Source: https://eaugrads.net/2019/06/16/contract-consideration-74/
Timestamp: 2019-11-22 19:06:43
Document Index: 481839828

Matched Legal Cases: ['§1404', '§1404', '§1404', '§1404', '§1404', '§1404', '§1404', '§1', 'Art. 7', 'Art. 5']

CONTRACT CONSIDERATION 7:4 – EAUGRADS ESTABLISHED SINCE 1999
CONTRACT CONSIDERATION 7:4
A benefit conferred or a detriment incurred by a party in exchange for another’s promise. Valuable consideration may be non-monetary as long as it is of some value to one or both parties. Also called good and valuable consideration and legal consideration.
A contractual agreement that designates the court and location where the parties would like to have their legal dispute decided is commonly known as a “forum selection clause.”
In Government contracts, a formal claim filed pursuant to the Contract Disputes Act of 1978 is defined as a “written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.”
A forum selection clause seeks to provide a court with “personal jurisdiction” and to establish “venue.” Personal jurisdiction is the court’s power to exercise authority over a party. Venue is the physical location where a court exercises its power. Thus, a forum selection clause seeks to provide a court located in a specific location with the power to resolve a dispute.
Courts have historically declined to enforce forum selection clauses, . In M/S Bremen v. Zapata Off-Shore Co.,the Court stated that they were often perceived as being contrary to public policy or to prevent an otherwise proper court from hearing a dispute. However, the court went against precedent, ultimately ruling that “in the light of present-day commercial realities … we conclude that [a] forum clause should control absent a strong showing that it should be set aside.“
In Stewart Organization, Inc. v. Ricoh Corp, the plaintiff filed a lawsuit at a federal court in violation of the parties’ forum selection clause. The defendant, relying upon §1404(a), requested the trial court to transfer the case to the federal court described in the forum selection clause. In addressing the relationship between §1404(a) (which empowers a plaintiff to change forums, typically out of counterclaim concerns) and a forum selection clause (which prevents a plaintiff from transferring forums), the Court stated that a forum selection clause is not controlling but is a “significant factor” for a court to consider when deciding whether it will transfer a case under §1404(a). The Court stated that a forum selection clause “should receive neither dispositive consideration … nor no consideration … but rather the consideration … provided in §1404(a).”
In Atlantic Marine Const. Co., Inc. v. U.S. Dist. Ct. for the Western District of Texas, the Court further refined the relationship between a forum selection clause and §1404(a). The Court held that a forum selection clause shall be “given controlling weight in all but the most exceptional cases,” consequently altering the appropriate §1404(a) analysis. The court made three findings:
The plaintiff’s choice of forum has no weight and the plaintiff bears the burden of demonstrating why the case should not be transferred to the court described in the parties’ forum selection clause.
The parties’ private interest factors weigh entirely in favor of the court described in the forum selection clause.
A court may continue to consider public interest factors, however, the Court stated that they will “rarely” prevent a case from being transferred.
Other than the existence of compelling public interest factors, Atlantic Marine does not state whether other factual circumstances may constitute an “exceptional case.” However, the Bremen court held that the presence of fraud and overreaching in negotiating a contract invalidates the forum selection clause itself. As such, their presence should constitute an exceptional case under Atlantic Marine. Moreover, Bremen arguably supports the general proposition that any legal theory that allows a party to invalidate the forum selection clause itself, for example mutual material mistake, constitutes an exceptional case under Atlantic Marine.
An “adhesion contract” (aka “standard form contract”) may also provide an opportunity for a litigant to demonstrate an exceptional case. In Carnival Cruise Lines Inc. v. Shute, the Court stated that a forum selection clause contained in a form contract is generally enforceable. Therefore, the mere fact that a form contract is not the product of negotiation and bargaining likely does not constitute an exceptional case under Atlantic Marine.
However, Carnival Cruise stated that form contracts are “subject to judicial scrutiny for fundamental fairness.” To make this determination, a court can consider whether the forum selection clause contains an inconvenient venue. An inconvenient venue is typically one which has no real connection to the parties’ contract, and/or is designed to discourage the party with no bargaining power from filing a lawsuit. A negotiated contract generally eliminates this concern because there is actual bargaining between the parties, as well as mutual agreement regarding venue.
