Last week, Amazon had UA polo shirts something over 60% off, so time will tell.
Under Armour and UCLA
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Last: 2 yr ago by wifeisafurd
selecting which executory contracts to keep sounds like a BK type reorg is coming to me.Lomiton said:
"...committed to the majority of our contractual agreements"
Hmmm, I could see being to committed to all my contractual agreements or none of my contractual agreements but for UA to admit that they are only committed to some of their commitments (majority = some) sounds like a company that doesn't take their commitments seriously and prefers to pick and choose exactly which commitments they are going to remain "committed" to.
I have a hard time thinking that UA management doesn't know what they are doing here but this whole thing continues to sound like their present situation is so bad they'd prefer to to take the hit and just pay later. UA's risk is that the "pay later" program could be quite a bit more expensive both in cash and in future contracts with others.
Guess UA has to do what they have to do - I would just think they'd come up with a better set of excuses than what their CEO just provided; it's going to sound awful in court.
Thank you, Okaydo. I saw Wilner's tweet earlier, but hadn't had a chance to read until just now.
IMO, the most interesting aspect is whether the signed term sheet or the unsigned contract is binding.
I don't see how either party can be held to the provisions of an unsigned contract...isn't that why it's unsigned?
That said, if redlines were exchanged that included acceptance of provisions like the force majeur then there is at least an argument to be made.
From the article:
"Note: The university did not provide the unsigned contract to the Hotline, because it does not consider the document to be official (and thus not subject to a public records request).
Cal does not usually release terms sheets but made an exception in this case, as it views the term sheet to be binding."
Regardless, it appears from the folks Wilner interviewed to be consistent with the sentiment in this thread that UA is reaching to find a way out of its obligations. This doesn't bode well for their college athletics business overall let alone Cal's confidence in their completion of any settlement/agreed path forward.
IMO, the most interesting aspect is whether the signed term sheet or the unsigned contract is binding.
I don't see how either party can be held to the provisions of an unsigned contract...isn't that why it's unsigned?
That said, if redlines were exchanged that included acceptance of provisions like the force majeur then there is at least an argument to be made.
From the article:
"Note: The university did not provide the unsigned contract to the Hotline, because it does not consider the document to be official (and thus not subject to a public records request).
Cal does not usually release terms sheets but made an exception in this case, as it views the term sheet to be binding."
Regardless, it appears from the folks Wilner interviewed to be consistent with the sentiment in this thread that UA is reaching to find a way out of its obligations. This doesn't bode well for their college athletics business overall let alone Cal's confidence in their completion of any settlement/agreed path forward.
That looks bad for UA.okaydo said:
IANAL but the reasoning Cal presents is pretty straight forward.
No inability to fulfill obligations, no material breach, even if the contract were signed.
I know money talks, but who would ever sign with UA now? They already suck as a brand. Most of their gear is ugly AF. Their performance gear is average now, with a few exceptions. And now the back out of contracts with everyone?
The only interesting deal they have is Curry, which is interesting because that only exists because of a small-time dicking over by Nike IIRC. So UA takes that bad move by Nike and 1000x's it to the entire sports world?
15 or 20 years ago I would buy UA anything because it performed better than Nike et al's lack of focus on innovation. Back then Nike was basically basketball shorts and a hiking/military boot line. WAY too focused on the Jordan-type leisure side. But now Nike has equivalent performance gear AND the style and leisure. While UA is just ugly stuff you wear under the stuff you want to wear.
The CEO of UA probably has a bunch of family holding Nike stock for him or something. What the hell are they thinking?
This is a fascinating look a contract negotiations that will provide a good hypothetical in the Contracts Class. For starters all those num-nuts on this board who went ballistic that Cal had never signed a "contract" with UA now know why. There was an enforceable Term Sheet (LOI) in place, and the parties couldn't agree on terms of a formal contract (called a long form agreement in the LOI).
My sense if this is far less clear than the Oregon academic presented. Term sheets are often ambiguous documents in which parties set out certain key terms of a deal, usually with the intent there will be further negotiation and documentation, and that was the case here, the LOI expressly says it is subject to the full agreement to be negotiated by the parties and even mentions which type of terms will be in that full contract. Subject to provisions discussed below, the LOI should be enforceable even with the express plan to enter a formal contract. If the material terms of the deal are there, as well as intent to be enforceable, the LOI is enforceable. And there are many provisions in the LOI that say that when signed that the LOIi is enforceable, until certain events occur, one of which is entering into a formal agreement.
But here comes alll the bad stuff the Oregon academic didn't mention. In California, an enforceable term sheet may create a duty of the parties to negotiate in good faith a final formal agreement, and failure to do so can result in adverse legal consequences. See Coplin vs. Baskins and Robbins, 117 Cal.Rptr.2d 875 (2002), which really was a game changer for lawyers who practice in this area. The duty arises from an underlying duty of good faith and fair dealing in all contracts, a somewhat unique obligation under California law, which the Oregon professor probably doesn't see much or understand. A well drafted term sheet under California law should include waivers of the implied covenant of good faith and fair dealing and reliance damages (as well as any other damages), as well as an affirmative statement that term sheet will not create an obligation to negotiate or be deemed a contract to negotiate. This one doesn't. Instead, the Term Sheet keeps referring to terms that will be flushed out in the Long Term Contract.
Which gets us to why is UA citing a force majeure provision that appears in a draft ? The professor suggest it is idiotic and Cal's response is quick to point out it makes no sense and then becomes very defensive that it tried to the long form contract with UA but couldn't come to terms. The question then becomes what really was the course of conduct in negotiations that didn't allow the partiers to complete the long form contact in over 4 years? What UA is probably arguing is that Cal acted in bad faith, and that the force majeure provision in the draft should therefore be enforced. I don't have enough information to provide an opinion. Courts have when a party act in bad faith to either "red line" (delete) or even add contractual provisions so the aggrieved party is made whole (this happens more often in UCC contracts). But obviously, to quote a force majeure provision in a draft is unusual to say the least. As for Professors; speculation that In (California), "my understanding is that parties invoking force majeure demonstrate that they made 'sufficient' or 'reasonable' efforts to avoid the consequences of the event" breaks several cardinal rules of practicing attorneys.
