Wk1 2 operation1


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Wk1 2 operation1

  1. 1. <ul><li>REVIEW </li></ul><ul><li>OPERATION I </li></ul><ul><ul><li>FINANCING STADIUM </li></ul></ul><ul><ul><li>CONTRACTUAL ISSUES </li></ul></ul><ul><li>WRAP-UP </li></ul>
  2. 2. <ul><li>AMERICAN LEGAL SYSTEM </li></ul><ul><ul><li>Checks & balances among three branches </li></ul></ul><ul><ul><li>Unique function of each branch </li></ul></ul><ul><ul><li>Dual court system </li></ul></ul><ul><ul><li>What trial & appellate courts do </li></ul></ul><ul><ul><li>Types of case </li></ul></ul><ul><ul><li>Jurisdiction </li></ul></ul>
  3. 3. <ul><li>ANATOMY OF LEGAL PROCEEDINGS </li></ul><ul><ul><li>Complaint  answer  discovery  settle or trial </li></ul></ul><ul><ul><li>How a trial ends </li></ul></ul><ul><ul><ul><li>Early dismissal </li></ul></ul></ul><ul><ul><ul><li>Settlement </li></ul></ul></ul><ul><ul><ul><li>Full trial </li></ul></ul></ul>
  4. 4. <ul><li>LEGAL ANALYSIS & REASONING </li></ul><ul><ul><li>Interpretation of law </li></ul></ul><ul><ul><ul><li>Constitution </li></ul></ul></ul><ul><ul><ul><li>Statute </li></ul></ul></ul><ul><ul><ul><li>Agency regulations </li></ul></ul></ul><ul><ul><ul><li>Common law (case law) </li></ul></ul></ul>
  5. 5. <ul><li>FINANCING STADIUM: GENERAL RULE </li></ul><ul><ul><li>Municipalities may not incur debt to support a private business unless it clearly serves a public purpose </li></ul></ul><ul><ul><li>Use of public finds in sports </li></ul></ul><ul><ul><ul><li>MLB: 80% </li></ul></ul></ul><ul><ul><ul><li>NFL: 70% </li></ul></ul></ul>
  6. 6. <ul><li>FINANCING STADIUM: HOW TO JUSTIFY USE OF PUBLIC FUNDS? </li></ul><ul><ul><li>Q at issue: Whether building a stadium for a sport franchise serves a significant public purpose </li></ul></ul><ul><ul><ul><li>What is public purpose? </li></ul></ul></ul><ul><ul><ul><li>Is there any unique value involved with sport franchises? </li></ul></ul></ul>
  7. 7. <ul><li>FINANCING STADIUM: EXAMPLE #1 (BENGALS) </li></ul><ul><ul><li>Hamilton county used public fund (458 million) for a new stadium for Bengals (increased sales tax by 1%) </li></ul></ul><ul><ul><li>Bengals promised more $$$ coming in & better record </li></ul></ul><ul><ul><li>Bengals kept losing & the county sued for renegotiation </li></ul></ul><ul><ul><li>Parties settled by mediation </li></ul></ul>
  8. 8. <ul><li>FINANCING STADIUM: EXAMPLE #2 (TWINS) </li></ul><ul><ul><li>Twins leased the Metrodome for exceptionally favorable contract terms </li></ul></ul><ul><ul><li>Twins wanted to get out of the lease for “Act of God” </li></ul></ul><ul><ul><ul><li>Act of God: If something uncontrollable happens, a party can get out of lease contract </li></ul></ul></ul><ul><ul><ul><li>First, Twins sells the team to MLB for $250 million </li></ul></ul></ul><ul><ul><ul><li>Second, MLB terminate the franchise  “Act of God”  Twins may go another city under the “Act of God” provision </li></ul></ul></ul>
  9. 9. <ul><li>FINANCING STADIUM: EXAMPLE #2 (TWINS) </li></ul><ul><ul><li>Court rule: “Local professional sport franchises are an important community asset and should fulfill their contractual obligations at an utmost level” </li></ul></ul><ul><ul><ul><li>“ You have argued that you are so special” </li></ul></ul></ul><ul><ul><ul><li>“ Yes, you are special so here we make you special…” </li></ul></ul></ul>