The Second Circuit Court of Appeals has continued this deferential attitude toward forum selection clauses. In Future Industries of America v. Advanced UV Light (2011), the court upheld the contract’s forum selection clause and its choice-of-law clause (both of which favored the defendant) (an example of a choice-of-law clause can be seen here), even though the defendant breached the contract.
Courts, however, will exercise selectivity in choosing whether to enforce a forum selection clause. The same court that decided Future Industries invalidated a forum selection clause due to the clause’s broad language. In Global Seafood Inc. v. Bantry Bay (2011), the Second Circuit found that the phrase ” ‘is governed by Irish Law and the Irish Courts’ ” does not “[impart] a clear and unambiguous intent by the parties to confer exclusive jurisdiction on Irish Courts or to select Ireland as the obligatory venue.” The court found that while the term “govern” grants Irish courts jurisdiction, it does not grant the courts exclusive jurisdiction. Therefore, the forum selection clause was not valid.
The Second Circuit in Phillips v. Audio Active Ltd. (2007) also created a four-part balancing test for determining the validity of a forum selection clause:
Whether the clause was reasonably communicated to the party resisting enforcement.
Whether the clause is mandatory or permissive, so that the court may determine whether the parties are required to bring any dispute to the designated forum or simply permitted to do so.
Whether the claims and parties involved in the suit are subject to the forum selection clause. If the forum selection clause was communicated to the resisting party, has mandatory force, and covers the claims and parties involved in the dispute, it is presumptively enforceable.
Whether the resisting party has rebutted the presumption of enforceability by making a sufficiently strong showing that “enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching.”
Forum selection clauses have evolved from being nearly inoperative to controlling unless exceptional circumstances exist. Exceptional circumstances appear to exist when there are compelling public interest factors under §1404(a), or when there is a basis to invalidate the forum selection clause itself. In certain circumstances, a forum selection clause contained in a form contract may constitute an exceptional case. However, the breadth of Atlantic Marine’s exceptional case limitation is unclear and will likely cause more litigation in the future until the Supreme Court provides a more exact definition.
ARBITRATIONFEDERAL ARBITRATION ACTCONTRACT LAWLEASE AGREEMENT
Whether the Federal Arbitration Act sets forth the sole grounds for judicial review of arbitration awards, or whether parties may agree on additional and broader grounds for such review.Court below: United States Court of Appeals for the Ninth Circuit
In 2000, Hall Street Associates filed suit seeking declaratory relief and damages from Mattel, Inc. for its failure to indemnify Hall Street for the cost of cleaning up water contamination at a toy manufacturing facility Mattel leased from Hall Street. After litigation began, the parties agreed to arbitrate some of the issues in dispute. They signed an agreement allowing either party to appeal the arbitrator’s decision in court if it contained errors of law or unsubstantiated findings of fact. Subsequently, the Ninth Circuit ruled in a separate case that any arbitration provisions giving courts more review power than that granted to them in the Federal Arbitration Act (FAA) were invalid. Since the provisions of the arbitration agreement between Hall Street and Mattel went beyond those in the FAA, the Ninth Circuit invalidated the District Court’s decision to review the arbitrator’s findings according to the parties’ provisions. At issue here is whether the FAA provides the sole grounds for judicial review of arbitration awards. Hall Street maintains that it is consistent with the spirit of the FAA and in the best interests of encouraging arbitration for courts to recognize all grounds for judicial review agreed upon by the parties, whether or not they go beyond those contained in the FAA. Mattel’s position is that the best way to preserve the integrity of arbitration proceedings is to limit the review power of courts to the grounds contained in the FAA. Because the Supreme Court’s decision in this case will affect the amount of freedom disputing parties have in crafting their arbitration agreements, ultimately it may affect whether parties choose to undergo the arbitration process at all.
