To A Hammer Everything Looks Like A Nail

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Knowing what you don’t know is a good thing. A practical application of that statement comes when you are trying to figure out how a particular jurisdiction will treat a particular agreement such as a lease. There are some legal principles that suffuse state law throughout the United States. The law of damages is NOT one of those principles. Yes, the generality of “damages” is pretty much the same all over, but the details are not. Here’s an example from a just-decided Colorado case from its Supreme Court.

The question that court considered was whether a seller could really make the choice of remedies provided-for in the following contract clause: [Read more…]

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What Can Humpty Dumpty Recover If His Wall Wasn’t Finished On Time?

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Today, we return to the topic of “damages.” Our context will be “waiving” them. That way, we won’t feel as if we are duplicating postings of long ago such as the ones you can review by clicking: HERE or HERE or HERE.

The core “damages” one can expect to collect are designed to give the injured party “the benefit of its bargain.” That’s not the same as being made “whole.” Those core damages, ones that probably should never be “waived” are designed to give a party the money necessary to get what it “bought” in the first place. So, if the buyer was promised a car with a spare tire and the trunk turned out to be empty, the measure of its damages would be the cost of a spare tire. If a tenant was supposed to get trash removal “included” and the full container is surrounded by overflowing trash bags, the tenant is entitled to enough money to get the trash hauled away. If a builder contracted to put up a building and didn’t finish it, the customer would be entitled to the quantum of money that would pay to finish the building.

But, what about the cost of going out to buy that tire? What about the lost business from customers who ran from the store because of the “stink”? What about the cost to rent alternate space because the building was not completed by the contracted-for time? [Read more…]

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Parallel Construction, Consequential Damages, And Use Of A Dictionary

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Questions about damages and remedies are not simple to answer and, often, the answers are less than fully satisfying. The overriding framework is that business people don’t really focus on these “leave it to the lawyers” issues until a problem rears its head. Unlike many lease and other agreement issues that are worked out between cooperating parties, when one starts to look at a document or at the law to see “what are my rights, what can I do, how can I be made whole,” the relationship has already broken down. That’s when each side starts counting commas and looking for all of the “notwithstandings.”

Today, we’re going to look at an actual case, one decided at the end of October by a California appellate court. It can be seen by clicking HERE.

It involves the concept of “consequential damages, “exclusive remedies,” and “rent and other charges.” And, as will come as no surprise to regular readers, it teaches us something about using the right words. Oh, yes, it also describes a very familiar process, that process being where lawyers are hired to try to find a way to argue that the words in a lease or other agreement support a conclusion contrary what any objective observer would see as the plain intention of the parties. In the course of that process, the dispute we’ll be describing became the subject of four, count them, four separate appellate proceedings. [Read more…]

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All Damages Are The Consequence Of Something. So, What’s This Subset Called “Consequential Damages”?

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What is the effect of a provision, whether in a lease, purchase agreement or any other kind of agreement, when it says something like this:

Neither party will be liable to the other for any indirect, special, consequential, incidental or punitive damage with respect to any claim arising out of this agreement (including without limitation its own performance or own breach of this agreement) for any reason.

Yes, today’s blog posting will be about “law.” After all, Ruminations does its blog posting at “retailrealestateLAW.com.” We’re not going to dissect every aspect of that sample provision or ones like it. We’re not going to endorse it as one to use. We’re only going to Ruminate about two kinds of damages – “consequential damages” and “direct damages.” [Read more…]

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For What Did You Intend To Indemnify? Choose Your Words Carefully!

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Today, we’re going to discuss two legal issues, one old and one new. The old one has to do with the use of extrinsic evidence, but with an interesting twist. “Extrinsic” means information coming from the “outside,” in our business (agreements, such as a lease), that means information from what was said or what was written before or at the same time the document was signed, but didn’t show up in the document itself.

The second, and the one that has generated a little bit of “buzz,” has to do with the scope of a promise to indemnify someone.

For those readers who like “primary” material, take a look at the California Court of Appeal Order published on December 7, 2015 in the case of Hot Rods, LLC v. Northrop Grumman Systems Corporation. It can be seen by clicking HERE. [Read more…]

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But, Not Everyone Can Get Away With Fraud By Clever Drafting

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Today, we continue our story of how to get away with fraud and deception. For those of you who were, as the Brits say, on “Holiday” last week (yes, England and the United States, two nations separated by a common language), you can catch up by clicking HERE.

Last week, we described how the seller of a company was able to hide behind an agreement’s provision wherein the buyer agreed that it was relying only on the information and representations recited in the agreement. Then, by signing the agreement on the day of closing, it could only complain about what happened between signing and closing. At best, that was a few minutes or so. Perhaps our readers accepted that as fair because the buyer was carefully monitoring the company’s revenues for March of 2012, the critical “test” month. It knew that the sales figures were somewhat implausible and should have known that the “last minute” jump in revenue was “strange.” Maybe, that’s why the Delaware Chancery Court was unwilling to parcel out a little of the “equity” for which chancery courts were developed. (OK, that explanation is a stretch, but we’re not ready to concede that the words “justice” and “business” are in different dictionaries. But, how about the rest of last week’s story?) [Read more…]

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Exclusive Use Clauses – Writing Them Wrong

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An “evergreen” (or timeless) discussion topic at law conferences, such as the recently concluded ICSC Law Conference in Phoenix (a highly, highly recommended annual event) is the “exclusive use clause.” We’ve written about exclusive use restrictions, too many, many times, too many to furnish only a link or two. [If you want to see one or more of those postings, use “exclusive use” in the search box.] Today, we’ll talk a “little” law and we’ll throw in a bonus at the end.

Basically, Ruminations will look at the difference between writing “Landlord will not …” and “No part of the Property may be used … .” [Read more…]

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What, Me Worry? “AS-IS,” Whyfor?

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When you come across a contract provision that shouts out “AS-IS,” do you have a complete understanding about what is involved or just a general one? For the most part, when you take something “AS-IS,” you are taking it without any warranty. That means the landlord or seller doesn’t have to “make it right” – the risk of something being wrong falls on YOU. Unless you find a sympathetic judge, it means you are taking the “whatever” with all faults – those you can see AND (even, maybe) those you couldn’t have seen.

Basically, “AS-IS” has to do with your expectations. If you buy a boxed radio from an electronics chain store at something close to a “real” selling price, you expect (and have the right to expect) that it will function as a radio should function. If you fish the same kind of radio from the bottom of the barrel at a flea market and pay “two bucks,” you get it “AS-IS” even if there was no sign to that effect on the barrel. [Read more…]

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