December 2011

Liquidated damages provisions can be a useful way to ensure that you have a remedy if the other party to a contract fails to live up to its end of the bargain. When things go south in a commercial relationship, proving that a breach of the contract has occurred is only half the battle; the other half is proving damages, which can often be difficult. (The third half is executing on the judgment, but that’s a subject for a different blog.) A liquidated damages clause can help solve that problem.

Liquidated damages are a stated sum of money damages (or a formula for determining the damages) that the parties stipulate to in advance. Here’s a sample liquidated damages clause. [click to continue…]

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IP Draughts is hands down the best new contracts blog of 2011. It’s published by Mark Anderson, the principal partner at UK intellectual property firm Anderson Law LLP. Mark writes most of the posts himself, although the project is a team effort and includes an occasional post by others at his firm.

Some might argue that IP Draughts is in fact an IP blog, rather than a contracts blog, but I beg to differ. I’ve collected some of my favorite contracts posts to support my case. [click to continue…]

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I don’t often link to content located in the nether regions of a law firm’s website, but this piece about indirect damages is worth an exception. It was written by Stephen Brett of the UK intellectual property law firm Anderson Law LLP. Not coincidentally, one of the best contract law blogs I follow is the firm’s IP Draughts blog, which covers intellectual property issues with a heavy emphasis on contract issues.

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Owatonna Clinic — Mayo Health System v. Medical Protective Co. of Fort Wayne, Indiana

Owatonna Clinic — Mayo Health System sued Medical Protective Company, its medical malpractice insurer, for refusing to defend and indemnify it in a malpractice suit. Medical Protective’s defense was that Owatonna had not complied with the insurance policy’s notice requirements. The United States District Court for the District of Minnesota ruled in favor of Owatonna Clinic, and Medical Protective appealed.

A claims-made policy, the clinic’s malpractice policy covered only claims submitted during the policy period. [click to continue…]

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Pop quiz: You work for a title company. During a routine audit of your closed files you discover that a lien release is missing from a deal that closed a few years ago. Without the lien release your customer’s house remains subject to a lien granted by the residential developer who sold the lot to your customer. Do you (a) request a lien waiver to make sure things are in order or (b) let sleeping dogs lie?

I’m not going to tell you what I would do, but a recent case decided by the Missouri Court of Appeals (Melson v. Traxler) dealt with just such a scenario. [click to continue…]

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Safety National Casualty Corp. v. Austin Resolutions, Inc.

Safety National Casualty Corporation (“Safety National”) engaged Austin Resolutions, Inc. (“Austin”) to negotiate savings on bills from a hospital. The bills were Safety National’s responsibility by virtue of a claim against an excess workers’ compensation policy Safety National had issued. Under the oral agreement between Safety National and Austin, Austin was to be paid 25% of any savings it negotiated.

The claim under Safety National’s excess liability policy arose out of serious injuries sustained by an employee of Safety National’s insured in a car accident while on the job. [click to continue…]

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You sign two identical contracts with two different suppliers, one to buy stuff and the other to buy services. If both of your suppliers default in the exact same way, your rights will be the same under each contract, right?

Probably not, because the law that applies to the sale of goods is not the same as the law that applies to the sale of services. There’s a lot of overlap, and most contract law principles apply to both, but the law isn’t the same. [click to continue…]

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If a travel website erroneously lists a low price for air fare and you book a trip, can you hold the airlines to the low fare? As the ContractsProf Blog recently explained, it depends, but you might be able to. The ContractsProf’s post discusses a situation where the published fare was a fraction of the going rate for a round trip from San Francisco to Palau. Was it a case of a unilateral mistake? It depends on whether the customer should have known that the fare was in fact too good to be true.

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Dingxi Longhai Dairy, Ltd. v. Becwood Technology Group, L.L.C.

Becwood, a Minnesota-based distributor, contracted with Dingxi, a Chinese supplier, to purchase a large amount of organic Kosher inulin. Becwood planned to sell the inulin to Stoneyfield Farm, Inc. for use in yogurt products. Dingxi shipped the product in four separate shipments. Becwood paid for the first shipment in full before its arrival, but then rejected all four shipments claiming that the product was contaminated with mold.

Dingxi recalled the third and fourth shipments before they reached their destination ports and sued in the United States District Court for the District of Minnesota for breach of contract and misrepresentation seeking to recover the full price for shipments two, three, and four. [click to continue…]

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In his lesser-known recent opinion in which ostriches make an appearance, Judge Richard Posner of the U.S. Seventh Circuit Court of Appeals considered whether a memorandum of understanding and a letter of intent formed binding contracts. As you might have guessed from this post’s title—which is a quote from the opinion—the answer was no.

(In his better-known ostrich opinion, Judge Posner benchslapped one of the lawyers arguing before the court for disregarding precedent that was detrimental to his case. The opinion, in which Judge Posner compares the lawyer to an ostrich with his head in the sand, is complete with pictures. See this post at Above the Law for the picture of man in suit with head in sand.) [click to continue…]

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