Did the Ninth Circuit Court of Appeals err when it held, in conflict with several other federal Courts of Appeals, that the Federal Arbitration Act (“FAA”) precludes a federal court from enforcing the parties’ clearly expressed agreement providing for more expansive judicial review of an arbitration award than the narrow standard of review otherwise provided for in the FAA?The present dispute between these parties concerns whether a clause in their arbitration agreement guaranteeing judicial review of an arbitrator’s decision is valid under the Federal Arbitration Act (9 U.S.C. §§1-16) (FAA). Hall Street Associates owned property leased by Mattel and sought a ruling that Mattel was required to meet various contractual lease obligations. Hall Street Associates v. Mattel, Inc., 145 F. Supp. 2d 1211, 1213 (D. Ore. 2001).
Whether the Eleventh Amendment bars the Southeast Interstate Low-Level Radioactive Waste Management Commission, jointly with four compacting States, from asserting claims in a Supreme Court original action, that North Carolina has violated the Southeast Interstate Low-Level Radioactive Waste Management Compact and is subject to the Commission’s sanctions order.Court below: Original Jurisdiction
Original Jurisdiction: On Motion of North Carolina to Dismiss Claims of the Southeast Interstate Low-Level Radioactive Waste Management Commission
This case involves a lawsuit brought by several states and the Southeast Interstate Low-Level Radioactive Waste Management Commission against the State of North Carolina for its alleged breach of contract under the Southeast Interstate Low-Level Radioactive Waste Management Compact to license a waste disposal facility. In June 2002, the member states of the Compact and the Commission filed a Bill of Complaint, which the Supreme Court granted. The Special Master then filed his Preliminary and Second Reports with this Court on April 2, 2009. The Supreme Court subsequently received these Reports and ordered them filed. This case is now before the Supreme Court as both an original and exclusive jurisdiction case; it also addresses issues of contract law. The Supreme Court’s decision in Alabama v. North Carolina may have significant effects on constitutional law, most notably on the extent of the Court’s original and exclusive jurisdiction over a judicial case or controversy between States.
Plaintiffs except to the following conclusions of the Special Master:
1. Article 79F) of the Southeast Interstate Low-Level Radioactive Waste Management Compact (the “Compact”), which states that the Commission may “sanction[]” “[a]ny party state which fails to comply with the provisions . . . or . . . fulfill the obligations” of “this compact,” does not give the Commission the authority to level monetary sanctions against a party State when it fails to comply with the Compact. Preliminary Report 15–25.
2. Even if North Carolina violated the Compact, it was not subject to the sanctions authority of the Commission because it withdrew from the Compact before sanctions were imposed. Preliminary Report 25–29.
3. North Carolina did not waive its right to contest the legality of the sanctions proceedings even though it attended and refused to participate in the hearing. Preliminary Report 29–30.
4. Even though the Compact expressly provides that the Commission is “the judge of the [party States’] compliance with the conditions and requirements of this compact,” Art. 7(C), the Commission’s determination that North Carolina breached the Compact is neither conclusive nor entitled to any deference from the Court. Second Report 1920.
5. While it is undisputed that North Carolina ceased taking any steps to license a facility in December 1997, more than 18 months before it withdrew from the Compact, North Carolina, as a matter of law, did not breach its duty under the Compact to “take appropriate steps to ensure that an application for a license to construct and operate a facility . . . is filed.” Art. 5 (C). Second Report 10?24.
6. The implied duty of good faith and fair dealing does not apply to interstate compacts and North Carolina did not withdraw from the Compact in bad faith. Second Report 29–35.
7. North Carolina did not repudiate the Compact when it informed the Commission that it would take no further steps to license a facility. Second Report 24–28.
The State of North Carolina takes exception to the following conclusions of the Special Master:
1. The recommended denial of North Carolina’s motion to dismiss all claims brought by plaintiff Southeast Interstate Low-Level Radioactive Waste Management Commission. Under both the Eleventh Amendment and common-law sovereign immunity principles, only the United States or a sister State may sue a non-consenting State in federal court, absent a valid congressional abrogation of the State’s sovereign immunity. Because North Carolina has not waived, and Congress has not abrogated, North Carolina’s sovereign immunity from suit by the Commission, the Commission’s claims cannot proceed in this Court. In this case, this Court has jurisdiction to the Special Master’s recommendation, North Carolina’s motion to dismiss the Commission’s claims should be granted.
