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"Mayweather-Pacquiao Boxing Match Sets Off Fight Over Fees"

Boxers Floyd Mayweather and Manny Pacquiao don't square off until May 2, but the media companies behind the highly anticipated welterweight title bout are already coming to blows over how to split up the money. At issue are the terms that Time Warner Inc.'s HBO and CBS Corp.'s Showtime want from pay-television distributors to offer the fight on pay-per-view. A price to watch hasn't been set, but it is expected to be about $90, which would be a new high. Typically, the split for a pay-per-view fight between distributors and programmers is around 50-50. In this case, HBO, which has rights to Mr. Pacquiao, and Showtime, which has rights to Mr. Mayweather, are seeking much more favorable terms for their fighters. The initial offer from HBO and Showtime was a 70-30 split, people close to the fight said. Pay-TV providers immediately rejected that and there has been little movement from either side since. "Everybody at some point will hopefully be rational and we'll be able to put our heads together and come up with a good solution. We're not there yet," said Michael Berman, executive vice president and general counsel of iN Demand, which negotiates on behalf of big cable operators including Comcast Corp. and Time Warner Cable Inc. Boxing enthusiasts have clamored for this match for years, and it is expected to easily set a pay-per-view revenue record. The current high is $152 million for the 2013 fight between Mr. Mayweather and Saul "Canelo" Alvarez. The pay-per-view price for that fight was $65 for standard definition and $75 for high definition. Over two million viewers purchased it. Because of the demand, HBO and Showtime think a 50-50 split is a nonstarter. The camps of the boxers, who get the lion's share of the revenue, ultimately must sign off on any deal. "I wouldn't agree to it," said Bob Arum, chief executive of Top Rank Inc., which handles promotion for Mr. Pacquiao, of a 50-50 split. "I really believe everybody agrees that there has to be a more generous split and they are in the process of working out what it will be." HBO Sports Senior Vice President Mark Taffet declined to comment on the state of negotiations beyond saying discussions are "far down the road." A spokeswoman for Mr. Mayweather didn't respond to a request for comment. Showtime declined to comment. Some distributors are willing to be flexible, but don't want to just roll over on the terms. "To the extent the fight performs beyond what we've seen in pay-per-view before, we're happy to consider untraditional economics. Until that point however, it is speculative and therefore the economics should be more traditionally set," said Rob Jacobson, chief content officer of Vubiquity, which negotiates on behalf of AT&T Inc. and other distributors. That HBO and Showtime have to jointly negotiate with distributors is also a drag on the pace of the talks, people involved in the negotiations said. Satellite provider DirecTV, which generally has the highest buy rates for fights, isn't as optimistic. "Even in what should be its best of times like now, boxing always seems to manage to give itself a black eye," said Dan York, chief content officer at DirecTV. Beyond the proceeds from U.S. pay-per-view buys, the fight is expected to bring in $75 million in event ticket sales, $10 million in international revenue and an additional $10 million in sponsorship. As for the money that flows to the boxers, 60% will go to Mr. Mayweather while 40% will go to Mr. Pacquiao, according to a split the camps have negotiated.

"CBS Returns, Triumphant, to Cable Box"

CBS and Time Warner Cable ended their protracted contract dispute Monday evening with CBS winning not only a significant financial increase for its programming, but also its stake in the digital future. The agreement between the two sides restored the CBS network and its related channels, including Showtime, to millions of cable subscribers largely in three major cities: New York, Los Angeles and Dallas. The outcome underscored the leverage that the owners of important television content, especially sports like N.F.L. football, retain over distributors like cable systems. The looming National Football League season, which starts this week, includes key games every week on CBS. "It was hugely important," an executive involved in the negotiation said Monday night. (The executive asked not to be identified because the participants agreed not to offer details on the agreement beyond the official announcement.) Indeed, Time Warner Cable executives had said earlier that a reason the company decided to remove the CBS stations in early August was because of the recognition that it would lose leverage the closer it got to the N.F.L. season. David Bank, a media analyst for RBC Capital Markets said, "With the content, especially the N.F.L. and CBS being the No. 1 network in the ratings, you just have to believe they are going to win every time." The two sides did not release any specific information on the terms of the agreement. They had battled for exactly a month over an increase in fees CBS was seeking for the right to retransmit CBS stations in the three major cities and some other locations on Time Warner Cable systems. Another crucial issue was whether CBS would retain the digital rights to its content, which it wanted to sell to Web-based distributors like Netflix and Amazon. Executives on both sides acknowledged early in the talks that CBS was seeking an increase to about $2 per subscriber, up from about $1. Separate statements from the chief executives of each company indicated that the outcome apparently tipped heavily toward CBS. Its president, Leslie Moonves, said in a memo to the company staff that the network had secured virtually all of what it was seeking. "We are receiving fair compensation for CBS content," Mr. Moonves said. He specifically included not only additional fees for CBS content, but also the retention of the digital rights. Glenn A. Britt, Time Warner Cable's chairman and chief executive, conceded that "we certainly didn't get everything we wanted." CBS did make "some minor concessions" to get the deal settled, the executive involved in the negotiation said. The talks extended until 3 a.m. Monday. In his statement, Mr. Britt said Time Warner Cable ultimately "ended up in a much better place than when we started," though he did not specify how. He also again pushed for some kind of change in the rule that granted networks the rights to compensation from cable companies for their programming "The rules are woefully out of date, are the primary reason cable bills are rising," Mr. Britt said. "We sincerely hope that policy makers heed that call and take action to prevent these unfortunate blackouts soon." Time Warner Cable pressed throughout the monthlong impasse after it removed CBS's stations from its systems for some form of government intervention, from either the Federal Communications Commission or Congress, but none materialized. While the acting F.C.C. chairwoman, Mignon L. Clyburn, said on Aug. 9 that she was distressed at the standoff and was "ready to consider appropriate action if this dispute continues," it continued for another three weeks without her intervening. Several media analysts said early in the dispute that the commission's options were limited because the right of a station owner to seek retransmission compensation was granted in a law passed by Congress in 1992. Monday evening, Ms. Clyburn issued a statement saying: "I am pleased CBS and Time Warner Cable have resolved their retransmission consent negotiations, which for too long have deprived millions of consumers of access to CBS programming. At the end of the day, media companies should accept shared responsibility for putting their audience's interests above other interests and do all they can to avoid these kinds of disputes in the future." Both sides hurled accusations during the standoff. CBS executives said Time Warner Cable removed their stations unnecessarily (including Showtime, which requires a separate fee from subscribers) and negotiated in a dysfunctional manner, and Time Warner Cable accused CBS of making exorbitant demands and performing a disservice to all Time Warner Cable subscribers by blocking the CBS.com Web site. But the settlement was ultimately a financial arrangement between two partners, one of which had content the other needed to satisfy its customers. Mr. Bank said that, if anything, the deal may make it easier for networks to press cable and other distributors like satellite systems to squeeze out more favorable fees, without all the noise and recriminations this dispute inspired. CBS quietly renegotiated a deal with the FiOS bundled Internet phone and television service owned by Verizon in the midst of its conflict with Time Warner Cable. "I think the Verizon deal happening when it did was not helpful to Time Warner," Mr. Bank said. "It was probably really damaging."

"Rejecting Billions, Snapchat Expects a Better Offer"

What business makes no money, has yet to pass its third anniversary and just turned down an offer worth billions of dollars? Snapchat, a social media service run by a pair of 20-somethings who until last month worked out of a beachfront bungalow in Venice, Calif. Thanks to today's rabid rat race for the hottest social media start-ups, Snapchat has joined the list of tech companies — like Tumblr and Instagram — with no money coming in but multiple sky-high takeover offers. So far, Snapchat's leaders have balked at the offers, according to three people with knowledge of the overtures, including a recent multibillion-dollar proposal from Facebook, the biggest social network of them all. It's not that they don't want billions of dollars. In part, it's because they think making a deal now would leave many billions more on the table. The service, started in 2011 by Evan Spiegel, 23, and Bobby Murphy, 25, two former Stanford fraternity brothers, lets users send photo and video messages that disappear after they are viewed. Snapchat quickly gained a reputation as an easy way to send sexually suggestive photos, but it also picked up steam as a fun and easy way to trade photo messages. The company has in recent months become one of the most sought-after businesses in the tech industry, getting attention from top Silicon Valley companies and venture capital firms, as well as international technology companies. In the past, several start-ups found even greater success by passing up a billion dollars or more, including Facebook and Twitter. Even Twitter, with its red-hot debut on the public market, still has skeptics who question whether it can grow enough to justify its current market capitalization of more than $20 billion. But Silicon Valley is littered with many more entrepreneurs whose big dreams went unfulfilled, people who were at the helm of the next big thing and lost momentum before they could cash out. "I think this is classic bird-in-hand versus bird-in-bush," said Julie A. Ask, an analyst at Forrester Research. "Snapchat must believe the bird-in-bush is bigger." There are some suggestions about why Snapchat thinks it will be worth far more later than it is now. For one thing, Snapchat's leaders think it might be one of the first social media companies in the United States to build its business largely around revenue beyond advertising. On stage at an industry event in September, Mr. Spiegel said that he wanted to duplicate the success of overseas chatting applications like WeChat. Many such companies, particularly WeChat and Line, have found ways to make money from their applications through virtual goods and games. WeChat, which is based in China and operated by a company called Tencent, allows its users to subscribe to brands like Starbucks and Nike and receive messages from them. Line, a Japanese messaging app, has $10 million a month in revenue from selling stickers that users can send to each other while chatting with friends. But the decision appears to have also been influenced by one of Snapchat's big venture backers, Benchmark Capital, according to a person close to the talks. Before leading an investment in Snapchat, Benchmark led an early bet on Instagram, a photo service, and was disappointed when Instagram's founders decided to sell to Facebook for $1 billion last year. Despite the high price tag, the firm thought Instagram could have succeeded as a stand-alone company, or at least could have brought a higher offer. Eight months after the Instagram sale, Benchmark switched tactics and placed an initial $13 million bet on Snapchat. Benchmark executives thought they might be able to profit from Facebook fatigue by investing in services like Snapchat that offered users — particularly teenagers — greater privacy. It is those teenagers who most interest Facebook. In an earnings call this month, Facebook said that its youngest users were using its service less. Still, the news about Snapchat rejecting Facebook's offer, first reported by The Wall Street Journal on Wednesday, sent a small shock through the industry. Both Snapchat and Facebook declined to comment. Snapchat and applications like it represent a coming sea change in social media, one not necessarily defined by shared or public interactions. These services present an antidote to mainstream services that are meant to capture life moments so they can be shared, liked and commented on. Snapchat's appeal lies largely in the lack of permanence. It offers a reprieve from worrying about awkward or unflattering photos turning up unexpectedly. Snapchat recently said that it now processed upward of 350 million messages a day. In February, the company was processing only 60 million a day. Other messaging services similar to Snapchat are also quickly gaining in popularity. WhatsApp, KakaoTalk, Kik, WeChat and Line, to name a few, have added hundreds of millions of users in the last few years, and each continues to grow. That rocketlike growth has emboldened Snapchat's leaders to hold out for a better deal, and with a suitor of their choice, at least for now. One person with knowledge of the talks, who would speak only on the condition of anonymity, said one roadblock in the talks with Facebook was that Mr. Spiegel questioned whether he wanted to work for Mark Zuckerberg, Facebook's young billionaire chief executive. In addition, Snapchat relishes being a successful company outside Silicon Valley. In December, when the company was still getting its footing in the social media market, Mr. Zuckerberg requested a meeting. But he traveled to Venice, Calif., to meet with the company, according to Snapchat's founders, instead of them visiting him at his headquarters in Northern California. Shortly after the meeting, Facebook started a similar product called Poke. But Poke never took off. Even Facebook's stand-alone messaging product, called Messenger, has struggled to attain the same kind of momentum that rivals have gained. Facebook released a new Messenger mobile app on Wednesday. And in Silicon Valley, where something new could pop up at any time, tech companies and investors are often compelled to act when they can — sometimes with fear and little regard for the number of zeros involved. Another potential suitor for Snapchat is Tencent, one of the three Internet giants in China. In September, Pony Ma, one of the founders of Tencent, spoke of that constant tension when discussing his interest in Snapchat. "I'm facing a crisis in this industry, said Mr. Ma. "Young people, the things they like on the Internet, increasingly I don't understand it. This is my biggest worry."

"Maryland 'applying serious settlement pressure' to ACC with latest counterclaim"

Except these assertions, filed Tuesday morning in North Carolina by the state's Office of the Attorney General on behalf of the school in a 53-page counterclaim to the ACC's lawsuit against Maryland, are of secondary importance. At the core of Maryland's claim rest antitrust allegations against the ACC, which have little to no relation to ESPN and the potential luring of Big Ten schools. Perhaps Maryland, by including the revelation that officials from Pittsburgh and Wake Forest attempted to attract two Big Ten schools east of the Mississippi River - Penn State has been reported as one target - intends to paint the ACC as hypocritical by making the school pay dearly for exiting while attempting to attract schools from other conferences at the same time. Yet the juicy allegations could be Maryland's latest salvo in its attempt to get the ACC to agree to a settlement. "Maryland is applying some serious settlement pressure to the ACC with the filing of this counterclaim," said an individual with direct knowledge of the West Virginia-Big East legal battle from 2011, when the Mountaineers accepted an invitation to join the Big 12. "Any proven revelation of joint efforts by ESPN and the ACC would have major implications, not just here but throughout all realignment disputes." The counterclaim also cites former Boston College Athletic Director Gene DeFilippo, who in 2011 told the Boston Globe that "ESPN is the one who told us what to do" after the ACC invited Syracuse and Pittsburgh to join the conference. Those comments were hastily retracted by DeFilippo two days later, but his initial admission serves, in Maryland's eyes, as evidence that ESPN has "incentivized the ACC to compete more aggressively in the market for conference affiliation/membership." "Many Big East partisans have long suspected, admittedly without evidence, that it was ESPN that helped to orchestrate the departure of Pittsburgh and Syracuse from the conference, and the quote from the former Boston College AD cited in the counterclaim only added fuel to that suspicion," said the individual, who requested anonymity to retain former client confidences. "Maryland would have been a member in good standing of the ACC during the time when any such discussions between ESPN and the ACC would have occurred, so the potential for discovery of some very important documents in this case would be high. If there is an untold story here, the ACC would want to do everything to avoid discovery by settling the case now." Besides, would either side truly want this issue to still be on the table when Maryland officially leaves the ACC on July 1? Would ACC Commissioner John Swofford want to attend ACC football media day this summer and still be asked questions about the former conference member? Would Maryland want to proceed into its self-dubbed "fearless future" while still worrying about legal issues left in its "proud past"? But say the ACC refuses to settle and the matter does reach a courtroom, a far-off prospect given that the ACC will likely file a motion to dismiss Maryland's counterclaim and the school will file a motion for discovery. Then the presiding judge will focus not on whether the ACC tried to poach Big Ten schools to increase its value in the eyes of ESPN, but whether the conference violated antitrust law. "I don't think from an initial pleading standpoint, the stuff about talking to other schools, that's not what's going to drive the initial motion practice," said Stephen M. Chippendale, an attorney with McKenna Long & Aldridge in Washington who specializes in antitrust issues. "From an antitrust perspective, that comes in as coloring for the case." By implementing the $52 million exit fee and withholding conference and NCAA revenue from Maryland, the counterclaim alleges the ACC "injured competition in the market for conference affiliation/membership, that is the market in which conferences compete for university members and in which universities compete for membership in conferences." Said Chippendale: "The key test, as they say up front under the Maryland antitrust law: Has there been unreasonably harmed competition in the market?" As for the counterclaim itself, it's not dissimilar to the antitrust claim made by the state in January 2013, when it tried to have the ACC's lawsuit dismissed in Prince George's County Circuit Court. Maryland Attorney General Douglas F. Gansler called the exit fee "an antitrust violation and an illegal penalty" at the time. That antitrust claim was subsequently dismissed in June by Prince George's County Circuit Court Judge John Paul Davey, but Maryland's latest legal filing recycles similar language about the antitrust issue. Why? "That's a good point to keep in mind, is strategically what are they doing?" Chippendale said. "They didn't just file this suit. This is their answer and counterclaim. They're fending off the allegations against them. When you're representing a party in this case, it's good to have your own allegations. It gives you leverage. It gives you a punch, if you think of it like a boxing match." In other words, Chippendale said, effectively agreeing with the individual who dealt with the Big East-West Virginia case, Maryland could simply be striking back in the hopes that, eventually, both sides agree to sit down and settle out of court.

POWER OF ACCEPTANCE

For acceptance to be valid for forming a contract, it must be exercised while the power of acceptance is still effective.

PROMISES BINDING WITHOUT CONSIDERATION

General rule is that most states enforce a promise to pay a past debt, but it must be a signed writing when the statute of limitations has passed on the debt. General rule is that a promise to pay for benefits previously received is enforceable, especially in an emergency situation. Options contracts and guarantees to pay the debts of another are enforceable if in writing.

