

Tags

Adams On Contract Drafting Blog, AdamsDrafting Blog, Contract Law, Ken Adams, Legal Writing, The Koncise Drafter

Ken Adams’s Articles, Adams on Contract Drafting Blog

http://www.adamsdrafting.com/writing/ken-adamss-articles/

In addition to Ken’s posts from February 2013, this blog contains Ken’s posts from The Koncise Drafter (from December 2010 to February 2013) and from the AdamsDrafting blog (from May 2006 to December 2010).

 

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“Lost In Fine Print” – Documentary on Forced Arbitration.

20 Monday Oct 2014

Posted by Celia C. Elwell, RP in Arbitration, Consumer Law, Contract Law

≈ Comments Off on “Lost In Fine Print” – Documentary on Forced Arbitration.

Tags

Arbitration, Consumer Law, Contract Law, ContractsProf Blog, Lost In Fine Print, Nancy Kim

Documentary on Forced Arbitration, by Nancy Kim, ContractsProf Blog

http://tinyurl.com/kulpycd

The Alliance for Justice has released a documentary on forced arbitration called Lost in the Fine Print.  It’s very well-done, highly watchable (meaning your students will stay awake and off Facebook during a viewing), and educational.  I recently screened the film during a special session for my Contracts and Advanced Contracts students.  It’s only about 20 or so minutes and afterward, we had a lively discussion about the pros and cons of arbitration.  We discussed the different purposes of arbitration and the pros and cons of arbitration where the parties are both businesses and where one party is a business and the other a consumer.  Many of the students had not heard about arbitration and didn’t know what it was.  Many of those who did know about arbitration didn’t know about mandatory arbitration or how the process worked.  Several were concerned about the due process aspects.  They understood the benefits of arbitration for businesses, but also the problems created by lack of transparency in the process.  I thought it was a very nice way to kick start a lively discussion about unconscionability, public policy concerns, economics and the effect of legislation on contract law/case law.

I think it’s important for law students to know what arbitration is and it doesn’t fit in easily into a typical contracts or civil procedure class so I’m afraid it often goes untaught.  The website also has pointers and ideas on how to organize a screening and discussion questions.

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Google, Mutuality, and Wrap Contracts – Something Doesn’t Seem Quite Right . . .

25 Sunday May 2014

Posted by Celia C. Elwell, RP in Contract Law, Wrap Contracts

≈ Comments Off on Google, Mutuality, and Wrap Contracts – Something Doesn’t Seem Quite Right . . .

Tags

Contract Law, ContractProf Blog, Google, Mutuality, Nancy Kim, Terms of Use, Wrap Contracts

Mutuality and Wrap Contracts, by Nancy Kim, ContractProf Blog

http://tinyurl.com/m8d9f3s

As I’ve noted in a prior post, there is a lawsuit pending against Google for email scanning which was recently denied class status.  Something that’s puzzled me about wrap contracts generally, including Google’s, is that many of them don’t seem to be contracts at all – and not simply because of the (lack of) consent issue.  They typically contain modification at will clauses and termination at will clauses.  In contracts class, I teach students that generally (with the exception of employment contracts) these clauses lack mutuality unless constrained in other ways, such as a notice period.  While there may be consideration (use of service in exchange for…data?  eyeballs?  not clear), there is no consideration if the promises are illusory and don’t actually bind a party.   Google’s terms of use, for example, state:

‘You can stop using our Services at any time, although we’ll be sorry to see you go. Google may also stop providing Services to you, or add or create new limits to our Services at any time.’

and this unilateral modification clause:

‘We may modify these terms or any additional terms that apply to a Service to, for example, reflect changes to the law or changes to our Services. You should look at the terms regularly. We’ll post notice of modifications to these terms on this page. We’ll post notice of modified additional terms in the applicable Service. Changes will not apply retroactively and will become effective no sooner than fourteen days after they are posted. However, changes addressing new functions for a Service or changes made for legal reasons will be effective immediately. If you do not agree to the modified terms for a Service, you should discontinue your use of that Service.’

Google then isn’t bound to actually provide anything according to its Terms of Use.

In the email scanning case, Google is making the argument that consent to email scanning was obtained in the context of ‘consenting’ to the Terms of Use.  But if these ‘contracts’ are not really contracts because they lack mutuality, then can Google really claim that their users ‘consented’ to the email scanning?  Is there blanket assent to terms outside of the context of a contract?

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Get It In Writing!

