Who owns the rights to ebooks – publishers who bought the rights to publish “in book form” or the original authors? I’ll bet on the authors.

Who owns the rights to electronic versions of books governed by contracts published back in the days when there was no such thing as an e-book?

Typically, the contracts an author signed with the publishers of those books gave the publisher the exclusive right to publish “in book form” or “in any and all editions.” According to the New York Times (hyperlinks added),

In 2001, Random House sued RosettaBooks, an e-book publisher, for copyright infringement when Rosetta signed contracts with authors . . . to release digital versions of previously published novels.

In its suit, Random House relied on wording in its contracts that granted it all rights to publish the works “in book form.”. . .

In 2001, a federal judge in Manhattan denied Random House’s request for a preliminary injunction against RosettaBooks, ruling that “in book form” did not automatically include e-books. An appellate court similarly denied Random House’s request.

On Friday, however, the Times reports (hyperlinks in original) that “Markus Dohle, chief executive of Random House, sent a letter (pdf) to dozens of literary agents, writing that the company’s older agreements gave it ‘the exclusive right to publish in electronic book publishing formats.’” According to Mr. Dohle’s letter:

The vast majority of our backlist contracts grant us the exclusive right to publish books in electronic formats, as well as more traditional physical formats. At the same time, we are aware there have been some misunderstandings conceming ebook rights in older backlist titles. Our older agreements often give the exclusive right to publish “in book form” or “in any and all editions”. Many of those contracts also include enhanced language that references other forms of copying or displaying the text that might be developed in the future or other relevant language that more specifically reflects the already expansive scope of rights. Such grants are usually not limited to any specitic format, and indeed the “f0rm” of a book has evolved over the years to include variations of hardcover, paperback and other written word fonnats, all of which have been understood to be included in the grant of book publishing rights. Indeed, ebook retailers market, merchandise and sell ebooks as an alternate book format, alongside the hardcover, trade paperback, and mass market versions of a given title. Whether physical or digital, the product is used and experienced in the same manner, serves the same function, and satisfies the same fundamental urge to discover stories, ideas and infomation through the process of reading.

Accordingly, Random House considers contracts that grant the exclusive right to publish “in book form” or.”in any and all editions” to include the exclusive right to publish in electronic book publishing formats. Our agreements also contain broad non-competition provisions. so that the author is precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained. We believe the effective exercise of electronic rights is key to the future of publishing and that the combined marketing of print and digital formats increases overall sales and creates the largest possible pool of revenues for authors and publishers, Our efforts and investments in the digital realm perfectly complement Random House’s unmatched physical sales and distribution capabilities, which remain a centerpiece of our business and relationships.

But William Styron’s family disputes Random House’s assertions that it owns the rights to publish electronic versions of Mr. Styron’s books. One problem with Random House’s position is that, despite what Mr. Dohle writes, Random House’s contract with Mr. Styron did not grant to Random House rights that refer to “forms of copying or displaying the text that might be developed in the future,” and, in further contradiction to Mr. Dohle’s words, were quite explicit in being “limited to . . . specific format[s].” As the District Court decision in the case between Random House and Rosetta Stone makes clear, Styron’s contract granted Random House “an exclusive license to ‘print, publish and sell the work in book form,’ Styron also gave it the right to ]license publication of the work by book clubs,’ ‘license publication of a reprint edition,’ ‘license after book publication the publication of the work, in whole or in part, in anthologies, school books,’ and other shortened forms, ‘license without charge publication of the work in Braille, or photographing, recording, and microfilming the work for the physically handicapped,’ and ‘publish or permit others to publish or broadcast by radio or television … selections from the work, for publicity purposes ….’”

The court reasons that the “separate grant language . . . to convey the rights to publish book club editions, reprint editions, abridged forms, and editions in Braille . . . would not be necessary if the phrase ‘in book form’ encompassed all types of books. That [language] specifies exactly which rights were being granted by the author to the publisher.”