"WWE Aims to Pin Down Rich New TV Rights Deals (EXCLUSIVE)"

If USA Network wants to retain its biggest hit, "Monday Night Raw," it's gonna have to pay. Next month, for the first time, WWE will shop the rights to "Raw" and all of its shows at the same time — a list of weekly series that includes Syfy's "Friday Night SmackDown," "Main Event" on ION Television, the CW's "Saturday Morning Slam" and reality show "Total Divas" on E! The goal is to significantly increase the $139.5 million in TV licensing fees WWE earned (in 2012) for its shows, and attempt to get closer to the rich network deals that sports organizations like the NBA, NHL NASCAR, as well as soccer command. In the past, deals for WWE's series were brokered individually on a staggered timeline, usually every three to four years or so. But WWE has spent nearly two years quietly lining up rights to expire simultaneously in an effort to secure higher fees and appease shareholders who have grown increasingly frustrated that the company's TV deals are not worth more at a time when live "event" programming is more valuable than ever. By offering up all its shows at once, "We're letting the marketplace determine if it's interested in all or pieces," says Michelle Wilson, WWE's chief revenue and marketing officer. The company also is tackling a self-inflicted perception problem. For years, it's touted its over-the-top characters and soap opera storylines ahead of the live aspect of the year-round action in the ring. "We've had to evolve our thinking," Wilson says. "We are clearly entertainment-based, but if you think about the characteristics of our brand, it's live action, and that's sports. We want to be compensated for a live audience, since live content is getting a very significant premium in the marketplace." The company cites Nascar's impressive dealmaking this summer as an example. The racing league secured a new 10-year deal with NBC and Fox worth $820 million a year. And that increase came in the face of declining ratings for many of its races. WWE argues that "Raw" and "SmackDown" alone are just as attractive, with a rabid fanbase that's helped build networks, and its series are diverse in ethnicity and age. Combined, the shows air 156 episodes a year that average a 2.2 household rating. Nascar airs 154 races and averages a 1.38 household rating among viewers, who are 92% white and over 50. WWE's audience is far more diverse and broken out fairly evenly among age groups. A selling point is that 44% of them are under 34. That's helped boost gross ratings points, something Madison Avenue keeps a close eye on. Another plus for WWE: 90% of "Raw's" and "SmackDown's" viewers watch the shows live plus same day, making the shows DVR proof. (Think NBC's latest stunt with "The Sound of Music".) "The value of live content has gone from becoming important to essential," says George Barrios, WWE's chief strategy and financial officer. "As a network, if you don't have live must-see content your existence comes into question." To make its show more attractive, WWE is considering a live version of its two-hour "SmackDown," which currently is taped on Tuesday before its Friday airing. To do that, costs to produce the series would increase, due to scheduling, and the show would likely need to move to a new night. But WWE would be willing to make the switch in return for a better fee for the series. WWE added a third hour to "Raw" last year (starting with its 1,000th episode) in an effort to expand storylines, increase exposure for its stars, but also enable USA to generate more advertising revenue after three-hour specials performed well. The Stamford, Conn.-based company ideally would like to partner with a conglomerate that owns a variety of channels the way NBCU currently airs many of WWE's shows. Along with "Raw," "SmackDown" and "Total Divas," specials like "Tribute to the Troops" and a shortened version of its annual "WrestleMania" pay-per-view also air on NBC. WWE already has reached out to or held meetings with the expected list of players who own a variety of channels hungry for programming, including A&E, Disney, Viacom, 21st Century Fox and Discovery. Negotiations and bids can't take place until Feb. 15, when NBCU accepts or rejects WWE's final offer; other bids are due Feb. 28, with WWE set to select its media partners by March 4. Should a new deal with another conglom happen, WWE's shows wouldn't move to a new network until October. Yet even as WWE makes the rounds of media congloms, industry insiders say they believe there is no way that NBCUniversal will loosen its grip on WWE. "Monday Night Raw" is a huge ratings generator for USA Network in the weekly ratings; without "Raw" on its schedule, the network would drop from first place to as low as No. 4 among basic entertainment channels. When it comes to collecting premium advertising dollars, however, USA Network earns the lowest CPMs for "Raw" than other programs, sources say. Translation: the ads that air during "Raw" are cheap. Still Syfy would also lose a sizable audience without "SmackDown," which has raised viewership by 35% for the network. "Divas" is a hit for E! but has perhaps benefitted WWE more, given that it's helped the company attract more women, which currently make up around 35% of its audience. The third hour of "Raw" is up 44% vs. programming that aired in the timeslot last year. "Saturday Morning Slam" is up 34% for the CW, "Main Event" is up 25% for ION and "Divas" has boosted ratings 166% for E! WWE's pay-per-views, including annual juggernauts "WrestleMania" and "SummerSlam" won't be part of the negotiations, since those will air on the company's new subscription-based WWE Network, which will also include original series and access to the company's VOD library. Launch plans for the channel, which WWE sees as its own NFL Network, have yet to be revealed. However, WWE maintains that it could break even on the venture if it can sign up 800,000 to 1 million subscribers willing to pay around $10 to $14 per month. Digital next-day rights to shows would also become part of any new licensing deal with a TV network, costing Hulu Plus the programming it currently airs. In the past, TV Everywhere wasn't a hot topic for networks when WWE inked its current network deals. "Partners who pay licensing fees are now expecting to get the TV Everywhere distribution rights," Barrios says. As it tries to land a better deal, WWE is ready to flex some of its marketing muscle, eager to show off how it's been able to attract more high-profile advertisers to sponsor its PPVs and tie-in with its wrestlers, known as Superstars. Those now include General Motors, Ford Motor Co., Disney, Doritos, DreamWorks, Paramount, Kmart, Subway, Taco Bell, Colgate, Frito-Lay, Schick and Mattel — attractive to any network, since the channels are the entities that sell and earn the ad dollars. WWE controls PPV sponsorships, digital ad sales and talent appearances. Other revenue streams also must be taken into consideration. WWE's social media teams also connect with millions of fans daily, while its magazine, websites, toy lines, YouTube channel (for which it produces 10 to 12 hours of original programming a year) and videogames are popular — and ratings rise for shows that feature WWE's talent roster, including John Cena (see above), as guest stars. "WWE is a proven ratings juggernaut, making USA Network No. 1 for the past eight years and delivering more average viewers than every sports property, with the exception of the NFL," said WWE chairman and CEO Vince McMahon in a statement to Variety. "Given the increasing demand for live, DVR-proof content, we believe the market will value our programming significantly above where we've been in the past." Adds Wilson of the upcoming negotiations: "This is new territory we're in. All of the things we've done over the last five years have helped raise the profile of our brand and there's recognition from the marketplace of what we deliver. Now it's up to the marketplace to tell us if we're worth it."

THE 3 REQUIREMENTS OF EVERY ENFORCEABLE CONTRACT

OFFER ACCEPTANCE CONSIDERATION

RELIANCE DAMAGES

Reliance damages put the plaintiff in the same position he would have been in had the contract not been made, so he typically will receive his out-of-pocket costs in performing (including preparation to perform after signing) but not profit. Used when profits are too speculative or in promissory estoppel cases to avoid injustice. Generally, reliance damages may not exceed the contract price or expectation damages

Parol Evidence Rule Definitions

The Parol Evidence Rule prohibits parties to a written contract from attempting to alter the meaning of the contract by introducing evidence of other written or oral agreements made prior to or contemporaneously with the original written contract. Parol evidence rule only applies to an "integration", which is defined as a document that the parties' intended be the FINAL expression of their agreement. A "partial integration" is a document intended to be final but not intended to include all details of the parties' agreement. A "total integration" is a document intended to be final and also intended to include all details. For partial integrations, no evidence of prior agreements or discussions may be introduced that contradict the signed agreement For total integration, no evidence of prior agreements or discussions may be introduced that either contradict or add to the signed agreement. Parol Evidence Rule only applies to writings or discussions that take place PRIOR to or contemporaneously with the signing of an integration. Contemporaneous writings (signed at the same time as the integration) are not treated as parol evidence and are treated as part of the integration but only if they are referenced in the integration. Subsequent oral agreements are never parol evidence unless the written integration contains a "no oral modification" clause.

"Maryland, ACC settle lawsuits; conference will keep $31.3 million in exit fees"

The University of Maryland and the ACC announced a settlement Friday that allows the conference to keep $31.3 million in exit fees paid by the school in the wake of its move to the Big Ten. The agreement, which ends nearly two years of contentious litigation, frees Maryland from making any future payments to the ACC, of which it was a founding member. While it closes a round in the multimillion dollar game of conference realignment, the settlement also could set a precedent — and send a stark message — for schools looking to move and conferences seeking to stop them. "I think what most conferences will do is make it more difficult to exit in the future," said Gabe Feldman, director of the sports law program at Tulane University. "I think the ACC has made that clear." The ACC filed suit against Maryland in November 2012, shortly after the school announced it was joining the Big Ten, seeking enforcement of a withdrawal payment of approximately $52 million. Maryland filed a counterclaim in January seeking $157 million plus punitive damages. The lawsuits will be dismissed and are considered closed. "Our student-athletes, coaches, staff, fans and alumni will forever hold dear the memories of six outstanding decades in the Atlantic Coast Conference," Maryland Athletic Director Kevin Anderson said in a joint statement. "Today marks the next chapter in the history of Maryland Athletics, and we look forward to creating new memories in the decades to come." The ACC and the University of Maryland said in the joint statement that they would have no further comment. In College Park, Maryland football Coach Randy Edsall showed little emotion in discussing the agreement before practice Friday afternoon, telling reporters, "Just glad that it's over and we can just focus on the season and focus on football." Andrew Zimbalist, a professor of economics at Smith College, called the settlement an area that is "highly subjective." Maryland will be plugged into the Big Ten revenue-sharing stream, including lucrative television and licensing options, he said, which is likely to make Friday's terms financially sensible for the school. "With a $31 million settlement, I think Maryland probably does pretty well. . . . The trade-off with the extra revenue with the Big Ten will make it worth their while," Zimbalist said. "On the other hand, the ACC gets $31 million, and basically it's free money. It's good for them, too. It's a compromise that works out pretty well for both sides." Rutgers, which officially joined the Big Ten along with Maryland on July 1, announced in February that it agreed to pay the American Athletic Conference $11.5 million to withdraw its membership from that league. Maryland President Wallace D. Loh had publicly questioned the legality of the increase of the ACC's exit fee before the school left the conference. The Maryland state's attorney general office filed a counterclaim on behalf of the school in January, alleging the conference violated its own constitution by increasing the exit fee from about $20 million to $52 million. Maryland's countersuit alleged antitrust violations by the ACC. The suit also alleged that two league schools were prompted by ESPN and lucrative television opportunities when it attempted to sway other Big Ten schools to leave and join its conference. Both sides agreed to mediation in April, and Judge John R. Jolly Jr. assigned Bethesda-based mediator Jonathan B. Marks to meet with the parties. But the suit dragged on even as Maryland celebrated its inclusion into the Big Ten and the ACC welcomed Louisville into the fold. There had to be financial consequences for Maryland in this case, said Sheldon Steinbach, a former legal counsel to American Council on Education who has been monitoring university athletic legal issues for more than four decades. The question wasn't whether Maryland would pay the ACC, Steinbach said; it was how much it would pay. "It seems to me, having surveyed the scene for 47 years, Maryland has walked away with a fair deal. The ACC has preserved its contractual rights, and everyone can go on to play another day," Steinbach said.

"WILLIAMS SHOULD HAVE GOTTEN A BETTER DEAL"

The saga of Ricky Williams and one of the most famous deals in NFL history took an interesting turn last week when Williams had a new agent work out the terms of an extension with the Miami Dolphins. That new agent was Williams himself. Williams acted as his own representation because his previous agent, Leigh Steinberg, is currently not certified as an agent by the NFL Players Association. Steinberg let his certification lapse in 2007 for business reasons, although he said he is in the process of becoming certified again. As for the one-year extension Williams agreed to last Saturday with the Dolphins, all Steinberg would say is, "I did not negotiate that contract." He had no further comment on the matter because he hadn't talked to Williams, who has yet to play out the terms of a contract he signed as a rookie in 1999, or see the deal. A league source with direct knowledge of the contract said Williams received a roster bonus this year. For every game he is one the 53-man roster, Williams receives $93,750 for a maximum roster bonus of $1.5 million. He gets paid the bonus throughout the season as he earns it. The bonus is not guaranteed and he does receive it if he gets hurt or is released by the team. In addition, Williams will get a $3.4 million base salary in 2009 and a $100,000 workout bonus for that offseason as part of the deal. There are no additional incentives in the deal for 2009. Williams received no guaranteed money as part of the contract. As one NFL source described it: "It's not a good deal, but what can you do? He agreed to it." Both Williams and the Dolphins declined to discuss the specifics of the contract. Williams declined an email request to talk about the deal and team spokesman Harvey Greene said the Dolphins "don't talk about contract negotiations." Last week, Williams said he was happy because he believed the contract provided him with stability. "It's nice. I'm at a point in my career where I'm looking for some kind of stability," Williams said in a group interview session. "At least I got another year here and keep my kids in the same place. I'm taking classes now, so it will help with the transition for life after football. I'm happy to be here for another year." Two of Williams' four children live with him in South Florida. The other two children live in other parts of the country. For at least one of the children who doesn't live with him, Williams is required to pay more than $50,000 a year in child support and provide other financial benefits. That amount is regardless of whether Williams plays football. While Williams' value will forever be limited by his history of suspensions because of drug use and because he retired before the 2004 season, getting $3 or $4 million in guarantees as part of a new contract next year may not have been that difficult, according to the source. Exceeding the total of $5 million in additional money Williams got in the contract for this year and 2009 seemed like a reasonable bet. "There are a lot of ifs with Ricky, but with the money that's out there for free agents right now, he could have easily gotten that much," the source said. "There probably would have been some strings attached, but I think he could have done better than this." The 31-year-old Williams was the No. 5 overall pick in the 1999 draft by New Orleans after a controversial trade by the Saints in which they gave up all their draft picks and future picks for the rights to get Williams. At the time, Williams was represented by rapper Master P, who Williams hired after firing first agent Andrew Brandt. Brandt, a lawyer who had represented Williams as a baseball player, later became the salary cap guru and contract negotiator for the Packers. Brandt was with the Packers until early this year. Under Master P, Williams hired Leland Hardy as his football contract negotiator. Hardy then constructed a rookie deal for Williams that has been used in law schools and business schools as a model for bad contracts. Williams received a signing bonus worth $8.8 million as part of the deal and could have earned between $11 and $68 million over seven years as part of the contract. Unfortunately, the bulk of the incentives were based on Williams surpassing the first four years in performance by former Denver running back Terrell Davis, whose first four seasons are the most productive by any running back in NFL history. Williams eventually fired Master P and Hardy and hired Steinberg after his first season. Neither the rapper nor Hardy are agents any longer. In 2002, Williams was dealt to the Dolphins for what eventually became two first-round picks. Before the season, Williams and the Dolphins agreed to restructure the deal so that Williams could earn incentives and increase his base pay in following years. However, the contract featured language that is no longer allowed in the NFL that required that Williams pay back any incentives he earned and any rollover salary he earned under the incentives, in addition to any prorated signing bonus he had remaining from his rookie season. Williams earned more than $3 million in incentives in 2002 as he rushed for an NFL-leading 1,853 yards. An amount equal to the more than $3 million was added to his 2003 salary as well. However, when Williams failed multiple drug tests before the 2004 season and retired from the league, the Dolphins went after the money in federal court and through the NFL. The team received a court judgment for $8.6 million and an arbitrator upheld the team's right to get the money under the contract he signed. That decision eventually led the NFL and NFLPA to negotiate what is known to this day as the Ricky Williams Rule, under which money that is earned from incentives can't be taken away from a player after the fact. Williams' deal became even more complicated as he retired and/or was suspended by the league for all or parts of the 2004, 2005, 2006 and 2007 seasons. This year, Williams' 10th since being drafted, was to be the final year of his contract. Or as Steinberg put it last Friday before the extension was done by Williams: "You remember the movie, 'The Endless Summer?' This is The Endless Contract. But finally it's all coming to an end. It's amazing. Most players have free agency after four years. Ricky took 10. Ricky doesn't do things in conventional ways." Once again, that appears to be the case.

"U.S. and China Seek Arms Deal for Cyberspace"

WASHINGTON — The United States and China are negotiating what could become the first arms control accord for cyberspace, embracing a commitment by each country that it will not be the first to use cyberweapons to cripple the other's critical infrastructure during peacetime, according to officials involved in the talks. While such an agreement could address attacks on power stations, banking systems, cellphone networks and hospitals, it would not, at least in its first version, protect against most of the attacks that China has been accused of conducting in the United States, including the widespread poaching of intellectual property and the theft of millions of government employees' personal data. The negotiations have been conducted with urgency in recent weeks, with a goal to announce an agreement when President Xi Jinping of China arrives in Washington for a state visit on Thursday. President Obama hinted at the negotiations on Wednesday, when he told the Business Roundtable that the rising number of cyberattacks would "probably be one of the biggest topics" of the summit meeting, and that his goal was to see "if we and the Chinese are able to coalesce around a process for negotiations" that would ultimately "bring a lot of other countries along." But a senior administration official involved in the discussions cautioned that an initial statement between Mr. Obama and Mr. Xi may not contain "a specific, detailed mention" of a prohibition on attacking critical infrastructure. Rather, it would be a more "generic embrace" of a code of conduct adopted recently by a working group at the United Nations. One of the key principles of the United Nations document on principles for cyberspace is that no state should allow activity "that intentionally damages critical infrastructure or otherwise impairs the use and operation of critical infrastructure to provide services to the public." The goal of the American negotiators is to have Chinese leaders embrace the principles of the United Nations code of conduct in a bilateral agreement with Washington. But it seems unlikely that any deal coming out of the talks would directly address the most urgent problems with cyberattacks of Chinese origin, according to officials who spoke on the condition of anonymity to describe continuing negotiations. Most of those attacks have focused on espionage and theft of intellectual property. The rules under discussion would have done nothing to stop the theft of 22 million personal security files from the Office of Personnel Management, which the director of national intelligence, James R. Clapper Jr., recently told Congress did not constitute an "attack" because it was intelligence collection — something the United States does, too. The agreement being negotiated would also not appear to cover the use of tools to steal intellectual property, as the Chinese military does often to bolster state-owned industries, according to an indictment of five officers of the People's Liberation Army last year. And it is not clear that the rules would prohibit the kind of attack carried out last year against Sony Pictures Entertainment, for which the United States blamed North Korea. That attack melted down about 70 percent of Sony's computer systems. Sony is not, by most definitions, part of the nation's "critical infrastructure," although the Department of Homeland Security does include "movie studios" on its list of critical "commercial facilities," along with stadiums, museums and convention centers. Still, any agreement to limit cyberattacks in peacetime would be a start. "It would be the first time that cyber is treated as a military capability that needs to be governed as nuclear, chemical and biological weapons are," said Vikram Singh, a former Pentagon and State Department official who is now vice president for international security at the Center for American Progress. Within the Obama administration, the effort to design "a set of norms of behavior" to limit cyberattacks has been compared to President John F. Kennedy's first major nuclear treaty with the Soviet Union in 1963, which banned atmospheric nuclear tests. That accord did not stop the development of nuclear weapons or even halt underground tests, which continued for decades. But it was a first effort to prevent an environmental disaster, just as this would be a first effort by the world's two biggest economic powers to prevent the most catastrophic use of cyberweapons. Joseph S. Nye, a Harvard professor known for his studies of American power, said the concept of a "no first use" doctrine for cyberattacks had been "gestating for some time" in a variety of international forums. "It could create some self-restraint," Mr. Nye said, but he added that the problem was, "how do you verify it, and what is its value if it can't be verified?" That problem goes to the heart of why arms control agreements in the cyberspace arena are so much more complicated than better-known agreements covering nuclear weapons. In the Cold War and still today, nuclear arms remain in the hands of states, meaning they can usually be counted and their movements observed. Cyberweapons, too, are often developed by countries — the United States, Russia, China and Iran are among the most sophisticated — but they can also be found in the hands of criminal groups and teenagers, neither of which negotiate treaties. Moreover, it was usually clear where a conventional attack had originated; the trajectory of a missile could be tracked by radar or satellite. Mr. Obama himself noted last week the difficulty of tracing a cyberattack, and thus of deterring it — or retaliating with confidence. Earlier efforts to get Mr. Xi and other senior Chinese leaders to address cyberattacks have largely failed. Mr. Obama spent a considerable amount of time on the issue during a summit meeting with Mr. Xi at Sunnylands, a California estate, in 2013. But even after that session, the Chinese denied that their military was involved in attacks, and portrayed themselves as victims of attacks from the United States. It was not an entirely spurious claim: Classified documents released by Edward J. Snowden showed a complex effort by the National Security Agency to get into the systems of a Chinese telecommunications giant, Huawei, though the United States maintained that the effort was for national security surveillance, not for the theft of intellectual property. The recent Chinese movement on cybersecurity can be traced to several events, officials say. The Office of Personnel Management breach, which went undetected for roughly a year, was traced to Chinese sources, and one official said evidence had been presented to Chinese officials. In August, Susan E. Rice, Mr. Obama's national security adviser, took a trip to Beijing to meet with Mr. Xi and other officials, and used it to increase pressure on China, suggesting that newly devised economic sanctions could be imposed. Mr. Obama referred to that possibility in two recent speeches, suggesting that he would hold off only if there was progress with Mr. Xi. Last week, a high-level Communist Party envoy, Meng Jianzhu, who is responsible for state security, came to Washington and met with Ms. Rice, several American intelligence officials and the director of the F.B.I., James B. Comey. That session focused on coming up with some kind of agreement, however vaguely worded, that Mr. Obama and Mr. Xi could announce on Friday. For the United States, agreements limiting cyberweapons are also problematic. The country is spending billions of dollars on new generations of weapons, and in at least one famous case, the cyberattacks on Iran's nuclear enrichment site at Natanz, it has used them. American cyberwarriors would be concerned about any rules that limited their ability in peacetime to place "beacons" or "implants" in foreign computer networks; these are pieces of code that monitor how foreign computer systems work, and they can be vital in determining how to launch a covert or wartime attack. The Chinese have littered American networks with similar technology, often to the consternation of the Pentagon and intelligence agencies. "One of the things to look for are any rules that bar 'preparing the battlefield,' " said Robert K. Knake, a senior fellow at the Council on Foreign Relations who worked in the White House cybersecurity office earlier in the Obama administration. Mr. Obama, who has said little about the United States' development of cyberweapons during his presidency, has begun to talk about it in recent days. "If we wanted to go on offense, a whole bunch of countries would have some significant problems," he told the Business Roundtable on Wednesday.

