From: bzs@ussr.std.com (Barry Shein)
Subject: Re: 32/V licensing
Organization: The World
	<17170@ulysses.att.com>
Date: Thu, 3 Sep 1992 00:20:04 GMT


From: smb@ulysses.att.com (Steven Bellovin)
>This notion of the contract being thrown out because circumstances have
>changed is nonsense.

Hardly nonsense, on what are you basing this? Did you happen to ask an
attorney or have read contract law?

>Look at it this way -- suppose you're employed somewhere,
>and, relying on your salary, you get a mortgage to buy a house.  If,
>two years later, you lose your job, you can't go to the bank and say,
>``My circumstances have changed;

One can posit circumstances that aren't relevant.

Some are, some aren't, now I understand why you are confused, you want
some sort of simple, universally applicable algorithm that defines
"circumstances".

It just doesn't work that way. It's an enumerated set with hundreds if
not thousands of special cases (i.e. case law.)

And, in fact, if your circumstances change as you describe there is in
fact a way out of the contract, it is called "bankruptcy" (not the
only way, but a way.)

That it has a name does negate its being a "circumstance".

Obviously all contracts can only be enforced only so long as there is
something worth enforcing.

If you have no money, and have no livelihood, the other party can
stand on the roof and howl at the moon at the unfairness of it all,
but it will hardly put money in the bank.

I would call such a situation a change in circumstances that affects
the original assumptions of the contract.

>Well, you can say it, but you're not going to get very
>far, at least if you want to keep your house.

In fact you very well might keep the house, or are you saying that no
one has ever re-negotiated the terms of a mortgage when the other
choice was bankruptcy/foreclosure? It really depends on how the
leverage falls and the likelihood of your living up to a modified
contract.

Banks generally lose 25% or more of the selling price of a house in a
foreclosure. The reason is that they must sell it fast or else be
faced with the house-maintenance costs, insurance, security on an
empty property, etc.

Banks know well they do not want to own a property. In fact, a cynic
might well say that you enter into a 30 year mortgage to provide the
bank with maintenance and security services on a property they own and
pay them a hefty fee for the right to do so.

So for starters that is leverage, if they're net negative on
foreclosure they are likely to be more willing to re-negotiate
voluntarily. Or certainly in a bankruptcy court (generally the first
thing a bankruptcy judge does is halt all collection actions,
including foreclosures, soas to try to get debts renegotiated, that is
exactly the purpose of bankruptcy court: To break all contracts in a
manner judged by a third party [the court] to be as fair as possible
to all parties involved, under the law.)

If the value of the house has dropped in a soft market below the value
of your mortgage and you are willing to keep the responsibility if
they can give you some slack then you can bet they're going to be
willing and sit down and talk about it if the other choice is taking a
$50,000 hit on a $250,000 mortgage. Assuming it's believable that
you've merely hit a trough and in a year (eg) you'll be fine
financially, they'll talk if the other choice is eating a big loss.

>It's quite possible that AT&T would not have made UNIX system licenses
>so readily available if they'd known what was going to happen.  On the
>other hand, maybe they would have -- there's a lot of research software
>that's still made available to universities.  And in any event, the
>current suit is by USL, not AT&T -- and though AT&T is the majority owner,
>it's by no means the only owner of USL.

Indeed, it's hard to replay the past changing the parameters.

However, the fact is that some very fundamental assumptions under
which those licenses were signed have changed. And whether you believe
it or not, trust me, that is very, very important to a court of law in
a contract dispute. Ask a lawyer.

As to AT&T being a majority owner and the existence of other minority
owners:

USL will, as necessitated by law, hide behind responsibility to
shareholders to control their strategy. That is what is known as a
fiduciary relationship, which is what USL has with their stockholders,
in particular their major stockholders (e.g. if I buy one share of
AT&T I obviously do not have the same influence, legally, as if I buy
enough to sit on their board of directors.)

However, there are rights of minority shareholders (particularly
applicable to closely held corporations like USL, once you trade on
the open market it all becomes more complicated tho they still by and
large exist, but the SEC adds a lot more rules which, in a phrase,
replace responsbility in many circumstances with fair, public
disclosure.)

I am not sure there is anything particularly relevant here tho, unless
some conflict in vision arose between AT&T and the minority
shareholders of USL.

So, AT&T has both the legal right and power to call the shots and
demand satisfaction in USL's decision making and strategy. Minor
infractions can cause the current management of USL to easily be
fired. Major infractions can hold both USL and the individual
management (officers) PERSONALLY responsible for damages. The
technical term is malfeasance, again, ask a lawyer.

>I have no idea what USL's
>policies towards universities are.

This they have already made a matter of public record: They sue them.

As they say, if the shoe fits they may as well wear it.

--
        -Barry Shein

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