The court further opined that “a reasonable person ‘cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business,’  would conclude that the grant language does not include ebooks. ‘To print, publish and sell the work in book form” is understood in the publishing industry to be a ‘limited’ grant.’” (citations and footnote omitted)

Finally, the court pointed out that Random House itself had acknowledged that ebooks are a new medium (and thus, presumably, not within the contemplation of the parties when they entered into their agreements to allocate their respective rights):

In this case, the “new use” – electronic digital signals sent over the internet – is a separate medium from the original use – printed words on paper. Random House’s own expert concludes that the media are distinct because information stored digitally can be manipulated in ways that analog information cannot. Ebooks take advantage of the digital medium’s ability to manipulate data by allowing ebook users to electronically search the text for specific words and phrases, change the font size and style, type notes into the text and electronically organize them, highlight and bookmark, hyperlink to specific parts of the text, and, in the future, to other sites on related topics as well, and access a dictionary that pronounces words in the ebook aloud. The need for a software program to interact with the data in order to make it usable, as well as the need for a piece of hardware to enable the reader to view the text, also distinguishes analog formats from digital formats. See Greenberg v. National Geographic Soc’y, 244 F.3d 1267, 1273 n.12 (11th Cir. 2001) (Digital format is not analogous to reproducing the magazine in microfilm or microfiche because it “requires the interaction of a computer program in order to accomplish the useful reproduction involved with the new medium.”). (citation omitted; hyperlink added).

There’s no question the publishing houses are fighting for their very existence. It’s interesting, though, that copyright holders are fighting the publishing companies over those rights. So much of the focus in this area of late has been over Google’s right to copy books to make them searchable so that they could be found and, as a result, purchased or otherwise obtained from the rightful owners of the books themselves. But now it’s the publishers who are trying to stretch the rights they contractually negotiated for decades ago to realms no one imagined at the time.

It will be interesting to see where this goes next. As a contracts professor, my first impression is that Random House isn’t exactly in the strongest of positions.

Consumer Protection: an old idea that’s new again.

It is remarkable how much times have changed, and how quickly. Since the election of Ronald Reagan the legal common wisdom has been that allowing individuals to enter into whatever agreements they wish, no matter how risky, leads us to the best of all possible worlds. Most usury laws became irrelevant. If you wanted to borrow at a ridiculously high interest rate, who was the government to say you couldn’t? I’ve been told that my opposition to that common wisdom was a belief that people are stupid. I suppose that’s one way to put it, but I certainly don’t except myeslf from the group I am judging. Saying I think people are stupid is just a way of saying I’m arrogant, paternalistic, and think I know what’s better for others than they do themselves. But give people the opportunity to take irrational risks, and they will. Give enough people enough opportunities to take irrational risks, and you put the entire society at risk. So now we’re speaking again (as we began to back in the Sixties)  in terms of consumer protection — laws limiting what terms consumers can be bound to and requring that whatever terms are agreed to are agreed to openly and plainly. Such regulation supplements the common law of contracts, which is founded on the idea of freedom of contract — precisely that individuals are free to make whatever stupid deals they wish. You want to sign up for a credit card with a 29% APR? Who am I to stop you. But there’s nothing wrong with limiting freedom of contract to some extent — it likely strengthens another core principal of contract law: that we should enforce contracts because they are agreements people consciously and intentionally enter into.

From the New York Times:

The federal consumer protection system failed the country, disastrously, in the years leading up to the mortgage crisis. One big cause was the sharing of responsibility for compliance with laws and regulations among several agencies that communicate poorly with each other and tend to put the bankers’ interests first and consumer protection second — if they pay attention to it all.

The Obama administration was right on the mark last week when it recognized this problem and proposed a solution: consolidating the far-flung responsibilities into a strong, new agency that focuses directly on consumer protection. The plan, modeled on a bill already introduced in the Senate by Richard Durbin, Democrat of Illinois, deserves broad support in Congress.

Do you know you’ve agreed that Amazon can decide you’ve agreed to something other than what you agreed to?

I teach contract law. One of the most interesting issues in contract law is the extent to which it is based on conscious agreement. Theoretically, two free individuals are at liberty to agree to govern their relationship with respect to any given matter (the sale of a car, the division of assets in a divorce, the employment by one of another, the limitations on the use of materials posted by one on a web site governed by another) in any way they agree.