"The Contract Is Signed. And Now the Negotiation Begins."

We are trained in business that the ultimate goal is to get our client to sign on the dotted line. Once there's a signature on a contract, our job as deal maker is done. All that's left is to deliver on our end of the agreement. Growing up in Texas, where my first job as a teenager was working for a Houston oil man, I learned this a bit differently. Every deal he did with a fellow Texan was sealed with a handshake, and he never had any concern trusting in the my-word-is-my-bond code. I wish all my deals could be done this way — especially now that I have expanded my auction business into China. China is a more complex business climate when it comes to negotiating. Sales presentations will be accompanied by dinners, lunches and drinks, and it takes time to get a deal. Your customer wants to know you before doing business with you. This isn't about knowing your company. It's about understanding your habits, traits and personality. So imagine this: You do all of the work of developing a deep and sincere relationship with your client, and you finally get a contract signed. You are excited about delivering on the terms — but that isn't what happens. Instead, there are more negotiations, and the terms change. The natural inclination is to be annoyed, possibly even verging on physical anger. You'll be tempted to utter some specialized vocabulary that only Americans speak fluently. I liken it to remodeling a home. I've been through the experience a few times, and it's inevitably full of disappointment, deceit, frustration, tears, anger and bitterness. Service providers promise a date for an installation, then tell you they won't be able to meet the deadline they gave you. Sorry, you'll have to live with it. The general contractor throws up his hands; he can't do anything about it. You are going to be the one to adjust. You are going to be the one who comes up with the solution. If you understand remodeling, you probably can imagine contract negotiations in China. I don't care who you are and what your relationship is with your client, the contract will be renegotiated. It is simply the way business is done. I think it happens for a few reasons, one of which is that argument is considered sport. Banter and bickering are fun. Another reason is that conceptually, a win-win deal is considered impossible. The Chinese belief is that there can only be one winner and one loser — and that foreigners aren't as clever or as capable. They're perceived as easy targets. Here's an example from my own business: We negotiated a deal to auction goods from a luxury watch maker. Our terms were that the retailer had to allow us to start the bidding at 80 percent off the retail price. Our business model calls for a low starting point, competitive bids, and then raising the price. This is always our toughest negotiation point in any contract, but it is standard for every single client. When the inventory was to be delivered, the client came by with his watches and said he couldn't abide the starting price we had agreed upon. He had changed his mind and decided that he needed the starting price to be 50 percent off retail. That simply wasn't possible. We had already advertised and marketed his auction, so walking away wasn't an option. We didn't remind him that there was a signed contract — that would have been pointless. After several long meetings, we offered him something not part of the original agreement: We would give him the contact information for those attending the auction. And we would make our buyers aware that we would be sharing their information with the brand. In the end, it was a win-win settlement. Our client was able to grow his database of luxury buyers, and we gained credibility by being associated with a respected brand. The process of reaching that deal was far from serene but our approach was to stay steady and keep repeating our points. In the end, we had an exceptionally good auction. The client remains a customer and has become one of our best advocates. The lesson I have learned is that while renegotiation can't be avoided, it can be managed. There is no point in getting angry when someone asks for the terms to be changed. Take a deep breath and understand that this is just part of the process. Learn to leave yourself some room in the numbers or keep some add-in services in play — you will need them. You can also set the rules for renegotiating by establishing, for example, that you can only take this contract back to your board two more times. Clients in China understand that higher powers will direct your negotiations, and they respect authority. Learn the word impossible. You will hear it many times, and you will need to use it when it isn't possible to negotiate further. But never walk away in anger. If you don't exit gracefully, you will cause your client to lose face. Leave the negotiation on a high note, or if you need to step away and think calmly about ways to sweeten the deal, you can stop the negotiation by saying you are going to review the agreement and see what can be done. Having a Chinese colleague involved in the discussions will help you understand the subtleties and help keep you relaxed. Just like the house remodeling, the contract will get done — and you will forget all the delays, budget overruns and hassles when you get to enjoy the results.

"Hitched to an Aging Star: Anatomy of a Deal, and Doubts" March 2013

Yankees pitcher Mariano Rivera was convinced that Alex Rodriguez had made a colossal blunder. Rodriguez, the Yankees' standout third baseman, had created a public uproar and infuriated team officials by opting out of his contract, the richest in the history of baseball at the time, seemingly to pursue options with other teams. "I told him he had to take responsibility and make it right," Rivera said last week at spring training, recalling how he admonished his teammate in the fall of 2007 and urged him to reconcile with the Yankees. "He had to call them." Rivera's stern telephone call set in motion a negotiation that led to a contract that stands as the largest ever in American sports: $275 million over 10 years. It involved the rapper Jay-Z urging his friend Rodriguez to stay in New York, Goldman Sachs executives stepping in as intermediaries to smooth the negotiations and Rodriguez flying to Tampa, Fla., to ask the Steinbrenners for forgiveness, according to interviews with nearly a dozen people with direct knowledge of Rodriguez's negotiations. Within two years, he helped to deliver the team's 27th World Series title. But now, five years into the contract, that financial commitment hangs ominously over opening day, threatening to impose itself on virtually every decision the Yankees make and severely hampering management's ability to cope with the shortcomings of an aging roster. As the Yankees prepare to open the 2013 season Monday — without the injured Rodriguez — the team still owes him $114 million through the end of 2017, when he will be 42. "At the time, there was an expectation that A-Rod would be breaking all the home run records by the end of the contract, and that is exciting for the fans," said Andrew Zimbalist, an economist at Smith College and an expert in sports business. "But now it's eating up an enormous amount of payroll, and it has clearly become an albatross for the Yankees." Long before he joined the Yankees, Rodriguez was represented by Scott Boras, an agent whose clients include many of the game's biggest stars and who has a reputation for extracting huge sums of money from teams. Boras had worked his magic for Rodriguez when he joined the Texas Rangers after the 2000 season, securing a precedent-setting 10-year, $252 million deal. That landmark contract contained a key provision. Known as an opt-out clause, it essentially set up Rodriguez for two big paydays in the prime of his career, whereas most players get one at most. Rodriguez had the choice to walk away from his contract after seven years and take another shot at the open market by making himself available to other teams. The option followed Rodriguez to the Yankees when they traded for him before the 2004 season. He took advantage of the clause in 2007 after winning his second Most Valuable Player award in three years, and his third over all. He was 32. After the Yankees' season ended, Rodriguez met with Boras and his associates at Boras's offices in Newport Beach, Calif. For three hours, the Boras group made an elaborate presentation to Rodriguez, replete with videos, charts and testimonials detailing their strategy to promote Rodriguez in free agency. They projected how much money certain teams might offer, and how Boras would market him to other teams. At the end of the presentation, Rodriguez complimented them for their hard work but said he wanted to return to the Yankees. The air went out of the room. Boras and his team believed they could land a huge contract — possibly as much as $300 million — on the open market. Several days later, on Oct. 28, the Yankees' archrivals, the Boston Red Sox, were on their way to winning the World Series in a sweep for the second time in four seasons. It was Game 4, on a Sunday night, and Major League Baseball had the country's attention with a crowning moment for one of its most beloved teams. Then chaos erupted. During the game, news broke that Rodriguez was opting out of his contract with the Yankees, stealing attention from the Red Sox' victory and turning him into an object of scorn by those who thought he was being selfish and greedy. Bud Selig, the Major League Baseball commissioner, was clearly incensed by the distraction at the climax of the sport's showcase. Hank Steinbrenner, a Yankees co-chairman, quickly denounced Rodriguez. During the Red Sox' Champagne celebration in the clubhouse after the game, Steinbrenner called a reporter for The New York Times and said that he, his brother, Hal, and their ailing father, George, agreed that if Rodriguez did not want to be a Yankee and be compensated as he had been, "then we don't want him." Yankees General Manager Brian Cashman had been reading a bedtime story to his son, Teddy, during Game 4 and had fallen asleep. He awoke to the buzz of his cellphone. Reporters at the World Series were calling and e-mailing for his reaction to the news. Then he saw an e-mail from Boras notifying the Yankees that his client had opted out. As far back as spring training, Cashman had repeatedly said that if Rodriguez opted out, the Yankees would not negotiate to lure him back. To this day, the parties dispute whose idea it was to exercise the opt-out clause. Boras maintains that he would never take such a step without his client's direction. But people close to Rodriguez insist he never approved it and made that clear in the meeting with Boras's staff in Newport Beach. Either way, the action created two deep rifts, one between Rodriguez and the Yankees, and another between Rodriguez and Boras. Reconciliation Rodriguez had been drifting from Boras by then. The disagreement over the opt-out led Rodriguez to sever the relationship formally, with papers filed with the players' union — but not before Boras was brought in to help supervise one last document. Perhaps the only people happy with news of the opt-out were the Rangers, who had agreed to pay a subsidy of $21.3 million to the Yankees at the time of the 2004 trade. Once Rodriguez exercised the option, the original contract evaporated, and the Rangers were off the hook. Texas obviously had no interest in bringing Rodriguez back, but other teams were intrigued. In early November, it looked as if Rodriguez was leaving New York. That was when Rivera intervened. Rodriguez placed his conciliatory call to Hank Steinbrenner. He said he had never wanted to opt out and again blamed Boras. Rodriguez then enlisted the help of John Mallory, a Goldman Sachs wealth management adviser he knew from Miami. Mallory put Rodriguez in touch with his fellow Goldman Sachs financial adviser Gerald Cardinale, who had done work for the Yankees, and the two financial experts began serving as intermediaries between Rodriguez and the Yankees. Cardinale was the Yankees' banker. He had worked on lucrative business deals with the team. Mallory and Cardinale got on a Goldman Sachs phone line and called Randy Levine, the Yankees' team president. Mallory told Levine what Rodriguez had said to Hank Steinbrenner. He said Rodriguez was sorry, was ready to apologize to the Steinbrenners in person and wanted to return to the Yankees. Despite their public outrage, the Yankees had reasons to consider a reunion. Rodriguez was coming off another sensational year, and he had helped fill Yankee Stadium to capacity since his arrival in 2004. The Yankees set an attendance record that year with 3,775,292 fans, only to be broken in each of the next four years. From 2005 to 2008, Rodriguez never played before fewer than 4 million fans at the old Yankee Stadium, and ratings on the team-owned YES Network soared. There was also every expectation that Rodriguez, who had 518 career home runs at the time, would eventually pass Willie Mays, Babe Ruth, Hank Aaron and Barry Bonds to bring the title of home run king back to the Bronx. The ratings and marketing potential for that chase were considered extraordinary. Negotiations soon began over the phone. Levine was the point man for the Yankees, with Mallory and Cardinale passing along initial proposals from Rodriguez, which would have guaranteed him well over $300 million. Mallory and Cardinale made about 10 calls to Levine over the next few days, transmitting the proposals and counterproposals back and forth. Rodriguez also enlisted the help of the investor Warren E. Buffett, a friend and adviser who helped Rodriguez devise ways to resolve a stalemate over a $50 million gap. Ultimately, the terms of the deal would include $265 million in guaranteed salary, a $10 million signing bonus and an additional $30 million in marketing bonuses tied to landmark home runs. For each of the five milestones — tying Mays, Ruth, Aaron, Bonds and breaking the record — Rodriguez would receive $6 million. The Yankees looked at the bonuses as a kind of licensing fee they would pay to Rodriguez to secure all the rights to market the home run chase, which would presumably become a commercial boon. On Nov. 8, as Levine and Hal Steinbrenner drove to Naples, Fla., from Tampa for a meeting of baseball owners, they received a call from Cardinale. Rodriguez had agreed to the basics of the deal. At that point, the Yankees had to get Boras involved, and told Rodriguez that. Boras was still Rodriguez's designated representative and the only one mandated to supervise Rodriguez's interests. There was also the matter of placating the Steinbrenners. For them to sign off on the deal, Rodriguez would have to go to the owners in Tampa on bended knee. On Nov. 14, Rodriguez and his wife, Cynthia, flew in from Miami. They sat in Hal Steinbrenner's living room over coffee and iced tea with Hal and Hank Steinbrenner. Levine was there, too, as was Cashman. Rodriguez professed his regret, again blaming Boras for the entire ordeal, and expressed his wish to remain a Yankee. Within hours, the final details were worked out, and the richest deal in baseball history was all but complete. Concerns Creep In In each of the next three seasons, Rodriguez had at least 30 homers and 100 runs batted in, and although he missed the first month of the 2009 season while recovering from surgery on his right hip, he almost single-handedly led the team to the title that fall. He hit 6 homers and drove in 18 runs in 15 games that postseason, and in the euphoric aftermath of that victory, few fretted over his contract. "It's a bit early to weigh in on a contract that hasn't come to its completion," Hank Steinbrenner said in an e-mail last week, "but I know we won a World Series in 2009 with Alex wearing pinstripes and playing a big part in that success." The first inkling of trouble came shortly before the 2009 season, when Rodriguez was forced to admit publicly that he had used performance-enhancing drugs while with the Rangers. Suddenly, the potential marketing bonanza for any historic home runs was diminished because he was no longer considered unblemished. Then, in 2011, injuries resurfaced, as did doubt that Rodriguez would reach any of the milestones. He played in only 99 games in 2011, missing time to knee surgery and a sprained left thumb, and he hit just 16 home runs. Last season, he hit 18 home runs with 57 R.B.I., batted .272 and missed six weeks after breaking his hand. He returned a month before the playoffs but played so poorly that Manager Joe Girardi pinch-hit for him, then benched him — a public slight virtually unheard-of for one of the game's elite stars. For his career he has 647 home runs, 115 short of Bonds. In January, matters grew worse. Rodriguez's name surfaced in connection with an anti-aging clinic in South Florida that was suspected of supplying Rodriguez and other players with performance-enhancing drugs. Rodriguez, through a publicist, denied the allegation. But the Yankees and Major League Baseball were irritated. The Yankees also saw the possibility of an escape hatch from their financial commitment to an injured player in apparent decline. They considered the possibility of voiding Rodriguez's contract over the supposed misdeeds. But baseball's substance-abuse policy mandates the punishment through suspensions; financial penalties are prohibited. Rodriguez had surgery on his other hip in January, and he has not spent one day at the Yankees' camp during spring training, instead recovering in New York. Terry Fahn, a spokesman for Rodriguez, said in an e-mail only that Rodriguez was diligently focused on his rehabilitation. The Yankees, who have reached the postseason in 17 of the last 18 years, are in a financial bind. The team wants to trim its payroll — which is about $220 million for 2013 — to below $189 million for the 2014 season in order to qualify for millions of dollars in rebates and luxury-tax savings while still fielding a championship-caliber team. The average annual value of the remaining years on Rodriguez's contract is $22.8 million. One possibility is that the injury is so bad that Rodriguez is medically unable to play. At that point, an insurance policy would pay for a substantial part of the contract. The Yankees' insurance policy on the contract includes a four-month deductible, and after that, they are reimbursed for 33 percent of the salary in the first year. If Rodriguez is considered permanently disabled, the insurance will cover 75 percent of the remaining money after the four-month period. Or Rodriguez might stumble along until both sides agree on a buyout, a possibility that few would have foreseen back in the fall of 2007. "We saw him at the time as the one that's going to be around a long time and he's going do great things," said Hal Steinbrenner, now the Yankees' managing general partner. "We're halfway through the contract. Alex is capable, if he's healthy after the surgery. If the hips are fine, both of them, he's capable of living up to everybody's expectations. Will he? I don't know. It's up to him. There's plenty of time to do it." Five more years, to be precise, beginning Monday.

ACCEPTANCE

a manifestation of agreement to the terms of the offer in the manner required by the offer.

"Broncos release Elvis Dumervil"

Denver Broncos defensive end Elvis Dumervil agreed to a reduced salary, but was released by the team after the paperwork for the new contract was not filed with the league office in time Friday, according to sources. Dumervil's 2013 salary of $12 million was set to be guaranteed at 4 p.m. ET, but he agreed to take a pay cut to $8 million. According to a source, both parties reached agreement at 3:25 p.m. ET on the restructured contract. But the team did not get a fax from Dumervil's agent until 4:06 p.m. ET, so it had to release him, according to the source. Broncos team president John Elway issued a statement Friday night, explaining the situation from the team's point of view. "Due to the procedural elements that were involved in executing the new proposal, we imposed a 1 p.m. MDT deadline for a decision, one hour before the NFL's waiver wire at 2 p.m. MDT. Our deadline was clearly communicated to Elvis' representative," Elway said in the statement. "At 1 p.m. MDT, we were informed by Elvis' representative that he declined our offer. We then prepared Elvis' termination notice to officially file his release with the NFL office. "At approximately 1:25 p.m. MDT, however, we were informed that Elvis changed his mind and accepted the same contract we proposed nearly two-and-a-half hours earlier. Although we expressed our concern regarding the time constraints, we were assured that the signed documents would be submitted to us before the league's waiver deadline. "We did not receive the documents from Elvis by the league's deadline and were forced to release him shortly before 2 p.m. MDT. "Due to this situation, there are now salary-cap implications associated with this transaction that we must consider with regard to potentially re-signing Elvis. At this moment, we are discussing all of our free-agency options to determine what's best for the Denver Broncos." Marty Magid, Dumervil's agent, said he received the renegotiated document from the Broncos at 3:45 p.m. ET. He said he had Dumervil wait by a fax machine to receive the copy and then send it back. Magid said he thought he got it back in proper time. "I got it and just hit the button," he said. Magid said he already has received calls from other teams interested in signing Dumervil. Previously, Elway called Dumervil's contract "out of whack." "It's not all about dollars. But when it's way out of whack? Then it's so out of whack that you've got to say: That [salary] can't be it," Elway said Thursday, according to the Denver Post. "Especially when you look at the market and what's out there now. Hopefully, he realizes that." Dumervil signed a six-year, $61.5 million contract in 2010 when Josh McDaniels was coaching the team and before Elway joined the Denver front office. Dumervil had 11 sacks last season, second on the team behind Von Miller. Dumervil led the league with 17 sacks in 2009. Though the parties had agreed on a deal, the odds of Dumervil returning to Denver are hampered because cutting him could leave them with a salary cap hit of up to nearly $5 million. The Broncos need more cap space while trying to shore up their interior defensive line, cornerback and running back positions. Peyton Manning will earn $20 million in 2013, and if the Broncos had Dumervil play at his previous salary, those two would have accounted for more than one-quarter of their cap space. Among the pass-rushers on the market this season include Manning's former teammate with the Colts, Dwight Freeney.

