Contracts Commons^™

The Behavioral Effects Of (Unenforceable) Contracts, Evan Starr, Jj Prescott, Norman Bishara

Articles

Do contracts influence behavior independent of the law governing their enforceability? We explore this question in the context of employment noncompetes using nationally representative data for 11,500 labor force participants. We show that noncompetes are associated with reductions in employee mobility and changes in the direction of that mobility (i.e., toward noncompetitors) in both states that do and do not enforce noncompetes. Decomposing mobility into job offer generation and acceptance, we detect no evidence of differences in job search, recruitment, or offer activity associated with noncompetes. Rather, we find that employees with noncompetes—even in states that do not enforce them—frequently …

Making Employment Arbitration Fair And Accessible, Theodore J. St. Antoine

Articles

Mandatory arbitration agreements require employees, as a condition of employment, to agree to arbitrate all employment disputes instead of filing court suits. The Supreme Court has approved such agreements but many labor experts oppose them. The U.S. House of Representatives has passed a bill to prohibit pre-dispute agreements, the common form for mandatory arbitrations. This article argues that the House bill would have the practical effect of virtually eliminating employment arbitration. Instead, proposals are presented for either legislative or judicial steps to ensure that employment arbitration is fair and accessible. Requirements would include: (1) voluntary agreements on the part of …

The Best Of Times And The Worst Of Times: The Current Landscape Of Mandatory Arbitration Clause Enforcement In Domestic Arbitration, Virginia Neisler

Law Librarian Scholarship

There is nothing new about arbi­tration, a method of alternative dispute resolution designed to settle disputes more efficiently, cheaper, and faster than litigation. Today, mandatory arbitration clauses are ubiquitous in commercial contracts, social media terms and conditions, employment contracts, and more. These contracts, where one party in the weaker position (often a consumer or an employee) must either accept or reject the terms as written with no power to negotiate, are known as contracts of adhesion. The widespread use of arbitration clauses—specifically, pre­dispute, forced arbitration agreements, often including class­action waiv ers found in adhesion contracts—has come under pressure.

Understanding Noncompetition Agreements: The 2014 Noncompete Survey Project, J. J. Prescott, Norman D. Bishara, Evan Starr

Articles

In recent years, scholars and policymakers have devoted considerable attention to the potential consequences of employment noncompetition agreements and to whether legislatures ought to reform the laws that govern the enforcement of these controversial contractual provisions. Unfortunately, much of this interest—and the content of proposed reforms—derives from anecdotal tales of burdensome noncompetes among low-wage workers and from scholarship that is either limited to slivers of the population (across all studies, less than 1%) or relies on strong assumptions about the incidence of noncompetition agreements. Better understanding of the use of noncompetes and effective noncompetition law reform requires a more complete …

Agency, Code, Or Contract: Determining Employees' Authorization Under The Computer Fraud And Abuse Act, Katherine Mesenbring Field

Michigan Law Review

The federal Computer Fraud and Abuse Act ("CFAA ") provides for civil remedies against individuals who have accessed a protected computer without authorization or in excess of their authorization. With increasing numbers of employees using computers at work, employers have turned to the CFAA in situations where disloyal employees have pilfered company information from the employer's computer system. The vague language of the CFAA, however, has led courts to develop three different interpretations of "authorization" in these CFAA employment cases, with the result that factually similar cases in different courts can generate opposite outcomes in terms of employee liability under …

Arbitration Costs And Forum Accessibility: Empirical Evidence, Christopher R. Drahozal

University of Michigan Journal of Law Reform

In this Article, written for this symposium issue on "Empirical Studies of Mandatory Arbitration," I examine the available empirical evidence on these two questions. I take "mandatory arbitration" to refer to pre-dispute arbitration clauses in consumer and employment (and maybe franchise) contracts. Accordingly, I limit my consideration of the empirical evidence to those types of contracts. I do not discuss empirical studies of international arbitrations, which almost always arise out of agreements between commercial entities. Nor do I discuss empirical studies of court-annexed arbitrations, which may not derive from party agreement and do not ordinarily proceed to a binding award.

