Today we're going to discuss the puzzling case of Dan Cohen versus Cowles Media Company. Which deals with the question of when it is necessary for parties to intend that an agreement with consideration be legally binding in order for them to be legally bound by that agreement. The setting for the case is the 1982 election for governor of the state of Minnesota. Independent Republican candidate Wheelock Whitney was running against Democratic farmer labor candidate Rudy Perpich, who had served as governor for several years in the 1970s. In the middle of the election, Dan Cohen, who was a well known Republican businessman, called up reporters for two major newspapers from the Twin Cities, the St. Paul Pioneer Press Dispatch and the Minneapolis Star and Tribune. He told them that he had information about a candidate in the election and offered to give it to them if they agreed not to identify him in their reporting or to ask him about his source. That information turned out to be the records from cases that had been brought a decade earlier against Marlene Johnson, Perpich's running mate. When the reporters went to the courthouse to check that the records were correct, they discovered that Cohen himself had sent someone to dig them up. The editors, not the reporters, but the editors at the newspapers, decided that this was an important part of the story. And the editors decided to include Cohen's identity in the articles, in spite of the reporters' explicit promises and over the reporters' objections. When Cohen saw the newspapers the next day, he was outraged to see his name in the articles. He also lost his job because of his name being mentioned. And so he decided to take the newspaper publishers to court. Since the information that had been published was true, he couldn't sue for defamation. Instead, he sued for fraudulent misrepresentation and for breach of contract. At trial, he won big, the jury awarded him $200,000 in compensatory damages and a quarter of a million dollars in putative damages, giving him the victory on both claims. The court of appeals then reversed the misrepresentation claim. We're going to read the Minnesota Supreme Court's decision from 1990, which ruled for the newspapers on both of these points. Justice Simonett deals very quickly with the misrepresentation claims. He wrote, a representation as to future acts does not support an action for fraud merely because the represented act did not happen. Unless the promisor did not intend to perform at the time the promise was made. There was plenty of evidence that the reporters did intend to keep their source's identity a secret when they made the promise. One of them even refused to have her name in the article's byline because she was so offended by what her editors had done. This misrepresentation rule means that mere failure to perform what one has promised doesn't amount to fraud. We don't want to characterize everyone who doesn't succeed at fulfilling all their promises as a fraudster. Instead, when someone fails to follow through on a promise, for which there was consideration, parties generally should pursue a suite for breach of contract. We limit, what is called promissory fraud actions, to circumstances when the promisor at the time of promising didn't intend to perform the promise. Justice Simonett then moves to the question of whether Cohen has a valid claim for breach of contract. On first glance, his agreements with the reporters definitely look like contracts. The reporters' promises were given in exchange for considerations in form of the documents that Cohen handed over. There was consideration, there was quid pro quo. The newspapers then proceeded to break their promises about keeping his identity secret. But while Simonett certainly thinks that the reporters were ethically obliged not to disclose Cohen's identity, he's reluctant to make their agreements legally enforceable. Moral and legal obligations do not always coincide. Ultimately, the judge is, quote, not persuaded that in the special milieu of media newsgathering, a source and a reporter ordinarily believe they are engaged in making a legally binding contract. They are not thinking in terms of offer and acceptance in any commercial or business sense, unquote. And so the judge decides not to, quote, superimpose a legal obligation on a moral and ethical obligation, unquote. The case therefore suggests that at least in the context of reporters and their sources, there needs to be explicit evidence that the parties wanted to be legally bound in order for their agreement to be legally binding. I am troubled by the justice's conclusion that the sources don't think that reporters are making legally binding commitments when they promise not to use their name. This rule is very odd because it's the opposite of the ordinary rule, which is summarized in Section 21 of the Second Restatement of Contracts. That section says, neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract. But a manifestation of intention that a promise shall not affect legal relations may prevent the formation of a contract. In other words, the default is that when the parties make an agreement involving all the necessary components of offer and acceptance and consideration, that agreement is legally binding. Even if it doesn't say that the parties intend for it be legally binding. Parties can choose explicitly not to make their agreements legally binding, but they need to go to extra effort to do so. That's why you some times see the statement, quote, this is not a legally enforceable agreement included in written documents. This is called a TINA LEA provision based on the abbreviation for this is not a legally enforceable agreement. In this case, Justice Simonett turns the principle on its head. The parties don't have a legally binding contract because there's no explicit evidence that they wanted, that they intended it to be legally binding. This is the general rule in many other countries, including England and continental Europe countries, but not in the United States. Aside from a few exceptions, for example Judge Simonett mentions that the rule that promises within families are generally unenforceable, without extra evidence that the family members intended them to be legally bound. Here the court seems to be motivated to make a new exception out of the concern that legal liability in cases like these would interfere with the important work of reporters and newspaper editors. We saw a similar sort of concern for the effect of law on particular professions in Sullivan versus O'Connor earlier. Where the court was worried about enforcing physicians' promises of cures and that whether such enforcement would interfere with the ability to advise and a care for their patients. It's not clear, though, that Justice Simonette's concern about the news industry is a valid one. Sources might be more willing to give information to reporters if they knew that the promises of confidentiality would be legally enforceable. It's also important to note that the United States Supreme Court ended up ruling for the plaintiff in this case finding that generally applicable laws apply to the press in spite of the incidental effects of the ability to gather and support the news. The US Supreme Court said that there still could be an action under promissory estoppel. All right, and so let's go to a quiz here. Eric agrees to give Maria one of his cat's new kittens if she helps him build a website. At the time, neither of them thinks that a casual agreement between friends is legally binding. She helps him, but he then refuses to give her the kitten. Could Maria enforce the agreement in court? Well, the answer is yes. As we've seen from the restatement, the default rule in American law is that when parties come to an agreement with consideration, that agreement will be legally enforceable in court. They can avoid the default only if they explicitly make their agreement non-enforceable, with something such as a TINA LEA provision. There are some exceptions to this rule. The traditional ones are for agreements between family members and for social engagements. Your friend can't take you to court if you show up late to lunch. As you've seen in the case of Cohen versus Cowles ,Media courts occasionally find other exceptions as well. Here, Justice Simonett thought that confidentially agreements between sources and reporters were in a domain where parties would not expect legal consequences to rise from their agreements, and so he reversed the default rule. Now, the Supreme Court of the United States, in New York Times versus Sullivan found that under the First Amendment of our Constitution, a newspaper could not be liable for mere negligent misrepresentations concerning public figures. But imagine that a newspaper, let's call it Survanda, on the front page of each issue, expressly promises to compensate any individual that it mentions who is injured by the newspaper's negligent misrepresentation. And secondly, expressly represents that it intends this promise to be legally enforceable. The newspaper believes that it can sell more newspapers if it warrants the quality of its product. Putting aside consideration problems, would it be constitutional to enforce this kind of contract? In essence, is New York Times v Sullivan merely a default rule? if so, could the Legislature flip the default and require newspapers who didn't want to stand behind the truthfulness of their statement? To opt out of liability by including the short disclaimer somewhere in the publication, that they intend not to be responsible for the injury done by their negligent reporting.