"ACC, Terps prepare to fight in court over Maryland's $52M exit fee"

The University of Maryland might have thought it could get out of the Atlantic Coast Conference as easily as former Terps basketball coach Gary Williams used to toss off his suit jacket during a tough game. But the ACC has refused to be cast off so freely. The league continues to push ahead with its legal fight to collect a disputed $52 million exit fee from Maryland as it departs for the Big Ten. The contest, which goes before the N.C. Court of Appeals on Sept. 26 for a preliminary skirmish, is being watched with great anticipation by major colleges and universities thinking about conference shopping and hopping. A ruling against Maryland could be seen as a major toll on the increasingly common practice of conference hopping, slowing or ending a new trend in which league alignments shift so frequently that even the hardest-core fans have difficulty recounting which teams are in a league. "In the broader picture, I think all the conferences are looking to see if the courts are going to recognize the validity of a conference protecting itself," said Clark Smith Jr., a Greensboro lawyer on the team representing the ACC. "This is all about money. I don't think anyone would dispute that." Maryland, despite its much-ballyhooed departure, remains in the ACC until July 1, 2014. ACC Commissioner John Swofford has said that Maryland will be treated like other schools in the league during its farewell year. But court documents offer a picture of a strained relationship, including Maryland's list of the many ways it sees the Big Ten as a better partner - in athletics, academics and economics. The first issue for the courts to untangle: On whose turf will the feud be heard? Lawsuits have been filed in North Carolina and Maryland. Attorneys for the ACC contend North Carolina, the birthplace of the 60-year-old conference, is the proper place for sorting out what they describe as a "contract dispute." The Maryland Board of Regents has asked for the case to be dismissed in North Carolina with hopes that a home crowd in the Maryland courts will settle the spat. A Maryland judge put the lawsuit there on hold earlier this summer until the North Carolina courts rule on the proper venue. That's what will be argued before a three-judge N.C. Court of Appeals panel on Sept. 26, but it could be weeks or months before a ruling is issued and the more substantive issues fully addressed. Is Big Ten better? The case dates back to November 2012, when cash-strapped Maryland blindsided the ACC with news that it would cast aside 60 years of tradition for promises of a bigger payday from the Big Ten. The school in College Park, Md., was in such financial straits in its athletic department that seven sports teams were cut and a hunt for more lucrative opportunities was underway in the fall. To its suitors, Maryland touted its presence in the TV markets of Baltimore and Washington, D.C., which when combined would be the country's fourth largest. The Big Ten Network, launched in August 2007, can reach an estimated 80 million households through agreements with more than 300 cable, satellite and telco affiliates in all 50 states and Canada, according to a June 2013 report from a university commission. All that exposure could be worth millions a year more to the school. Maryland would be the southernmost school in a conference that includes traditional football powers such as Penn State, Ohio State, Nebraska and Michigan. Rutgers University is scheduled to join in July 2014, along with Maryland. As Maryland shopped around for a new league, the ACC attempted to protect itself from a departure that could wreak havoc on its budget. In September 2012, ACC hiked its departure fee to $52 million - three times the ACC's $17.4 million operating budget and more than double the nearly $20-million exit fee on the books since 2011. Maryland has argued in its court filings that the 2012 increase - opposed by Maryland President Wallace Loh and Florida State - was done outside proper procedures. Maryland argued in its lawsuit in Prince George's County that the ACC violated antitrust laws and its constitutional bylaws when it raised its exit fee. The Maryland courts have tossed out the antitrust claims, but haven't ruled on other issues. Since Loh announced Maryland's plans not to pay the fee, the ACC has been withholding millions of dollars in normal disbursements to the school - more than $10 million. Maryland contends many factors went into its decision to leave the ACC, and in court documents maintains that the Big Ten outstrips the league the Terrapins are leaving behind. "First, the Big Ten Conference is highly competitive in numerous sports and can provide Maryland superior competitive opportunities, visibility and reputational benefits that are superior to those available from the ACC," the Maryland suit against the ACC states. "Second, membership in the Big Ten Conference brings with it academic and research resources that are vastly superior in comparison to the ACC and that will enrich the experience of Maryland's students and faculty and help fulfill the university's core academic mission. "Third, membership in the Big Ten conference will provide Maryland with superior economic benefits and permit it to stabilize initially, and ultimately enhance, the overall competitiveness and breadth of its athletic offerings." Will they settle? The ACC argues in its North Carolina lawsuit that Maryland's departure weakened it financially. A withdrawal, the ACC has argued, can lead to conference instability and might hamper negotiations for lucrative TV deals. The ACC, at the time, had not joined the many conferences that required teams to relinquish their media rights upon departure. In other conferences, departing schools couldn't go negotiate other television deals. This past April, though, ACC Commissioner John Swofford persuaded the conference's members - including new additions Syracuse, Pittsburgh and Louisville - to hand their media rights over to the conference until 2027. No matter the outcome of the lawsuit, it appears that Maryland will leave. Swofford, meanwhile, has helped the ACC regain its footing by adding new members. Legal experts say either side could benefit from avoiding a lengthy legal fight. "It seems like it behooves both sides to settle," said Bradley S. Shear, a sports lawyer based in Bethesda, Md., and sports management professor at George Washington University who has been following the case. "Usually, these lawsuits settle." There were similar lawsuits when West Virginia left the Big East for the Big 12 in 2011. The university filed a suit to forgo its waiting period, and the Big East filed a suit in Rhode Island, where that conference is headquartered. West Virginia ultimately settled that case, agreeing to pay $20 million to the Big East as the Mountaineers headed to the Big 12. Most disputes over exit fees have been settled out of court, attorneys say. The ACC-Maryland suit, Shear said Friday, could slow the rush to look for new leagues. "Obviously with this type of lawsuit," he said, "it will make schools think twice about whether they want to jump conferences."

"Revisiting the greatest sports deal of all time"

This is a tale of fortune, both good and bad. Here's what's known: Thirty-five years ago this June two brothers, Ozzie and Daniel Silna, along with their lawyer, Donald Schupak, negotiated what's been called the greatest sports deal of all time. On an initial investment of $1 million, the Silnas have reaped an estimated $237 million. Here's what's unknown: if doing business with the greatest Ponzi-schemer ever caught has washed away those riches. *** In 1974 Ozzie and Daniel Silna, owners of a successful New Jersey textile company, bought an American Basketball Association team known as the Carolina Cougars and immediately moved the franchise to St. Louis, then the largest U.S. television market without professional basketball. They renamed the team the Spirits of St. Louis, paying homage to Charles Lindbergh's airplane. A man named Bob Costas, in his first year of professional broadcasting, did the team's play-by-play on radio station KMOX. The Spirits, led by the mercurial rookie, Marvin Barnes, made the ABA playoffs in the 1974-1975 season, losing in the second round. The next season, the team added a 6'10" rebounding and point-scoring machine named Moses Malone. But that season would be the ABA's last. In the summer of 1976, the National Basketball Association, tired of competing with the ABA for talent and wary of future litigation, decided to merge with the upstart league, which, at the time, had seven franchises. Executives from both leagues met that June in Hyannis, Mass., to hash out the merger. The NBA agreed to add four of the ABA franchises: the Denver Nuggets, Indiana Pacers, San Antonio Spurs and New York Nets (later to become the New Jersey Nets). One of the franchises, the Virginia Squires, folded before the meeting. Two teams were left out of the merger: the Kentucky Colonels and the Silnas' Spirits. The ABA offered the franchises $3 million each to fold. John Y. Brown, owner of the Colonels, took the deal. (Then the president and majority owner of Kentucky Fried Chicken, Brown would go on to become the governor of Kentucky.) The Silnas turned it down. Instead, they negotiated their own deal. ABA officials, wanting to tidy up the merger, agreed to the following: the Silnas would be paid for any Spirits players drafted by NBA teams, an amount that came to roughly $2.2 million. On top of that, the Silnas would also get a 1/7th share of each of the four former ABA teams' NBA "visual media" rights (which amounted to 57% of one full share). Here's the kicker: they would receive that share of the NBA's television revenue...in perpetuity. ABA teams got no NBA TV money for three years. When the cash started to flow to the former ABA teams in 1979, the Silnas began receiving somewhere close to $200,000 annually. But that was merely a warm up. When the NBA began to explode in popularity in the 1980s and 1990s (thanks to Magic Johnson, Larry Bird and, eventually, Michael Jordan), television rights fees escalated in concert. In 1997 the NBA negotiated a $2.6 billion deal with NBC and Turner. In 2002 the league made a $4.6 billion deal with ABC/ESPN and TNT. By 2007, the Silnas had reaped an estimated $180 million in NBA TV money. That year, the NBA extended its broadcast deals for another eight years for roughly $930 million annually, which means the Silnas have made an estimated $57 million in the last three years. Their total take so far: an estimated $237 million (Schupak has a small stake in all of this). The Silnas stand to make another $95 million or so in the coming five years. (To put this in perspective, the New York Knicks received an estimated $31 million in shared NBA TV revenue this season. The New Jersey Nets, a former ABA team that must pay the Silnas, received $26.25 million. The Silnas received $19 million.) Donnie Walsh, the current president of the New York Knicks and the former longtime executive with the Indiana Pacers (one of the former ABA teams that shares its TV revenues with the Silnas), once described the Silnas' arrangement as "the greatest deal known to man." *** Daniel Silna sits in the sun-soaked office of a media relations firm located in a corporate park in Paramus, New Jersey. The silver-haired 66 year-old is wearing eyeglasses, a black blazer and a crisp white shirt. He says that he has never before spoken to the media about the deal that he, Ozzie (78 years old) and Schupak made with the American Basketball Association thirty five years ago. The Silna brothers are the sons of Latvian immigrants who came to the U.S. via Palestine in the 1930s. Silna's father started a textile business in New Jersey. After graduating from Columbia then Fordham Law School, Dan joined his father's business. In 1969 Dan and Ozzie started their own knitting company. Two years later, they sold it but continued to run operations. Dan says the bug to buy a professional basketball team "came from me." At age five, Dan was the mascot for older brother Ozzie's Jewish Community Center basketball team. "I would dribble toward the basket. I was too small to shoot the ball, so I'd throw it over my head to one of the players who would lay it in," he says. By age 12, Dan had developed a full-blown obsession with basketball. "But when I was fully grown, before I started to shrink, I was 5'10" and a half and weighed 150 pounds soaking wet," he says. He didn't play basketball in high school and was cut from his college team. "I kept saying that if I can't play, the best thing to do is own a team," he says. In early 1974, the Silnas made a $4.85 million offer to Fred Zollner for the NBA's Detroit Pistons, but Zollner rejected the deal (Zollner would later sell the team to William Davidson for $7 million). So they looked to the ABA. After meeting with Mike Storen, the commissioner of the ABA (and ESPN anchor Hannah Storm's father), they bought the Carolina Cougars for $1 million, and moved the team to St. Louis. The brothers saw the purchase as a way to possibly get into the NBA, believing an NBA-ABA merger was inevitable. Despite making the playoffs in their first year, the Spirits were far from a successful franchise, selling only 600 season tickets in an arena with 10,000 seats. Dan says he and Ozzie spent between $2-$3 million on the team and "had zero cash flow." At the beginning of the 1975-1976 season, the Nuggets and the Nets applied for membership in the NBA, which effectively turned the ABA's last season into a lame-duck. Three franchises folded, leaving the ABA with only seven teams. When it became clear that a merger was in the offing, the owners of the remaining ABA teams met. At that meeting, Dan says, Ozzie proposed that any team not taken by the NBA should be compensated with a 1/7th share (because there were seven teams left) of the TV revenue of the teams that did make it in. Dan says the other owners all agreed. "And actually, when four teams went in and left just one out, maybe that should have been a 1/5th share," he says. When the time came for the ABA to compensate the Spirits for folding, the Silnas held firm to what they believed was the original promise. They got their deal. In what turned out to be a prescient move, the Silnas and Schupak locked in the compensation for the deal at 28 teams, just in case the NBA went expansion-crazy. (The Silnas get a 1/7th share of the four teams based on a 28-team league, not the current 30-team one.) The Silnas tried to get back into basketball by buying the Nets in 1979 from Roy Boe. But the deal never happened. The Silnas got out of their knitting business in 1982. Dan ran a photo-finishing shop in New Jersey from 1983 until 2008. Ozzie still runs an embroidery business in California and is active in coastal conservation projects in his home town of Malibu. Schupak runs the investment firm, SGI Cambium. About the NBA TV deal, Dan says: "When we reached the agreement, NBA playoff games were shown on tape delay after the 11 o'clock news. We had no concept that it would grow into what it is today. We had hopes, but..." Then his voice trails off. He admits that he and Ozzie sometimes marvel at their good fortune when they talk on the phone or during the three to four times a year they see each other. Dan says he does not know how much money he and his brother have made on the deal. *** As expected, the four former ABA teams are not pleased to still be sharing their TV revenues with two brothers who have not owned a team for 35 years. The former ABA owners attempted to buy out the Silnas in 1979. They tried again in 1995. The Silnas never considered either offer. Herb Simon is a 76 year-old mall property magnate who, with his late brother, Melvin, bought the Indiana Pacers in 1983 for $11 million. The Pacers contribute an estimated $4.75 million a year to the Silnas, the same as the other three former ABA teams. When asked if he was aware of the Silnas' deal when he bought the Pacers 28 years ago, Simon says: "Maybe. Maybe not. It didn't really matter at the time. It was very insignificant at the time." But it matters to him now. "Something went wrong somewhere," says Simon. "The intent of the deal [with the Silnas] was not to have it in perpetuity. It was to compensate them for the loss of their franchise. It's just an egregious situation now." In March 2009 Simon told the Indianapolis Star that the Pacers had been losing money for years. Does having to share TV revenues with the Silna add to the pain of the moneylosing? "We're not losing money right now, not this second," says Simon. "But we have in the past. I think the question answers itself. This deal has gone way beyond its original intent. It has to be restructured." Simon indicates that he intends to press the matter in court. "There has been some legal action. We intend to follow it up and see what the underlying problem is." Dan Silna has heard the complaints before. "Is it egregious that the value of Simon's franchise has gone up to $300 million or so?" he replies. (Forbes estimates the Pacers are worth $269 million.) "He's a lucky guy for having been there for all of those years. I wish him more luck." Regarding potential lawsuits, Dan says, simply: "I believe our contractual rights are solid." *** On paper, Simon's purchase of the Pacers looks even better than the Silnas' deal. Many other sports franchise buys do, too. Take Robert Kraft's purchase of the New England Patriots as an example. In 1994 Kraft—who is thought of as one of the most astute sports businessmen in the country—bought the Patriots for $174 million. Seventeen years later, the team is worth $1.4 billion. But in every one of those years, Kraft has had to pay for, among other things, player and employee salaries and insurance. He financed a new stadium. He has accumulated debt. The Silnas' money is pure profit. *** But there is a hitch here. As CNBC's Darren Rovell first reported, the Silnas were clients of Bernard L. Madoff Investment Securities. On the Madoff client list, the Silnas come up seven times—as individuals and as owners of investment entities and trusts. There is even an account called "Spirits of St. Louis." The brothers first invested with Madoff in the 1990s, introduced to his fund through their accountant. "We were unaware it was a fraud," says Dan. "Whenever I got my statements from him, I double-checked them and they made sense." The Silnas got something on the order of 10% returns with Madoff, not the 30-40% that others supposedly did. Dan says they did not know Madoff personally, but that he met him once. "I went to his office because I had a question," says Dan. "I asked him what the downside was. He looked me straight in the eye and told me that if everything went south at once the most I could lose was 4%." Dan says he and Ozzie lost all of the money they had invested with Madoff, which included trusts set up for their grandchildren. "But we did not have all of our money with Madoff. I feel terrible for the people who lost everything. Thankfully, we were pretty well-diversified." The Spirits of St. Louis account, he says, was closed well before Madoff was shut down. In fact, according to Irving Picard, the trustee in charge of liquidating the Madoff accounts, the Silnas were "net winners," at least for the period between 2002 and 2008 (which is the six-year statute of limitations period). Picard has filed three lawsuits against the Silnas and is asking for $24 million in "fictitious profits" that the Silnas withdrew from their Madoff accounts. Dan and Ozzie have filed countersuits. "Our position is that he [Picard] is starting in the wrong place, that his definitions are wrong and that he's come to the wrong conclusion," says Dan. It's impossible to know how much the Silnas actually lost with Madoff. Though Dan says they were "well-diversified," he refuses to provide examples of where he and his brother stashed the rest of their cash. In any event—even if the Silnas lost all of their basketball money—they are not headed for the poor house any time soon, not with the estimated $95 million coming in from the NBA deal in the next five years. *** Dan Silna remains a huge fan of the NBA and takes great pleasure in rattling off NBA-related trivia. He can tell you, off the top of his head, the players whom the Boston Celtics traded to the St. Louis Hawks for Bill Russell in 1956. ("Worst basketball blunder of all time. The Hawks got 'Easy' Ed Mcauley and Cliff Hagan for a man who turned out to be one of the best of all time," says Dan.) He can tell you Bob Petitt averaged over 20 points a game during his career. He likes the way the current Dallas Mavericks coach, Rick Carlisle, coaches team defense. He is not sold on the bench depth of the Miami Heat. Dan says he played basketball twice a week until he was 64. "Now I play with my grandson in the yard," he says. "Thank God I can still beat him." Dan sometimes regrets not being more involved in the pro game. Would he give up all the money to have had the Spirits in the NBA? "I'd love to own an NBA team. If we'd have been given the opportunity, we would have gone in. That was the dream." The Spirits deal will have to suffice as the next best thing to owning a NBA team. Assuming Madoff didn't drain the Silnas completely, it might even be better.