Property, Contracts, And Politics, Mark Tushnet

Michigan Law Review

Rebecca Scott is a historian, not an economist. Describing how a dispute over a mule's ownership was resolved, Professor Scott reproduces a receipt two claimants left when they took the mule from the plantation whose manager claimed it as well (p. 185). By contrast, analyzing property relations in the pre-Civil War American South, economic historian Jenny Wahl observes, "[E]conomic historians tend to [use] ... frequency tables, graphs, and charts." The differences in visual aids to understanding indicate the various ways historians and economists approach a single topic-the relation between markets and politics, the latter defined to include the deployment of …

Is U.S. Ceo Compensation Inefficient Pay Without Performance?, John E. Core, Wayne R. Guay, Randall S. Thompson

Michigan Law Review

In Pay Without Performance, Professors Lucian Bebchuk and Jesse Fried develop and summarize the leading critiques of current executive compensation practices in the United States. This book, and their highly influential earlier article, Managerial Power and Rent Extraction in the Design of Executive Compensation, with David Walker offer a negative, if mainstream, assessment of the state of U.S. executive compensation: U.S. executive compensation practices are failing in a widespread manner, and much systemic reform is needed. The purpose of our Review is to summarize the book and to offer some counterarguments to try to balance what is becoming …

The Rise Of America's Two National Pastimes: Baseball And The Law, Cleta Deatherage Mitchell

Michigan Law Review

Mark McGwire's seventieth home run ball sold at auction in January of this year for $3,005,000. In late 1998, Baltimore Orioles owner Peter Angelos sued a former Orioles manager and his daughter in the circuit court of Cook County, Illinois. Angelos alleged that the original lineup card from the 1995 game when Cal Ripken, Jr., broke Lou Gehrig's consecutive game record belongs to the Orioles, not to the former manager and certainly not to his daughter. There may be no crying in baseball, but there is money. And wherever earthly treasure gathers two or more, a legal system arises. From …

The Federal Arbitration Act And Individual Employment Contracts: A Better Means To An Equally Just End, William F. Kolakowski Iii

Michigan Law Review

This Note argues that courts should adopt a narrow reading of the employment contract exception to the FAA, thus making arbitration agreements in most individual employment contracts enforceable under the Act. Part I argues that a textual analysis of the FAA supports a narrow interpretation of the exception. Because some courts and commentators have argued that the text favors a broad interpretation, Part II examines the legislative history of the exception and demonstrates that no firm conclusions can be drawn about congressional intent regarding the exception's scope. Finally, Part III demonstrates that a narrow reading of the exception best serves …

Drafting The Dispute Resolution Clause, Whitmore Gray

Book Chapters

Providing in a contract for ways to resolve disputes that may arise presents a substantial challenge to the lawyer. In one sense, this is what a lawyer regularly does in contract drafting-anticipating misunderstandings or problems that experience has indicated are likely to arise, and trying to provide clear solutions in advance. When it comes to drafting a specific clause for the resolution of further disputes that may arise, however, many lawyers are at a substantial disadvantage. The task comes at the end of the substantive negotiations. The client does not want to focus on, or draw the other party's attention …

Hiring Ruled Contractual, Bill Gore, Douglas A. Kahn, Stan Shields

Articles

On December 29, 1988, the California Supreme Court decided Foley vs. Interactive Data Corp., perhaps the most eagerly awaited state supreme court decision in years. The Foley ruling, which immediately was hailed as a tremendous victory for California employers, eliminated punitive damage awards for many wrongfully terminated employees. That was good news for the employers. The decision, however, also provided employers with sobering news. Most significantly, the court ruled that employment relationships essentially are contracts, with terms created by the reasonable expectation of the parties. Thus, the majority of California employees now have a right to sue for breach …

Challenging The Employment-At-Will Doctrine Through Modern Contract Theory, Clare Tully

University of Michigan Journal of Law Reform

This Note advocates an implied contract analysis that both satisfies contractual requirements and protects the reasonable expectations of employees and employers. Part I describes the various reliance interests that employees bring to their jobs, the employer inducements that cause this reliance, and the business benefits that accrue when employees rely upon these inducements. Part II examines in detail judicial reluctance to enforce either these reliance interests or employer promises as contract rights under the at-will doctrine. Part II also urges the increased use of modern contract theories such as promissory estoppel, quasi-contract, and implied contract to protect employee reliance interests …

The Labor Court Idea, R. W. Fleming

Michigan Law Review

When the War Labor Board first began to exert pressure on companies and unions to adopt grievance arbitration clauses during World War II, there was a considerable hesitance on both sides. Both groups worried that while third party decision making might momentarily improve productive efficiency, it would do so at the price of a long-run loss in institutional integrity and autonomy, and peace at any price held little fascination for either side. Nevertheless, grievance arbitration was accepted and gradually became the normal mechanism for resolving contractual disputes in the United States.

