The BUSKLAW Newsletter

                                                   This Photo by Unknown Author is licensed under CC By-SA In last month's newsletter , we determined that Michigan law doesn't recognize the concept that "unreasonable" or adhesion contracts are unenforceable. But there is a caveat: a liquidated damages contractual provision must be reasonable to be enforceable.  A liquidated damages provision is a term of art in the legal world. It applies when, according to Professor Bryan Garner , the parties to a contract agree in advance on the measure of damages to be assessed if a party defaults. Liquidated damages provisions are common in employee non-competition agreements, and it was that clause in one such agreement that Kent County Circuit Court Judge Christopher Yates examined in the case of Alpha Automotive v Cunningham Chrysler of Edinboro. The...

If you work with contracts, it's just a matter of time before a contract with an "unreasonable" provision is sitting on your desk. Perhaps this happened because your company didn't have enough bargaining leverage to get the other party to change the unreasonable provision, but your senior management directed you to proceed anyway. Or maybe the unreasonable provision snuck in during the heat of contract negotiation and wasn't noticed until months later. In any event, you're thinking about going to court and arguing that the unreasonable provision should be disregarded (or even invalidate the contract). What are your chances?  In Michigan, you'll have an uphill battle, as the plaintiffs found out in the case of Rory v Continental Insurance Company CNA that was decided by the Michigan Supreme Court in 2005 and, to my knowledge, is still good law.  The contract at issue was an auto insurance policy issued by Continental to Rory. (Yes, an insurance polic...

( Author's Note: This post was first published in the 9/26/2016 edition of the Grand Rapids Business Journal  available here . But I've reproduced it for the sake of maintaining my newsletter's continuity and in case the link ever becomes unavailable. Also, the GRBJ didn't publish the neat wolfman graphic!) _______________________________ We all know that various beasties lurk about in October, the month of Halloween (Busklaw HQ is appropriately decorated), but beastly provisions can also lurk in contracts, ready to cause misery to the unwary. This is exactly what happened to a Massachusetts food distributor, Siegel Egg Company,  in a contract for the purchase of frozen blueberries from Naturipe Foods , the marketing arm of the Michigan Blueberry Growers, in a Kent County Circuit Court case (Naturipe Foods LLC v Siegel Egg Company, Inc).  In 2011, Naturipe submitted a written offer to sell a large quantity of frozen blueberries to Siegel in multiple shipment...