One problem with this theory is that so few of our contractual relationships are based on anything resembling conscious agreement. When is the last time you read a rental car agreement? The agreement governing use of your credit card? (Well, we might all be doing that more these days.) The terms of service governing your Facebook account?

The vast majority of us never read the terms of service governing our use of commercial web sites. Yet there is little question we are bound to them and that we entrust them with our creative work and our information we want to keep private. More surprisingly, perhaps, when we agree to these terms of service we almost always agree that the service provider can change the terms unilaterally. In other words, we are agreeing that our relationship with the web site will be whatever the web site decides that relationship will be.

As Plagiarism Today explains:

[I]t is standard practice for many sites to silently change their terms of service as the terms itself allow them to do. Users are often unaware of potentially worrisome changes until after a problem has arisen, when it is often too late to do anything about them.

But now the Electronic Frontier Foundation has created “‘TOSBack‘”: a ‘terms of service’” tracker for Facebook, Google, eBay, and other major websites”:

At www.TOSBack.org, you can see a real-time feed of changes and updates to more than three dozen polices from the Internet’s most popular online services. Clicking on an update brings you to a side-by-side before-and-after comparison, highlighting what has been removed from the policy and what has been added. . . .

“Some changes to terms of service are good for consumers, and some are bad,” said EFF Senior Staff Attorney Fred von Lohmann. “But Internet users are increasingly trusting websites with everything from their photos to their ‘friends lists’ to their calendar — and sometimes even their medical information. TOSBack will help consumers flag changes in the websites they use every day and trust with their personal information.”

Why do we enforce contract promises?

Over the course of my professional career, Law and Economics has grown from one school of thought among many to one so dominant that many of its postulates have virtually become unquestioned premises from which legal reasoning begins. The Law and Economics school of thought is wide-ranging, but might fairly be described the way Wikipedia puts it: Law and Economics is an “approach to legal theory that applies methods of economics to law. It includes the use of economic concepts to explain the effects of laws, to assess which legal rules are economically efficient, and to predict which legal rules will be promulgated.”

One of the most influential premises of Law and Economics is that contractual promises are enforced purely because of their capacity to maximize the society-wide allocation of resources. Thus, it is said that the contractual promise has no moral value over and above its economic value. This view both explains why typically someone suing for breach of contract can recover only the financial equivalent of the benefit they would have received had the contract been performed. There is no additional quantum of damages added to provide an incentive not to breach.

Thus, it is said, a contractual promise is in fact a promise either to fulfill the promise or to pay the damages that result from breach. This view, it is argued, has long been the view of the common law, as exemplified by Oliver Wendell Holmes’ late 19th Century statement that “the duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it, and nothing else.” Thus, the thinking goes, if someone who has made a contractual promise can make out better by breaking the promise, paying damages for breach, and entering a different deal, that result is not merely tolerable — it is to be desired. Such a breach of promise is known as an “efficient breach” because it theoretically results in an increase in overall resources: the party injured by the breach is supposed to get everything he was supposed to get under the contract, the breaching party is getting something better, and the new party with whom the breaching party contracts is getting a deal he would not otherwise have gotten.

The Law and Economics view is by no means the only one current in the theorizing about the basis for enforcing contractual promises (and the interpretation Law and Economics devotees put on Holmes’ statement is disputed). As a contracts professor and litigator, though, my experience is that the idea that the contract promise has no moral value over and above its economic value is a very, very influential one.

It is a view, too, that is of a piece with the rise to virtual unquestioned dogma that unregulated free markets always result in the highest social good. One problem, though, is that unregulated free markets entrench the power of the wealthiest. So people bound by promises (the “promisor”) can force the person to whom they are bound (the “promisee”) to change the terms of the promises if the promisor has greater financial ability to force the promisee into a legal resolution that is unacceptable to the promisee.