The Supreme Court And Labor Dispute Arbitration: The Emerging Federal Law, Russell A. Smith, Dallas L. Jones

Michigan Law Review

Within the past few years, the United States Supreme Court has handed down a number of decisions of great significance to the labor dispute arbitration process. Some have been concerned with problems of arbitrability or arbitral authority; others with the availability and exclusivity of the arbitration process vis-a-vis alternative legal remedies for breach of the labor agreement; and still others with the effect of a breach of obligation by one party to the labor agreement upon the obligations of the other party. We propose in this article to analyze these decisions, to attempt to categorize the different kinds of challenges …

Reflections On The Nature Of Labor Arbitration, R. W. Fleming

Michigan Law Review

The use of arbitration as a means of settling labor-management disputes has increased steadily in the past twenty years. Recent decisions of the Supreme Court have underlined the importance of the process. The natural tendency is to compare labor arbitration with the court system as an adjudicatory process. There are, however, significant differences between the two, and this needs to be better understood.

An intelligent evaluation of the differences, and of the labor arbitration tribunal in general, can be made only after an exploration of its origin and history, and after some consideration of the kinds of cases which are …

Labor Law-Collective Bargaining Agreements-Implied Limitation On Management's Right To Subcontract, A. Paul Victor

Michigan Law Review

During the existence of a collective bargaining agreement which included both exclusive recognition and union shop clauses but did not include a management prerogatives clause, defendant employer, without the consent of the plaintiff union, contracted out janitorial work which had previously been performed by three of its employees. Subsequently, these employees were laid off and the plaintiff's protest, though in compliance with all grievance procedures, was unsuccessful. Thereupon, the plaintiff sought declaratory judgment relief under section 301 of the Labor-Management Relations Act, alleging that the defendant had no right to subcontract work customarily performed on its premises by its employees …

Labor Law-Collective Bargaining Agreements-Sham Exception To The Parol Evidence Rule In Welfare Trust Fund Agreement, John M. Price

Michigan Law Review

Defendant, shortly after commencing a small-scale strip-mining operation, signed a standard United Mine Workers collective bargaining agreement. He claimed that before signing he informed the union representative that he could not pay the union wage scale, or the specified royalty payments to the plaintiffs, trustees of the union welfare and retirement fund, and that he signed only after being assured that the agreement was a mere formality. Defendant did not pay union wages, and sent monthly checks to the plaintiffs only in amounts he felt he could afford. Plaintiffs brought suit on the written agreement for payment of the royalties …

Past Practice And The Administration Of Collective Bargaining Agreements, Richard Mittenthal

Michigan Law Review

In a recent United States Supreme Court decision, Mr. Justice Douglas, speaking for the majority, stated that "the labor arbitrator's source of law is not confined to the express provisions of the contract, as the industrial common law-the practices of the industry and the shop-is equally a part of the collective bargaining agreement although not expressed in it." When compared to actual management-union experiences in contract administration, this dictum seems unduly broad. It may be premature as well, for no coherent "rationale of grievance arbitration" has yet been developed. If such a rationale is to be achieved, far more work …

No-Strike Clauses In The Federal Courts, Frank H. Stewart

Michigan Law Review

One consideration will support several promises. A promisor may extract more than one promise in return for his single undertaking to do - or not to do. It depends upon his bargaining power. His single undertaking may be so valuable that several promises are necessary to induce him to act, or not to act. He is privileged to hold out for the best deal. The law does not examine his motives or reduce his demands. And from this arises the common- law principle that one consideration may support several promises.

Labor Law - Arbitration - Restriction Of Judicial Intervention Into The Arbitration Process, James J. White

Michigan Law Review

Respondent company laid off a number of employees as a result of its decision to contract out maintenance work formerly done in the company shop. After the grievance procedure failed to resolve petitioner union's claim that this violated the contract provision against lockouts, and the company refused the union's request for arbitration, the union sought specific performance of the promise to arbitrate contained in the collective bargaining contract. In dismissing the plea, the district court found that contracting out work was solely a function of management and therefore not arbitrable because the contract specifically excluded from arbitration "matters which are …

Labor Law - Arbitration - Determination Of The Question Of Arbitrability Under Section 301(A) Of Labor-Manabement Relations Act, Cecil R. Mellin

Michigan Law Review

Plaintiff- union brought an action under section 301 (a) of the Labor-Management Relations Act to compel arbitration of a grievance over the subcontracting of work by defendant-employer. The collective bargaining agreement provided that questions as to the proper interpretation or application of any of the provisions of the agreement would be submitted to arbitration and that all matters involving exclusively managerial functions were excluded from arbitration. The trial court held the grievance not arbitrable. On appeal, held, reversed. An implied covenant of good faith and fair dealings and the fact that some private arbitrators have held that the conventional …

The Law Of The Collective Agreement, Charles O. Gregory

Michigan Law Review

The Wagner Act contained no law governing collective agreements. Congress left their enforcement to the state and federal courts under the miserable body of common-law rules. Under various theories the courts worried about consideration, mutuality of obligation, duress and public policy aspects as if they were dealing with conventional contracts.