  10. 10. <ul><li>FINANCING STADIUM: GENERAL RULE </li></ul><ul><ul><li>Building stadia serves public purpose in general </li></ul></ul><ul><ul><li>Use of public funds OK </li></ul></ul><ul><ul><li>Opponents may not have viable legal challenges </li></ul></ul><ul><ul><li>Political Q > legal Q </li></ul></ul>
  11. 11. <ul><li>CONTRACTUAL ISSUES: INTRODUCTION </li></ul><ul><ul><li>Contract: “legally enforceable agreement” </li></ul></ul><ul><ul><li>Elements for contract formation </li></ul></ul><ul><ul><ul><li>Offer </li></ul></ul></ul><ul><ul><ul><li>Acceptance </li></ul></ul></ul><ul><ul><ul><li>Consideration </li></ul></ul></ul><ul><ul><ul><li>No defense </li></ul></ul></ul>
  12. 12. <ul><li>CONTRACTUAL ISSUES: OFFER </li></ul><ul><ul><li>Clear manifestation of desire to make a contract </li></ul></ul><ul><ul><li>Example 1 </li></ul></ul><ul><ul><ul><li>“ I hope I can buy a BUICK right now” </li></ul></ul></ul><ul><ul><ul><li>“ I would pay if someone can mow my lawn” </li></ul></ul></ul><ul><ul><li>Example 2 </li></ul></ul><ul><ul><ul><li>“ I will give you my house for $10,000” </li></ul></ul></ul><ul><ul><ul><li>“ I will pay $500 for using this gym on Monday next week from 9:00 a.m. to midnight” </li></ul></ul></ul>
  13. 13. <ul><li>CONTRACTUAL ISSUES: ACCEPTANCE </li></ul><ul><ul><li>Must accept without additional terms </li></ul></ul><ul><ul><ul><li>A: “I will pay $500 for using this gym on Monday next week from 9:00 a.m. to midnight” </li></ul></ul></ul><ul><ul><ul><li>B: “OK. But only until 11:00 p.m.” (no contract for additional term “only until…”) </li></ul></ul></ul><ul><ul><li>Additional term  Counter offer </li></ul></ul><ul><ul><ul><li>A: “I will pay $500 for using this gym on Monday next week from 9:00 a.m. to midnight” </li></ul></ul></ul><ul><ul><ul><li>B: “OK. But only until 11:00 p.m.” </li></ul></ul></ul><ul><ul><ul><li>A: “OK. Then I will use it by 11:00 p.m.” (Contract OK) </li></ul></ul></ul>
  14. 14. <ul><li>CONTRACTUAL ISSUES: CONSIDERATION </li></ul><ul><ul><li>Must be a “bargained for” promise (not a gift) </li></ul></ul><ul><ul><li>Example 1 (no contract) </li></ul></ul><ul><ul><ul><li>“ I will give you $500 tomorrow” </li></ul></ul></ul><ul><ul><ul><li>“ I will give you $100,000 when you turn to 30 years old” </li></ul></ul></ul><ul><ul><li>Example 2 (exchange of something  contract) </li></ul></ul><ul><ul><ul><li>“ I will give you my BMW for $500” </li></ul></ul></ul><ul><ul><ul><li>“ I will give you $10,000 if you quit smoking” </li></ul></ul></ul>
  15. 15. <ul><li>CONTRACTUAL ISSUES: NO DEFENSE </li></ul><ul><ul><li>There must not be a defense to make it null </li></ul></ul><ul><ul><li>Examples: A contract is void if  </li></ul></ul><ul><ul><ul><li>A party lacks capacity (e.g., a minor, intoxicated) </li></ul></ul></ul><ul><ul><ul><li>Contract made under duress (e.g., gun on head) </li></ul></ul></ul><ul><ul><ul><li>Contract for performing an illegal conduct </li></ul></ul></ul><ul><ul><ul><li>Statute of Fraud applies (e.g., if contract is for goods which has value over $500  MUST BE WRITTEN) </li></ul></ul></ul>