The disparity in economic power the theory of efficient breach does not account for is on display in the power corporations hold to renegotiate employment contracts.  Since an employee can only recover for breach whatever damages are available to him through law, the threat of being limited to that remedy can be a powerful one. Thus, as the New York Times pointed out last week,

Contracts everywhere are under assault.

The depth of the recession and the use of taxpayer dollars to bail out companies have made it politically acceptable for overseers to tinker with employment agreements.

But, as David Skeel, a law professor from the University of Pennsylvania quoted in the article points out,

We run roughshod over some contracts and not over others. . . . Right now, employment contracts seem to be the type of contract that is viewed as eminently rewritable.

So we have Larry Summers, President Obama’s Chief Economic Adviser, arguing in connection with the bonuses paid to AIG employees that the contractual promises are too sacred under the law to undo: “”We are a country of law. . . There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system.” On the other hand, the UAW’s agreement to give up rights under its contract with the auto companies was required by the government as a condition of the federal monies the automakers received.

So, are contractual promises “sacred” in some way, or are they only worth whatever the parties to them can extract given their relative financial strength and political influence? I don’t think I know.

Again, let’s give more attention to individual justice and less devotion to abstract rules

The hope for the Obama administration I expressed in my post last Thursday was that it would promote a legal culture in which courts would begin to pay more attention to the justice required in individual cases rather than, as has been increasingly true over the last thirty years, feel increasingly bound to abstract interpretations of language that lead to plainly unjust results. My focus in that post was on statutory interpretation, but the same sentiment applies to the interpretation of contract language, as Ralph James Mooney made clear in The New Conceptualism in Contract Law, 74 Or. L.Rev. 1131, 1170-1171 (1995). Mooney also noted, as I implied in last Thursday’s post, that the new focus on abstract rules and language at the expense of just results in individual cases invariably favors moneyed corporate interests:

Just as they have in contract formation disputes, American courts recently have embraced far more conceptualist approaches to contract interpretation issues. They [exalt] the written word over the parties’ actual . . . agreement. They exercise their pre-modern faith in the objectivity of language, and overturn jury verdicts, by applying classical interpretive rules like ”plain meaning,” ”four corners,” and interpretation as a ”matter of law.” In general, American courts the past dozen years have moved noticeably away from the most fundamental theorem of contract interpretation, that the law should enforce the parties’ intention, toward a more abstract, disembodied inquiry, resembling, what should the parties have meant when they signed this form contract? In addition, this intellectual regression once again has had important political consequences. . . . Notice that, as in formation cases, it is almost invariably a seller, a bank, an employer, or . . . an insurer that benefits from the New Conceptualism in contract interpretation. This judicial tilt away from underdogs, back toward the privileged beneficiaries of classical contract law, is, of course, the New Conceptualism’s most troubling feature of all.

Zippy the Pinhead: “Siegel, Shuster & Z-Man”

Negotiating between playwrights and non-profit theaters

The “Brewing Fight over Theatrical Rights” reported in today’s New York Times strikes this law professor as an easily resolved conflict.  Playwrights are complaining that non-profit theaters, in their standard form contracts to produce plays, are asking for 40 percent of the author’s royalties for the play for 10 years.  “In other words, if [the playwright] were to collect, say, $50,000 from [his play] over the next decade – a respectable sum for a well-received new play – the [non-profit theater] would receive $20,000 of it.”

The forty percent of future earnings (known as “subsidiary rights”) is standard for commercial theaters, but is a new high for non-profits.  From the playwrights’ point of view, it’s simply too much.  You don’t want your kids to grow up to be playwrights — they’ll starve.  The article quotes one playwright, Sarah Ruhl, who says, “If you’re talking about the difference between $18,000 a year or $30,000 a year, that’s the difference between being able to support yourself by playwriting – or not.”