2. The failure to recommend granting North Carolina’s motion for summary judgment on the quasi-contract claims asserted in Counts III, IV, and V of the Bill of Complaint. It is a settled common-law rule that where the parties’ relationship concerning a given subject matter is governed by the terms of an express contract, no equitable claim will lie in addition to a claim for breach of contract. The Special Master declined to address North Carolina’s motion at this stage in the proceedings, but the motion is legally and factually ripe for adjudication, and should be granted.
This is an original jurisdiction case brought by the States of Alabama, Florida, Tennessee, and Virginia, joined by the Southeast Interstate Low-Level Radioactive Waste Management Commission (the “Commission”) (collectively “petitioners”) seeking remedy for the State of North Carolina’s alleged breach of the Southeast Interstate Low-Level Radioactive Waste Management Compact (the “Compact”).
A contractual agreement that designates the court and location where the parties would like to have their legal dispute decided is commonly known as a “forum selection clause.”Keywords: CIVIL PROCEDURECONTRACT LAWSECOND CIRCUITSUPREME COURTwex: COMMERCEbusiness lawcommercial lawcontractscommercial activitiesTHE LEGAL PROCESSalternative dispute resolutionarbitrationmediationcivil procedurecourtswex definitions
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See, e.g. Digital Equipment Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994).Keywords: CONTRACT LAWwex: wex definitionsbusiness lawcommercial transactions
Read moreabout Valuable consideration
An obligation imposed by law to prevent unjust enrichment. Also called a contract implied in law or a constructive contract, a quasi contract may be presumed by a court in the absence of a truKeywords: CONTRACT LAWGIFT PROMISEUNJUST ENRICHMENTCONTRACTwex: COMMERCEbusiness lawcontractswex definitions
Read moreabout Quasi contract (or quasi-contract)
The parol evidence rule governs the extent to which parties to a case may introduce into court evidence of a prior or contemporaneous agreement in order to modify, explain, or supplement the contract at issue. The rule excludes the admission of parol evidence. This means that when the parties to a contract have made and signed a completely integrated written contract, evidence of antecedent negotiations (called “parol evidence”) will not be admissible for the purpose of varying or contradicting what is written into the contract. Keywords: LAWSUITS-COURTCONTRACT LAWCONTRACTSwex: commercial transactionscourts and procedurewex definitions
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An adhesion contract (also called a “standard form contract” or a “boilerplate contract”) is a contract drafted by one party (usually a business with stronger bargaining power) and signed by another party (usually one with weaker bargaining power, usually a consumer in need of goods or services). The second party typically does not have the power to negotiate or modify the terms of the contract. Adhesion contracts are commonly used for matters involving insurance, leases, deeds, mortgages, automobile purchases, and other forms of consumer credit.Keywords: CONTRACT LAWCOURTSwex: COMMERCEbusiness lawcommercial lawcontractscommercial activitiesconsumer protectioncommercial transactionscourts and procedurewex articles
Read moreabout Adhesion Contract (Contract of Adhesion)
An attachment or exhibit to a document, such as a contract. For example, a contract to manufacture widgets may have an adendum listing the specifications for said widgets. As this modifies the original document, it should be signed or executed with the same formalities.Keywords: CONTRACT LAWwex: COMMERCEbusiness lawcommercial lawcontractscommercial activitieswex definitions
Read moreabout Addendum
STATE SOVEREIGNTYCONTRACT LAWORIGINAL JURISDICTIONFEDERAL LAWINTERSTATE COMPACT INTERPRETATIONELEVENTH AMENDMENT
The ability of parties to bargain and create the terms of their agreement as they desire without outside interference from government. wex: COMMERCEbusiness lawcommercial lawcontractscommercial activitieswex definitionsKeywords: CONTRACT LAW
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