Contracts Commons^™

Rethinking Contract Practice And Law In Japan, John O. Haley

Vanderbilt Law School Faculty Publications

This article explores "the Japanese advantage" in the enforcement of ex ante contract commitments in comparison with the United States, arguing that ostensible convergence of Japanese and United States contract practice in on-going business relationships is based on very different assumptions and conditions. Writing in the early 1960s Takeyoshi KaWashima in Japan and Stewart Macaulay in the United States described prevailing views and practices related to business agreements. Their respective observations indicated a tendency in both countries to avoid formal, legally enforceable contacts. For over four decades scholars on both sides of the Pacific have tended view these observations as …

The New Wal-Mart Effect: The Role Of Private Contracting In Global Governance, Michael P. Vandenbergh

Vanderbilt Law School Faculty Publications

This Article argues that networks of private contracts serve a public regulatory function in the global environmental arena. These networks fill the regulatory gaps created when global trade increases the exploitation of global commons resources and shifts production to exporting countries with lax environmental standards. As critics of trade liberalization have noted, public responses often are inadequate to address the attendant environmental harms. This Article uses empirical data to examine how private contracting regulates firm behavior, focusing on supply-chain contracting. The Article shows that more than half of the largest firms in eight retail and industrial sectors impose environmental requirements …

Student-Athlete Contract Rights In The Aftermath Of "Bloom V. Ncaa", Joel Eckert

Vanderbilt Law Review

Jeremy Bloom is the defending World Champion in moguls skiing, representing the United States in this discipline at both the 2002 and 2006 Winter Olympics. Bloom also played football for the University of Colorado from 2002 to 2003 where he established two Colorado football records. Before enrolling at Colorado in 2002, Bloom had endorsed numerous products and desired to continue doing so throughout his time in college so that he could fund his skiing career.

The National Collegiate Athletics Association ("NCAA") allows student-athletes ("athletes" or "student-athletes") to compete professionally and receive salaries in sports other than those for which they …

An Empirical Analysis Of Ceo Employment Contracts: What Do Top Executives Bargain For?, Randall Thomas, Stewart J. Schwab

Vanderbilt Law School Faculty Publications

In this paper, we examine the key legal characteristics of 375 employment contracts between some of the largest 1500 public corporations and their Chief Executive Officers. We look at the actual language of these contracts, asking whether and in what ways CEO contracts differ from what are thought of as standard employment contract features for other workers. Our data provide some empirical answers to several common assertions or speculations about CEO contracts, and shed light on whether these contracts are negotiated solely to suit the preferences of CEOs or have provisions that insure that the employers' interests are also safeguarded. …

Is The Cisg Benefiting Anybody?, Gilles Cuniberti

Vanderbilt Journal of Transnational Law

The Convention on Contracts for International Sale of Goods (CISG) was supposed to increase legal certainty and reduce the transaction costs of international buyers and sellers. This Article argues that none of these goals has been met. A survey of 181 court decisions and arbitral awards applying the CISG shows that the vast majority of international buyers and sellers do not address the issue of the law governing their contracts, irrespective of the value at stake. Although the data is not easy to interpret, it follows that international buyers and sellers are simply not concerned with the legal regime governing …

Traditional Knowledge & Intellectual Property: A Trips-Compatible Approach, Daniel J. Gervais

Vanderbilt Law School Faculty Publications

Should intellectual property provide a means for strengthening the range of incentives that local communities need for conserving and developing genetic resources and traditional knowledge (TK)? If so, how and at what cost? To be able to suggest answers, a number of issues must be resolved. They are the focus of the Article. First, one must build, and then cross, a cultural bridge to explain current forms of intellectual property to holders of traditional knowledge, including definitional efforts to determine the nature and depth of the overlap(s). This achieves a dual objective: it allows intellectual property circles to understand and …

Contractual Choice Of Law And The Prudential Foundations Of Appellate Review, David Frisch

Vanderbilt Law Review

Within the past decade, professional organizations interested in making the law better suited to commercial transactions have begun to advocate the proposition that contracting parties should have almost unlimited power to choose the law to govern their relationship. The new choice-of-law framework resulting from these reform efforts will provide parties with an expanded menu of legal regimes from which to choose when drafting their contract and, in turn, will lead to a more frequent use of choice-of-law clauses. Indeed, some have even suggested that omitting such a clause may soon become malpractice for the commercial lawyer. Given both the trend …

Corrective Justice In Contract Law: Is There A Case For Punitive Damages?, Curtis Bridgeman

Vanderbilt Law Review

Twentieth-century American legal theory has been dominated by utilitarian and economic approaches. As a result, scholarly analyses of contract and tort law have focused on the public effects of the resolution of private disputes. But in the last twenty years or so justice has undergone a renaissance as so-called corrective-justice theorists have tried to shift the discussion in private law back to the relationships between individual parties. Tort law has been a particularly fertile ground for corrective-justice theorists, and a lively debate has developed about what the best corrective-justice account of tort law would look like.

