2014 Commercial Law Developments, Prepared by the Commercial Transactions Committee for the Business Law Section 2014 Annual Report
IX. Contracts

A. Formation, Scope, and Meaning of Agreement

  • Cobb v. Ironwood Country Club, _ Cal.App.4th _ (2015) - Good faith makes contract with unilateral modification right not illusory.
  • Parapluie (9th Cir Fe 14 2014): Status of claim for promissory fraud.

B. Adhesion Contracts, Unconscionable Agreements, Good Faith and Other Public Policy Limits, Interference with Contract

  • Express Working Capital, LLC v. Starving Students, Inc., 2014 WL 2862310 (Tex. Ct. App. 2014) - A seller of future accounts receivable would not raise a usury defense against the buyer because the defense applies only to "loan" transactions, not to sales of accounts. Despite the buyer's recourse against the seller, the transaction was a sale because there was no specified amount or due date and, more importantly, that is what the transaction purported to be. Pursuant to a non-uniform provision in Texas version of UCC § 9-109, the parties' characterization of the transaction is binding.
  • In re Doctors Hospital of Hyde Park, Inc., 508 B.R. 697 (Bkrtcy. N.D. Ill. 2014) - [Addressing yield maintenance premium.]
  • Quadrant Structured Products v. Vertin, 23 N.Y. 3d 549 (C.A.N.Y. 2014) - A no-action clause in an indenture is to be strictly construed.
  • In re Denver Merchandise Mart, 740 F.3d 1052 (5th Cir.) - Creditor could not collect a prepayment premium on debt accelerated but not prepaid, pursuant to the terms of the agreement.
  • [Add Calif. prepay case]
  • [Add Indenture decisions]
  • Mahlum v. Adobe Systems Incorporated, _ F.Supp.2d _ (N.D. Calif. 2015) - Early termination fee is not liquidated damages and thus not analyzed to determinte if it's a 'penalty'.
  • Jade Fashion v Harkham Industries (Cal.Ct.App. September 4, 2014) - Consideration of whether discount for early payment should be analyzed as "liquidated damages."
  • Le Metier Beauty Investment Partners LLC v. Metier Tribeca, LLC, NYLJ 1202719289123 (Sup.Ct. App/ Div. 2015) - Enforceability of defective non-reliance clause evaluated as a 'general disclaimer'.
  • Grand Prospect Partners, L.P. v. Ross Dress For Less, Inc., _ Cal.App.4th _ (2015) - No procedural unconscionability where party refuses to negotiate with respect to a particular term.

C. Choice of Law

  • Roberts Holdings, Inc. v. Becca's Bakery, Inc., 423 S.W.3d 920 (Mo. Ct. App. 2014) - A lessee of bakery equipment contributed the equipment to a joint venture. The lessee was a necessary party in the lessor's replevin action against the joint venture. Because that party was not joined and both the lease and the joint venture agreement required litigation to occur in superior court in Spokane, the Missouri court correctly dismissed the action.
  • Amegy Bank v. DB Private Wealth Mortgage, Ltd., 2014 WL 791503 (M.D. Fla. 2014) - Because UCC § 9-201 provides that a security agreement is effective against creditors of the debtor, the choiceof- law clause in the security agreement governed the secured party's declaratory judgment action against a third party in which the secured party sought an equitable lien to the extent that the proceeds from the sale of the collateral were used to benefit the third party. The chosen law did not govern the secured party's tort claims against the third party. Those claims were governed by the law of the jurisdiction with the most significant relationship to the particular issues.

    Comment: UCC § 9-201 makes the security interest, not the security agreement effective against third parties.
  • Carmen Group, Inc. v. Xavier University of Louisiana, 2014 U.S. Dist. LEXIS 61883 (D. D.C. 2014) - Enforcing choice of forum clause in contract over objection that it was included due to mistake or error.
  • In re Nelson, _ B.R. _ (Bankr.D.S.C. 2014) - Enforces choice of law clause, which gives secured party greater rights.

D. Arbitration

  • Martin v. Cavalry SPV I, LLC, 2014 WL 1338702 (E.D. Ky. 2014) - A buyer of a credit card account could enforce an arbitration clause in the credit card agreement.
  • U.S. ex rel. Brickhead Electric, Inc. v. James W. Ancel, Inc., 2014 WL 2574529 (D. Md. 2014) (Under Maryland law, arbitration clause needs separate consideration).

X. Other Laws Affecting Commercial Transactions / Table of Contents