"HARVARD PROGRAM ON NEGOTIATION"

1. Get your head in the game. Like top athletes, smart negotiators confront the cognitive and psychological errors that could keep them from performing at their best. In 2000, Matt Harrison was the most promising pitcher in the Major League Baseball (MLB) draf. Te Colorado Rockies chose him as their seventh pick and then sweetened the pot afer Harrington, his parents, and his agent, ommy anzer, rejected the team's first offer. On behal o his client, anzer turned down the Rockies' final offer o $4 million over two years, though it was a typical offer or a seventh-pick player. Afer a disappointing season in the independent leagues, Harrington entered the 2001 MLB draf, where the San Diego Padres made him the 58th overall selection. On the advice o his new agent, Scott Boras, Harrington rejected an offer o $1.25 mil lion over our years and a $300,000 signing bonus. In 2002, ollowing another lackluster season in the independent leagues, Harrington did poorly in the MLB draf and turned down less than $100,000 rom the ampa Bay Devil Rays. In 2003, the Cincinnati Reds drafed Harrington in the 24th round and offered him little more than the opportunity to play; again talks ell through. In 2004, the New York Yankees drafed Harrington in the 36th round but passed on making him an offer.Afer ailing to receive any offer in the 2005 draf, Harrington became a ree agent. In 2006, he received a minor-league contract rom the Chicago Cubs, but he was released beore the 2007 season began. He continues to play or independent-league teams, earning about $1,000 per month, and works other jobs during the off-season.Matt Harrington holds the dubious distinction o being the longest holdout in the history o the MLB draf. His string o botched negotiations ensured that his career ended beore it could even begin. The mistakes Harrington and his negotiating team made are spectacular as a whole, but considered one by one, they are not unique. In their book, Judgment in Managerial Decision Making (Wiley, 7th ed., 2008), proessors Max H. Bazerman o Harvard Business School and Don A. Moore o Carnegie Mellon University present Harrington's thwarted baseball career as a cautionary tale to illustrate the decision-making errors that affect virtually all negotiators. In negotiation, we unwittingly operate under a number o systematic and predictable cognitive biases on a regular basis. Many o these errors in thinking result rom our tendency to put too much trust in our intuition. Here we present three o the most common mistakes that Bazerman and Moore have identified and suggest a number o ways to keep this aulty thinking rom ruining your most important talks. Mistake No. 1: Viewing negotiation as a fixed pie. Negotiators ofen alsely assume that their interests are directly opposed to those o their counterparts. Te prevalence o competition in our society, ranging rom sports to university admissions to corporate promotion systems, can lead us to view many other situations as win-lose. For example, too many negotiators assume that the pie o resources is fixed in size when, in act, opportunities exist to expand the pie by creating value. What's more, researchers have ound that the belie in a fixed pie causes negotiators to devalue any concession their "adversary" makes. Unortunately, Matt Harrington and his agents succumbed to the tendency to view the other side's alleged best offer with too much suspicion. Tey also neglected to explore the possibility o a value-creating trade, such as accepting the salary offered and negotiating perormance-based bonuses i Harrington played as well as he expected. Solution: Share information. Te simplest way to break through the fixed-pie mindset in a negotiation is to disclose inormation to your counterpart. In particular, try to provide inormation that could lead to wise tradeoffs. I a customer complains about your prices, break down your costs or her and ask whether she is willing to make concessions on delivery time or other issues in return or lower prices. Typically, the discoveries you reach jointly will outweigh the risk that the other side will take advantage of the information you disclose. Mistake No. 2: Anchoring on the first offer. Harrington and his family fell victim to another common cognitive bias: they were overly affected by the first number that entered the negotiation. Harrington's first agent, Tommy Tanzer, told MLB teams with high draf choices that Harrington would require at least a $4.95 million first-year signing bonus—an unrealistic amount that scared off seven teams in the draf. Tis high anchor created expectations in the minds o Harrington and his family that could not be supported. Initially, the Harringtons stood by anzer's hard bargaining. Only later did they come to understand that they had hired an inexperienced agent—and file a lawsuit against him or botching the deal. Solution: Reject anchors. Unprepared negotiators are ar more likely to all into traps, such as inappropriate anchors, than their prepared counterparts. When you come to the table unprepared, you put yoursel at a distinct dis-advantage. Set concrete goals or the negotiation in advance so you won't be swayed by others' influence tactics and vivid stories. In addition, keep in mind that your thinking will tend to be more intuitive and less rational when you're pressed to make snap decisions. Don't allow other negotiators to orce you to give an answer right away. Instead, schedule breaks between negotiating sessions that give you time to think and evaluate. Mistake No. 3: Escalating commitment. Afer wising up about anzer, why did the Harringtons make the same mistake year afer year—rejecting decent offers in avor o much worse alternatives? When anzer urged his 18-year-old client to turn down the Rockies' multimillion-dollar deal, he unwittingly set up his client or a string o ailed negotiations. According to Bazerman and Moore, negotiators have a tendency toward irrational escalation of commitment —a strong psychological need to justiy their prior decisions and behaviors, both to themselves and to others. Afer you've invested a great deal o time and energy in a course o action, it's difficult to know when to quit. Many o us would rather remain committed to a losing strategy than admit we're throwing good money afer bad. As or Harrington, by turning down one disappointing draf offer afer another, he committed himsel more deeply to doing better the next year, even as the odds o that happening dropped out o sight. Solution: Don't dwell on the past. Thoughts about the "sunk costs" you've invested can keep you plodding orward long afer you should quit a negotiation or settle or a disappointing deal. Yet economists tell us that past investments should rarely affect our decisions about the uture. At each decision point during your talks, make sure you have a sound basis or escalating your commitment to a deal. 2. Manage team dynamics. When you are trying to pull your team together, you'll need to carefully navigate group negotiations. How do you get the attention of negotiating partners who seem intent on running off to greener fields? Tat's the question Dan Beebe, the commissioner o the Big 12 college athletics conerence, aced as his league threatened to splinter apart. A rush on the field. Beebe's troubles began on June 10, 2010, when the University o Colorado abandoned the Big 12, lured away by the Pacific-10. Larry Scott, the Pac-10's new commissioner, was on a mission to launch a league V network by acquiring member schools in new geographic regions, according to the New York Times. A day later, the University o Nebraska also decamped rom the Big 12, joining yet another league, the Big en. Te Big 12 was down to 10 members— a number that immediately threatened to go down by hal. Lining up behind the University o exas, the Big 12's moneymaking powerhouse, were exas ech University, the University o Oklahoma, and Oklahoma State University, attracted by the Pac-10's promises o sky-high television revenues. Meanwhile, exas A&M University, another Big 12 member, was said to be flirting with the Southeastern Conerence as well as the Pac-10. Te other five members o the Big 12 aced the prospect o scrambling to find new homes in other leagues. Hit hard by the economic crisis, universities have put pressure on their athletic divisions to ramp up revenues. In this climate, the long-predicted prospect o college athletics conerences merging into our 16-team "super-conerences," structured around lucrative V deals rather than traditional rivalries and geography, suddenly seemed imminent. The playbook changes. On June 14, though, the game o musical chairs came to an abrupt end. Te University o exas announced it would stay in the Big 12, as did its our ollowers. Tere were a number o reasons or the schools' change o heart. First, and most notably, Commissioner Beebe promised them between $14 million and $25 million each in V revenue per season (with the highest sum going to exas), about double their 2009 V earnings. exas also gained the right to launch a potentially lucrative Longhorns V network. Beebe had negotiated with the Big 12's V networks, ABC/ESPN and Fox, or promises o generous renegotiation terms in the years ahead. Tese uture V deals were viewed as critical to winning over University o exas President Bill Powers and keeping the conerence intact. Second, the five schools that would have been lef in a tattered Big 12 offered to give exas, exas A&M, and the University o Oklahoma their share o the reported $32 million in departure penalties that Nebraska and Colorado owed or abandoning the conerence. Tird, a number o influential individuals "without a dog in the hunt" — including business executives, athletic directors, and network executives — quietly lobbied exas and the other schools being pursued to stay put, a National Collegiate Athletic Association (NCAA) source told ESPN.com. Tese concerned outsiders reportedly warned the universities that the Pac-10's expansion deal was against their best interests. Te group also was said to have helped Beebe with his V negotiations. Finally, exas made 11th-hour demands that turned out to be a deal breaker or the Pac-10. Given its plan to build its own V network, the Pac-10 reused to let exas keep its local network rights. Nor would the Pac-10 give the school the "extra sweetener" it desired in revenue sharing, a source told the Times. Having gone down to 10 teams, the Big 12 is expected to have to oreit its traditional championship game, in accordance with NCAA rules. But under Beebe's leadership, the league succeeded in keeping storied rivalries intact while also appeasing its members financially—at least or the time being. "Te Near-Collapse of the Big 12: Holding a Winning eam ogether," first published in the Negotiation newsletter (September 2010). 1 Do a side deal or two Commissioner Beebe understood the power of money to influence the mutinous universities. Through side deals with ABC/ESPN and Fox, he secured promises of TV contracts that rivaled the Pac-10's offer. 2 Exploit patterns of deference The University of Texas was the clear leader of the Big 12 schools that were threatening to defect. Aware of this fact, Beebe concentrated his efforts on winning over Texas in the expectation that the others would line up behind its decision. 3 Ask for sacrifice The five universities that risked being abandoned in the Big 12 stepped up financially to help keep the league united. Such sacrifices demonstrate goodwill and team spirit. 4 Enlist new players The shadowy group that worked to try to hold the Big 12 together may have strongly influenced the final outcome. If your counterparts won't listen to you, recruit outsiders they respect to argue your case. How to inspire team loyalty 3. GAIN A COMPETITIVE EDGE To triumph in cutthroat situations, such as negotiations where agents are present, you'll need to tap new sources of strength. Show me the money, that refrain from the 1996 movie, Jerry Maguire, shouted by a ootball player to his agent, continues to echo through U.S. proessional sports negotiations today. A public arena, enormous piles o cash, and even bigger egos combine to make sports negotiations a unique context. Yet anyone who has negotiated through agents, aced a competitive atmosphere, or lacked strong deal alternatives can learn a lot rom team athletics.Why are sports talks so tough? In his chapter "First, Let's Kill All the Agents! " in Negotiating on Behalf of Others (Sage, 1999), Harvard Business School proessor Michael Wheeler analyzes the key eatures that can make sports negotiations so contentious. Here are three o them: 1. The presence of agents. In recent decades, the rise o players' unions, collective bargaining, and growing revenue streams rom advertising and broadcast ees gave players more leverage than ever beore—and created a greater need or experts to negotiate athletes' increasingly lucrative and complex contracts. Agents can add value by matching players with the right teams and insulating them rom subpar offers and hard-bargaining tactics, according to Wheeler. But because sports agents typically have relationships with many different teams and players, and earn a portion o their clients' salaries (typically 4% to 10%), they ace significant conflicts o interest. Sports agents are routinely accused o keeping players in the dark during contract talks and ocusing on player salary to the exclusion o other deal eatures that might please their clients, such as a great location or options or contract extensions.For reasons such as these, a small number o athletes choose to negotiate on their own behal. Former Major League Baseball (MLB) pitcher Curt Schilling successully negotiated an $8 million incentive-laden one-year contract extension with the Boston Red Sox or himsel, only to sit out the entire 2008 season with a shoulder injury. On his blog, Schilling wrote in 2007 that "at some point in your career, an agent becomes baggage." 2. Lack of alternatives. Consider the saga o baseball player Matt Harrington, described in the first article in this report. As we noted, or our years straight, the pitcher entered the MLB draf. Year afer year, negotiating through different agents, Harrington turned down offers rom MLB teams. As Harrington got older, the offers got worse, alling rom a promise o $4 million over two years to little more than the chance to play in the majors. Te story illustrates a prime eature o most proessional sports deals: a lack o strong outside alternatives. In most negotiations, i talks with one counterpart don't go well, we can walk away and deal with someone else. But in the major U.S. team-sports leagues, including MLB, the National Football League, and the National Basketball Association, players enter the system through a draf that requires them to negotiate with one particular team. For most junior players, holding out or a better deal means sitting out the season—not an appealing career option. Only when athletes have served their team or a set number o years are they eligible to become ree agents and negotiate with other teams. 3. No zone of agreement. In negotiations outside the realm o sports, parties typically see value in negotiating with each other only i a zone of possible agreement, or ZOPA, exists. I you've decided to pay no more than $15,000 or a new car, you won't bother visiting your local Porsche dealership. Yet agents and sports teams ofen begin their negotiations miles apart. Instead o dealing in the ZOPA, according to Wheeler, they deal in the "NOPA"—the realm of no possible agreement. In a 1995 study, Wheeler and his colleagues David Lax and James Sebenius tested this theory by observing how actual National Hockey League (NHL) general managers behaved in a simulated NHL salary negotiation. Almost all the pairs, playing the role o player's agent and general manager, started the negotiation with a large gap in their bargaining range. Tat is, those acting as agents demanded much higher salaries or their players than those playing managers were willing to offer. In NOPA negotiations where the only alternative is to walk away (or, or senior players in some sports, to let an arbitrator decide your ate), parties on both sides o the table concentrate on getting the other party to budge, notes Wheeler. Under these conditions, negotiation becomes nothing more than a matter o hoping the other guy blinks first. From competition to collaboration. If you've faced some of the same challenges that plague sports negotiations, these our tips can help you strive for greater collaboration and trust: 1. Manage your agent. In a chapter in Negotiating on Behalf of Others, Brian S. Mandell argues that athletes who negotiate through agents need to take a number o steps to guard against agent incompetence and conflicts o interest. Tis advice applies to all negotiators who allow others to speak or them. First, give your agent clear instructions regarding your long-term goals and your range of interests. Second, limit your agent's authority to make commitments on your behal. Tird, make sure that your agent consults with you throughout the negotiation process. Fourth, try to align your agent's compensation with your interests by structuring a payment scheme that rewards him or creating value at the table. Finally, veriy your agent's statements by reaching out to your negotiating counterpart. Even i you're not sitting at the table, you still have a right to speak with the other side. Here's one more tip: i your agent won't ollow these instructions, find a new agent or consider representing yourself. 2. Insist on expanding the pie. Whether you're negotiating on your own or through an agent, you are likely to periodically encounter negotiators who persist in haggling over a single issue—typically price. How can you convince someone to discuss ways to create more value or both parties? First, reduce some o the external pressures on your negotiation. I you're acing a tight deadline, try to extend it. I you're being closely monitored by an audience, such as members o your organizations or the media, work on making your negotiations more private. At the table, discuss the benefits o viewing each other as collaborators rather than as rivals. 3. Analyze the market. Examining each other's constraints and broader market forces can help negotiators move from a NOPA to a ZOPA. In 2005, the NHL enacted a collective-bargaining agreement that placed an overall salary cap tied to league revenues. As a consequence, players and their agents have had to lower their expectations of what some NHL teams can afford to pay. Similarly, business negotiators need to consider the larger economic forces in which they are working. In the midst of a recession, it might be unrealistic for you to expect customers to accept a significant price increase as part of your contract renegotiations, even if they did last year. 4. Create better alternatives. Occasionally, it may seem as if everything is riding on the outcome of a particular deal. But that kind of pressure can sabotage even the best negotiators. When preparing for a negotiation that seems like a once-in-a-lifetime opportunity, make a list of all the other options you might explore if you don't succeed. By improving your sense of psychological power, you set yourself up to perform at your best.

MUTUAL MISTAKE

3 conditions must exist for the adversely affected party to avoid the contract on the basis of mutual mistake: 1. Basic Assumption: The mistake must concern a basic assumption on which the contract was made. Example: both the buyer and seller believe that the Honus Wagner rookie card is genuine when in fact it's a fake. 2. Material effect: The mistake must have a material effect on the agreed exchange of performance. Example: both buyer and seller believe that the bat was used by Babe Ruth, when it was in fact used by Lou Gehrig, but is worth about the same amount so there is no material effect of that mistake. 3. The party seeking to avoid the contract must not be the one whom the contract has implicitly imposed the risk of the mistake

ACCEPTANCE BY SILENCE

An offer can not generally be accepted by silence, except: For services (not goods), if offeree receives the benefit of the services and had a reasonable chance to reject the services and knew or should have known the offeror expected to be compensated. (Mowing lawn). Prior conduct between the parties. If offeree receives goods and keeps them, the exercise of "dominion" may be deemed an acceptance.

OFFER

An offer is defined as an expression of willingness to enter into a deal that justifies a reasonable person in assuming that his/her agreement will conclude the deal, i.e., an offer creates the power of acceptance.

WHEN THE ACCEPTANCE VARIES FROM THE OFFER

Common law "mirror image" rule: If the offeree's response varies at all from the terms of the offer, including adding new terms, it is a rejection and counter-offer, not an acceptance. UCC (Uniform Commerical Code) rejects mirror image rule due to "battle of the forms" for businesses selling and buying goods.

Intent of legal enforceability

Do the parties intend that the contract be legally enforceable? Intent generally controls whether an offer has been made. There is a presumption of intent to contract in business relationships but no such presumption of intent to contract in personal relationships

"A Sign of Desperation in Facebook's Snapchat Offer"

Facebook's Snapchat bid shows triple the desperation. The social network paid $1 billion for no-revenue Instagram a little over a year ago. Now, it's said to be dangling as much as $3 billion to lure a mobile app that sends self-destructing digital images. Facebook's apparently escalating need to buy off marauders at its moat suggests its defenses may be scalable. Coming just months before its initial public offering, Facebook had obvious reasons to buy Instagram. Consumers were spending more time on mobile devices, instead of desktop computers. This was listed as a "risk factor" in its prospectus for its initial public offering as the social network still hadn't figured out how to make money on mobile advertising. More important, it faced the risk that users might migrate to a rival optimized for smartphone usage. Buying Instagram gave Mark Zuckerberg's dorm room creation 30 million mobile users in a flash. The business has grown fast — it now has well over 150 million. Facebook is just starting to roll out ads on Instagram, but the purchase looks to be working. If Facebook does buy Snapchat, it would be based on the idea that it can replicate its success with Instagram. Snapchat has similarly astounding growth. In September, its users were sending 350 million photos a day, up from 200 million in June. Moreover, Snapchat's young users tend to stick with the service and use it more frequently. Selling ads on a service most famous for its potential to send sexually suggestive photos might be a challenge, but similar questions have been raised about promotions on social networks from the start. And Snapchat isn't entirely a substitute for Facebook, so this isn't a zero-sum game. It may be more about grabbing a larger slice of an expanding pie. Still, there's a disquieting element about a company spending billions for a simple application it could almost certainly have replicated for next to nothing. Facebook's acknowledgment that teenagers are using its service less on a daily basis may signify the social network is losing its edge among the ranks of new technology adapters. That it is also now willing to shell out $3 billion to snuff out a rival in its infancy brings with it a whiff of desperation.

DETRIMENT

In order for there to be consideration, the promisee must suffer a "detriment", which means he/she must do something that he/she doesn't have to do, or refrain from something that he/she has the right to do. As long as the promisee suffers a detriment, regardless of how small or inadequate, it will be valid consideration. For example, if I promise to pay you $25,000 if you don't smoke or drink alcohol until you graduate, you've suffered a detriment and it's a binding contract.

STATUTE OF FRAUDS

Most oral contracts are enforceable. However, 5 types of contracts are unenforceable unless they are in writing and those types of contracts are considered to fall within the Statute of Frauds. These 5 categories are: 1. A contract to answer for another's debt; 2. A contract made upon consideration of marriage; 3. A contract for a sale of an interest in land; 4. A contract that can not be performed within one year from its making; and 5. A contract for the sale of goods under the UCC for at least $500.

IMPRACTICABILITY

Requirement in order for a party to be discharged from his contractual duty is generally extreme impracticability, which comes close to impossibility. Example: if stadium burns down and only other stadium is only available at 3am. Many impracticability cases deal with severe cost increases to a supplier, which will usually only discharge the supplier if the increase was not foreseeable.