  16. 16. <ul><li>CONTRACTUAL ISSUES: LEASE CONTRACT </li></ul><ul><ul><li>A contract between a facility owner and tenant </li></ul></ul><ul><ul><ul><li>A sport team & stadium owner </li></ul></ul></ul><ul><ul><ul><li>A event host & city </li></ul></ul></ul><ul><ul><li>Try to anticipate all (hopefully) foreseeable events </li></ul></ul><ul><ul><li>Detailed contract  less chance of litigation </li></ul></ul>
  17. 17. <ul><li>CONTRACTUAL ISSUES: LEASE CONTRACT (COMMON CLAUSES) </li></ul><ul><ul><li>Rental & revenue sharing </li></ul></ul><ul><ul><li>Non-assignment & choice of law </li></ul></ul><ul><ul><li>Harmless: Owner not liable for 3 rd party’s injury </li></ul></ul><ul><ul><li>Indemnification: Owner will get paid back if sued </li></ul></ul>
  18. 18. <ul><li>CONTRACTUAL ISSUES: LEASE CONTRACT (COMMON CLAUSES) </li></ul><ul><ul><li>Insurance clause: Requiring tenant to get insured </li></ul></ul><ul><ul><li>Force Majeure: Relieving party for Act of God </li></ul></ul><ul><ul><li>Damage clause: Tenant must pay for damage </li></ul></ul>
  19. 19. <ul><li>CONTRACTUAL ISSUES: GAME CONTRACT </li></ul><ul><ul><li>Example: Contract between home & visiting team </li></ul></ul><ul><ul><li>Must include: </li></ul></ul><ul><ul><ul><li>Location, time, & place of game </li></ul></ul></ul><ul><ul><ul><li>Financial arrangement </li></ul></ul></ul><ul><ul><ul><li>Termination clause (e.g., liquidated damage) </li></ul></ul></ul><ul><ul><ul><li>Promotional rights (sponsor’s rights) </li></ul></ul></ul>
  20. 20. <ul><li>CONTRACTUAL ISSUES: SALES OF GOODS </li></ul><ul><ul><li>Contract about transaction of goods </li></ul></ul><ul><ul><li>Must include: </li></ul></ul><ul><ul><ul><li>Description of goods </li></ul></ul></ul><ul><ul><ul><li>Price and payment schedule </li></ul></ul></ul><ul><ul><ul><li>Warranty & guarantee of satisfaction </li></ul></ul></ul><ul><ul><ul><li>How & when contract may be cancelled </li></ul></ul></ul>
  21. 21. <ul><li>CONTRACTUAL ISSUES: SERVICE CONTRACTS </li></ul><ul><ul><li>Contract about services </li></ul></ul><ul><ul><li>Must include: </li></ul></ul><ul><ul><ul><li>Independent contractor provisions (≠ Employee) </li></ul></ul></ul><ul><ul><ul><li>Requirement of insurance </li></ul></ul></ul><ul><ul><ul><li>Indemnification provisions </li></ul></ul></ul><ul><ul><ul><li>Guarantee of satisfaction </li></ul></ul></ul>
  22. 22. <ul><li>FINANCING STADIUM </li></ul><ul><ul><li>Use of public fund for building stadia is OK because it is deemed to serve public interest </li></ul></ul><ul><ul><li>More political than legal issue now </li></ul></ul><ul><ul><li>But court may be against sport franchise when it tries to circumvent lease terms (i.e., public asset) </li></ul></ul>
  23. 23. <ul><li>CONTRACTS: ELEMENTS </li></ul><ul><ul><li>Offer </li></ul></ul><ul><ul><li>Acceptance </li></ul></ul><ul><ul><li>Consideration </li></ul></ul><ul><ul><li>No defense </li></ul></ul>
  24. 24. <ul><li>CONTRACTUAL ISSUES IN OPERATION </li></ul><ul><ul><li>Lease agreement </li></ul></ul><ul><ul><li>Game contracts </li></ul></ul><ul><ul><li>Sales contracts: Goods & services </li></ul></ul>