By contrast, comparatively little …

Renegotiation And Adaptation Of International Investment Contracts, Klaus P. Berger

Vanderbilt Journal of Transnational Law

In modern-day international investment practice, especially in connection with the exploitation of natural resources, Production Sharing Agreements have come to take over the role of the classic concession agreement. Like their predecessors, these contracts are particularly vulnerable to disturbances in the commercial balance agreed to, or assumed by, the parties at the conclusion of the contract. This vulnerability has three primary causes.

First, these are classic examples of long term contracts. In the petroleum industry, the commitment of significant capital for exploration, particularly in development, and the assumption of considerable risk, particularly in exploration, require contracts covering up to and …

Renegotiation And Adaptation Clauses In Investment Contracts, Revisited, John Y. Gotanda

Vanderbilt Journal of Transnational Law

Professor Dr. Klaus Berger, in Renegotiation and Adaptation of International Investment Contracts: The Role of Contract Drafters and Arbitrators, proposes that international investment contracts include a clause allowing the parties to renegotiate the terms of their contract if certain events take place.' If they are unable to reach an agreement, Professor Berger advocates that the parties agree to permit an arbitral tribunal to modify the terms of the contract to restore the economic equilibrium assumed by the parties when they concluded the agreement. Although commentators have often championed these clauses, private parties involved in international transactions have included them infrequently. …

The Impact Of Digital Distribution On The Duration Of Recording Contracts, Revella Cook

Vanderbilt Journal of Entertainment & Technology Law

The success of digital distribution depends on various factors that shape today's music industry. Part I will examine the traditional method of releasing an album and its impact on the duration of recording agreements. This section will focus on the recent legislative debate within California and will illuminate problems regarding the duration of a standard recording contract. Part II investigates modern methods of distribution and whether digital distribution is a viable alternative for the retail of music. Part III discusses innovative marketing models that could reduce costs associated with an album's release. Part IV examines barriers that the music industry …

Idea Men Should Be Able To Enforce Their Contractual Rights: Considerations Rejecting Preemption Of Idea-Submission Contract Claims, Celine Michaud, Gregory Tulquois

Vanderbilt Journal of Entertainment & Technology Law

It is a long-standing and general rule that ideas are "free as the air" as Justice Brandeis eloquently stated in the dissent to the seminal case International News Service v. Associated Press.' This axiom of copyright law expresses the idea that copyright does not protect ideas but only protects the expression of ideas in a work. The distinction between unprotected ideas and protected expression is often referred to as the idea-expression dichotomy...

The principle of the idea-expression dichotomy was initially stated in Baker v. Selden, and later cases further articulated this principle, so that it has become one of the …

Filmmakers Beware: Protecting Profits Through International Licensing Agreements, Harris E. Tulchin

Vanderbilt Journal of Entertainment & Technology Law

The discussion that follows provides a description of the typical license terms and a more in-depth treatment of three areas of primary importance to the agreement: (1) release requirements; (2) licensed rights terms; and (3) payment obligations. The agreement usually begins with a short description of the particular motion picture licensed, the title, and the key creative elements such as its stars, director, writer, and producer. It states the country or territory to which the motion picture is licensed. The agreement will generally provide for an overall term of a number of years from the availability of certain delivery materials, …

The Recording Artist Agreement: Does It Empower Or Enslave, Lynn Morrow

Vanderbilt Journal of Entertainment & Technology Law

In June 2000, Courtney Love, the controversial lead singer of the rock group Hole, lambasts, among other things, record company profits. In an essay entitled "Courtney Love Does the Math," she maintains that a recording artist agreement is itself a form of music piracy. She tells a compelling story about a band and a record company. As a result of a bidding war between the major labels, the band was given what is considered a huge deal-a twenty percent artist royalty and a million dollar advance. Providing a breakdown of how the million dollars was spent, Ms. Love calculates that, …

Guarantying A Hit (Or Miss): Understanding The Completion Guaranty Business In Hollywood, James W. Coupe

Vanderbilt Journal of Entertainment & Technology Law

Titanic was. So was Waterworld. Heck, even The Adventures of Baron Munchausen was. Blockbusters? No. Oscar winners? Wrong again. Yet these three films do share one unfortunate characteristic-- each of these pictures was over budget, drastically in some cases. Although caused by different forces and cured by different individuals, each film eventually forced someone to pay a great deal of money unexpectedly. Like many unforeseen expenses, these too can be insured against. Enter stage right, a completion guaranty company.