"Facebook Enters $16 Billion Deal for WhatsApp"

The frenzy to acquire fast-growing technology start-ups reached new heights on Wednesday as Facebook announced its largest acquisition ever, saying it would pay at least $16 billion for WhatsApp, a text messaging application with 450 million users around the world who pay little or no money for it. The eye-popping price signals the lengths to which Facebook's co-founder and chief executive, Mark Zuckerberg, will go to protect his company's turf as the dominant social network on the web, and is sure to fuel the debate on whether consumer Internet companies are overvalued. Facebook, based in Menlo Park, Calif., will pay $4 billion in cash and $12 billion worth of shares for WhatsApp. But the ultimate cost of the deal could rise to $19 billion, with WhatsApp employees and founders receiving an additional $3 billion in restricted stock units, which would vest over the next four years. By any measure, Facebook is paying a steep price for a service that is widely used internationally but is less known in the United States. WhatsApp does not sell advertising and has very little revenue. It charges users a flat fee of $1 a year to use the service, and the first year is free. The purchase price dwarfs the $1 billion Facebook paid for Instagram, the photo-sharing service. At the time of that deal in 2012, critics assailed Facebook for overpaying, and this megadeal is sure to attract similar scrutiny. And the price is also much higher than the $3 billion Facebook unsuccessfully offered to acquire Snapchat, another messaging service, late last year. But Mr. Zuckerberg is clearly willing to spend big to acquire hot messaging technologies, which typically attract younger people than Facebook does. "Facebook is constantly working to not lose anybody," said Nate Elliott, an analyst with Forrester Research. "Sometimes that is them innovating on their own, sometimes that's them mimicking competitors, and sometimes that's them buying competitors." The acquisition also reflects a new strategy at Facebook: The company intends to acquire or build a family of applications instead of simply buttressing its core social network. Now a 10-year-old social network with 1.2 billion users globally, Facebook has become so ubiquitous in many countries that it risks losing some of the attention of users. In buying WhatsApp, which is growing faster than its rival Twitter and other social services, Facebook gains access to customers who prefer communicating one-on-one or with very small groups rather than sharing information more widely. Facebook also has struggled to gain traction in the message space in recent years, a big motivation for its failed offer for Snapchat. While Facebook Messenger, the company's chat platform, is popular with users, recent attempts to create its own direct messaging service have failed. Facebook is justifying the price of this deal by citing WhatsApp's startling growth, which has been even faster than Facebook's own in its early years. On a conference call with analysts, David Ebersman, Facebook's chief financial officer, compared WhatsApp to companies with the potential to grow to 1 billion users. "The primary thing we focused on was how healthy this network is and the pace at which it was growing," he said. "We looked at other networks that have achieved those kinds of scale" and that helped provide a framework, Mr. Ebersman said. In the announcement on Facebook's website, the company said that WhatsApp's messaging volume is now approaching the entire volume of all text messages sent globally. Based on global estimates, that number could be as high as seven trillion messages sent on WhatsApp a year. In the conference call, Jan Koum, WhatsApp's co-founder and chief executive, played down the idea of putting ads on WhatsApp and said he was satisfied with its current subscription model. "Monetization is not going to be a priority for us," Mr. Koum said. The two companies have held informal talks for two years, but the deal came together quickly. In the spring of 2012, Mr. Zuckerberg first reached out to Mr. Koum. The two met at a coffee shop in Los Altos, Calif., and spoke for an hour, then took a walk for another hour and a half. Later that year, they began a series of dinners, and continued to discuss messaging and communication services during meals and walks in the hills above Silicon Valley. Mr. Zuckerberg asked Mr. Koum to dinner at his home on Feb. 9, where he formally proposed a deal and invited Mr. Koum to join the Facebook board. Mr. Koum thought about it for a few days, and the two men met again on Valentine's Day. Mr. Koum came over to Mr. Zuckerberg's home, crashing the dinner Mr. Zuckerberg was sharing with his wife, Priscilla Chan. They negotiated over a plate of chocolate-covered strawberries intended for Ms. Chan. By the end of the weekend, they had struck a deal. Corporate advisers played some role as well. Michael Grimes, the Morgan Stanley banker who orchestrated Facebook's flawed initial public offering in 2012, was this time on the other side of the table, advising WhatsApp on its sale. A big winner is Sequoia Capital, the venture capital firm with a long track record of success that provided WhatsApp's principal funding. By some metrics, the cash and stock being paid for WhatsApp make it among the richest deals of all time. With 55 employees, WhatsApp is commanding a price equivalent to $344 million an employee, or about $28 a user. And it is the largest acquisition ever of a venture capital-backed start-up, according to Dow Jones VentureSource. Facebook had $7.9 billion in revenue last year, most of it from advertising. Mr. Zuckerberg said that money would help give WhatsApp the breathing room to focus on growth without needing to come up with an immediate plan for making money. In that sense, Mr. Zuckerberg is following the successful strategy he used for Instagram, allowing the service to grow quickly before gradually adding in revenue — in Instagram's case, from advertising. WhatsApp, which is based in a small office in Mountain View, Calif., was founded by Mr. Koum and Brian Acton, two former Yahoo executives, in 2009. Mr. Acton and Mr. Koum have enjoyed portraying WhatsApp as the antithesis of Silicon Valley. Unlike many young start-ups that clamor for attention, the WhatsApp founders often turn down interviews with the press. They have denounced the model of relying on ads for revenue. And in an interview last year, they made clear they were not quickly adding users with the goal of selling their business. "Selling the company is easy," Mr. Koum said last year. "It happens in Silicon Valley all the time. Anybody can build a company and sell the company the next day. That doesn't make you special, it doesn't make you unique, it doesn't make you all that great."

"Maryland alleges ACC violated its own rules over exit fee, tried to lure Big Ten schools away"

The state of Maryland filed a counterclaim against the ACC in a North Carolina court on Monday evening, alleging that the conference broke its own rules when it increased the conference's exit fee to $52 million and that it "ignored and breached the ACC Constitution in its urgency to punish Maryland and deter further withdrawals from the conference." The countersuit also alleges that two ACC schools — prompted by ESPN and motivated by the desire for more lucrative television contracts — attempted to persuade several Big Ten schools to switch conferences. The school is seeking $157 million from the ACC, plus punitive damages to be determined by the court. The counterclaim, filed by the state attorney general's office on behalf of the University of Maryland, its Board of Regents and the entire university system, was filed in response to the ACC's lawsuit against the University of Maryland. In November 2012, the ACC sued Maryland, asking the same North Carolina court to enforce the conference's $52 million exit fee as the school departs for the Big Ten after this academic year. According to Maryland's countersuit, a representative from Wake Forest and a representative from Pittsburgh "each contacted a Big Ten university in an attempt by the ACC to recruit at least two Big Ten schools to leave the Big Ten and join the ACC." Maryland alleges that "these actions by the ACC were designed by the ACC to enable the ACC (and member universities) to extract more lucrative terms from potential broadcast partners, including from ESPN," which provided "counsel and direction." The specific Big Ten schools were not named in Maryland's counterclaim, although it did say that "the ACC did not attempt to recruit for membership in the ACC any university west of the Mississippi," which rules out Nebraska, Minnesota and Iowa. A spokesman for the Maryland Office of the Attorney General declined to provide the names of the targeted Big Ten schools when asked via e-mail, citing privacy reasons but implying they could eventually be revealed during the discovery or trial phase of the legal process. The claim cites a 2011 quote from former Boston College Athletic Director Gene DeFilippo, who told the Boston Globe: "You don't get extra money for basketball. It's 85% football money. TV — ESPN — is the one who told us what to do. This was football; it had nothing to do with basketball." DeFilippo apologized two days later for those comments, saying he "spoke inappropriately and erroneously." Maryland's claim also alleges that the ACC has withheld NCAA money, through the organization's Grants in Aid, Sports Sponsorship and Student Assistance Funds, though "at no time has the ACC ever been entitled to assume ownership or control of Maryland's NCAA funds or to withhold them from Maryland." According to the claim, the ACC had previously acted as a middleman for these funds but was "obligated to and did pass those funds to Maryland." Other allegations — that the $52 million exit fee does not reflect the actual damages suffered by the ACC because of Maryland's departure, that school president Wallace D. Loh has been excluded from ACC Council of Presidents meetings and that his request for added agenda items have been denied — have been repeated in other claims filed by Maryland. The $156,799,026 sought in damages represents "three times the amount of compensatory damages for the ACC's violations of the Maryland Antitrust laws." The ACC officially declined comment, citing the ongoing litigation. Maryland's counterclaim represents the latest punch thrown in a prolonged legal battle between the two sides. Shortly after Maryland announced its intention to leave the conference for the Big Ten, the ACC filed a lawsuit in Greensboro, N.C., seeking roughly $52 million in withdrawal penalties. The conference also began withholding the distribution of conference funds from the school in December 2012. Shortly before Maryland announced its intention to depart for the Big Ten, the ACC's school presidents voted to increase the conference's exit fee from around $20 million to around $52 million, or three times the conference's operating budget. Loh was one of two ACC school presidents to vote against the increase, citing "legal and philosophical" grounds. In its countersuit, Maryland alleges that, according to the ACC Constitution, the increased exit fee should not have gone into effect until July 1, 2013, and thus the conference should not have been allowed to withhold funds from the school starting in December 2012. In January 2013, Maryland attempted to have the ACC's lawsuit dismissed in Prince George's County Circuit Court, saying "a North Carolina court has no jurisdiction over the sovereign state of Maryland and its public universities." The courts in Maryland have stayed their decisions until the matters in North Carolina are resolved. The state also attempted to get the ACC's lawsuit dismissed in North Carolina court, an appeal that was rejected. Stephen M. Chippendale, an attorney at McKenna Long & Aldridge in Washington who specializes in antitrust and unfair-competition issues, said the countersuit is simply the next logical step for Maryland as the case moves forward in North Carolina. "When you're representing a party in this case, it's good to have your own allegations. It gives you leverage. It gives you a punch, if you think of it like a boxing match," Chippendale said. "That case got stayed in Maryland, now they're in North Carolina court, they're facing these allegations from the ACC and they have to defend against them. This is part of their defense to their allegations against them."

Objective theory of contracts

Whether a reasonable person in the position of the other party would have thought there was an intent to make an offer.

LIQUIDATED DAMAGES

A Liquidated Damages Clause is a contract provision specifying the consequences (usually financial) of a breach of contract. For example, in a contract between a school and an athletics conference, there is an "exit fee" clause if the school leaves for another conference, which is generally considered a liquidated damages clause. A court will generally enforce liquidated damages clauses, but only if it is satisfied that the clause is an attempt to estimate what the actual damages will be and not if it believes the provision is a "penalty", i.e., an attempt to penalize a party for breach by awarding a sum far in excess of the damages that will actually be suffered. Generally, the clause must meet these two requirements: 1. The amount fixed must be REASONABLE relative to the anticipated or actual damages for breach, and 2. The harm caused by the breach must be uncertain or difficult to calculate accurately. Courts are split as to whether to enforce a liquidated damages clause if it turns out there are no actual damages at all.

Remedies in Quasi-Contract

A lawsuit may be brought for restitution in quasi-contract when: 1. The contract is illegal or unenforceable due to vagueness, impossibility, impracticability, frustration of purpose; or 2. The plaintiff has materially breached the contract as well as the defendant.

RESTITUTION

A party that has partly performed under an oral contract falling within the Statute of Frauds may recover in "quasi-contract" for the value of the benefits received by the other party. Example: Landlord has oral agreement with Tenant for a 2 year lease. The lease must be in writing under SOF both because it is an interest in land and because it can't be performed within one year. Tenant moves in, and then moves out after 3 months. Landlord can recover the "reasonable value" of the 3 month occupancy (but not the agreed-upon 2 yr rent), even if it is more than the rent they had agreed upon for the 3 months. Defined as the value conferred on defendant by plaintiff's performance Used to prevent "unjust enrichment" of defendant. Measured by the market value defendant would have had to pay to receive plaintiff's part performance and is not limited to contract price. Not available where plaintiff has fully performed and defendant only owes money. May be awarded even if plaintiff would have lost money had contract been fully performed.

MARRIAGE PROVISION

A promise for which the consideration is marriage or a promise of marriage must be in writing and is within the Statue of Frauds. Example, if you marry me I promise to give you my collection of Star Trek action figures. That promise is unenforceable unless in writing.

LAND CONTRACT

A promise to acquire or transfer ANY interest in land must be in writing, including a lease (although most states have statutes making oral leases of less than one year enforceable). A promise to give a mortgage on real estate falls within the Statute of Frauds and must be in writing as well. Exceptions to the rule on land contracts include if the seller actually makes the conveyance of land, she may recover the oral contract price. Also, if one party partly performs (not including paying the purchase price) or takes possession and makes costly improvements, then the contract need not be in writing to be enforceable.

SURETYSHIP

A promise to pay the debt or duty of another ("suretyship") is unenforceable unless in writing. The exception is if the promisor's chief purpose is to further her own interest. For example, if Employee owes Current Employer money for a loan and Prospective Employer wants to hire Employee but Employee can't contractually leave his current job until the loan is paid, Prospective Employer's promise to pay Employee's debt does not have to be in writing since her chief purpose is to further her own interest (i.e., hire Employee).

SIGNED MEMORANDA AND STATUTE OF FRAUDS

A signed memorandum summarizing an oral agreement is usually enough to satisfy the Statute of Frauds even if there is no signed contract if the memo (1) identifies the subject matter of the agreement, (2) indicates that an agreement has been made by the parties, (3) states the essential terms of the agreement, and (4) is signed by the party to be charged.

ORAL RESCISSION AND MODIFICATION

A written contract may generally be canceled ("rescinded") by oral agreement of the parties, even in cases where the original contract was required to be in writing under the Statute of Frauds and where the original contract has a "no oral modifications or rescissions" clause. A written contract may not generally be orally modified if there is a "no oral modifications" clause, unless one or both parties materially changes a position in reliance on the oral modification.

OBLIGATION OF GOOD FAITH AND FAIR DEALING

All courts will include an obligation of good faith and fair dealing in the performance and enforcement of contracts. This obligation means that a party is required to behave in a way that is consistent with the other party's reasonable expectations of how the contract will work. For example, if we have a contract that I will sell you my car and when you come to pick it up, the car is up on blocks and I have removed the tires, a court will find that even if the contract is silent on whether the car will include tires, I have breached my obligation of good faith and fair dealing.

Who may accept an offer?

An offer may only be accepted by the person(s) to whom the offer is directed. The offeree must be aware of the offer (reward situation).

Constructive Conditions

As mentioned in an earlier slide, "substantial performance" (rather than strict performance) with constructive conditions is required to form a duty for the other party to perform. If a party fails to substantially perform but the defect can readily be cured, the other party's duty to perform is suspended until the first party has a reasonable chance to cure (i.e., fix) his defective performance. If the defect can't easily be cured or if the party fails to take advantage of a chance to cure, the other party is completely discharged from the obligation to perform.

DURESS

Duress is defined as any wrongful act or threat which overcomes the free will of a party and can be used as a defense if the defendant can show that he was UNFAIRLY COERCED into entering into or modifying the contract. Duress uses a subjective standard The following may constitute duress: violence or threats of violence Wrongful taking or keeping of property or threats to do so Threats to breach a contract or other wrongful acts (often used in cases of modifying contracts)

Measuring Damages: Expectation, Reliance and Restitution

Expectation: If the contract is valid and enforceable, plaintiff will generally receive her "expectation interest", i.e., what she would have received had the contract been performed, including profit. Reliance: If damages can't be measured accurately or if plaintiff sues under a promissory estoppel theory, plaintiff may receive her "reliance interest", which puts her in the same position she was in prior to the making of the contract (e.g., awarding out-of-pocket costs), but not profit. Restitution: If a non-breaching plaintiff has partially performed, courts may award "restitution interest" which is the value of the benefit (as distinguished from the contract price) that the defendant has received.

IMPLIED WARRANTY OF MERCHANTABILITY

Implied in any contract for the sale of goods if the seller is a merchant with respect to those goods is that they will be fit for the ordinary purposes for which such goods are used. This warranty is implied in every contract for goods sold by a merchant unless specifically disclaimed in the contract.

CAPACITY TO CONTRACT

Minors (generally under 18) and the mentally infirm have a limited power to contract and any contract they enter into is voidable at their option, i.e., they can either enforce the contract or get out of it. If the minor or mentally infirm is a defendant in a breach of contract suit, the plaintiff will not be permitted to receive any profits but will have a limited right of restitution (return of goods or other value if possible).

UNILATERAL MISTAKE

Much more difficult for the mistaken party to avoid the contract based on unilateral mistake than mutual mistake. The mistaken party must make the same three showings as in mutual mistake, plus either 1. The mistake is such that enforcement of the contract would be UNCONSCIONABLE, OR 2. The other party had reason to know of the mistake, or the other party caused the mistake.

DOCTRINE OF MISTAKE

Mutual mistake is when both parties have the same mistaken belief. Unilateral mistake is when only one party has the mistaken belief. Existing fact: Doctrine of mistake only applies to an existing fact, not a mistaken belief of what will happen in the future.

TYPES OF OFFERS THAT MAY NOT BE VALID TO FORM A CONTRACT

Offers in jest Solicitation of bids Advertisements, unless very specific or commit the other party to take a certain actions Auctions, unless express said to be "without reserve"

PUNITIVE DAMAGES

Punitive Damages (damages beyond the actual damages suffered by plaintiff) are rarely allowed in breach of contract cases unless there is also fraud or bad faith by defendant.

Discharge of Contracts

Rescission: As long as neither party has fully performed (an executory contract), the parties can agree to cancel the whole contract. This is called "mutual rescission". If one party has fully performed, a mutual rescission will not be effective because there is no consideration received by the performing party for agreeing to the rescission. A mutual rescission may be an oral agreement, even if the contract itself falls within the Statute of Frauds and was in writing.

"Notre Dame and Under Armour Seek Win-Win With Apparel Deal"

