Class II Charles University – Law Faculty October 2012 © Peter Kolker 2012

How does the dispute begin:  Contract between U.S. and Czech Company for Czech Tech to produce and send to U.S. high tech automotive radios:  What are the contract terms? What’s “the deal” Class II2

 Before there can be a Breach of Contract, there must be a Contract. What does it take to prove there is a contract?  “Offer” - the request to the other side to buy or sell something.  “Acceptance” – the agreement to the offer; that is to, buy or sell something.  Must match exactly the offer. This results in:  “Meeting of the Minds” on what is being bought or sold. Class I I – 20123

 A description of the product or service that is clear.  Time for the sale to take place or service to be provided.  Quantity – how many? – Can be a variable number – “requirements contract”.  Price and delivery terms.  Warranty or other post-sale agreements.  Often, an agreement on how and where to resolve disputes.  Is there “consideration” to each side?  A benefit each side receives? Class II

 In writing or otherwise clearly agreed?  By people who are legally capable of agreeing.  Not a child or someone who is not able to agree.  Breach of the Contract: violation of its terms.  A “substantial” violation, not a minor error  Remedy: Damages – money to correct the breach.  Sometimes, an injunction may be granted;  An injunction prevents a party to the contract from doing something. Class II

 An injunction is often given before the case is decided finally – it is a “preliminary” remedy.  What if it should not have been given?  The party who obtained the injunction must post a bond to repay the other party, if the injunction should not have been given.  So, there is a danger in seeking an injunction. But it is an important opportunity.  Apple’s injunction against Samsung Class II

 Not all disputes are worth fighting about:  Costs of the dispute may be too high  Damage to the relationship by bringing the suit: even if it is right, it is not getting any new orders from a customer it just sued;  Damage to its reputation if it is known to fight with its customers – who wants to do business with such a company  But, if it is worth fighting about – a lot of money or an important principle, then how is a law suit handled in the U.S.?  We will later consider if there is another way:  A lternative  Dispute  Resolution Class II-20127

U.S. Company: “we’re going to Court in the U.S.“ Very expensive for Czech Company. Why? What is the process in U. S.? Class II

 How will this work:  First, the Complaint (claim) is filed.  Then, the defense to the claim is filed.  Now, both sides know what the case is about.  But what is the evidence ? What is the proof? How is it obtained? Class II9

 Unlike cases in the Czech Republic, or in the E.U. generally (except for the U.K.), cases in the U.S. allow extensive and expensive “discovery”. What is that ?  Pre-trial testimony from anyone with information about the case (“depositions”).  Document Production: all of your documents, including all of your private s (except for those with your attorney).  This includes the that you thought you had deleted.  These can be very damaging – to either side.  Obtaining s from your opponent may help you prove your case. Expensive, but could be a big help. Class II10

 How are documents obtained?  A “document” is a piece of paper BUT it is also an electronic record: “Electronically Stored Information”  A lot of volume  Think about the s or SMS sent between you and your friend to arrange a meeting  How many people receive the same ?  The s requested will go back for years.  Problems of collecting and producing them.  Problems of reviewing them when produced  A very expensive process. Class II

Class II12

 Now you have the documents: but what will the witness say about them?  In U.S. litigation, you can take a “deposition”  A deposition is the sworn testimony of a witness as if given in a court room, but it is taken privately, recorded and with a transcript.  It is a “preview” of how the witness will testify at trial.  It is a record that will limit the witness afterwards Class II

 The Trial  U.S. courts allow jury trial, or trial without juries. - 6 or 12 persons decide the facts; the judge instructs the jury on what the law is:  What each side must prove to win. - Juries are difficult to predict and can reach a result based on emotional responses. - This is dangerous for both sides, but juries often favor the “home team” – the person or company from that area. - Jury trials take longer and are more expensive. Class II14

 Or, cases in the U.S. can be decided by a judge alone, without a jury.  If tried by a judge, he or she then decides the facts and applies the law.  Attorney’s fees are usually paid by each side, regardless of who wins.  If the loser pays legal fees for both sides, it raises the cost of bringing suit.  Good cases might be eliminated  Also, bad cases might be eliminated  How are judges in the U.S. selected, and what does this tell you about the fairness of the judge? Class II15

 Selection of Judges in the U.S.: is it fair?  Almost all have practiced law privately or with the government before becoming a judge  Not specially trained to be a judge – they learn “on the job”  Federal judges are appointed by the U.S. President  They serve for life  State judges may be elected for 5 years, or more; or  State judges may be appointed by the governor  Either way, they are subject to influence  But they may be more democratic Class II16

 Judges in the Czech Republic are in career positions  Not having served as lawyers first, they may not see the case in the same way as the lawyers do.  If the judge is not good, or does not work hard, can he be replaced?  There is no (or limited) pre-trail discovery: you will hear the positions for the first time during the trial, limiting your ability to prepare for it.  You will not have access to the documents from the other side, so you may not know the full story.  Attorney’s fees will be paid by the losing side. Class II17

 Cost and uncertainty of Litigation cause parties to look for other methods of resolving disputes: what are they and how do they work?  A. Arbitration  Agreement to resolve disputes through a private, but binding method of resolving a dispute  Provided for by the contract: specific provision instead of litigation. Class II18

 Arbitration resolves a dispute outside of court, but in a binding way.  Arbitrator’s decision (an “Award”) is then entered into Court as a judgment  Same as if the case had been tried in Court  When an Award is entered, the losing party is supposed to pay the amount.  But what if the losing party won’t pay?  An Award, by itself is not enforceable, like a court judgment is, so the Award must be entered in court as a judgment.  When a request to enter the Award as a judgment is made, the losing party may try to oppose by claiming irregularities in the arbitration. Class II

 Limited Right of Review:  An Award can not be appealed in the same way as a judgment in a trial court can be appealed.  The only basis for resisting an arbitration Award after it has been entered are:  If the arbitrator(s) did not reveal a relationship with the parties when requested to do so at the beginning; or  If the arbitrator(s) exceeded their authority by entering an award that went beyond the request; or  If there was improper conduct during the arbitration (for example: an arbitrator met with one of the lawyers in private during the arbitration).  If no basis to challenge, the Award will be entered as a judgment, and then collection can proceed. Class II20

 Some types of disputes may still be presented to Court if they are described in the agreement to arbitrate:  Example: where urgent remedy is needed – someone is taking your intellectual property and is about to put it on the internet.  One of your former employees has taken customer files, copied them and is about to give them to a competitor.  Arbitration, while usually fast, does not have the same immediate remedy measures as litigation in court has available.  So contracts to arbitrate provide for exceptions for court filing for some situations. Class II

 If a case is arbitrated in one country, can the resulting decision be enforced in another?  International Arbitration has become common since 1958  “New York Convention” on International Arbitration, sponsored by United Nations  This is a treaty – an agreement among countries to enforce arbitration awards in other countries  More than 140 countries agree and joined treaty  Czech Republic joined in 1993 Class II22

Class II23

 Let’s Take a Possible Case you might encounter:  If you were the Czech business person in a dispute with the U.S., and the facts and contract were as provided to you before this class, where and how would you bring the case, and why?  What are the things you would think about? Class II24