The first is called RTFC. R for read, t is for "the" and c for contract - you can guess F. Cal did not rightfully supply the draft agreement in the public records act request, so therefor the professor doesn't have a clue what the force majeure provision says or requires. There could be expressly all sorts of obligations or none whatsoever to mitigate the impacts. It is not even clear COVID would be a force majeure event under the provision.
Does the provision decide whether all of the impacted party's obligations are excused or only those that are directly related to the coronavirus outbreak. Does it consider whether the obligations of the non-impacted party are relieved as well. Does a contractual termination occur if a force majeure event is present or is performance simply delayed
The second rule is don't guess the law in a state that you don't practice in - hire a local expert (hey Jon, you listening?). Section 1511(2) of the Civil Code is clear that a court cannot hold a party liable for breach of contract when performance was impossible because of external forces. Not good for the professor or Cal. However, that code section doesn't apply when the parties choose to expressly determine otherwise, which means you actually have to look a the contract provision. Moreover, to make the generalization by the professor even more careless, California doesn't have a set of doctrines the look at sufficient or reasonable effort to avoid consenqucers of force majeure events (though given neither UC nor UA have control over government requirements with respect to COVID, no one probably come-up what actions either party was able to take based on this gibberish). Instead, the courts interpret the parties' intent by looking at the actual provision on a case by case basis, leading such generalizations made by the professor to be incorrect as a mater of law. The seminal state supreme court decision,Pacific Vegetable Oil, says courts should analyze whether a force majeure event made performance impossible on a case-by-case basis, and provide the remedies "under the particular circumstances."
The idea that a court will terminate the contract for de minimus sale by a third party of Nike Cal clothing doesn't pass the smell test to this old lawyer.
Bottom line is UA may or may not have an argument based on the courts willingness to find Cal negotiated the formal agreement in bad faith (no evidence that Cal did of did not) and willingness to apply a force majeure provision that none of us have read, and allow the contract to be terminated. That seems like an uphill battle on the surface, but we don't know the specific facts or what the applicable force majeure provision says.
My sense if this is far less clear than the Oregon academic presented. Term sheets are often ambiguous documents in which parties set out certain key terms of a deal, usually with the intent there will be further negotiation and documentation, and that was the case here, the LOI expressly says it is subject to the full agreement to be negotiated by the parties and even mentions which type of terms will be in that full contract. Subject to provisions discussed below, the LOI should be enforceable even with the express plan to enter a formal contract. If the material terms of the deal are there, as well as intent to be enforceable, the LOI is enforceable. And there are many provisions in the LOI that say that when signed that the LOIi is enforceable, until certain events occur, one of which is entering into a formal agreement.
But here comes alll the bad stuff the Oregon academic didn't mention. In California, an enforceable term sheet may create a duty of the parties to negotiate in good faith a final formal agreement, and failure to do so can result in adverse legal consequences. See Coplin vs. Baskins and Robbins, 117 Cal.Rptr.2d 875 (2002), which really was a game changer for lawyers who practice in this area. The duty arises from an underlying duty of good faith and fair dealing in all contracts, a somewhat unique obligation under California law, which the Oregon professor probably doesn't see much or understand. A well drafted term sheet under California law should include waivers of the implied covenant of good faith and fair dealing and reliance damages (as well as any other damages), as well as an affirmative statement that term sheet will not create an obligation to negotiate or be deemed a contract to negotiate. This one doesn't. Instead, the Term Sheet keeps referring to terms that will be flushed out in the Long Term Contract.
Which gets us to why is UA citing a force majeure provision that appears in a draft ? The professor suggest it is idiotic and Cal's response is quick to point out it makes no sense and then becomes very defensive that it tried to the long form contract with UA but couldn't come to terms. The question then becomes what really was the course of conduct in negotiations that didn't allow the partiers to complete the long form contact in over 4 years? What UA is probably arguing is that Cal acted in bad faith, and that the force majeure provision in the draft should therefore be enforced. I don't have enough information to provide an opinion. Courts have when a party act in bad faith to either "red line" (delete) or even add contractual provisions so the aggrieved party is made whole (this happens more often in UCC contracts). But obviously, to quote a force majeure provision in a draft is unusual to say the least. As for Professors; speculation that In (California), "my understanding is that parties invoking force majeure demonstrate that they made 'sufficient' or 'reasonable' efforts to avoid the consequences of the event" breaks several cardinal rules of practicing attorneys.
The first is called RTFC. R for read, t is for "the" and c for contract - you can guess F. Cal did not rightfully supply the draft agreement in the public records act request, so therefor the professor doesn't have a clue what the force majeure provision says or requires. There could be expressly all sorts of obligations or none whatsoever to mitigate the impacts. It is not even clear COVID would be a force majeure event under the provision.
Does the provision decide whether all of the impacted party's obligations are excused or only those that are directly related to the coronavirus outbreak. Does it consider whether the obligations of the non-impacted party are relieved as well. Does a contractual termination occur if a force majeure event is present or is performance simply delayed
The second rule is don't guess the law in a state that you don't practice in - hire a local expert (hey Jon, you listening?). Section 1511(2) of the Civil Code is clear that a court cannot hold a party liable for breach of contract when performance was impossible because of external forces. Not good for the professor or Cal. However, that code section doesn't apply when the parties choose to expressly determine otherwise, which means you actually have to look a the contract provision. Moreover, to make the generalization by the professor even more careless, California doesn't have a set of doctrines the look at sufficient or reasonable effort to avoid consenqucers of force majeure events (though given neither UC nor UA have control over government requirements with respect to COVID, no one probably come-up what actions either party was able to take based on this gibberish). Instead, the courts interpret the parties' intent by looking at the actual provision on a case by case basis, leading such generalizations made by the professor to be incorrect as a mater of law. The seminal state supreme court decision,Pacific Vegetable Oil, says courts should analyze whether a force majeure event made performance impossible on a case-by-case basis, and provide the remedies "under the particular circumstances."