Labor Law - Arbitration - Power Of Arbitrator To Enjoin Union From Continuing Slowdown, Lawrence M. Kelly

Michigan Law Review

An arbitrator, acting under a collective bargaining agreement which called for a "speedy arbitration" procedure, issued an award enjoining the unions from continuing a slowdown in violation of that clause of the agreement forbidding strikes, lockouts, and slowdowns. A Supreme Court order granted the employers' motion to confirm the award and overruled the unions' cross motion to vacate. The unions claimed that the arbitrator, in issuing the injunction, had exceeded the powers granted him under the agreement and had acted contrary to section 876a of the Civil Practice Act (the New York Anti-Injunction Act). The Appellate Division affirmed the order …

Labor Law - Hot Cargo Clauses No Defense To Secondary Boycotts, Joel D. Tauber S.Ed.

Michigan Law Review

In August 1954 the Sand Door & Plywood Company sold a general contractor, through a millwork contractor, certain non-union-made Paine Lumber Company doors. The union notified its members at the construction site that the doors should not be hung because of the "hot cargo" · clause in their union contract. After negotiations between Sand Door and the union failed, Sand Door filed charges alleging secondary boycott action by the union in violation of section 8(b)(4)(A) of ·the amended National Labor Relations Act. A Board order was issued and enforced by the court of appeals. On certiorari to the United States …

The Legal Nature Of Collective Bargaining Agreements, Archibald Cox

Michigan Law Review

One reflecting upon the legal nature of a collective bargaining agreement can hardly avoid beginning with the thought that the institution has flourished outside of the courts and administrative agencies and often in the face of legal interference. The law had fallen into disrepute in the world of labor relations because it failed to meet the needs of men. Collective bargaining agreements were negotiated and administered without regard to conventional legal sanctions. Grievance procedures and arbitration evolved into an intricate and highly organized, private judicature. Many experienced and perceptive observers argued that the conventional sanctions for commercial contracts should not …

Corporations - Officers And Directors - Indemnification Of Expenses Incurred In Defense Of Contract Of Employment, John P. Williams

Michigan Law Review

Plaintiff, Sorenson, contracted with defendant, Overland Corporation, to become one of its directors, and the contract was approved by Overland's stockholders. After he began to serve as a director, Sorenson was made a party defendant to a stockholder's derivative suit attacking the propriety of his contract of employment with Overland. The derivative suit terminated in favor of Sorenson and he then brought an action for reimbursement of the counsel fees incurred by him in defending the stockholder's action. Plaintiff's action was under a corporate by-law providing that the corporation shall indemnify directors and officers against expenses incurred by them in …

Agency - Liability Of Principal For Termination Of Agents Employment, William G. Mateer S.Ed.

Michigan Law Review

In the summer of 1949, appellant entered into an oral contract for an indefinite time with the appellee whereby the former was granted an exclusive wholesale distributorship of appellee's farm and garden equipment. A four-year period followed in which appellant increased the number of dealers in appellee's product from four or five in 1949 to over one hundred in 1953. In the latter part of 1952 appellant contemplated an enlargement of its facilities which would require it to enter upon a fifteen-year lease. Since the lessor desired some assurances as to the duration of appellant's franchise, appellant wrote to appellee …

Labor Law - Labor-Management Relations Act - Strike During Life Of Contract Under A Reopening Provision, Dudley Chapman

Michigan Law Review

A collective bargaining agreement between Lion Oil Company and the union provided that if either party should desire to amend, notice should be served on the other, but not before August 24, 1951. The contract could be terminated by giving sixty days notice to terminate if agreement could not be reached within the sixty days following notice to amend. The contract did not contain a no-strike clause. The union gave notice on August 24, 1951 of its desire to amend, and having reached no agreement, struck on April 30, 1952 without having served notice to terminate. Both parties agreed that …

Labor Law - Lmra - Status Of A Walkout Prompted By Health Reasons In The Face Of A No-Strike Clause, Robert E. Hammell S.Ed.

Michigan Law Review

The employer and the union were covered by a contract which contained a no-strike clause. In spite of this agreement, buffers in the employer's plant walked off their jobs when a blower in the buffing room failed to carry away dust and cool the area properly. The trial examiner found that the walkout was a protected concerted activity and not a strike, and that the employer had therefore committed an unfair labor practice by refusing to permit the buffers to return to their jobs when the blower had been repaired. On exceptions taken to these findings, the NLRB reviewed and …