Dissecting the Bargain

1. Dissecting the Bargain Contracts – Prof. Merges Jan. 20, 2011

2. Kirksey v. Kirksey • Procedural History

6. Kirksey v. Kirksey • Procedural History • What is the “agreement of the parties” with respect to the appeal?

7. “If you will come down and see me, I will let you have a place to raise your family” • Is this a request for return performance?

8. “Williston’s tramp” • “If you will meet me at J. Press on Mt. Auburn Street, I will give you a new overcoat.”

10. “If you will come down and see me . . .” • Note 2., page 57 • “Lunchtime at Tiffany’s”

11. Breakfast at Tiffany’s (1961)

12. Which one resembles Kirksey?

13. The key issue in Kirksey • Is the return performance “sought in exchange for” the promise?

14. Which one resembles Kirksey? • Is the return action requested to make possible a gift? • How can you tell?

15. What is the promisor’s motive? • Is the return performance what the promisor wanted, or is it merely necessary to carry out the promisor’s true intention?

16. Rest. 2d, § 71: Requirement Of Exchange; Types Of Exchange (1) To constitute consideration, a performance or a return promise must be bargained for. (2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise AND is given by the promisee in exchange for that promise.

17. It’s simple: “reciprocal mutual inducement,” that’s the key!

18. Employment Agreements • What is an “at-will” employee?

19. At Will “Those whose employment agreements are terminable by either party at any time and for any reason, or for no reason at all.” -- P. 58

21. History • Who sued whom, for what?

22. History • Who won?

23. Court of appeals • Result?

24. Court of appeals • “Certified question” (teeing up a Supreme Court decision) • “Is subsequent employment alone sufficient consideration to support a promise” not to compete after termination?

25. What does Lake Land Employment argue in the Ohio Sup Ct?

26. There is consideration

27. Agreement • What was the key provision?

28. Noncompete “Columber will not engage in in any business within a 50mile radius of Akron, Ohio for three years following termination of employment” -- P. 58

29. Facts surrounding the signing • When signed? • What was said or promised?

30. Hypothetical . . . • What if Lake Land had said “if you sign this you get a raise tomorrow?” • Or: “we promise not to fire you the rest of today”? • Or: “not for the next three minutes”?

31. Compare these promises with at-will employment • What is the basic deal in an at-will arrangement?

32. Ohio Sup Ct opinion • History of common law reception of covenants not to compete

33. Basic attitude . . . • Quite negative • Agreements “in restraint of trade” • Guilds, royal privileges, “engrossing,” monopolies

34. Blackstone, Adam Smith

35. But in today’s modern economy . . . • What is the rationale for enforcing covenants not to compete?

36. Basic rationale “Trust and cooperation . . . Share confidential information and secrets . . . Encourage productivity increases . . .”

37. Judge Richard Posner

38. Enforceability may be desirable, but . . . • Where is the consideration?

39. Employer Employee

40. Employer Employee Can a “covenant not to compete” be part of the consideration provided by the employee at the outset of employment?

41. Employer Employee What about after employment has commenced?

42. Staring salary Employer Employee Agreement to work

43. According to critics of noncompetes -- • What is the problem with enforcing them?

44. According to supporters of noncompetes, where is the consideration?

45. According to supporters of noncompetes, where is the consideration? • Continued employment for a substantial time • Additional compensation • Additional training

46. Employer Raises, promotions, etc. Employee Agreement not to compete after leaving

47. T1 Employer Raises, promotions, etc. T2 Agreement not to compete after leaving Employee

48. T1 Fixed term salary Employer Same fixed term salary T2 Agreement not to compete after leaving Employee

49. What is the holding? • There is consideration for the agreement not to compete; it is the continued employment of the employee

50. Does this make sense? • As described, was there consideration for the noncompete?