The non-profit theaters, on the other hand, “argue that they deserve a cut because they increase the value of a new play with a first-rate New York production.”  And anyone involved in the non-profit world in these days knows that any source of income is desperately needed.  It isn’t really fair to say, as Ms. Ruhl does, “A nonprofit theater could raise that $12,000 from a corporation or a donor.”  For most non-profit theaters, it seems unlikely donors fall off trees.  Very few theaters are as well situated as the Lincoln Center Theater in New York and the Center Theater Group in Los Angeles, each of which has agreed to take no subsidiary rights.  It’s nice when you can draw on the charitable impulses of Wall Street and Hollywood moguls.  And the comment seems particularly insensitive coming from Ms. Ruhl, who, according to the New Yorker, “is thirty-four and has already won a half-million-dollar MacArthur Fellowship for her plays.”

So here’s the problem: for most playwrights, who make very little on their plays, 40 percent of their royalties for 10 years is too much.  For most theaters, the only way to produce plays is to tap every source of income they can.  Why not a sliding scale?  10 percent for the first X dollars in royalties, 20 percent for the next Y amount, etc.

This should not be war between playwrights and non-profit theaters.  They need each other, and mutually beneficial ground can easily be achieved.  Anyone should be able to see the common ground and I don’t expect this “brewing fight” to be a very bloody one.

Then again, when money is tight, people can get very nasty about the little remaining.  Those fights, though, are capitalism at its worst.  As Lewis Hyde, the writer about whom I wrote the other day, has noted, we already know that successful playwrights should support new playwrights and that we should not have to rely on private patronage to fund new plays.  In his Afterword to the Canongate edition of The Gift (pdf), Hyde writes about “the ethic by which the producer and director Joseph Papp used to manage the Public Theater in New York”:

Papp’s habit was to underwrite a great many theater productions and take a small ownership stake in each. Those that succeeded helped pay for those that came later. In the most famous example, “A Chorus Line” began at the Public Theater and then went to Broadway, opening in the summer of 1975. It ran without interruption for fifteen years, a commercial success that allowed Papp to support the work of less-established playwrights and companies. David Mamet, Sam Shepard, Elizabeth Swados, the Mabou Mines theater group and dozens more received support during the years that Papp managed the Public. Potential profitability is not a criterion for funding awards at Creative Capital; as with other arts funders, we ask our panels to look for originality, risk-taking, mastery, and so forth; we respond especially to projects that transcend traditional disciplinary boundaries. That said, the principle of sharing the wealth is essential to the Creative Capital model. It makes explicit the assumption that all who have succeeded as artists are indebted to those who came before, and it offers a concrete way for accomplished practitioners to give back to their communities, to assist others in attaining the success they themselves have achieved.

Surely you’re joking. I can tell by that ridiculous price.

On Friday I mentioned the case of a radio contest winner who successfully sued the radio station for the value of a Renaul Clio after she’d won a contest offering the car to the contest’s winner.  When she’d shown up to the station to claim her prize, the station had given her a tiny model of a Renault instead of an actual car.  This type of case turns on whether a reasonable person would believe the offer is a serious one.  Radio stations do offer cars as prizes.  In contrast, check out the following:

After seeing the ad, John Leonard, then a 21-year-old business student, discovered he could purchase individual Pepsi points from the company for 10¢ each.  After sending Pepsi $700,008.50 — representing money he had raised from five investors for 6,999,985 Pepsi Points, fifteen of his own Pepsi Points, and a little extra for “shipping and handling” — Leonard demanded his jet. Pepsi laughed off the claim, pointing out the Harrier had never been offered in the Pepsi Points catalogue and was just in the commercial to provide a humorous completion to the piece.

As indicated by Snopes.com, “If we have to put disclaimers on spots that are obviously farces, where does it end?” Pepsi spokesman Jon Harris said. Well, it didn’t end there. Leonard filed suit in Miami against Pepsi for breach of contract, fraud, deceptive and unfair trade practices, and misleading advertising.

Leonard lost.  In the opinion dismissing Leonard’s lawsuit, Judge Kimba Wood (speaking from personal experience, an excellent judge, though not immune from notoriety), did what lawyers often have to do — spell out in painstaking detail what most people accept as gut feelings.  In this case, she had to spell out that a reasonable person viewing the commercial would know that Pepsi was joking about the Harrier Jet:

Plaintiff’s understanding of the commercial as an offer must also be rejected because the Court finds that no objective person could reasonably have concluded that the commercial actually offered consumers a Harrier Jet. . . .

