More Boring Insurance Stuff

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Yes, today’s posting will be boring and perhaps a little dry. And, to add insult to injury, nothing in it will be earth-shattering. But, knowledge is power. And, even if you don’t want to be powerful, you certainly don’t want to be drafting documents and making business agreements involving insurance without knowing what is available and what is possible. Do you? We didn’t think so.

Yes, today we write about insurance, and whenever we do so, we repeat this caveat: “Find and rely on a genuine insurance expert. This stuff is not intuitive.” Our primary goal is to let our followers know enough about insurance to realize that they and we don’t know enough. A secondary goal is to get those of us who include insurance requirements in our documents to know that last year’s (or even last week’s) text may no longer be what we would like to have written. Lastly, for those who buy insurance, today’s blog posting might induce you to call and say hello to your insurance broker or other advisor. [Read more…]

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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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Five Or More Take-Aways From A Single Mailbox (Rule)

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There must be a backstory to the case Ruminations will look at today. But, first, we’ll ramble a little, touching on this ‘n that.

There’s a common law rule called the “mailbox rule” or if you are on the eastern side of the Atlantic in another English-speaking county, the “posting rule.” [The United States and Great Britain – two nations separated by a common language. Credit: George Bernard Shaw.] The rule says that, absent some other bar, an offer is accepted when it is presented to the postal service, put in the hands of a postal worker or placed in a mail box). Basically, absent saying otherwise, an offeror is deemed to have “appointed” the postal service as its agent for receipt of an acceptance. The risk of receipt is thus placed on the offeror. This rule applies in other situations, one of which is relevant to today’s story.

This is a good place to remind all readers to carefully review the Ruminations disclaimer at the bottom of the blog page. Today, our disclaimer clearly means that no reader should try to learn the law from our description of the “mailbox rule.” Our description is just a starting point for understanding its extent and, more importantly, its limitations. That having been said, don’t ignore that the rule exists. [Read more…]

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We Never Do That Until We Do, Now Let’s Negotiate

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Why do we do this to each other? Yes, at the end of the day, bargaining power is the dominant factor in determining a negotiated result. But, does that mean reaching a deal is an act pure gamesmanship? We hope not.

We recently attended a panel program, quite a good one, featuring four landlord representatives and four counterparts on the tenant side. For the most part, those working for landlords held singular views. It wasn’t much different on the tenant side but for one factor. The represented landlords were large multi-property companies; the represented tenants included a 10 store chain, a prominent supermarket, a well-known health club chain, and a very large publicly owned franchisor. So, on the tenant-side, there was a broader range of “power.”

The issue that triggered today’s blog posting had to do with a the issue of tenants requesting protection from the big real estate tax hit that could take place if a shopping center in California was sold. Trust us, that can happen, and it can happen big time. [Read more…]

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We Can Waive Claims, Not Subrogation

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What’s an “evergreen”? An evergreen contract is one that automatically renews unless one party or the other affirmatively terminates it. An “evergreen” blogging topic is one that never dies; one that we can visit over and over. The topic of insurance waivers of subrogation is such an “evergreen.”

We just reviewed a March 22, 2017 decision from a United States District Court sitting in New Jersey. Let us tell you some things about it. It has a twist. [You can see it yourself by clicking: HERE.]

Allegedly “unsupervised, untrained, and unlicensed maintenance workers” employed by a residential landlord were accused of misusing (our euphemism) an acetylene torch and thereby setting a fire that destroyed tenants’ property. The tenants’ insurance company paid the losses and sued the landlord for recovery.
The landlord (almost certainly, the landlord’s own insurance company) responded that each tenant-insured had waived and released it from liability for such a fire. [Read more…]

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Representations; Warranties; Covenants; Weasel Words And Estoppel Certificates. Huh?

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Last week, we left off with: This trilogy (“represent” – “warrant” – “covenant”) is thrown about so casually that it isn’t possible to generalize as to what the cumulative effect might be. Try replacing the word “covenant” with the word “agree” and then reread the statement being requested as part of the estoppel. To “covenant” does not mean to “acknowledge.” It means to “agree” in the sense of to “promise.”

Now, as promised, we will elaborate. [That should come as no surprise to long-time readers of Ruminations.]

One way to appreciate the difference between making a representation and giving a warranty is to understand the consequence of each statement. In the case of a representation, the “relying” party may act as if the representation (statement) was true, but only if that relying party either did not know it was untrue at the time it was given or if the relying party couldn’t have easily known it was untrue. That’s what “reliance” is all about. In addition, in appropriate circumstances, though unlikely in an estoppel, if a material representation is untrue at the time given, the recipient of that representation may suspend its contractual obligations or even terminate an agreement with the representing party. For example, in the normal transaction, if a car seller represents that the car runs, and it doesn’t, the buyer can terminate any agreement to buy that car because whether a car runs is material. Of course, if the buyer really knew that the car didn’t run, it could not rely on the representation. [Read more…]

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Estoppel Letters – Can’t We All Get Along?

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About 9 months ago, we wrote about some practical aspects of dealing with estoppel letters. Readers can see that blog posting by clicking: HERE. [We did so more substantively in 2011 and that can be seen by clicking: HERE.] Today, in fulfillment of a promise made 9 months ago, we have more to say about requesting and furnishing those letters.

We start with where we left off. Furnishing estoppels is an administrative matter, not a substantive one. There may be items under dispute that will be covered by an estoppel, but responding to the request for the estoppel should not be one of them. And, it shouldn’t matter whether the lease requires one party or the other to furnish one. Estoppels are needed to support the property, to keep the stool upright, so to speak.

Experience informs us that the most common tension as between landlords and tenants about estoppels is that the requesting party often has made its request too close in time to when the certificate is needed. Sometimes that situation is inevitable; sometimes it is the result of carelessness. Regardless of the reason, the need for a quick response frequently causes unneeded tension. It may seem that landlords are those most often pressuring their tenants for a quick turn-around. That’s only because, by far, landlords request estoppels more frequently from tenants than tenants request them from their landlords. [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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