The idea that a court will terminate the contract for de minimus sale by a third party of Nike Cal clothing doesn't pass the smell test to this old lawyer.
Bottom line is UA may or may not have an argument based on the courts willingness to find Cal negotiated the formal agreement in bad faith (no evidence that Cal did of did not) and willingness to apply a force majeure provision that none of us have read, and allow the contract to be terminated. That seems like an uphill battle on the surface, but we don't know the specific facts or what the applicable force majeure provision says.
I agree with much of what you say, particularly the final paragraph which I think addresses the real issues: (i) will a court find that any provisions in the unsigned "Long Form Agreement" are binding; (ii) if so, are the force majeure and termination provisions in the LFA binding; and (iii) if so, what do those actually say.wifeisafurd said:
This is a fascinating look a contract negotiations that will provide a good hypothetical in the Contracts Class. For starters all those num-nuts on this board who went ballistic that Cal had never signed a "contract" with UA now know why. There was an enforceable Term Sheet (LOI) in place, and the parties couldn't agree on terms of a formal contract (called a long form agreement in the LOI).
My sense if this is far less clear than the Oregon academic presented. Term sheets are often ambiguous documents in which parties set out certain key terms of a deal, usually with the intent there will be further negotiation and documentation, and that was the case here, the LOI expressly says it is subject to the full agreement to be negotiated by the parties and even mentions which type of terms will be in that full contract. Subject to provisions discussed below, the LOI should be enforceable even with the express plan to enter a formal contract. If the material terms of the deal are there, as well as intent to be enforceable, the LOI is enforceable. And there are many provisions in the LOI that say that when signed that the LOIi is enforceable, until certain events occur, one of which is entering into a formal agreement.
But here comes alll the bad stuff the Oregon academic didn't mention. In California, an enforceable term sheet may create a duty of the parties to negotiate in good faith a final formal agreement, and failure to do so can result in adverse legal consequences. See Coplin vs. Baskins and Robbins, 117 Cal.Rptr.2d 875 (2002), which really was a game changer for lawyers who practice in this area. The duty arises from an underlying duty of good faith and fair dealing in all contracts, a somewhat unique obligation under California law, which the Oregon professor probably doesn't see much or understand. A well drafted term sheet under California law should include waivers of the implied covenant of good faith and fair dealing and reliance damages (as well as any other damages), as well as an affirmative statement that term sheet will not create an obligation to negotiate or be deemed a contract to negotiate. This one doesn't. Instead, the Term Sheet keeps referring to terms that will be flushed out in the Long Term Contract.
Which gets us to why is UA citing a force majeure provision that appears in a draft ? The professor suggest it is idiotic and Cal's response is quick to point out it makes no sense and then becomes very defensive that it tried to the long form contract with UA but couldn't come to terms. The question then becomes what really was the course of conduct in negotiations that didn't allow the partiers to complete the long form contact in over 4 years? What UA is probably arguing is that Cal acted in bad faith, and that the force majeure provision in the draft should therefore be enforced. I don't have enough information to provide an opinion. Courts have when a party act in bad faith to either "red line" (delete) or even add contractual provisions so the aggrieved party is made whole (this happens more often in UCC contracts). But obviously, to quote a force majeure provision in a draft is unusual to say the least. As for Professors; speculation that In (California), "my understanding is that parties invoking force majeure demonstrate that they made 'sufficient' or 'reasonable' efforts to avoid the consequences of the event" breaks several cardinal rules of practicing attorneys.
The first is called RTFC. R for read, t is for "the" and c for contract - you can guess F. Cal did not rightfully supply the draft agreement in the public records act request, so therefor the professor doesn't have a clue what the force majeure provision says or requires. There could be expressly all sorts of obligations or none whatsoever to mitigate the impacts. It is not even clear COVID would be a force majeure event under the provision.
Does the provision decide whether all of the impacted party's obligations are excused or only those that are directly related to the coronavirus outbreak. Does it consider whether the obligations of the non-impacted party are relieved as well. Does a contractual termination occur if a force majeure event is present or is performance simply delayed
The second rule is don't guess the law in a state that you don't practice in - hire a local expert (hey Jon, you listening?). Section 1511(2) of the Civil Code is clear that a court cannot hold a party liable for breach of contract when performance was impossible because of external forces. Not good for the professor or Cal. However, that code section doesn't apply when the parties choose to expressly determine otherwise, which means you actually have to look a the contract provision. Moreover, to make the generalization by the professor even more careless, California doesn't have a set of doctrines the look at sufficient or reasonable effort to avoid consenqucers of force majeure events (though given neither UC nor UA have control over government requirements with respect to COVID, no one probably come-up what actions either party was able to take based on this gibberish). Instead, the courts interpret the parties' intent by looking at the actual provision on a case by case basis, leading such generalizations made by the professor to be incorrect as a mater of law. The seminal state supreme court decision,Pacific Vegetable Oil, says courts should analyze whether a force majeure event made performance impossible on a case-by-case basis, and provide the remedies "under the particular circumstances."
The idea that a court will terminate the contract for de minimus sale by a third party of Nike Cal clothing doesn't pass the smell test to this old lawyer.
Bottom line is UA may or may not have an argument based on the courts willingness to find Cal negotiated the formal agreement in bad faith (no evidence that Cal did of did not) and willingness to apply a force majeure provision that none of us have read, and allow the contract to be terminated. That seems like an uphill battle on the surface, but we don't know the specific facts or what the applicable force majeure provision says.
One anecdotal point. Sometimes courts imply customary terms into an agreement and the binding Letter Agreement requires the parties to negotiate customary terms. It seems UA is going to have a hard time implying the force majeure and termination provision are "customary." Based on an article I read a while back which I'm sure is linked in this thread, it appears most UA agreements with other schools don't have FM provisions.