In evaluating the commercial, the Court must not consider defendant’s subjective intent in making the commercial, or plaintiff’s subjective view of what the commercial offered, but what an objective, reasonable person would have understood the commercial to convey. . . .

If it is clear that an offer was not serious, then no offer has been made . . .  An obvious joke, of course, would not give rise to a contract. . . . On the other hand, if there is no indication that the offer is “evidently in jest,” and that an objective, reasonable person would find that the offer was serious, then there may be a valid offer.

Plaintiff’s insistence that the commercial appears to be a serious offer requires the Court to explain why the commercial is funny. Explaining why a joke is funny is a daunting task; as the essayist E.B. White has remarked, “Humor can be dissected, as a frog can, but the thing dies in the process….” The commercial is the embodiment of what defendant appropriately characterizes as “zany humor.”

First, the commercial suggests, as commercials often do, that use of the advertised product will transform what, for most youth, can be a fairly routine and ordinary experience. The military tattoo and stirring martial music, as well as the use of subtitles in a Courier font that scroll terse messages across the screen, such as “MONDAY 7:58 AM,” evoke military and espionage thrillers. The implication of the commercial is that Pepsi Stuff merchandise will inject drama and moment into hitherto unexceptional lives. The commercial in this case thus makes the exaggerated claims similar to those of many television advertisements: that by consuming the featured clothing, car, beer, or potato chips, one will become attractive, stylish, desirable, and admired by all. A reasonable viewer would understand such advertisements as mere puffery, not as statements of fact, see, e.g., Hubbard v. General Motors Corp., 95 Civ. 4362(AGS), 1996 WL 274018, at *6 (S.D.N.Y. May 22, 1996) (advertisement describing automobile as “Like a Rock,” was mere puffery, not a warranty of quality), . . . and refrain from interpreting the promises of the commercial as being literally true.

Second, the callow youth featured in the commercial is a highly improbable pilot, one who could barely be trusted with the keys to his parents’ car, much less the prize aircraft of the United States Marine Corps. Rather than checking the fuel gauges on his aircraft, the teenager spends his precious preflight minutes preening. The youth’s concern for his coiffure appears to extend to his flying without a helmet. Finally, the teenager’s comment that flying a Harrier Jet to school “sure beats the bus” evinces an improbably insouciant attitude toward the relative difficulty and danger of piloting a fighter plane in a residential area, as opposed to taking public transportation.

Third, the notion of traveling to school in a Harrier Jet is an exaggerated adolescent fantasy. In this commercial, the fantasy is underscored by how the teenager’s schoolmates gape in admiration, ignoring their physics lesson. The force of the wind generated by the Harrier Jet blows off one teacher’s clothes, literally defrocking an authority figure. As if to emphasize the fantastic quality of having a Harrier Jet arrive at school, the Jet lands next to a plebeian bike rack. This fantasy is, of course, extremely unrealistic. No school would provide landing space for a student’s fighter jet, or condone the disruption the jet’s use would cause.

Fourth, the primary mission of a Harrier Jet, according to the United States Marine Corps, is to “attack and destroy surface targets under day and night visual conditions.” . . . Manufactured by McDonnell Douglas, the Harrier Jet played a significant role in the air offensive of Operation Desert Storm in 1991. . . . The jet is designed to carry a considerable armament load, including Sidewinder and Maverick missiles. See id. As one news report has noted, “Fully loaded, the Harrier can float like a butterfly and sting like a bee–albeit a roaring 14- ton butterfly and a bee with 9,200 pounds of bombs and missiles.” . . . In light of the Harrier Jet’s well-documented function in attacking and destroying surface and air targets, armed reconnaissance and air interdiction, and offensive and defensive anti-aircraft warfare, depiction of such a jet as a way to get to school in the morning is clearly not serious even if, as plaintiff contends, the jet is capable of being acquired “in a form that eliminates [its] potential for military use.”