Any and all film productions financed by non-producer third parties should have a completion guaranty. In the most fundamental terms, a …

The Sky Is Falling (Or Is It?): International Contracts And The Y2k Problem, Mark B. Baker

Vanderbilt Journal of Transnational Law

Y2K problems at this point in time are reasonably foreseeable due to the amount of attention given the subject. Contracting parties should examine potential Y2K problems arising internally and address them before January 1, 2000. Yet the extent of Y2K problems, be they widespread or solitary occurrences, remains unforeseeable and unpredictable. Even those parties having adequately addressed internal Y2K problems can experience difficulties due to external parties having failed to become Y2K-compliant. This "second tier" of unforeseeability supports the use of excused performance, but the "first tier" foreseeability that Y2K problems potentially exist prevent viable use of the defense. In …

Inertia And Preference In Contract Negotiation: The Psychological Power Of Default Rules And Form Terms, Russell Korobkin

Vanderbilt Law Review

In The Problem of Social Cost,' the foundational article of the law and economics movement, Ronald Coase suggested that when transaction costs are zero, the initial allocation of a legal entitlement is irrelevant to its eventual ownership. Assuming no transaction costs, the Coase Theorem predicts that if party A values an entitlement more than does party B, A will keep the entitlement if it is initially allocated to him, and he will buy it if it is originally allocated to B. This powerful insight depends on the behavioral assumption that an individual's valuation of entitlements does not depend on ownership; …

Restrictions On Forum-Selection Clauses In Franchise Agreements And The Federal Arbitration Act: Is State Law Preempted?, James Zimmerman

Vanderbilt Law Review

The use of forum-selection clauses in contracts continues to increase. Emboldened by the Supreme Court's endorsement of forum- selection clauses, large companies now frequently use these clauses in a variety of contracts. Contracting parties use these clauses in part to ensure that the parties can resolve any dispute in a convenient forum. Often, however, a party inserts a forum-selection clause to limit liability by increasing the barriers to litigation or arbitration. Typically, the party inserting the forum-selection clause has superior bargaining power and inserts into the contract a clause designating a forum remote to the other party, where any dispute …

Intervention And Joinder As Of Right In International Arbitration, S. I. Strong

Vanderbilt Journal of Transnational Law

For the purpose of this Article, an existing party is said to have a claim to join a third party into an arbitration as of right when (1) in the third party's absence, complete relief cannot be accorded among those already parties to the arbitration or (2) the third party asserts an interest relating to the subject of the arbitration and is so situated that the disposition of the arbitration in the third party's absence may (a) as a practical matter impair or impede the third party's ability to protect that interest or (b) leave any of the persons already …

Contract Law In The People's Republic Of China, Mark C. Lewis

Vanderbilt Journal of Transnational Law

The emergence of the People's Republic of China (PRC) as a market power and the reversion of Hong Kong to PRC sovereignty in 1997 have focused the attention of the international business community on the PRC's willingness to enforce contractual obligations according to the rule of law. Some scholars have questioned whether the rule of law can ever be realized in China without a change in the basic system of governance. This Note attempts to answer that question, at least in the context of the Foreign Economic Contract Law (FECL), the law governing contractual disputes between Sino and foreign enterprises …

The Internationalization Of Contractual Conflicts Law, Patrick J. Borchers

Vanderbilt Journal of Transnational Law

Professor Borchers maintains that United States conflict of laws rules regarding contracts have long had an international character. This Article reviews the development of contractual conflicts law and examines how, through Joseph Story's treatises, the United States law in this area assumed an international perspective.

These international influences have played and will increasingly play an important role in the development of U.S. contractual conflicts rules. This influence can be seen in both choice-of-forum and choice-of-law agreements. Both have been upheld by U.S. courts initially in international cases, which presented starker contrasts in choice of law or choice of forum. Once …

Reconceptualizing Sovereign Immunity, Harold J. Krent

Vanderbilt Law Review

The United States generally is immune from suit without its con- sent. Accordingly, neither Congress nor the executive branch need pay damages' for any contract breached, any tort committed, or any constitutional right violated by the federal government. Although the doctrine of sovereign immunity persists, it persists subject to near unanimous condemnation from commentators. Many have rejected the underlying theory that the "King can do no wrong" as oddly out of place in our republican governments and many have noted as well that sovereign immunity was never applied as comprehensively in the past as it is today. Presently, there seems …

Opportunism And Trust In The Negotiation Of Commercial Contracts: Toward A New Cause Of Action, G. Richard Shell

Vanderbilt Law Review

In a complex economy, many business transactions take place sequentially-one party performs in part or in full before the other side executes its side of the bargain. Sequencing has many advantages, but it creates an unfortunate incentive. Having received its benefit from the bargain, the party who is to perform last may be tempted to renege on its obligations. Law and economics scholars often describe the conduct of a reneging party in these situations as "opportunistic." The reneging party, perceiving an opportunity to increase its gain, yields to temptation and refuses to perform. The law of contract helps to diminish …