SOUTH BEND, Ind. — Adam Clement, Under Armour's creative director for team sports, traveled to Notre Dame's Gothic-inspired campus last November after his upstart sports clothing company heard that one of the most valuable college programs might soon be in need of new sponsorship. Clement peered closely at the Main Building's famous Golden Dome and noticed subtle wide crosshatches on its surface. On the inside, under the dome, he examined the intricate, curlicue pattern on the mosaic floor. These touches helped inspire the uniforms Notre Dame will wear Saturday in Indianapolis for the so-called Shamrock Series against in-state rival Purdue. Unlike the simple home-and-away uniform designs, which Under Armour did not alter drastically from Adidas's, this ensemble contains a pattern on the sleeves inspired by the mosaic and crosshatching on the iconic golden helmet (the first to bear Notre Dame's interlocking ND logo). When the Shamrock Series uniform was shown to Jack Swarbrick, who attended Notre Dame and is in his seventh year as its athletic director, he insisted he had never noticed that aspect of the dome's architecture before. "Now our players just need to play really well in those cool uniforms," Coach Brian Kelly said in August. But whether Notre Dame plays well means less to Under Armour than the exposure it gains after signing what was billed as the most valuable outfitting deal in college sports history. Under Armour will provide uniforms, footwear and apparel for all 26 of the university's varsity teams for 10 years — and pay handsomely for the privilege. The figure has been reported as $90 million, including cash, stock and merchandise, but Swarbrick says it is higher. (Under Armour and Notre Dame, a private university, declined to be more specific.) It is a splashy move for a tradition-rich university that this season seems to be breaking from its most time-honored customs. The grass field that had been viewed as hallowed ground for 84 years was replaced with artificial turf, and Notre Dame Stadium is set to undergo a $400 million construction project that will add academic and student center space. Last weekend, Notre Dame concluded its traditional series with Michigan, the team it played in its first game. Even the requirements for the Irish Guard, which leads the team onto the field, have been altered. And a recent scandal in which five players are being held out of practice and competition during an investigation into accusations of academic fraud — not to mention last year's expulsion of the star quarterback Everett Golson for similar infractions — did little to dampen the agreement. After all, even a tarnished dome can be worth its weight in gold. "You celebrate the university for taking such a strong stand," said Kevin Plank, Under Armour's founder and chief executive, who added, "Notre Dame doesn't need us when the sun is shining; they need us when it's raining." Under Armour's motto for the Notre Dame deal is Tradition Meets Performance, but that can be turned on its head: Each partner is perceived to have only one of those characteristics. Each partner is looking for what it lacks in the other. It is the basis for a lasting relationship, but it means the stakes are higher than usual. Notre Dame also gives Under Armour immediate entree to a gigantic, passionate fan base — not to mention lots of airtime on NBC, which televises all the Fighting Irish home football games. "I'm not saying we've been playing in single-A ball," said Plank, whose company also outfits Auburn, South Carolina, Utah and others, "but we just signed the Yankees." After playing football at Maryland and discovering a need for moisture-wicking gear, Plank in 1996 founded Under Armour, the teenage arriviste of sports apparel that made a name for itself with undergarments. The company inserted itself into the wacky uniform race in 2003 by creating gear for Maryland that was even flashier than Nike's at Oregon. The Notre Dame-Under Armour partnership is compelling because it is complementary: the ultimate establishment (or stodgy) football program trying to adjust to the times by joining with the ultimate renegade (or showy) apparel company seeking gravitas. They may prop each other up; they may allow each other to fall. Notre Dame reached the national championship game only two seasons ago and has looked impressive this season, starting 2-0 while being led by Golson, who was readmitted and has another year of eligibility. But nobody could confuse the current team — at least not yet — with the perennial powerhouse it once was. Under Armour's annual revenue, a little shy of $3 billion, is roughly equivalent to Nike's annual marketing budget. Although Under Armour reportedly offered the basketball superstar Kevin Durant — a Maryland native and therefore a man after Plank's heart — a 10-year, $300 million deal this summer, Durant re-signed with Nike. Still, analysts at Sterne Agee reported this month that for the first time, Under Armour was the second-largest sportswear brand in the United States, edging Adidas so far in 2014 with revenue of $1.2 billion. The firm expected Under Armour's total revenue to grow 20 percent each year in the next five years. "One of the things we bring to Notre Dame is, as they're starting to recruit athletes and engage their fan base, we're a young, innovative brand," said Matthew C. Mirchin, the company's executive vice president for global marketing. "Then you look at what was attractive to us — it's that authenticity, history, heritage." Preserving that history was a priority for Under Armour, and those around the Irish program seem pleased with the results. "I really like how Under Armour incorporated the tradition of Notre Dame," said Nick Martin, the team's starting center. "Because, you know, tradition's a huge thing here." If it did not know that, Under Armour learned that all-important lesson as soon as the deal began. On Dec. 3, just after the relatively short negotiating window for rivals to Adidas commenced, several Notre Dame officials visited Under Armour's Baltimore headquarters, a converted Procter & Gamble factory near Fort McHenry, inspiration for "The Star-Spangled Banner." On the 10-acre campus on the harbor, which includes a football field and a state-of-the-art gym, employees are known as teammates, meetings as huddles. Although this huddle was reserved for Under Armour's presentation, Swarbrick gave an impromptu half-hour disquisition on the history of Notre Dame football: how the university was boycotted by the Western Conference (the Big Ten's predecessor); how Jesse Harper coached the great Knute Rockne; how, on Nov. 1, 1913, Harper introduced the first successful game plan to incorporate the forward pass against Army. "That story was all about innovation," Swarbrick said. "While we are well-established and our brand is well-established, we don't want to lose touch with that innovative core." A few days later, after Notre Dame met with a rival outfitter in New York, it decided to go with Under Armour. The deal was announced in January. Sam Poser, an industry analyst at Sterne Agee, said, "I think they figured that by getting the heritage of a Notre Dame and with the visibility of Notre Dame every Saturday on NBC, it was a combined win, because they didn't have to worry about buying television commercials." (Under Armour advertises on NBC in conjunction with the Olympics and other events.) Under Armour audited Notre Dame's existing uniforms and apparel, noting logo inconsistencies with the aim of correcting them — a particularly important detail for two brands looking to expand globally. And they went to work, in a windowless "war room" with whiteboards plastered with phrases like "Play Like a Champion Today" and "Onward to Victory" and questions like, "Do We Use the Shamrock?" and "What Is Correct Green?" A clock counted down to July 1, highlighting the tight schedule. For its part, Notre Dame provided two golden helmets "for inspiration," said Clement, the Under Armour creative director. The helmets could also be read as a subtle hint not to tinker too much. "I think the expectation or fear was we would do something loud or crazy," he said. But, Clement added, "they didn't have to tell us not to do certain things." And so the main changes to the team's uniforms involved the type of fabric. In promotional materials, Under Armour declares that its mission is to "make all athletes better." The fabric the company used has a proprietary blend of spandex that provides stretch without too much weight and recovers its shape — something Notre Dame pass rushers might be thankful for in the fourth quarter. Notre Dame hopes Under Armour will help introduce the Fighting Irish to generations that have a harder time recalling the days when Ara Parseghian's teams, and even Lou Holtz's, were the fear and dread of rivals. "I love the way they skewed younger," Swarbrick said of Under Armor. "Especially with a traditional brand, you want to make sure you don't become narrowed to an older audience. I was so struck as I did my own focus group of one, by wandering through some sporting goods stores, at just how much of the youth market they were clearly capturing." But one standard operating procedure for Under Armour was a no-no for Notre Dame. In some initial designs for T-shirts and other gear, Under Armour placed its two overlapping U's, above Notre Dame's ND. "The Notre Dame logo can't be below your logo," was the university's instruction, Mirchin said. Under Armour gladly obliged. After all, the university's mission is not far from the contemporary company's slogan: Protect This House.

"Payout may come for an A.B.A. team that is long gone"

The N.B.A. has long hoped to be released from its financial obligation to Ozzie and Daniel Silna, brothers who owned the Spirits of St. Louis in the defunct American Basketball Association. But it has never been easy. The Spirits were excluded from the 1976 merger of the two leagues. So the Silnas watched unhappily as the New York (now Brooklyn) Nets, the Denver Nuggets, the Indiana Pacers and the San Antonio Spurs were absorbed into the N.B.A. But the Silnas negotiated an astonishing benefit that was critical to the merger: an agreement to be paid one-seventh of the national television revenue that each of the four teams was to receive, as long as the league continued to exist. That amounted to being paid in perpetuity, and so far, the deal has provided the Silnas with about $300 million. Their deal is as much a part of A.B.A. history as red, white and blue basketballs, the 3-point line and the big Afros of Julius Erving and Darnell Hillman. It is a lasting memory of how, through luck or prescience, the Silnas and their lawyer, Donald Schupak, capitalized on the league's growing popularity. The N.B.A. has tried to buy them out, including an effort before the financial crash in 2008. Negotiations have picked up in the last six to nine months. On Tuesday, the Silnas, the league and the four former A.B.A. teams will announce a conditional deal that will end the Silnas' golden annuity. Almost. The Silnas are to receive a $500 million upfront payment, financed through a private placement of notes by JPMorgan Chase and Merrill Lynch, according to three people with direct knowledge of the agreement. The deal would end the enormous perpetual payments and settle a lawsuit filed in federal court by the Silnas that demanded additional compensation from sources of television revenue that did not exist in 1976, including NBA TV, foreign broadcasting of games and League Pass, the service that lets fans watch out-of-market games. Still, the league is not getting rid of the Silnas altogether. They will continue to get some television revenue, some of it from the disputed sources named in their lawsuit, through a new partnership that is to be formed with the Nets, the Pacers, the Nuggets and the Spurs, according to the people with knowledge of the agreement. But at some point, the Silnas can be bought out of their interest in the partnership. The Silnas, of course, did not have to settle. They could have continued to make money from the N.B.A., without ever having to invest in players or build an arena. Clearly, their old agreement would have to be honored as long as the N.B.A. continued to exist. But there is a reluctance, more by Daniel, 69, than Ozzie, 80, to keep fighting the league, said one of the people who discussed the agreement. Although wealthy people often plan their estates, much of the Silnas' riches from the N.B.A. is already in family trusts. Bob Costas, the NBC sportscaster who called Spirits games, said in a telephone interview, "My guess is that for the N.B.A., the upside is that in the foreseeable future, there will come a time when they will not have to look at this and blanch and it will be in the past." League officials declined to comment because the settlement must be approved by the judge, Loretta A. Preska, who has presided over the case in United States District Court in Manhattan. The Silnas' deal resonates, at least in part, because it appears that they snookered the league, or, more accurately, the Nets, the Pacers, the Nuggets and the Spurs, who dealt directly with the brothers. But Michael Goldberg, the A.B.A.'s former general counsel, recalled in a recent interview that the four teams were desperate to get into the N.B.A. and willing to satisfy the Silnas. "Schupak said they'd take TV rights in perpetuity as a kind of Hail Mary to get money down the road," he said. "What was missing was someone saying, 'Thirty years, 50 years, or until something happens, and it's over.' " The Spirits got a sweeter deal than the Kentucky Colonels, who were also not absorbed into the league. John Y. Brown, the Colonels' owner, got $3 million to fold his team. And while the Silnas, who were planning to move the franchise to Utah at the time of the merger, did not bring a roster that included Caldwell Jones and Marvin Barnes into the N.B.A., they got a $2.2 million payment — and all that television money. They never acquired another team and have attended to their investments (some of which went sour during the Bernard L. Madoff Ponzi scheme). But their deal, widely called the greatest in sports history, if not in American business, lives on as a remnant of the marriage of the undercapitalized A.B.A. and the N.B.A. in its mid-1970s doldrums, before Magic Johnson, Larry Bird and Michael Jordan. "The only way to appreciate this," Goldberg said, "is to go back in a time capsule to the bidding wars between the leagues; the N.B.A. tiring of them, and saying, 'Let's take four teams, but not St. Louis and Kentucky, and we'll move on.' "

ILLEGALITY

The general rule is that neither party to an illegal contract may enforce it, particularly for a completely executory contract (where neither party has rendered any performance). Exceptions include where: only one party is justifiably unaware of the facts that make the contract illegal only one party has a wrongful purpose a statute is intended to protect only one party If the illegal contract has been fully or partially executed, courts will enforce it in the above 3 instances as well as if the conduct is illegal but doesn't involve moral turpitude or if one party (the party trying to enforce the contract) is much less guilty than the other.

Promise vs Condition

The important distinction between a promise and a condition is that if the act is a promise that fails to occur, the other party can sue for breach of contract and damages. If the act is a condition that fails to occur, the other party is excused from performing but can't sue for breach of contract or damages.

NOMINAL DAMAGES

When there is a cause of action for breach of contract, but no real harm has been done, a plaintiff may still get a small fixed judgment for nominal damages without regard to the amount of harm he has suffered.

ANTICIPATORY REPUDIATION

"Anticipatory Repudiation" is defined as when a party clearly indicates that he can not or will not perform his contractual duty. Expressing vague doubts about performing are not enough to constitute anticipatory repudiation. In addition to a statement, it can be an action that makes performance impossible. For example, if player signs a contract today to play exclusively for Team A in 2016, and subsequently signs another contract to also play for Team B in 2016, this is anticipatory repudiation by action and Team A can sue player immediately, rather than waiting until 2016. If one party anticipatorily repudiates the contract, the other party can sue for breach as soon as the repudiation occurs, even if it is before the repudiator's time for performance has arrived. Example, celebrity signs a contract with sponsor to shoot a commercial on Sept 1, but says on August 1 that he refuses to do the shoot. Sponsor can sue for breach on August 1. An exception to the above is if the repudiating party owes money and refuses to pay, the innocent party may not sue for the money until the payment is due under the contract.

FORESEEABILITY

"Hadley v. Baxendale" limits the consequential damages recoverable to those: (1) foreseeable by any reasonable person, or (2) remote or unusual, but only if the defendant had actual notice of the possibility of those consequences. Note that "Hadley" rule may be modified by agreement of the parties, i.e., contracts may have clauses permitting unforeseen damages.

IRREVOCABLE OFFERS

1. SIGNED OPTION CONTRACT THAT RECITES THE PAYMENT OF CONSIDERATION TO THE OFFEROR FOR THE OFFER. E.g., payment for option to turn a book into a movie. 2. PART PERFORMANCE OR DETRIMENTAL RELIANCE MAKE AN OFFER TEMPORARILY IRREVOCABLE. E.g., for unilateral contracts, once performance is started the offer is irrevocable until offeree has reasonable time to complete performance...must actually start performance and just preparing to start is not enough.

SUBSTITUTED AGREEMENT

A substituted agreement is different than an accord and satisfaction in that the original agreement is discharged as soon as the substituted agreement is made. Substituted agreement is also distinguishable from accord and satisfaction in that in a substituted agreement, there must be a good faith dispute on the terms of the original agreement. Must be in writing where the original is in writing.

WHEN ACCEPTANCE BECOMES EFFECTIVE

ACCEPTANCE IS EFFECTIVE UPON PROPER DISPATCH BY OFFEREE (MAILBOX RULE), RATHER THAN RECEIPT BY OFFEROR, UNLESS THE OFFER PROVIDES OTHERWISE. IF ACCEPTANCE IS LOST OR DELAYED IN TRANSMISSION IT IS STILL EFFECTIVE IF PROPERLY ADDRESSED AND DISPATCHED. ACCEPTANCE OF AN OPTIONS CONTRACT IS ONLY EFFECTIVE UPON RECEIPT BY OFFEROR, NOT DISPATCH BY OFFEREE.

CONTRACTS INVOLVING MORE THAN 2 PARTIES

ASSIGNMENT AND DELEGATION Assignment is when one party to a contract transfers to a 3rd party his/her rights under the contract. Delegation is when one party to the contract appoints a 3rd party to perform his/her duties under the contract. A party to a contract may both assign and delegate to a 3rd party, but he/she may also do one without the other and the distinction between the two is important.

ADHESION CONTRACTS

Adhesion contracts are contracts with non-bargained clauses that are in fine print, complicated and/or extremely one-sided in favor of the party with all the bargaining power. A party who wants to avoid a contract based on it being a contract of adhesion must prove that the contract or clause is one of adhesion and either violates his reasonable expectations or is unconscionable. Adhesion contracts include "pseudo contracts" such as tickets to sports or entertainment events, trains or planes. Unconscionability is broadly defined as a contract (or clause) so one-sided and unfair that by judicial policy a court should not enforce it. Findings of unconscionability are typically reserved for consumer "contracts" and rarely for dealings between business people, unless there are very few players in an industry and a buyer or seller has no meaningful choice. If a contract or clause is found to be unconscionable, likely remedies are: 1. Refusal to enforce the contract or clause (in the latter case the court will likely enforce the rest of the contract). 2. Reformation of the contract or clause to make it "reasonable".

ACCORD AND SATISFACTION

An "executory accord" is when the parties to an original contract agree that one party promises to render a substitute performance in the future, and the other party agrees to accept that substitute performance as a discharge of the original duty. If the party does not render the substitute performance, the other party may sue at her option for breach of the original agreement or breach of the accord. No discharge of obligations is made until the accord is performed, at which point it is called "accord and satisfaction".

ASSIGNMENT

An assignment is defined as a PRESENT transfer of one's contractual rights. No consideration is required to make it binding since it is a present transfer. A future promise to transfer one's contractual rights is another contract (if supported by consideration), not an assignment. The ASSIGNOR assigns to ASSIGNEE his/her rights under the contract to receive performance from the OBLIGOR. Example: Baseball player owes money to his bank for a loan. Baseball player (ASSIGNOR) may transfer to bank (ASSIGNEE) his right to receive his baseball salary from the team owner (OBLIGOR). At common law, assignments can be oral but many states have statutes requiring a writing for assignments of right to receive payment. Gratuitous assignments (i.e., where assignor gets nothing in return from assignee) are enforceable but unlike assignments for consideration, may be revoked if the assignor: (1) dies, (2) makes a subsequent assignment of the same right to another, or (3) gives either assignee or obligor notice that the assignment is revoked. The assignment becomes irrevocable if: (1) the assignment is in writing and delivered to assignee, (2) assignee relies on the assignment to his detriment, or (3) obligor gives the assignee the payment or performance All contracts may be assigned, unless the assignment materially alters the obligor's duty or rights Courts will generally enforce "no assignment" clauses in contracts, except if (1) the assignor has fully performed, or (2) the right to sue for breach may always be assigned. If the "no assignment" clause states that "the contract may not be assigned" as opposed to "the rights under the contract may not be assigned", it will be interpreted to bar only delegation (of duties), not assignment (of rights). Important rule to remember is that "assignee stands in the shoes of the assignor", i.e., he/she takes the assignment subject to all defenses, setoffs and counterclaims that the obligor could assert against the assignor. Once obligor receives notice of the assignment from assignor, obligor can no longer pay or perform for the assignor and can only do so for the assignee. Ability to do contract modifications depends upon whether obligor has received notice of the assignment. Before obligor receives notice of the assignment, obligor and assignor are free to modify the contract. After obligor receives notice of the assignment, obligor and assignor may only modify the contract if assignor has not yet fully performed the contract. If modification is allowed, assignee gets the benefit of any new rights under the modification. COUNTERCLAIM, SETOFF and RECOUPMENT RECOUPMENT: If an obligor's claim against the assignor is related to the same contract that has been assigned to the assignee, the obligor may use this claim as a "recoupment" to reduce the amount obligor owes to assignee but not to yield a net award to obligor. SETOFF: If the obligor's claim against the assignor is not related to the assigned contract, obligor may assert the claim against assignee only if the claim arose before the obligor received notice of the assignment. Similar to recoupment, setoff may only be used to reduce the amount owed to assignee and may not yield a positive recovery for obligor. COUNTERCLAIM: The obligor may obtain a net positive recovery against the assignee only if the counterclaim relates directly to a transaction directly between the obligor and assignee.

ILLUSORY AND IMPLIED PROMISES

An illusory promise is a promise not supported by consideration. For example: freelance baseball scout offers to Yankees' GM as many Dominican 2nd base prospects as GM wants to sign during the season for $5,000 per player. GM says that's a deal. That is not an enforceable promise because GM has not committed to do anything (i.e., sign any players). Courts often try to avoid making agreements unenforceable for lack of consideration by finding that a promisee has made an implied promise. For example, a free agent soccer player gives an agent the right to represent her exclusively in her attempts to find a new team in exchange for 5% of her salary. Agent agrees to rep her. Player then turns around and signs a different agent to find her a team and agent sues player, who defends on the grounds that the agent didn't really promise to do anything. A court would find that agent had made an implied promise to use reasonable efforts to find player a team and that implied promise constitutes sufficient consideration to form an enforceable contract.

Express Conditions

As mentioned in an earlier slide, strict compliance with an express condition is usually required. However, if a contract is expressly conditioned upon the "satisfaction" of the other party, a court will usually presume an objective measure of satisfaction was intended unless it's a question of taste (e.g. work of art), and then a subjective standard applies.

BILATERAL VS UNILATERAL CONTRACT

Bilateral Contract is one in which both sides make promises, e.g., I promise to pay you $500 on October 1 if you promise to run 5 miles on September 28. Unilateral contract is one in which the offeror makes a promise in exchange for the offeree's act, e.g., I'll pay you $500 if you run 5 miles. Distinction between bilateral and unilateral is important in that: The bilateral contract is formed when the offeree accepts with his/her promise to perform. The unilateral contract is formed only when the offeree accepts by the act of fully performing (once the offeree starts to perform, the offer is temporarily irrevocable). In a unilateral contract, offeree must give offeror notice of performance within a reasonable time after completion, otherwise no contract is formed.

CONTRACTS THAT CAN NOT BE PERFORMED WITHIN ONE YEAR

Contract must be INCAPABLE of being fully performed within one year of its execution (not the time it takes the parties to perform). For example, if parties agree on Sept 12, 2013 that player will participate in a football game on September 14, 2014, that must be in writing even though the game itself will only take 3 hours. Impossibility of being performed must be judged as of the time of execution, not hindsight.

WRITTEN VS ORAL CONTRACTS

Contracts can be either written or oral, but some contracts must be in writing under the Statute of Frauds in order to be enforceable.

COMMON LAW

Contracts law is basically "Common Law", which means law made by judges in court cases rather than law made by legislative statutes (statutory law). However, in every state except Louisiana, contracts for the sale of most goods are governed by Article 2 of the Uniform Commercial Code ("UCC"), which is statutory law.

OTHER DEFENSES IN BREACH CASES OF ILLEGALITY

Courts will generally not enforce ILLEGAL contracts such as Gambling Loans that violate usury laws Performance of services without a required license or permit Non-compete clauses in business sales or employment contracts will not be enforced (although the rest of the contract will be enforced) if the clause is unreasonably broad as to duration, geography or in the definition of the industry.