Fifth, the number of Pepsi Points the commercial mentions as required to “purchase” the jet is 7,000,000. To amass that number of points, one would have to drink 7,000,000 Pepsis (or roughly 190 Pepsis a day for the next hundred years–an unlikely possibility), or one would have to purchase approximately $700,000 worth of Pepsi Points. The cost of a Harrier Jet is roughly $23 million dollars, a fact of which plaintiff was aware when he set out to gather the amount he believed necessary to accept the alleged offer. . . . Even if an objective, reasonable person were not aware of this fact, he would conclude that purchasing a fighter plane for $700,000 is a deal too good to be true.

Plaintiff argues that a reasonable, objective person would have understood the commercial to make a serious offer of a Harrier Jet because there was “absolutely no distinction in the manner” in which the items in the commercial were presented. Plaintiff also relies upon a press release highlighting the promotional campaign, issued by defendant, in which “[n]o mention is made by [defendant] of humor, or anything of the sort.” These arguments suggest merely that the humor of the promotional campaign was tongue in cheek. Humor is not limited to what Justice Cardozo called “[t]he rough and boisterous joke … [that] evokes its own guffaws.” Murphy v. Steeplechase Amusement Co., 250 N.Y. 479, 483, 166 N.E. 173, 174 (1929). In light of the obvious absurdity of the commercial, the Court rejects plaintiff’s argument that the commercial was not clearly in jest.

Leonard v. Pepsico has become a favorite of Contracts professors.  There are several good reasons why.  First, it plainly states the applicable rule: an offer is an offer if a reasonable person would take it as an offer, regardless of what the person making the offer subjectively intends.  Second, of course, it allows us to use in-class video, which makes us feel as if we’re somehow staying in touch with our students’ desires.  Third, Judge Wood does a good job at the skill that is so central to good lawyering — articulating feelings that most people are satisfied at merely feeling, not explaining.  In this case, the feeling is the feeling of humor (that Pepsi was just joking), but more often judges are required to explain why something is “just” when most non-lawyers would be satisfied with merely asserting “I just think it’s fair” or “I just think it’s not fair.”

Good lawyers, in short, begin their work where most people end their thinking.  Good lawyers take what people “feel” and make explicity and clear the reasons for those feelings.

Leonard v. Pepsico is an excellent case to illustrate one more very important principal.  What people intend is often embodied in and expressed by the price they are offering.  No one could take seriously an offer to buy a Harrier Jet for $700,000.  In fact, I might say (and often do to my Contracts students) that nothing is as expressive as price.

Top 10 of the World’s Weirdest Compensation Claims

I haven’t fact-checked this post, so I would take it with a grain or entire shaker of salt, but it’s amusing to read the Top 10 or the World’s Weirdest Compensation Claims.  As a Contracts professor, I am particularly amused by the following two (numbers 4 and 1 on the list):

In 2005 a Romanian prisoner, Pavel M., while serving 20 years for murder, sued God. He argued that his baptism was an agreement between him and God under which, in exchange for value such as prayer, God would keep him out of trouble.

Cathy McGowan, 26 of Derby, England, was overjoyed when a DJ told her that she had correctly answered a quiz question and had won the competition prize: a Renault Clio. However, when she arrived at the radio station to pick up her prize she was presented with a 4-inch model of the car. In 2001, she sued and a judge at Derby County Court ruled that the Radio Station and its owners to pay £8,000 for the real vehicle.

I would, incidentally, expect my current Contracts students to be able to answer on their exam why it would be that Ms. McGowan should have received the value of the real vehicle.  For that matter, they should be able to explain why Pavel M.’s breach of contract claim would be dismissed as well, though that argument might fall within the scope of Civil Procedure: my guess is that there is no governmental court in the United States that has subject matter jurisdiction over claims against God.  Personal jurisdiction, on the other hand, wouldn’t be a problem, assuming God is everywhere.  Putting aside the jurisdictional issues, it is difficult for me to opine on the merits of Pavel M.’s contract claim since I don’t have the terms of the agreement he reached with God.

On a not altogether incidental but less frivolous note, I should point out that frivolous claims (which Ms. McGowan’s plainly wasn’t) really aren’t the problem many people claim them to be.