Civil Rico Reform: The Gatekeeper Concept, Michael Goldsmith, Mark J. Linderman

Vanderbilt Law Review

Since coming into vogue in the mid-1980s, civil RICO has often been criticized and targeted for reform. Critics claim that civil RICO is too broad because it potentially applies to all commercial transactions.More specifically, opponents claim that RICO's inclusion of mail and wire fraud as predicate acts unjustly subjects all "legitimate businesses" to liability.For example, Representative Rick Boucher, sponsor of the 1989 RICO reform legislation, has stated:

"Fraud allegations are commonly made in contract situations, and all that is needed to convert a simple contract dispute into a civil RICO case is the allegation that there was a contract and …

Written Agreements In The Lender-Borrower Context: The Illusion Of Certainty, Robert D. Rowe

Vanderbilt Law Review

Recent legal battles in the lender-borrower arena have received widespread attention. The fact that these battles occur merits little surprise because borrowers often seek recourse against lenders when financial commitments go awry. Moreover, recent lender-borrower cases do not introduce any new legal theories. The outcome is the noteworthy feature of these cases. Borrowers increasingly are obtaining judgments against lenders. This Note examines recent lender-borrower cases from a contractual perspective, analyzing the application of traditional contract principles in the lender-borrower context. Part II of this Note contends that courts are trying to address three concerns in the lender-borrower context: maintenance of …

"Bad Faith Breach": A New And Growing Concern For Financial Institutions, Susan D. Gresham

Vanderbilt Law Review

A majority of courts have determined that all contracts impose on the parties to the contract an implied covenant of good faith and fair dealing in their actions with each other. This implied covenant prohibits a contracting party from injuring another party's right to receive the benefits of the agreement. Breach of this implied covenant usually creates a cause of action based on contract rights. Moreover, California courts maintain that breach of the implied covenant of good faith and fair dealing creates a tort action as well. The California courts initially limited these tort actions to claims against insurance companies. …

Contracts As Commodities: The Influence Of Secondary Purchasers On The Form Of Contracts, Henry T. Greely

Vanderbilt Law Review

In 1970 Professor Arthur Leff brought a new vision to a half century of debate about standard form contracts' by pointing out that consumer contracts should be seen not primarily as "contracts," but as"things," intangible products, sold to the consumer. As "things," Leff argued, form contracts should be subject to the same kinds of warranty laws as tangible goods. The debate about form contracts in consumer transactions continues, but, as Leff predicted, the debate largely has ignored his insight concerning the nature of the pieces of paper involved.

Books Received, Law Review Staff

Vanderbilt Journal of Transnational Law

Books Received

CONTRACT LAW IN THE U.S.S.R. AND THE UNITED STATES, VOL. I: HISTORY AND GENERAL CONCEPT

By E. Allan Farnsworth and Viktor P. Mozolin

Washington, D.C.: International Law Institute, 1987. Pp.xiii, 340. $35.00

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FOREIGN RELATIONS AND NATIONAL SECURITY LAW: CASES, MATERIALS AND SIMULATIONS

By Thomas M. Franck and Michael J. Glennon

St. Paul, Minnesota: West Publishing Company, 1987. Pp.lxiv, 941

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THE GRAND STRATEGY OF THE UNITED STATES IN LATIN AMERICA

By Tom J. Farer

New Brunswick, New Jersey: Transaction Books, 1988. Pp. xxxii, 294

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JUDGES

By David Pannick

New York: Oxford University Press,1987. Pp. vii, 255. …

Protecting Corporate Directors And Officers: Indemnification, Robert P. Mckinney

Vanderbilt Law Review

This Special Project Note on indemnification and the succeeding Special Project Note on insurance are intended to offer practical advice to practitioners with corporate clients. All fifty states have passed indemnification statutes that establish the scope and terms under which a corporation may, and in some cases must, indemnify its directors and officers. Legal counsel should test the scope of a particular indemnification statute by determining what standards must be met, what procedures must be followed, and what expenses may be indemnified under the relevant state statute. If a particular indemnification statute is not limited to the alternatives specified therein, …

Insurance In The People's Republic Of China: Laws And Practice, Henry R. Zheng

Vanderbilt Journal of Transnational Law

The insurance industry in the People's Republic of China (PRC) has expanded rapidly during the past several years. Since the end of 1979 when domestic insurance was reestablished, the income generated from insurance business has been increasing at a rate of over forty-four percent annually.' By early 1987, over 500,000 enterprises and business entities utilized property insurance and about 34 million people purchased personal insurance; during the first half of 1986 the total insurance earnings from the People's Insurance Company of China alone reached a record high of over 2.33 billion yuan. In the meantime, the insurance business has become …