THIRD PARTY BENEFICIARIES

Defined as a person whom the promisee in a contract intended to benefit. Example: I contract with Athlete to pay him $10,000 to make an appearance at Charity Gala, where money will be raised based on Athlete's appearance. The Charity is a third party beneficiary. Third party beneficiaries have the right to sue the promisor if either: 1. The person is an INTENDED (NOT INCIDENTAL) BENEFICIARY. In the prior example, the charity is an intended beneficiary but a person attending the charity benefit who is a fan of the athlete is only an incidental beneficiary. 2. The performance of the promise will satisfy an obligation of the promisee to pay money to the third party beneficiary. Modification of the contract by the original parties (i.e., not including the TPB) is not allowed if the TPB, before he/she receives notification of the modification either (1) materially changes his/her position in reliance on the promise, (2) brings a lawsuit on the promise, or (3) shows his/her agreement to the promise at the request of either of the original parties. In a suit brought by the TPB, the promisor/defendant may assert any defenses he would have had if he had been sued by the promisee. For example, in the case of the charity gala, if Athlete had been promised $10,000 in advance to appear at the gala and hadn't been paid, that defense of non-payment could be used in an action brought by Charity against Athlete. When the TPB sues the promisor, she has not waived her right to later sue the promisee. In the charity example, if the promisee hasn't made the required payment to Athlete to appear, TPB may also sue promisee. Promisee may also bring suit against promisor for the benefit of TPB if promisor breaches. In charity example, if promisee had made proper payment to Athlete who failed to appear, promisee could also sue Athlete for the benefit of TPB.

DELEGATION

Definition of Delegation is when one party transfers his/her DUTIES (not rights) under a contract to another. DELEGATOR is the party who delegates the duty of performance. OBLIGEE is the party to whom the performance is owed. DELEGATEE is the party who is delegated the duty of performance. Example: Party A agrees to mow Party B's law. If Party A delegates the duty of mowing the lawn to Susie, then Party A is the Delegator, Party B is the Obligee and Susie is the Delegatee. The delegator remains liable to obligee when he delegates the duty of performance, unless obligee has expressly agreed to accept the delegatee's performance in place of the delegator. That is referred to as a NOVATION. A duty of performance can generally be delegated unless the obligee has a substantial interest in having the delegator perform, such in cases of particular skills of the delegator. For example, particular skills would include sports or artistic performances, as well as professional services such as legal, medical or accounting. As usual, the parties can contract however they want in terms of whether a duty can be delegated. If the delegatee is given the OPTION to perform, she is not liable to either obligee or delegator. However, if the delegatee PROMISES to perform, she is liable to the delegator, but only to the obligee if it is determined that the obligee is a THIRD PARTY BENEFICIARY of the promise. When the delegator "assigns the contract" to the delegatee, the obligee is considered a third party beneficiary and can sue the delegatee if she fails to perform.

CONDITIONS OF PERFORMANCE

Definition: A condition is an event that must occur before a particular contractual performance is due. Example: Cowboys trade DB to Texans for 1st round draft pick if DB's knee passes physical given by Texans' doctor. It is a condition of consummating the trade and providing the draft pick that the DB must pass the physical. A "concurrent condition" is a condition that exists when the parties to a contract are to exchange performance at the same time. Example: I agree to sell you my untouched Honus Wagner card on Oct 1 for $1M, at which time you are to pay me for the card. An "express condition" is when the parties explicitly agree that a duty is conditioned upon the happening of an event. Example: I agree to sell you my untouched Honus Wagner card on October 1 for $1M, at which time you will pay me if you are satisfied that the card is untouched. A "constructive condition" is a condition implied in law. Example: I agree to ship to you my Honus Wagner card, unwrapped in its original package on October 1 and you agree to either return the card by October 3 as unsatisfactory or pay me $1M on October 4. It will be implied in law that your obligation to pay is conditioned upon your satisfaction that the card is unwrapped and in its original package . The distinction between express and constructive conditions is important because in express conditions, "strict compliance" is required to satisfy the condition whereas in constructive conditions, only "substantial compliance" is required.

PROMISSORY ESTOPPEL

Definition: A promise which lacks consideration but the promisor should reasonably expect to induce action or forbearance on the part of the promisee and which does induce such action or forbearance, is binding if injustice can only be avoided by enforcement of the promise. Used in cases of gifts (I'll pay for your college education if you go to school full time...you quit your job in reliance), promises to act as another person's agent or take care of property, offers by subcontractors to general contractors. Instead of relying upon restitution in quasi-contract, a party may rely upon the doctrine of promissory estoppel...where one party reasonably and foreseeably relies upon the oral agreement to her detriment, a court will generally enforce the agreement (as opposed to restitution where it's the value of the benefits conferred) if that is the only way to avoid injustice.

FRUSTRATION OF PURPOSE

Definition: If a party's purpose in entering into a contract is negated by events beyond his control. Common law case of Krell v Henry where Plaintiff rented his flat to Defendant for 2 days at a very high rate because the flat had a view of the King's coronation during the rental period. King became ill and coronation was canceled. Defendant was discharged from his duty to pay rent because his purpose in entering into the contract was frustrated. The two main factors are: 1. Foreseeability: The less foreseeable the event that caused the frustration, the more likely the defendant will be discharged. Totality of Frustration: The more total the frustration, the more likely the defendant will be discharged.

Inapplicability of Parol Evidence Rule

Evidence of an earlier writing or agreement is always admissible to show anything that would make the contract void, including illegality, fraud, duress, mistake or lack of consideration. Existence of a condition: For example, Jets and Giants agree in writing to trade a running back for a receiver, but prior to the signing they had agreed orally that the trade would only be effective if the Giants team doctor cleared the running back's surgically repaired knee. That would not be parol evidence and would be admissible evidence. Collateral agreements if supported by separate consideration: For example, Rangers and Astros agree in writing to trade an outfielder in exchange for a draft choice and orally agree beforehand that the Rangers owner will also buy the outfielder's house in Dallas for $5M to facilitate the trade. The oral agreement to buy the house is admissible in evidence. Agreements or transactions subsequent to the signed integration are always admissible.

Measuring Damages

Expectation damages are typically awarded in contract actions and reliance or restitution damages are typically awarded in quasi-contract actions.

EXPRESS WARRANTY

Express warranty is where the seller makes an explicit (not implied) promise that the goods have certain qualities. Must distinguish between factual descriptions and "puffery", the latter of which can not be the basis for any action for breach of warranty.

SUMMARY OF QUASI-CONTRACT SUITS

Generally quasi-contract suits are allowed in the following 3 cases where recovery on the contract is not permitted: 1. There was NO ATTEMPT to even form a contract (e.g., emergency situation where plaintiff could recover market value of his services). 2. Contract is UNENFORCEABLE due to Statute of Frauds, mistake, illegality, impossibility, etc. 3. Plaintiff has MATERIALLY BREACHED the contract but can recover in "quantum meruit" (as much as he deserves) for restitution interest minus defendant's damages (not allowed if breach is willful). Recovery in quasi-contract is either "restitution" or "reliance", but not "expectation".

PRE-EXISTING DUTY RULE

Generally, if a party promises to do something he/she is already legally obligated to do, or promises to forbear from doing something which he/she is not legally entitled to do, there is no "detriment" and therefore no consideration and no enforceable contract. For example, if I have a player under contract for 3 years, and 1 year into the contract I agree to give him more money for the remaining 2 years without changing any other terms, that is an unenforceable modification because there is no consideration for my promise. ILLUSORY AND IMPLIED PROMISES Another example, if I tell you that unless you promise to give me $100, I'm going to punch you in the nose, and you do promise to give me the $100. That is not an enforceable contract since I've only promised to forbear from something that I'm not legally entitled to do (i.e., punch you in the nose).

SUBSTANTIAL PERFORMANCE

If Party A substantially (but not fully) performs under a contract, Party B is not relieved of her obligation to perform and if she fails or refuses to perform, Party A has an action for breach of contract ("expectation damages"). Since Party A has not fully performed, Party B may have a counterclaim or setoff for any damages Party B may have suffered due to Party A's failure to fully perform.

SHAM AND NOMINAL CONSIDERATION

If a court concludes that the purported consideration is nominal or sham, it will be deemed to be not valid and therefore there will be no enforceable contract. For example, if I say that I'll give you 4 tickets to all UT football games this year for $1, a court may deem that even if the $1 is actually paid, I did not "bargain" for the $1, so it is nominal consideration and therefore not sufficient to form a contract. If the consideration is big enough to suggest there was a bargain, the fact that the consideration was inadequate will be irrelevant and the contract will be enforceable.

CONTRACT INTERPRETATION

If a term of the contract is ambiguous, courts will allow extrinsic evidence to help interpret the meaning of the ambiguity. Example, Party A agrees to give Party B a total of 10% of the "profit" from a sale, but the parties can't agree on the definition of "profit". A court would allow parol evidence to help determine how the parties intended to define profit. Primary Purpose: If the "primary purpose" of the parties in making the contract can be ascertained, that purpose controls. All terms are interpreted to be reasonable, lawful and effective. Construed against drafter: An ambiguous term with multiple possible meanings will be construed against the drafter of the contract. Negotiated terms control over fine print/boilerplate. Course of Performance: How parties conducted themselves in performing that contract. Course of Dealing: How parties conducted themselves in performing past contracts. Usage of trade: How most other parties in that industry conduct themselves. Above 3 methods may not be used to contradict an express terms of a contract, only to interpret an ambiguous term.

Repudiation and Prospective Inability to Perform

If one party indicates that she will subsequently be unable or unwilling to perform, that is the same as a present material breach and allows the other party to suspend performance. An indication of refusal to perform is called "anticipatory repudiation". An indication of willingness but inability to perform is called "prospective inability to perform". In a contract requiring payment, if the payor party is insolvent or financially unable to perform, this will also entitle the other party to stop performance. If the prospective inability to perform is certain, then the other party can suspend performance, cancel the contract and sue for damages. If the inability is uncertain, the other party may only suspend performance. There is a right to adequate assurance of performance, so if a party's words or conduct merely suggest he may not perform, the other party has a right to demand assurances that he will perform. If these assurances are not given, that will be deemed an anticipatory repudiation and the other party has the right to cancel and sue for damages.

MISREPRESENTATION

If one party makes a material misrepresentation to the other prior to signing, the innocent party may use the misrepresentation as either: 1. A defense in a breach of contract action brought by the misrepresenting party, or 2. grounds for rescinding the contract or damages. Requirements: 1. The misrepresentation need not be intentionally made but must be made as to a material fact; 2. The plaintiff must show that he/she justifiably relied of the misrepresentation; and 3. The misrepresentation must be of fact, not opinion. Example of "Puffery", which is opinion and can't be the basis for a misrepresentation: Agent says his player "is the best quarterback in the league". Generally, only affirmative statements can be considered as misrepresentations and a failure to disclose will not support an action, unless it is a half truth, a positive attempt to conceal a defect, or a similar failure to act in good faith.

IMPOSSIBILITY

If performance has been rendered impossible by events taking place after the contract was executed, the court will generally discharge both parties. This discharge will only occur if the parties did not allocate the risk of that event in the contract. Example: Player A is signed to a contract by Owner B to play for Owner's team in the World Football League. Before Player A reports to training camp, the WFL folds. Both Player and Owner will be discharged from the contract due to impossibility. There are 3 types of impossibility: 1. Destruction of the subject matter: Example of league folding 2. Impossibility of intangible but essential mode of performance: Example, if the stadium burns down and there are no other available stadiums 3. Death or incapacity if a contract specifically calls for performance by a particular person. Example, if Player A loses a leg in a motorcycle accident.

MISUNDERSTANDING

If the parties have a misunderstanding about what they are agreeing to, there will be no "meeting of the minds" and therefore no contract formed if (1) the term that is subject of the misunderstanding is material and (2) neither party knows or has reason to know of the misunderstanding. If one party knows or should know that he/she has a different understanding on the meaning of a vague term than the other party, there will be a contact on the term as understood by the innocent party.

CONFIRMATION OF AN ORAL CONTRACT

If the parties reach an oral agreement and subsequently, one party sends the other a document memorializing the agreement, it's know as a "confirmation". If confirmation contains an additional term, it becomes a part of the contract unless either (1) the additional term materially alters the oral agreement or (2) the other party objects to the additional term. If the confirmation contains a term that conflicts with a term in the original agreement, it doesn't become part of the contract.

WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE

If the seller had reason to know the buyer's purpose for the goods, and If the seller had reason to know that the buyer was relying on the seller's judgment to furnish suitable goods, and If the buyer did in fact rely on the seller's judgment; Then the seller will have impliedly warranted that the goods are fit for the particular purpose that the buyer intended.

Excuse of Conditions

In some cases, the non-occurrence of a condition is excused so that the other party must nevertheless perform. Hindrance: There is an implied promise of cooperation and when one party's wrongful conduct prevents the occurrence of the condition, that party must perform notwithstanding the non-occurrence of the condition. Waiver: A party who owes a conditional duty may waive the occurrence of the condition by indicating that he will not insist upon the occurrence before performing. Also, if a party continues his own performance even after learning that a condition has failed to occur, his conduct is likely to act as a waiver of the condition. Example, team agrees to pay Player a salary of $1M and a signing bonus of $100K on October 1 if player takes and passes a physical on September 1. If Player fails to take the physical but team pays him the signing bonus anyway and suits him up for play, it will be deemed to have waived the requirement of the physical.

EQUITABLE REMEDIES

Instead of (or in addition to) monetary damages, a court may order "equitable relief". There are two kinds of equitable remedies in contract cases: 1. Specific performance: Where the performance promised in the contract is awarded. Typical in real estate cases where the court orders the property transferred to the buyer or tenant. 2. Injunction: Where a party is ordered to refrain from a particular act. Not unusual in employment contracts, including players' contracts, and endorsement contracts.

INCAPACITY

Intoxication will give a party the power to avoid the contract only if (1) he is so intoxicated that he can't understand the nature of the transaction and (2) the sober party has a reason to know the mental state of the intoxicated party.

REMEDIES FOR BREACH OF CONTRACT

Lawsuits can either be brought in one of two ways: either "on the contract" when there is a legally enforceable contract and only the defendant has breached, in which case the court will look only to the contract to determine whether there was a breach and the amount of damages, or In "quasi-contract", where plaintiff is not asking for enforcement of the contract but rather for damages based on the actual value of his/her performance

LAWSUITS

Plaintiff files a "summons and complaint". The complaint contains the "cause(s) of action" against defendant. Defendant then files an "answer" which may include not only "defenses" to the plaintiff's causes of action, but also "counterclaims" against plaintiff for money or "crossclaims" against a third party. Defendant's answer may also contain a "setoff", which says that defendant may owe plaintiff money, but that plaintiff's claim for money should be reduced by the amount of the setoff.

TERMINATING POWER OF ACCEPTANCE

Power of acceptance is terminated if: Offeree REJECTS the offer, unless offeror states that the offer still stands or offeree states that although the offer is not accepted now, he/she would like to consider it further. Offeree makes a COUNTER-OFFER, unless offeror or offeree indicates otherwise. LAPSE OF TIME if offeror has set a time limit, otherwise it expires after a reasonable period. In a face-to-face conversation, there is only a power of acceptance during that conversation unless offeror declares otherwise. REVOCATION—offeror may generally revoke offer at any time before it is accepted. Revocation is only effective if and when it is received by offeree. DEATH OR INCAPACITY OF OFFEROR OR OFFEREE

Method of acceptance

The offeror is entitled to direct the method by which his/her offer may be accepted. If the offer is silent on method, any reasonable method is sufficient to create a valid acceptance.

Retraction of Repudiation

The repudiator may normally retract a repudiation and not be liable for breach of contract, but only until the other party (1) sues for breach, (2) changes his position materially in reliance on the repudiation, or (3) states that he regards the repudiation as final. There is always a duty of the innocent party to mitigate damages once the repudiation occurs.

EXPECTATION DAMAGES

The typical measure of damages for breach of contract is that which will put plaintiff in the same position as had the contract been performed. Calculated by the value of the defendant's promised performance (i.e., the contract price) minus whatever plaintiff saved by not having to complete her performance. If defendant has defectively performed, plaintiff can recover the reasonable costs of remedying the defect unless those costs are disproportionate to the loss in market value due to the defect. Plaintiff can only recover losses that she proves with "reasonable certainty", so it is difficult to recover lost profits for a new business or when the cost of contract completion is unknown or not proven.

INDEFINITENESS

There is no contract formed if the terms of the offer are too indefinite. For example, if the offeror agrees to sell the offeree "tickets to UT football games from time to time" but does not specify how many tickets or to which games or for how much, a court will find that there is no valid offer due to indefiniteness and therefore no contract. However, if the court believes that the parties intended to contract and can supply a reasonable value for a missing term in the offer, it may do so

WARRANTIES

Types of warranties include: Express warranty Implied warranty of merchantability Warranty of fitness for a particular purpose If a seller breaches a warranty, the buyer may bring an action for breach of warranty, which is a special type of breach of contract action.

RESTITUTION IN CASES OF IMPOSSIBILITY, IMPRACTICABILITY AND FRUSTRATION OF PURPOSE

When a contract is discharged due to one of these causes, a party can recover in quasi-contract for restitution—the value of the benefits conferred on the other party before the event that caused the discharge.

RELEASE

When a contract is executory only on one side (i.e., the other party has fully performed), the party who has performed may discharge the contract by executing a release, which must be either supported by separate consideration or signed by the releasing party.

Cases where Equitable Remedies are Unlikely

When monetary damages are adequate: Equitable relief will not be granted unless monetary damages are inadequate to protect the plaintiff, such as when damages can not be determined with reasonable certainty or when money can not substitute for contractual performance. When the contract terms are too indefinite to enable the court to frame an order. When it is likely to be difficult for the court to enforce and supervise the order. For example, in personal services contracts, specific performance is rare but injunctions are common.

DUTY TO MITIGATE DAMAGES

Where the plaintiff could have avoided an item of damage by REASONABLE EFFORT, he may not recover for that item if he fails to make the reasonable effort. This is known as the "duty to mitigate damages". Note that plaintiff must only make "reasonable efforts" to mitigate, and is not required to go to substantial expense or inconvenience or break another contract. If plaintiff makes reasonable efforts to mitigate and incurs additional expenses in doing so, he may also recover those expenses.

CONSIDERATION

With a few exceptions (discussed later) a contract will be unenforceable unless there is "consideration". Consideration exists if: 1. The promisee gives up something of value or suffers a legal detriment by circumscribing his/her liberty in some way; and 2. The promise is given as part of a "bargain", i.e., the promisor gives a promise in exchange for the promisee's giving up something of value or suffering a legal detriment. Therefore, promises to give gifts are generally unenforceable due to the lack of a "bargain". It is only the promise to make a gift that is unenforceable. Once the gift is actually made, it can't be taken back for lack of consideration. Business deals where one party does not really promise to do anything are also unenforceable for lack of consideration. For example, "I'll buy widgets from you for $100 each "if I want them" is not an enforceable contract. -cannot be nominal/sham -offeree must suffer detriment (must not violate pre-existing duty rule) -cannot be an illusory promise (w/o consideration) -implied promise can count as consideration

TORTIOUS INTERFERENCE WITH CONTACTUAL RELATIONS (OR BUSINESS RELATIONS)

Wrongful or Tortious Interference with Contractual Relations occurs where a person causes a party to commit a breach of contract. It is also known as "tortious interference with contract rights" or "intentional interference with contractual relations". The person causing the interference is a third party who is not included in the contract. Tortious interference falls under tort law rather than contract law. Because it considered a tort, the act which induces the breach must be intentional. The third party must have the intent not only to commit the act, but must also have the intent that the act will result in a breach of the contract. Tortious interference can also include the tort of interference with a business relationship. However, interference with contractual relationships occurs only when a valid contract is already in existence. The specific elements for proving tortious interference may vary from jurisdiction to jurisdiction. However, it is usually required to show that: A valid contract or contractual relationships exists between the two parties The third party had knowledge of the contract or contractual relationship The third party intended to induce one of the parties to the contract to commit a breach The third party was not privileged or authorized in any way to induce the breach The contract was in fact breached The non-breaching party suffered measurable damages