Since the Letter Agreement/term sheet is expressly binding and contemplates execution of a final Long Form Agreement, I think its very clear there is a mutual duty to negotiate in good faith. The Baskin & Robbins case found that duty on far lesser facts. However, as you point out, it seems neither party declared a default on this issue (at least not pre-covid) and the binding Letter Agreement provides 30 day cure rights, so based on what we know (which may be incomplete) I don't see any exposure for Cal or UA on this issue - yet.
I find it interesting that Cal did not provide notice of default to UA for its failure to negotiate. I think the reason is that: (i) Cal prefers the terms of the Letter Agreement at this point because Cal has few express obligations; and (ii) the duty to negotiate/Baskin Robbins case allows recovery of only reliance damages - not lost profits. So my guess is Cal does not want to go down that road because it could win the battle but lose the war.
The force majeure provision being customary is tricky. You have UA with a bunch of other contracts under other than California law (supposedly the UCLA contact is reported to have a force majeure provision, but I have not read the contract). Then you have another party, a state agency, that probably has force majeure provisions in many of its contracts (like most State agencies). I know when I was real estate counsel for a different state agency, we literally had to provide a written explanation when we varied from that Agency's standard provisions (like force majeure). I do agree with you that Calfornia courts, especially in UCC cases, do put in customary terms into contracts. We understand that, but probably few non-lawyers reading the Wilner article and the poor assessment by the Oregon expert, had any clue why UA was even raising a provision in a draft agreement that wasn't executed by either party.BearGoggles said:I agree with much of what you say, particularly the final paragraph which I think addresses the real issues: (i) will a court find that any provisions in the unsigned "Long Form Agreement" are binding; (ii) if so, are the force majeure and termination provisions in the LFA binding; and (iii) if so, what do those actually say.wifeisafurd said:
This is a fascinating look a contract negotiations that will provide a good hypothetical in the Contracts Class. For starters all those num-nuts on this board who went ballistic that Cal had never signed a "contract" with UA now know why. There was an enforceable Term Sheet (LOI) in place, and the parties couldn't agree on terms of a formal contract (called a long form agreement in the LOI).
My sense if this is far less clear than the Oregon academic presented. Term sheets are often ambiguous documents in which parties set out certain key terms of a deal, usually with the intent there will be further negotiation and documentation, and that was the case here, the LOI expressly says it is subject to the full agreement to be negotiated by the parties and even mentions which type of terms will be in that full contract. Subject to provisions discussed below, the LOI should be enforceable even with the express plan to enter a formal contract. If the material terms of the deal are there, as well as intent to be enforceable, the LOI is enforceable. And there are many provisions in the LOI that say that when signed that the LOIi is enforceable, until certain events occur, one of which is entering into a formal agreement.
But here comes alll the bad stuff the Oregon academic didn't mention. In California, an enforceable term sheet may create a duty of the parties to negotiate in good faith a final formal agreement, and failure to do so can result in adverse legal consequences. See Coplin vs. Baskins and Robbins, 117 Cal.Rptr.2d 875 (2002), which really was a game changer for lawyers who practice in this area. The duty arises from an underlying duty of good faith and fair dealing in all contracts, a somewhat unique obligation under California law, which the Oregon professor probably doesn't see much or understand. A well drafted term sheet under California law should include waivers of the implied covenant of good faith and fair dealing and reliance damages (as well as any other damages), as well as an affirmative statement that term sheet will not create an obligation to negotiate or be deemed a contract to negotiate. This one doesn't. Instead, the Term Sheet keeps referring to terms that will be flushed out in the Long Term Contract.
Which gets us to why is UA citing a force majeure provision that appears in a draft ? The professor suggest it is idiotic and Cal's response is quick to point out it makes no sense and then becomes very defensive that it tried to the long form contract with UA but couldn't come to terms. The question then becomes what really was the course of conduct in negotiations that didn't allow the partiers to complete the long form contact in over 4 years? What UA is probably arguing is that Cal acted in bad faith, and that the force majeure provision in the draft should therefore be enforced. I don't have enough information to provide an opinion. Courts have when a party act in bad faith to either "red line" (delete) or even add contractual provisions so the aggrieved party is made whole (this happens more often in UCC contracts). But obviously, to quote a force majeure provision in a draft is unusual to say the least. As for Professors; speculation that In (California), "my understanding is that parties invoking force majeure demonstrate that they made 'sufficient' or 'reasonable' efforts to avoid the consequences of the event" breaks several cardinal rules of practicing attorneys.
The first is called RTFC. R for read, t is for "the" and c for contract - you can guess F. Cal did not rightfully supply the draft agreement in the public records act request, so therefor the professor doesn't have a clue what the force majeure provision says or requires. There could be expressly all sorts of obligations or none whatsoever to mitigate the impacts. It is not even clear COVID would be a force majeure event under the provision.
Does the provision decide whether all of the impacted party's obligations are excused or only those that are directly related to the coronavirus outbreak. Does it consider whether the obligations of the non-impacted party are relieved as well. Does a contractual termination occur if a force majeure event is present or is performance simply delayed
The second rule is don't guess the law in a state that you don't practice in - hire a local expert (hey Jon, you listening?). Section 1511(2) of the Civil Code is clear that a court cannot hold a party liable for breach of contract when performance was impossible because of external forces. Not good for the professor or Cal. However, that code section doesn't apply when the parties choose to expressly determine otherwise, which means you actually have to look a the contract provision. Moreover, to make the generalization by the professor even more careless, California doesn't have a set of doctrines the look at sufficient or reasonable effort to avoid consenqucers of force majeure events (though given neither UC nor UA have control over government requirements with respect to COVID, no one probably come-up what actions either party was able to take based on this gibberish). Instead, the courts interpret the parties' intent by looking at the actual provision on a case by case basis, leading such generalizations made by the professor to be incorrect as a mater of law. The seminal state supreme court decision,Pacific Vegetable Oil, says courts should analyze whether a force majeure event made performance impossible on a case-by-case basis, and provide the remedies "under the particular circumstances."
The idea that a court will terminate the contract for de minimus sale by a third party of Nike Cal clothing doesn't pass the smell test to this old lawyer.