22 Saturday Feb 2014

Posted by Celia C. Elwell, RP in Intentional Misrepresentation, Intentional Promise, Promissory Fraud

≈ Comments Off on Get It In Writing!

Tags

Contract Law, Enforceable Promise, Intentional Misrepresentation, Promissory Estoppel, Promissory Fraud

“When I Get The Big Money, I’ll Take Care Of You,” by Myanna Dellinger, ContractProf Blog

http://tinyurl.com/lfs2gpy

Do such words imply an enforceable promise to give an employee additional compensation both for work already performed and for work to be performed in the future if the speaker actually obtains a sizeable chunk of money?

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Indiana Takes On Liquidated Damages in Contract Law.

11 Tuesday Feb 2014

Posted by Celia C. Elwell, RP in Appellate Law, Contract Law, Damages, Indiana Court of Appeals, Litigation, State Appellate Courts

≈ Comments Off on Indiana Takes On Liquidated Damages in Contract Law.

Tags

Auburn, Contract Law, ContractsProf Blog, Dean V. Kruse Foundation, Dean V. Kruse Foundation v. Gates, Indiana, Indiana Law Review, Jeremy Telman, Jerry Gates, Kimberly Cohen, Liquidated Damages, Michael Dorelli, Penalty Clause, Purchase Agreement, World War II Museum

Indiana Court of Appeals on Liquidated Damages, by Jeremy Telman, ContractsProf Blog

http://tinyurl.com/lqqbvpw

As you can see from the quote below, this is the fifth in this series. I encourage you to read the entire series to get the full big picture. -CCE

This is the fifth in a series of posts that draw on Michael Dorelli and Kimberly Cohen’s recent article in the Indiana Law Review on developments in contracts law in Indiana.

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Is It Herein, Hereunder, Or Over Yonder?

10 Monday Feb 2014

Posted by Celia C. Elwell, RP in 2nd Circuit Court of Appeals, Bad Legal Writing, Contract Law, Legal Analysis, Legal Writing, Legalese

≈ Comments Off on Is It Herein, Hereunder, Or Over Yonder?

Tags

Adams On Contracting Blog, Ambiguity, Bayerische Landesbank New York Branch v. Aladdin Capital Mgmt. LLC, Contract Law, Herein, Hereunder, Ken Adams, Legal Writing, Paul Hastings

“Herein” (And I Need A Label For This Kind Of Ambiguity), by Ken Adams, Adams on Contract Drafting Blog

http://tinyurl.com/lg9nuer

Ken Adams explains why to avoid “herein,” “hereunder,” and antecedent ambiguity when drafting contracts. -CCE

I’ve previously entertained you with court opinions addressing confusion over what part of a contract is being referred to in a contract provision. Who can forget the confusion over a “hereunder”? (See this post). Or over “except as provided below”? (See this post.)

Well, I have another treat for you. (Yes, I know, I’m too generous.)

The case is Bayerische Landesbank, New York Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42 (2d Cir. 2012) (PDF here). (I learned about it from this Paul Hastings newsletter.)

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Recent Kansas Case Ignores Sperm Donor Parties’ Written Agreement.

01 Saturday Feb 2014

Posted by Celia C. Elwell, RP in Child Support, Contract Law, Family Law, Litigation

≈ Comments Off on Recent Kansas Case Ignores Sperm Donor Parties’ Written Agreement.

Tags

Artificial Insemination, Child Support, Contract Law, Craigslist, Judge Mary Mattivi, Kansas Department of Children and Families, Kansas District Court, Parental Rights, Shawnee County, Sperm Donor, William Marotta

Sperm Donor Ordered to Pay Child Support Despite Agreement, by Nancy Kim, ContractsProfBlog

http://tinyurl.com/lsm5zth

A man responded to a Craigslist ad for a sperm donor posted by two women. Each of them signed an agreement that the man waived his parental rights and responsibilities. A child was born as the result.

Regardless of the parties’ written agreement, the Kansas Department of Children and Families, not the two women, sued to have the man declared as the legal father of the child. As the legal father, the Kansas Department of Children and Families asked the Court to award it $6,000 award against the man for past and future child support.

Because a Kansas statute requires a physician to perform the artificial insemination procedure, a Kansas District Court ruled that a sperm donor’s self-designation in the parties’ agreement was insufficient to waive parental rights and responsibilities. Therefore, the Judge decided that the Kansas Department of Children and Families was right – the man was indeed the legal father and owed the demanded child support. -CCE

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