Contracts in the Real World: Stories of Popular Contracts and Why They Matter
by Lawrence A. Cunningham, J.D.
In this highly-informative book, Lawrence Cunningham explains contract law by analyzing contemporary cases, many involving well-known names such as Lady Gaga, Conan O’Brien, Eminem, Michael Jordan, Frank and Jamie McCourt, JP Morgan Chase, and Sprint. The author is a law professor at George Washington University.
Cunningham explains the difference between tort law and contract law. Tort law “arises from behavior required of all people living in a civil society.” Fraud and negligence are tort claims. “Contract law concentrates on bargained-for transactions.” A key difference is that tort cases can include punitive damages, whereas contract cases cannot. “Contract law looks to compensate injured parties by putting them in the position performance would have. This gives them the benefit of their bargain. It precludes damages that would overcompensate and excludes damages for emotional distress, those for pain and suffering, and punitive awards. Tort remedies are essentially the opposite.”
“The language parties choose governs, at least so long as it is clear and does not yield absurd results. Evidence beyond the four corners of a document, especially evidence that preceded its execution, is admitted only when the writing itself is ambiguous.” Small details can have a big impact. “Linguistics cues abound, such as the telltale word ‘notwithstanding,’ or its opposite phrase, ‘except as otherwise provided.’”
The difference between “shall” and “must” is another subtlety. The former indicates a promise, whereas the latter signals a condition. “Promises must be performed or else a remedy paid; conditions limit the scope of a promise. If a condition does not occur, then the limited promise never ripens, and, therefore, it need not be performed.”
Litigation is expensive. In one case, Cunningham noted that “each party incurred legal fees of approximately $15 million fighting their bitter and protracted lawsuit, a price tag undoubtedly greater than the damages they suffered from the other’s transgressions… The Cussler-Crusader case offers obvious lessons for preparing contracts to anticipate impasses. Less obvious are the case’s more valuable lessons to be careful when choosing partners in business ventures and contracts. Cussler and Crusader did not seem to trust one another from the beginning of their relationship. Mistrust is not a good foundation for any deal extending several years.”
Additional concepts covered in this book include: accord and satisfaction, assignment, breach of contract, consideration, covenants not to compete, duty of good faith, expectancy damages and lost profits, forces majeure, freedom of contract, infancy doctrine, integration and merger clauses, loss mitigation, master of the offer, mutual assent, mutual mistake, officious intermeddlers, parol evidence rule, preexisting duty rule, promissory estoppel and reliance, restitution and unjust enrichment, scrivener’s error, statute of frauds, substantial performance, and waivers.
Cunningham, Lawrence A. Contracts in the Real World: Stories of Popular Contracts and Why They Matter. Cambridge: Cambridge UP, 2012. Buy from Amazon.com