Bottom line is UA may or may not have an argument based on the courts willingness to find Cal negotiated the formal agreement in bad faith (no evidence that Cal did of did not) and willingness to apply a force majeure provision that none of us have read, and allow the contract to be terminated. That seems like an uphill battle on the surface, but we don't know the specific facts or what the applicable force majeure provision says.
One anecdotal point. Sometimes courts imply customary terms into an agreement and the binding Letter Agreement requires the parties to negotiate customary terms. It seems UA is going to have a hard time implying the force majeure and termination provision are "customary." Based on an article I read a while back which I'm sure is linked in this thread, it appears most UA agreements with other schools don't have FM provisions.
Since the Letter Agreement/term sheet is expressly binding and contemplates execution of a final Long Form Agreement, I think its very clear there is a mutual duty to negotiate in good faith. The Baskin & Robbins case found that duty on far lesser facts. However, as you point out, it seems neither party declared a default on this issue (at least not pre-covid) and the binding Letter Agreement provides 30 day cure rights, so based on what we know (which may be incomplete) I don't see any exposure for Cal or UA on this issue - yet.
I find it interesting that Cal did not provide notice of default to UA for its failure to negotiate. I think the reason is that: (i) Cal prefers the terms of the Letter Agreement at this point because Cal has few express obligations; and (ii) the duty to negotiate/Baskin Robbins case allows recovery of only reliance damages - not lost profits. So my guess is Cal does not want to go down that road because it could win the battle but lose the war.
It is hard to say what happened in negotiations for a final agreement. What will happen now is posturing. Like the dumb twitter journalist who undoubtedly repeated what some UA guy leaked, and said Cal never signed the agreement. In fact Cal did sign the Term Sheet agreement, and no one signed the "final agreement:" which was still in draft form. Candidly, I have come to expect the worst from twitter journalists, but Jon Wilner usually takes the time to understand the issues he writes about. In this case, he should have asked California counsel for a second opinion.
Wifey/BearGoggles - in your opinion, assuming no negotiated settlement, how long will this issue take to be resolved in court (also assume one round of appeals)?
Cal will have already been to a Rose Bowl?Cal84 said:
Wifey/BearGoggles - in your opinion, assuming no negotiated settlement, how long will this issue take to be resolved in court (also assume one round of appeals)?
Almost all disputes are settled before trial - not sure what will happen to settlements with the State court system is disarray.
Strangely for an agreement that is intended to be enforceable for some period, there is no venue provision. The California court system is AFU due to COVID, and I don't know anyone that can predict when a civil action like this, presumably in Alameda County Superior Court, will be heard. The California courts basically shut down and were one of the last court systems to try to engage in technology alternatives. Essentially ever jury trial that was suspended due to COVID is or will be a mistrial because medical officers are not allowing jurors over 60 (take a guess the average age of jurors pools) to continue or given them an automatic pass if they don't want to return, as well as requiring courts to excuse jurors with medical issues. Very few courtrooms are physical set-up to handle properly spaced trials. I doubt people will want to be jurors under these circumstances, so good luck to my colleagues trying to get a jury pool.
There are all sorts of logistical and legal issues about handling remote trials, and when the courts are open again, criminal, mistrials, priority matters such as evictions, estate matters, etc. will all be heard before a standard civil trial for damages like this. So the answer is a long time, but nobody knows how long
If the matter is heard in federal court under diversity jurisdiction, the irony is the case will move much faster (federal cases move slower, but that will no longer be the case). My guess is at least a couple years.
The problem for Cal is that a substantial portion of the contract value is uniforms, equipment and clothes. Sebasterbear said the delivery to outfit the teams for this upcoming fall season was made before the dispute started. But at some point, assuming there are college sports for Cal in the future, Cal probably has to mitigate damages and find a new provider to dress its teams, long before this case goes to a jury.
Thanks for this. Good stuff you didnt have to take the time to type up for us.wifeisafurd said:
Section 1511(2) of the Civil Code is clear that a court cannot hold a party liable for breach of contract when performance was impossible because of external forces. Not good for ... Cal.
The line I left quoted: How is performance impossible for UA?
UA is claiming the marketing that Cal Athletics would provide dont exist, but it seems that performance on that side is impossible because of "external forces" while UA's obligation has not been made impossible. UA is still operating, etc.
Isnt that bad for UA, not Cal?
Maybe I got lost and am not understanding what you are saying.
There is a difference between the Civil Code and a force majeure provision.LunchTime said:Thanks for this. Good stuff you didnt have to take the time to type up for us.wifeisafurd said:
Section 1511(2) of the Civil Code is clear that a court cannot hold a party liable for breach of contract when performance was impossible because of external forces. Not good for ... Cal.
The line I left quoted: How is performance impossible for UA?
UA is claiming the marketing that Cal Athletics would provide dont exist, but it seems that performance on that side is impossible because of "external forces" while UA's obligation has not been made impossible. UA is still operating, etc.
Isnt that bad for UA, not Cal?
Maybe I got lost and am not understanding what you are saying.
Assume the Judge says as a matter of law I'm incorporating the force majeure provision into the agreement between the parties. If COVID (or government action due to COVID) falls within the contract provision as a force majeure event, then UA can make at least two arguments (I don't have enough facts to come-up with more arguments, or even if these two arguments are winners). First, Cal can't perform; thus, we didn't get the benefit of our contract, and that should mean we terminate the contract as opposed to defer performance. They can also argue that the contract is littered with stuff that UA can't do if campus is not open and there are no sports. For example, sell UA logo Cal gear, have performance programs, etc. Again the totality of no one being able to perform means terminate the contract, as opposed to defer performance.
The Civil Code just excuses performance. I don't know if a judge could say forbearance of performance means terminate the contract -research project. Excusing performance doesn't mean you get compensated for not performing. UA would look to no sports being played and argue no compensation in terms of clothes or coach salary support is due, etc.
I don't know what the force majeure in the draft says, but since in posturing, UA wants to use it, and Cal doesn't, I one would surmise (not know) that use of the force majeure is a better result for UA than relying on the Civil Code. The problem is we don't have sufficient information.
