Johnson v. JF Enterprises, LLC

In this case that I discuss in Arbitration Might Just Be the Most Exciting Area of Contract Law, the Missouri Court of Appeals, Western District held that a merger clause in an installment contract precluded a separately-signed arbitration agreement from being effective.

McCoy v. The Hershewe Law Firm, P.C.

In a dispute among law firms over splitting attorneys’ fees in a successful medical malpractice case, the Missouri Court of Appeals, Western District affirmed the lower court’s judgment. Applying the principles of quantum meruit, the trial court heard evidence that the value of Hershewe’s services could range from $4,800 up to $950,000 and awarded the firm $40,000. [continue reading…]

I’ve often had clients ask me to keep their contracts short and simple. That’s a great goal, especially since two of the purposes of a written contract involve informing the parties about their business relationship. The less accessible a contract is to the people who need to read it, the less helpful it’ll be.

Another purpose of a written contract, though, involves ensuring that your rights are as secure as possible if you have to fight for them. That means being clear about what your rights are, providing for effective remedies if you find yourself in a legal battle, and making sure that you’re made whole after the dust settles. It also means that dotting every i and crossing every t will be especially important.

The purpose or purposes that predominate in a particular business deal will affect how complex the written contract that memorializes the deal should be. Let me suggest a framework for thinking about how to ensure the appropriate level of legal protection.

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Most areas of contract law change very little over time. When a new way of doing business comes along, the law might take a while to figure out how to deal with it, but eventually a consensus approach (or two) is adopted by the courts, and things hum along once again.

Recent developments in contract law

An example during my lifetime are boxtop or shrinkwrap agreements that reflect a “terms to come later” approach to contracting. In these situations, merchants sell their computers or software and enclose additional terms in the product package. Thus, the buyer doesn’t have an opportunity to read all of the terms when they purchase the product. This poses a challenge to traditional contract law, which generally doesn’t give effect to silent terms.

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In a fun little experiment recently, I set up a question on Quora, “What’s the best anti-assignment provision in a contract ever?”, and invited people to submit clauses for the crowd to vote on.

Of course, asking what’s the best provision ever is a bit of a trick question, because the answer depends on the contract in which it’s to be used. For example, in a short and sweet agreement, you might want to go for minimum viable legal protection instead of a more full provision. Two of the players submitted answers along those lines. Here’s an example, which was submitted by Dana Shultz: “Neither Party may assign any of its rights or obligations under this Agreement without the prior written consent of the other Party.” [continue reading…]

Boomerang Transportation, Inc. v. Miracle Recreation Equipment Co.

Boomerang Transportation brought suit against Miracle Recreation Equipment alleging breach of a shipper-carrier contract. Under the contract Boomerang agreed to transport materials for Miracle in exchange for a per-mile payment, and a portion of the payment was subject to rebate based on Boomerang’s ability to obtain customers for “back haul.” Miracle counter-claimed alleging that Boomerang owed it a rebate. The trial court granted Miracle’s motion for summary judgment but didn’t take action on Miracle’s counterclaim. The Missouri Court of Appeals, Southern District dismissed Boomerang’s appeal on the grounds that the court did not have jurisdiction because the lower court’s judgment was not a final judgment.

Fire Insurance Exchange v. Horner

The Missouri Court of Appeals, Western District affirmed the lower court’s ruling that the word resident in a homeowner’s policy was unambiguous and included the unborn child of a woman who was a resident under the policy. [continue reading…]

If you’re interested in the business of law, your life is incomplete unless you’ve read Bruce MacEwen’s “Growth Is Dead Series” on the Adam Smith, Esq. blog. Here’s a link to the first post, Growth Is Dead: Part 1-Setting the Stage, in which MacEwen discusses the performance of the legal services industry from the beginning of the economic downturn until now, as well as the pressures currently faced by law firms.

The Growth Is Dead series takes what many of us vaguely think and feel about the current state of things and explains it brilliantly and with clarity.

In a post mid-way through the series, Growth Is Dead: Part 4-Economies I & II, MacEwen takes David Brook’s concept of two co-existing economies — one in which companies face intense global competition and the other in which companies do not — to describe what the legal services industry (and BigLaw in particular) has been experiencing since the latter part of 2008. [continue reading…]

In two opinions filed on March 6, 2012, the Missouri Supreme Court applied recent U.S. Supreme Court arbitration precedent to cases involving binding arbitration agreements. In yesterday’s post I discussed Brewer v. Missouri Title Loans, in which the Missouri Supreme Court held that a binding arbitration agreement was unenforceable due to unconscionability. Today I’ll discuss Robinson v. Title Lenders, Inc. d/b/a/ Missouri Payday Loans, in which the Missouri Supreme Court reversed the lower court’s determination that an arbitration agreement was unenforceable due unconscionability.

Background of Robinson v. Title Lenders, Inc.

The petitioner had borrowed money from Title Lenders, Inc. on 13 occasions, signing a loan agreement each time that contained a binding arbitration provision precluding class arbitration. She brought suit in October 2006 alleging, among other things, violations of the Missouri Merchandising Practices Act and seeking relief for herself as well as a putative class of borrowers. The lender moved to stay the action and to compel the borrower to pursue her claims through either arbitration or small claims court. In March 2009 the trial court stayed the court proceedings and ordered arbitration, but struck the class action waiver, finding it to be unconscionable. [continue reading…]

In two opinions filed on March 6, 2012, the Missouri Supreme Court applied recent U.S. Supreme Court arbitration precedent to cases involving binding arbitration agreements. In tomorrow’s post, I’ll discuss the court’s application of Stolt-Nielsen, S.A. v. AnimalFeeds International Corp. and AT&T Mobility LLC v. Concepcion to reverse a lower court’s judgment that refused to enforce an arbitration agreement due to unconscionability. But in today’s post, I’ll discuss Brewer v. Missouri Title Loans, in which the Missouri Supreme Court held that a binding arbitration agreement was unenforceable due to unconscionability.

Background of Brewer v. Missouri Title Loans

Petitioner Beverly Brewer borrowed $2,215 from Missouri Title Loans via a loan that had an annual percentage rate of 300% and that was secured by her automobile. The loan agreement contained a binding arbitration provision that required her to arbitrate claims and prohibited class arbitration, while the lender specifically retained its right to utilize the courts in order to repossess the vehicle. The agreement also provided that the parties would each be responsible for their own expenses, including fees for attorneys, experts, and witnesses.

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I recently made a presentation for fellow business lawyers entitled “Contractual Limitations: Why Are You Suing Me When Our Contract Says You Can’t?” (Here’s a copy of my presentation notes.) The answer is that in Missouri contractual provisions that limit the time within which suit may be brought are unenforceable, although, as with many rules, there are exceptions.

It’s common to see contractual limitations provisions in commercial contracts. For example, a contract might state, “No action on this agreement may be brought more than 12 months after it accrues.” As a commercial attorney, I’ve often pushed back on such clauses, arguing that the statute of limitations provides adequate protection against stale claims and that the contractual limitations provision could unfairly trip up my client even when there’s a legitimate claim. But in many cases, the provision isn’t enforceable anyway. [continue reading…]