Economic Illiteracy Makes Bad Law

A Court Finds a Salesman’s Contract “Unconscionable”

The great jurist Oliver Wendell Holmes once said, speaking about judicial decisions, that hard cases make bad law.[1] This may often be true, but that is not the only explanation for bad judicial decisions. There are other reasons why judges sometimes get things wrong—they may intend to reach a desired result, and bend the law to get there; or the lawyers for the parties may do a poor job arguing the case; or, more typically, judges simply make mistakes. In a case with potentially far-reaching implications decided by the California Court of Appeal for the Fourth Appellate District in San Diego, the court made a serious mistake; the reason was economic illiteracy. The case, John Ellis v. McKinnon Broadcasting Co.,[2] was a dispute between a TV station and a former employee of the station, an advertising salesman, over commissions that the salesman claimed were owed him. The salesman voluntarily resigned from the station and sued for a 20 percent commission on ads he had sold prior to his resignation but that were not paid for until after he left. The salesman had a written contract with the station that specified that “[n]o commissions will be paid to the Employee on advertising fees received by the station after the Employee’s final date of actual employment.”

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