This is a sword vs. shield issue. Section 1511(2) is a shield - it provides liability protection to a party who cannot perform its contractual obligations due to force majeure. It doesn't necessarily allow for termination/release of liability for all contract obligations (unless as a practical matter, all contract obligations were forever prevented by FM).LunchTime said:Thanks for this. Good stuff you didnt have to take the time to type up for us.wifeisafurd said:
Section 1511(2) of the Civil Code is clear that a court cannot hold a party liable for breach of contract when performance was impossible because of external forces. Not good for ... Cal.
The line I left quoted: How is performance impossible for UA?
UA is claiming the marketing that Cal Athletics would provide dont exist, but it seems that performance on that side is impossible because of "external forces" while UA's obligation has not been made impossible. UA is still operating, etc.
Isnt that bad for UA, not Cal?
Maybe I got lost and am not understanding what you are saying.
Separate from the statute, the contract can have "sword provisions" that provide a party the right to terminate the contract upon the occurrence of FM (or other) events. UA is claiming that its proposed provision in the unsigned "Final Contract" had those termination rights. Cal seems to disagree. We haven't seen the draft contract to even know what the provision says.
All of this assumes that there was a contractual obligation impacted by COVID. Cal's letter to UA made the same point you have - Covid hasn't prevented either party from performing their obligations under the signed Letter Agreement. In the signed letter agreement, Cal did not have an express obligation to field sports teams - I'm guessing the unsigned Final Contract might have (again we don't know). So we're back to the open questions of: (i) is anything in the unsigned contract binding; and/or (ii) will a court imply an obligation for Cal to field teams and, if so, does UA have a termination right.
BG makes a good point in his last paragraph. I assumed that playing sports is an obligation that Cal has under the contract. Big assumption, and not necessarily true. We don't know if that obligation is expressly stated in the draft full agreement or there is some conduct that implies such an obligation? (Read BG's last paragraph).BearGoggles said:This is a sword vs. shield issue. Section 1511(2) is a shield - it provides liability protection to a party who cannot perform its contractual obligations due to force majeure. It doesn't necessarily allow for termination/release of liability for all contract obligations (unless as a practical matter, all contract obligations were forever prevented by FM).LunchTime said:Thanks for this. Good stuff you didnt have to take the time to type up for us.wifeisafurd said:
Section 1511(2) of the Civil Code is clear that a court cannot hold a party liable for breach of contract when performance was impossible because of external forces. Not good for ... Cal.
The line I left quoted: How is performance impossible for UA?
UA is claiming the marketing that Cal Athletics would provide dont exist, but it seems that performance on that side is impossible because of "external forces" while UA's obligation has not been made impossible. UA is still operating, etc.
Isnt that bad for UA, not Cal?
Maybe I got lost and am not understanding what you are saying.
Separate from the statute, the contract can have "sword provisions" that provide a party the right to terminate the contract upon the occurrence of FM (or other) events. UA is claiming that its proposed provision in the unsigned "Final Contract" had those termination rights. Cal seems to disagree. We haven't seen the draft contract to even know what the provision says.
All of this assumes that there was a contractual obligation impacted by COVID. Cal's letter to UA made the same point you have - Covid hasn't prevented either party from performing their obligations under the signed Letter Agreement. In the signed letter agreement, Cal did not have an express obligation to field sports teams - I'm guessing the unsigned Final Contract might have (again we don't know). So we're back to the open questions of: (i) is anything in the unsigned contract binding; and/or (ii) will a court imply an obligation for Cal to field teams and, if so, does UA have a termination right.
If not, however, does this head down the mutual mistake route? By that I mean, there was a basic assumption Cal would be fielding sports teams, or no one makes this contract. That is why UA agrees to outfit teams and do all the other stuff it is obligated to do, and in return it get the right for its executives, vendors and others to enjoy great seats, travel to away games with th football team, and most importantly receive a huge marketing benefit. The picture of Chase Garbers in the end zone near the end of the Big Game, scoring the winning touchdown and raising his arms in the air thereby showing that UA logo to a bunch a defenders in red and white swoosh uniforms, was shown again and again and again is exactly the benefit UA was expecting. Winners wear UA. The picture of the Cal AD on Zoom trying to explain why there are no fall sports provides no benefits to UA.
Mutual mistake involves these four characteristics:
(1) The mistake must have been made by both parties at the time the contract was made;
(2) The mistake must involve a basic assumption on which the contract was made;
(3) The mistake must materially affect the agreed upon exchange; and
(4) The contract is only voidable by a party who was adversely affected by the mistake
If you told someone at Cal they would lose their sports to a virus for what may in the case of indoor sports Iike basketball is likely to be two seasons when they made the contract, they would have looked at you like you came from another planet. Same with the UA guys.
A "basic assumption" is an assumption relating to a material fact of the agreement. I'm willing to concede this probably is a basic assumption. Throw away sports there is no contract. I know there are arguments against this, but this is a reality check. No one would give you all this if the parties didn't assume they were playing.
But the mistaken belief must materially affect the exchange to such a degree that the imbalance is so great that it would be unfair to enforce the contract. That may be a big ask if Cal plays in football in spring, and is able to get this fall and spring sports in during 2021. If UA loses several years of football and basketball, I say Cal faces a risk that the contract is terminated by the judge.
All this is speculation, depending on the what the parties were actually negotiating. Again I recommend reading BG's post and my other posts. I'm also assuming there is no conduct by which UA assumed the risk of sports being cancelled.
For those who thought contracts were exactly what was written on a formally signed documents that contained every term, welcome to the real world where people engaged in commerce don't really go thorough all the formal steps, not to mention document their course of conduct. It is messy. I would not be shocked if UA got some relief from Cal for the COVID impacted period.
Cal better get its own lawsuit on file and press it to a conclusion asap.
Wouldn't want to get caught holding the bag in case of an Under Armour bankruptcy.
Wouldn't want to get caught holding the bag in case of an Under Armour bankruptcy.
