Standard K, Beating Tomatoes, Passing Gas and Class

I. Case of the Week

Our case this week takes us out into the flatlands, into the land of corn, farmers, and wrestlers, but we are not talking sports as we were last week. This week I will be discussing the deeply fascinating process of contract formation or, as in the case of C & J Fertilizer Inc v. Allied Mutual Insurance Co., contract ascension. Before we pit the expectations and intentions of the farmer against the big bad golf-club-wielding insurance company, we need to get a picture of the facts that led to the dispute. Fertilizer Company seeks to purchase “burglary” insurance. Fertilizer Company contacts Insurance Company, purchases insurance, and signs a contract agreeing to the terms of the coverage as they are laid out in the standard from by the insurance company. Fertilizer Company admittedly does not read all of the terms of the contract because the plan is “just like the one he has on the farm.” Fertilizer store room is burglarized. Fertilizer company files claim, but Insurance company refuses to cover the loss. Why? Because hidden deep in the pages of terms in small print in a section labeled “definitions,” the terms of contract state that signs of “forced physical entry are required” in order to constitute a burglary.

The court is divided, but the majority find for the plaintiff, C & J Fertilizer, based upon multiple lines of reasoning. The first of these is based on the Doctrine of Reasonable Expectation, which is further broken down into two parts. Primarily, the court finds that it is unreasonable to expect that buyers are going to read all of the terms of such standard contracts. This logic can be checked by most of our experiences. I rarely read all of the terms of the many contracts that I read on a daily basis. Just in the last week I signed a contract for repair service with my high speed internet provider, a licensing agreement for a software update that my computer told me I needed (and I certainly didn’t scroll through the terms before clicking “I agree,” and a medical release form that claimed that there was no warranty that the minor surgical procedure I needed this week would cure the problem, and worse, that there was a risk of permanent disfigurement or death! I signed all of these without hardly a glance, and those who were offering me these terms certainly were not expecting me to read them. (The nurse who was prepping me for surgery looked at me with a tinge of impatience as I read the terms more closely than probably anyone else that day and more closely than I normally would if I hadn’t just been reading all of these cases). It just occurred to me that the person who “offers” these terms (the repair man, my computer, the nurse) is rarely the person who writes the terms (the in-house lawyers) and this is one of the main contentions with such contracts: the bargaining position of the accepting party is essentially zilch. The only option you have is to not accept the terms and not receive the benefits you wish to contract for. Your lack of bargaining power allows the offering party to dictate the terms. In all of these situations there is a monopolizing effect. There is only one provider of cable internet in my neighborhood, without the updating download I couldn’t read “pfd” documents necessary for my studies, and without the surgery, I would remain in a lot of pain, so we are forced to accept their terms, but the court in C & J is trying to create a safely valve for such disproportionate bargaining powers. The second expectation they claim is unreasonable is defining burglary as requiring signs of entry. Maybe there is something valid in what my professors say when they tell us: “don’t check your common sense at the door.” The court makes a common sense decision, essentially finding that it is reasonable that Fertilizer Company, based on common knowledge, would not define burglary as requiring signs of forced entry.

In all fairness, we have to give some weight to the insurance company’s reason for having such provision. They are essentially trying to protect themselves from fraud, whereby a false claim would be filed for an inside job, and both the majority and the dissent agree that the provision on its own is valid. The real question lies in whether or not burying the term deep in the contract in the paragraph of definitions rather than exceptions was done because the insurance company knew that if the buyer knew the term, he would not buy the insurance. There are problems with this argument as well, and even though the court does not discuss this directly (or it was edited out of our case book) Fertilizer probably would have purchased the insurance anyway, even with the term there. It seems to me that we don’t read the terms to standardize contracts not only for the clear reason that they are long, tedious, boring, and in small print, but also because first, we don’t really care what the terms are and secondly we may not be able to find that product without the exact same terms. Try finding unpasturized milk in this country. This may not be a good comparison because pasteurization is governed by a statute, but on the other-hand it has become so standard we don’t even think about our milk in terms of pasteurization any more. I don’t think about my health insurance in terms of its terms, because I know they are there (whatever they are) and I need the insurance and no matter where I buy it, many of the same terms will be present. This topic is must vaster than I have time to go on here, but I find these questions fascinating and relevant and have caused me to pause for a moment before I just “accept.”

