I know it's been nearly a month since the July Florida bar exam but I've been moving and could not post something sooner. In most cases, I will probably omit to mention something you wrote about. Please let me know in the comments section - I would love to hear from you. These posts are just a way to get people talking about issues. Let's get started, shall we?
This is a straight contracts essay with so much to discuss. This was definitely one of those racehorse questions where the eager examinee could have spent far more than 1 hour writing about potential issues. Here, we have Professor, a surgeon with an apparent expertise in artificial limbs. She receives an offer to teach surgery and contact research in the field of surgical procedures for artificial limbs. Businessman Bill solicits Professor to enter business with him to invent and sell DNA test kits. At issue in this fact pattern is Professor's termination without notice and ownership of the patent for the DNA test kit. The call of the essay question asked you to discuss Professor’s rights and responsibilities to University, Bill, and the DNA test kit patent.
The first issue to discuss is whether either contract is valid and enforceable.
Professor v. University
Professor was hired by a private university for a term of five years to teach and conduct research. Crucial to the analysis are two pieces of information: (1) the university owns any patents developed during the 5 years, and (2) Professor’s contract cannot be terminated except for cause with 90 days’ notice.
What law applies? UCC or common law
Common law - This is a services agreement.
We are told in the fact patten's second sentence that University offers Professor a job which "she agrees" to. Now, it is not 100% clear whether "she agrees" is equivalent to "she accepts" the agreement. For the sake of brevity, we will assume that Professor and University entered into a valid contract. However, we do not know from the facts whether Professor signed an employment contract that included all of the language in the press release or whether in fact, the signed press release is being presented as the contract. I will analyze as if the signed press release is the complete terms of the agreement.
Nevertheless, doing the analysis, we get something like this:
For a contract to be valid, there must be an offer, acceptance, consideration, and no valid defenses to contract formation.
Professor is offered a job at University where she will teach surgical procedures for artificial limbs and conduct research in that area, with the University owning any patents she develops during this time. Professor is to be paid $250,000 a year for five years and cannot be terminated except for cause upon 90 days' notice.
Professor signs a copy of the press release and delivers it to the University's President on her first day of work.
Yes, $250,000 per year for 5 years in return for teaching and research.
Statute of Frauds - This agreement cannot be performed within 1 year. As such, the agreement needed to be in writing and signed by the person to be charged.
Due Process - Professor's agreement required a 90 day notice for termination for cause. You can waste valuable time here arguing whether University had cause to terminate (definitely possible) but the real issue is she was terminated without notice. You could write a nice paragraph about how the termination was a Due Process violation.
Expectation damages - Professor could collect 4 years of salary at $250,000 annually for a total of $1,000,000, reduced by the salary from Professor's new job producing DNA test kits (Duty to mitigate).
University will contend that if they are liable to pay Professor the remaining balance of salary on the 5 year contract, then the provision granting University ownership of any patents developed by Professor during this time period should also be enforced.
Professor will counter that she signed an agreement she understood gave University ownership of any artificial limb patents developed during the duration of the contract. Since the development of the DNA test kit is not a result of her teaching and research as part of her University duties, she will contend that she owns the patent for the DNA test kit.
Professor v. Bill
Professor received a written proposal by businessman Bill to produce and sell DNA test kits created by Professor. The proposal also included a licensing agreement providing that: (1) Bill has exclusive rights to DNA test kits developed by Professor, (2) Bill will pay Professor $5,000 for each kit produced, and (3) Professor receives a 25% interest in the company if an item is produced in the next five years. Further attached to the letter is a schedule of infomercials for Professor to tape and a non-compete clause.
What law applies? UCC or common law
Was there a valid contract between Professor and Bill?
Letter, licensing agreement, schedule, and non-compete form.
Professor signs letter and writes, “We’ll see how it goes.”
She changes $5,000 fee to $75,000. Is this a counteroffer? Accepted by Bill?
Mailbox Rule - Professor's acceptance effective when she mails documents back to Bill
Professor is to develop DNA test kits. Bill will pay Professor $5,000 for each idea that is produced. Professor will receive a 25% interest in the company if any item is produced in the next five years.
Statute of Frauds - not applicable
Valid acceptance? Changing the compensation on the licensing agreement from $5000 to $75000 is materially significant.
Modification/ Accord and Satisfaction - If Professor's alterations to the licensing agreement are viewed by the court as a modification, Bill would contend that Professor cashing the second check for $10,000 created an accord and satisfaction.
Does Professor never taping infomercials matter? It appears that the company made its' fortune as a result of Bill's controversial ads.
Non-Compete clause - A 10 year non-compete agreement in an employment contract will generally not be upheld by the court.
Promissory Estoppel - Would Professor, Bill, or University be unfairly compensated?
However you argued for or against valid contracts, I would conclude with the likelihood of Professor owning her DNA test kit patent as well as compensation that might be owed to University and Bill.
What do you think about this essay?