Wow, Cal is a far better position for having not signed a long form contract. At least BG and I get a better look at what UA would have to allege would be in the Cal contract. Better hold your thunder until you see UA's answer.BearSD said:
Cal better get its own lawsuit on file and press it to a conclusion asap.
Wouldn't want to get caught holding the bag in case of an Under Armour bankruptcy.
Cals' problem is they have far less damages, despite having a clearly better case IMO. Much of what Cal was paid, clothes, uniform and equipment, they would get from another sponsor.
I uploaded a copy of the full complaint if anyone wants to wants to relive their 1L contracts law days: Regents (UCLA) v Under Armour, Inc.
Uh, hope UCLA's lawyers don't have this on a contingency.bevans said:
I uploaded a copy of the full complaint if anyone wants to wants to relive their 1L contracts law days: Regents (UCLA) v Under Armour, Inc.
While they tried to throw a lot of mud about UA's finical issues (makes good headlines), the contract said each UCLA core team must play 50% of its scheduled games (core teams being defined as football, men's and women's basketball). Expect an anticipatory breach claim in the response brief. You really can't gauge these things at this stage, or know what strategies the parties are employing, but the terms of the contract laid out in the complaint are not all that favorable as made out in the media.
Cal in a much different position than UCLA, at the risk of understatement.
Edit: as more information comes out, expect different analysis from the lawyer types.
The obligation to play 50% of "scheduled" games is subject to Force Majeure (Paragraph 42 of the Complaint). I think UCLA has a decent argument that FM eliminates the 50% requirement entirety, so it is not in default, and that a game cancelled by the NCAA is no longer "scheduled." Not entirely clear how this interacts with the general FM provision, but these are decent arguments.wifeisafurd said:Uh, hope UCLA's lawyers don't have this on a contingency.bevans said:
I uploaded a copy of the full complaint if anyone wants to wants to relive their 1L contracts law days: Regents (UCLA) v Under Armour, Inc.
While they tried to throw a lot of mud about UA's finical issues (makes good headlines), the contract said each UCLA core team must play 50% of its scheduled games (core teams being defined as football, men's and women's basketball). Expect an anticipatory breach claim in the response brief. You really can't gauge these things at this stage, or know what strategies the parties are employing, but the terms of the contract laid out in the complaint are not all that favorable as made out in the media.
Cal in a much different position than UCLA, at the risk of understatement.
Edit: as more information comes out, expect different analysis from the lawyer types.
Yes, I saw that and then there was the general FM. So UCLA has to convince the court one FM applies for it, and that the other FM doesn't help UA. And you see why I say that the contract language was not the as one-sided as represented by UCLA in the media?BearGoggles said:The obligation to play 50% of "scheduled" games is subject to Force Majeure (Paragraph 42 of the Complaint). I think UCLA has a decent argument that FM eliminates the 50% requirement entirety, so it is not in default, and that a game cancelled by the NCAA is no longer "scheduled." Not entirely clear how this interacts with the general FM provision, but these are decent arguments.wifeisafurd said:Uh, hope UCLA's lawyers don't have this on a contingency.bevans said:
I uploaded a copy of the full complaint if anyone wants to wants to relive their 1L contracts law days: Regents (UCLA) v Under Armour, Inc.
While they tried to throw a lot of mud about UA's finical issues (makes good headlines), the contract said each UCLA core team must play 50% of its scheduled games (core teams being defined as football, men's and women's basketball). Expect an anticipatory breach claim in the response brief. You really can't gauge these things at this stage, or know what strategies the parties are employing, but the terms of the contract laid out in the complaint are not all that favorable as made out in the media.
Cal in a much different position than UCLA, at the risk of understatement.
Edit: as more information comes out, expect different analysis from the lawyer types.
Perhaps a read of UCLA contractual obligations (as set out in the posted brief below) might suggest that UA was a defensible position, and it is UCLA that will need to invoke protection of a force majeure clause. I still do not get the attempted termination of Cal's term sheet contract.Sebastabear said:Not sure I get your point here '71. UA isn't suing Cal - They don't need to. They've just told Cal they aren't going to follow through on their contractual obligations. And yes, I know for a fact that has happened. If anyone is suing anyone (and we are) it's going to be Cal suing UA.71Bear said:Did UA sue Cal? If so, why hasn't that information been made public?wifeisafurd said:
is it just Cal and UCLA? If so, wonder why? The contract with UCLA is substantial. Cal's is not. You wonder why Cal even would be on the radar given the size of other UA contracts. Again, I wonder if this reflects on the possibility of no football for the California schools, when everyone else is playing. The money for sponsors is in football. Otherwise, why would Cal be so unprofitable? It is not like UA is paying Cal the big bucks.
Otherwise, this is "sound and fury, signifying nothing" other than the schadenfreude re: UCLA's problem (just one of many at this particular time). Heck, earlier this year, the AD had to borrow (with interest) $18.9 from the UCLA General Fund to cover the Athletic Dept. deficit.
UA's legal position is indefensible. There is zero chance that Cal and UCLA have different force majeure clauses than Notre Dame, etc. These things are boilerplate. They can't pick which contracts they want to terminate because of an act of God affecting the entire world.
To WIAF's speculation that UA is terminating the California schools only because we won't be playing football and everyone else will, I'd note they kept Utah and there is zero chance some Pac-12 schools are going to have a season and others aren't - the conference has already agreed it's all for one in this. If California (the state) goes completely bonkers there are plans to work around that including playing games elsewhere.
But even if that were the case, this decision is premature by several weeks. No one (including Cal and UCLA themselves) know what is happening with football this season yet. UA certainly doesn't have some inside scoop they are using to buttress their position.
This is just a renegotiating ploy. They made a bad deal and don't like it. Let the games begin.