II. At Lawge

In further attempts to see both sides of the argument, I wanted to bring up a current topic relating to insurance fraud, especially since I am often disparaging toward insurance companies in my writing and if I ever apply for a job at one, they might find there way to this blog and read it (I am flattering myself here; first that anyone would look at my blog and secondly that I would get a job at an insurance company, but let us suspend reality for a second). In an NPR investigative story NPR : Tomato Farmers Caught Out in Insurance Scam a group of farmers recreated the scene of a hail storm, filed for insurance (which was backed by the U.S. treasury, so the insurance company didn’t put up too close of an investigation: actually, they were getting cut in on the deal) and then walked with a check. (I know I was going to try and be nice to insurance companies, but I just couldn’t help myself). The real hero of this story is the Federal Prosecutor blew the whistle on everyone. It is an interesting article and well worth a read.

III. Gossip Column

There are various forms of passing that take place in our section’s class room. It appears to me that everyone passed last semester finals, and if there is anyone who didn’t, it is because the never made it to class, because from my inexact survey of the room, everyone is still hanging on. Then there is passing notes, which for those of you who have not been in a law school class room in a while is more endemic than in the halls of my junior high. You would think that we are all a bunch of school kids again with assigned seats, lockers, and the incessant note-passing. We have gotten more advanced, or more technologically savvy. As you look around the room again, not looking for those who might have failed, you see everyone hiding behind their laptop screens, and you hear the constant tap on the keys, even when the Professor is going on about a topic that he has already discussed for 20 minutes. We are all passing notes in the form of IMs. I can’t say I am immune to it. There have been days when I have tried to stay off IM. During Civil Procedure for example and when our professor was hounding the same student for the exact language of an answer that he had in mind and the student just doesn’t seem to get it or the professor just likes playing that game, I am drawn to log on and comment about how old the game has become or how bad the girls outfit is who sits across the room. And then there was the rumor that one of our professors was passing gas, but for the sake of anonymity and for the fact that it really was only a rumor (although an out-loud *wink* one at that). Finally, the latest form of passing is passing from answering one of the questions that the professor asks. I don’t know exactly when this began. We all heard at the beginning of the semester that we shouldn’t stress too bad if we don’t know an answer because we can just pass, but lately it is getting out of control. It is like the flood gates have been slid open. Last week in Contracts, three students passed before the professor arrived at a student who was willing to take a risk and answer. I don’t know if people just don’t want to talk in class or they have not done the reading, neither of which I really understand. Talking in class really isn’t all that bad (the teachers guide you through it) and I have a hard time understanding why anyone would not even get the reading done (except in really exceptional circumstances). I mean that is the basic minimum you should be doing! The thing that is really amazing is that the professors seem to just accept it. I have seen undergraduate professors throw a fit and tell students to leave the classroom unless they have read, and I don’t know if the professors here don’t feel like they should be in a position to discipline us or what their reasoning is, but it is weak. Reading for the day should be your ticket into the class room. This is professional school. We are in the day section. None of us has full time jobs. I understand that some days you don’t have time and that passing should be allowed, but it should be a rare day and finding a student to answer a question shouldn’t be like throwing a bowling ball. I am going to mix bowling metaphors here and say that passing is like throwing a gutter ball: it happens to everyone, but you better bowl a strike on your second turn if you want to stay in the game.

IV. Quote of the Week

I know I have been reserving this for quotes from famous members of the judiciary, but I found this line so funny from the NPR article, I thought I would give it some emphasis. There are no rules here anyway; we can go back to the judges next week, or not.

“To complete the scene of devastation, they then picked up wooden tomato stakes and attacked the unsuspecting vegetables." They had one Mexican who did all the beating, he beat every 16,000 of them. He'd just go through there and knock the leaves off of them,"

I especially like how the vegetables have been portrayed as unsuspecting and how a bunch of red-neck farmers made the Mexican beat them to pieces. The language really gives the scene a feel that something criminal is going on and make the whole field of insurance fraud sound exciting. Maybe I should be a federal prosecutor.