CORNELL ECON 4040 - Transatlantic (3 pages)

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lecture 16

Lecture number:
Lecture Note
Cornell University
Econ 4040 - Economics and the Law
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Econ 4040 1st Edition Lecture 16 Outline of Last Lecture I Walker II Fiege Outline of Current Lecture I Transatlantic II Shirley Maclaine Transatlantic Brief Fact Summary The Plaintiff Transatlantic Financing Corporation Plaintiff sued the Defendant the United States Defendant in quantum meruit after it was forced to take the longer route from Texas to Iran around the Cape of Good Hope rather than the shorter route through the Suez Canal Synopsis of Rule of Law A legal impossibility which renders a contract voidable is defined as a thing that is not practicable or in other words only done at an excessive and unreasonable cost Facts The Plaintiff contracted with the Defendant to ship wheat from Texas to Iran The contract specified the destination but not the route The ordinary route would take the Plaintiff through the Suez Canal However due to armed conflict the Suez Canal had been blocked by Egypt The Plaintiff therefore proceeded along the route around the Cape of Good Hope The Plaintiff then sued to recover the additional costs of taking the longer route Issue Were the Plaintiff s duties impossible to perform thereby permitting rescission of the agreement Held No The D C Circuit Court of Appeals sets forth a three part test for impossibility 1 something unexpected must have occurred 2 the risk of the unexpected occurrence must not have been allocated by contract or custom and 3 the unexpected occurrence must have rendered performance commercially impracticable Here the first requirement is met The usual route from Texas to Iran would be through the Suez Canal and its closure would be unexpected Second the risk does not appear to have been allocated in the agreement or by custom to one party over the other Finally the performance was not rendered commercially impracticable While the cost of going around the Cape of Good Hope was greater than going through the Suez Canal there was no increased risk to the crew or goods It is not always the case that cost alone may never constitute impracticability but here the added expense is These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute not significant The Plaintiff is also in a better position to purchase insurance for th is contingency as a commercial shipper Discussion Performance is impossible if commercially impracticable Shirley Maclaine v 20 Century Fox Brief Fact Summary Plaintiff Parker better known as actress Shirley MacLaine contracted with Defendant Twentieth Century Fox Film Corp to play the female lead in the film Bloomer Girl Defendant thereafter repudiated the agreement by not producing the picture and instead offered Plaintiff the lead female role in another picture entitled Big Country Big Man Plaintiff declined and initiated this action to recover 750 000 the amount she was to be paid under the contract Synopsis of Rule of Law The measure of damages owed to a wrongfully discharged employee is the amount of salary agreed upon for the period of employment reduced by the amount the employer proves the employee has earned or with reasonable effort may have earned from other employment Facts Plaintiff contracted with Defendant to play the female lead in the movie Bloomer Girl for a salary of 750 000 However Defendant decided not to produce the film and offered instead for Plaintiff to play the lead in another film Big Country Big Man Unlike Bloomer Girl which was to be a musical filmed in California Big Country Big Man was to be a dramatic western filmed in Australia Also the contract for Big Country Big Man did not grant Plaintiff the same control over the choice of directors and screenplay that her Bloomer Girl contract did Plaintiff declined to act in Big Country Big Man and sued to recover her guaranteed salary Issue Should Plaintiff s recovery be limited by her failure to accept substitute work in mitigation of damages Held No A wrongfully discharged employee s recovery of her full salary must be reduced by the amount the breaching employer can prove she earned or with reasonable effort might have earned Importantly the employer must show that the other employment was comparable or substantially similar to that employment of which the employee was deprived The employee s rejection of or failure to seek a different or inferior kind of employment may not be considered For the factual differences stated above acting in Big Country Big Man constituted inferior employment Thus Plaintiff s refusal to accept the female lead in Big Country Big Man will not reduce her recovery Dissent The majority incorrectly distinguishes between two films but in fact the female lead in any movie should qualify as substitute performance Discussion A wrongfully discharged employee is entitled to his lost salary but he must mitigate damages by seeking alternative employment However he does not need to accept different or inferior employment

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