Yeah clearly our understanding of things changed from the time of my post in June. Must admit I had no idea Cal not only didn't have the same contract as UA but didn't even have a contract period. Didn't see that one coming. Of course to be fair, it also seemed to be news to the folks in the Cal legal department when it broke.wifeisafurd said:Perhaps a read of UCLA contractual obligations (as set out in the posted brief below) might suggest that UA was a defensible position, and it is UCLA that will need to invoke protection of a force majeure clause. I still do not get the attempted termination of Cal's term sheet contract.Sebastabear said:Not sure I get your point here '71. UA isn't suing Cal - They don't need to. They've just told Cal they aren't going to follow through on their contractual obligations. And yes, I know for a fact that has happened. If anyone is suing anyone (and we are) it's going to be Cal suing UA.71Bear said:Did UA sue Cal? If so, why hasn't that information been made public?wifeisafurd said:
is it just Cal and UCLA? If so, wonder why? The contract with UCLA is substantial. Cal's is not. You wonder why Cal even would be on the radar given the size of other UA contracts. Again, I wonder if this reflects on the possibility of no football for the California schools, when everyone else is playing. The money for sponsors is in football. Otherwise, why would Cal be so unprofitable? It is not like UA is paying Cal the big bucks.
Otherwise, this is "sound and fury, signifying nothing" other than the schadenfreude re: UCLA's problem (just one of many at this particular time). Heck, earlier this year, the AD had to borrow (with interest) $18.9 from the UCLA General Fund to cover the Athletic Dept. deficit.
UA's legal position is indefensible. There is zero chance that Cal and UCLA have different force majeure clauses than Notre Dame, etc. These things are boilerplate. They can't pick which contracts they want to terminate because of an act of God affecting the entire world.
To WIAF's speculation that UA is terminating the California schools only because we won't be playing football and everyone else will, I'd note they kept Utah and there is zero chance some Pac-12 schools are going to have a season and others aren't - the conference has already agreed it's all for one in this. If California (the state) goes completely bonkers there are plans to work around that including playing games elsewhere.
But even if that were the case, this decision is premature by several weeks. No one (including Cal and UCLA themselves) know what is happening with football this season yet. UA certainly doesn't have some inside scoop they are using to buttress their position.
This is just a renegotiating ploy. They made a bad deal and don't like it. Let the games begin.
While not signed and binding, if the FM clause wasn't part of the discussions for revisions that might be a bad fact for Cal.
It would be pretty funny to see UCLA win using FM both ways, unlikely, but stranger things certainly have happened.
It would be pretty funny to see UCLA win using FM both ways, unlikely, but stranger things certainly have happened.
Our knowledge is changing a lot (thanks to Wilner and others providing documents), so let me clarify. Cal does have a binding term sheet. The document says it is a binding contract until the infamous full length contract is negotiated and executed and replaces the same. Cal has been in negotiations with UA, but UA has not signed the full length contract. There is a bunch of analysis/speculation by BI lawyers here if a court would look at what has been negotiated, rather than just the term sheet.Sebastabear said:Yeah clearly our understanding of things changed from the time of my post in June. Must admit I had no idea Cal not only didn't have the same contract as UA but didn't even have a contract period. Didn't see that one coming. Of course to be fair, it also seemed to be news to the folks in the Cal legal department when it broke.wifeisafurd said:Perhaps a read of UCLA contractual obligations (as set out in the posted brief below) might suggest that UA was a defensible position, and it is UCLA that will need to invoke protection of a force majeure clause. I still do not get the attempted termination of Cal's term sheet contract.Sebastabear said:Not sure I get your point here '71. UA isn't suing Cal - They don't need to. They've just told Cal they aren't going to follow through on their contractual obligations. And yes, I know for a fact that has happened. If anyone is suing anyone (and we are) it's going to be Cal suing UA.71Bear said:Did UA sue Cal? If so, why hasn't that information been made public?wifeisafurd said:
is it just Cal and UCLA? If so, wonder why? The contract with UCLA is substantial. Cal's is not. You wonder why Cal even would be on the radar given the size of other UA contracts. Again, I wonder if this reflects on the possibility of no football for the California schools, when everyone else is playing. The money for sponsors is in football. Otherwise, why would Cal be so unprofitable? It is not like UA is paying Cal the big bucks.
Otherwise, this is "sound and fury, signifying nothing" other than the schadenfreude re: UCLA's problem (just one of many at this particular time). Heck, earlier this year, the AD had to borrow (with interest) $18.9 from the UCLA General Fund to cover the Athletic Dept. deficit.
UA's legal position is indefensible. There is zero chance that Cal and UCLA have different force majeure clauses than Notre Dame, etc. These things are boilerplate. They can't pick which contracts they want to terminate because of an act of God affecting the entire world.
To WIAF's speculation that UA is terminating the California schools only because we won't be playing football and everyone else will, I'd note they kept Utah and there is zero chance some Pac-12 schools are going to have a season and others aren't - the conference has already agreed it's all for one in this. If California (the state) goes completely bonkers there are plans to work around that including playing games elsewhere.
But even if that were the case, this decision is premature by several weeks. No one (including Cal and UCLA themselves) know what is happening with football this season yet. UA certainly doesn't have some inside scoop they are using to buttress their position.
This is just a renegotiating ploy. They made a bad deal and don't like it. Let the games begin.
UCLA Athletics can proceed with its lawsuit against Under Armour after the Baltimore brand backed out of a record $280 million contract to outfit athletes, a judge ruled Wednesday.https://t.co/qZbYT6k4jL
— The Baltimore Sun (@baltimoresun) August 27, 2021
All the judge did today was dismiss a summary judgment motion bu UA. UA tried to claim without providing evidence that would occur in a trail that the force majeure provision in the contract should apply. The judge rightfully said he was "unable to determine whether Under Armour's right to terminate under force majeure was triggered by the pandemic." Basically UA said the word pandemic a lot, but you still have to show that a force majeure event, like a pandemic, makes the agreement impossible or impractical. The Court found that requires evidence that only can be demonstrated at trial.okaydo said:UCLA Athletics can proceed with its lawsuit against Under Armour after the Baltimore brand backed out of a record $280 million contract to outfit athletes, a judge ruled Wednesday.https://t.co/qZbYT6k4jL
— The Baltimore Sun (@baltimoresun) August 27, 2021
UA may have a tenable defense to UCLA claims, but they have to prove it. I suspect this case will be making more news for awhile.
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