Council Approves Property Draft for Submission to Annual Meeting; New Project Launched on Transnational Insolvency Principles of Cooperation

At its meeting in Philadelphia on December 8 and 9, the Council reviewed and approved a draft of the Restatement Third, Property (Wills and Other Donative Transfers), for the membership to consider at the 2006 Annual Meeting. Also on the December meeting agenda were reports on the Restitution and Unjust Enrichment, Model Penal Code: Sentencing, and Software Contracts projects.

Council Draft No. 5 of the Property project, submitted by Reporter Lawrence W. Waggoner and Associate Reporter John H. Langbein, contained material on powers of appointment. The Council discussed a few sections that differ from the Restatement Second and considered two alternative subsections of § 19.23, dealing with the disposition of unappointed property when the donee allows a general power to lapse. The Council voted to use the second alternative, which will ease estate administration by having unappointed property pass to the donee or the donee’s estate. The approved provision departs from the Restatement Second rule that unappointed property passes back to the donor or the donor’s transferees or successors in interest.

Reporter Andrew Kull presented Council Draft No. 7 of Restatement Third, Restitution and Unjust Enrichment, containing the final material on liability in restitution. Following a discussion concentrated on the "slayer rule" and sections concerning benefits received by a defendant from a third party, the Council approved the draft. The Reporter will draft new material over the next year to be added to the material in Council Draft No. 7 for presentation at the Annual Meeting in 2007.

The Council discussed a submission from Reporter Kevin R. Reitz on the Model Penal Code: Sentencing project. The U.S. Supreme Court’s surprise decision in Blakely v. Washington (June 2004) and the subsequent effects of Blakely nationwide raised several issues on which the Reporter sought the Council’s advice. A lively discussion focused on whether the project should offer a first-order recommendation that states should adopt a presumptive guidelines system made compliant with Blakely, coupled with a second-order recommendation in favor of an advisory guidelines system that avoids Blakely requirements. The scope of jury factfinding procedures at sentencing and the general purposes of sentencing in individual cases were also discussed extensively. The material was not presented for approval and will be revised for further presentation and discussion at this year’s Annual Meeting.

The new Software Contracts project was presented by Reporter Robert A. Hillman of Cornell Law School and Associate Reporter Maureen A. O’Rourke, Interim Dean of Boston University School of Law, in their maiden appearance before the Council. Begun in 2004, the project aims to propound clear and fair rules to help parties to software contracts understand their rights and achieve their goals. Preliminary Draft No. 2, which was discussed by the project’s Advisers and Members Consultative Group in September, deals with definitions, scope, general terms, and standard-form contracts, and includes sections on federal preemption, public policy, and choice of law and forum. The Reporters received helpful guidance at the recent meetings and will continue to work on the material.

In other action, the Council approved the initiation of a joint dissemination project with the International Insolvency Institute with respect to the Principles of Cooperation developed in the Institute’s Transnational Insolvency Project. The Principles were developed for use by the United States, Canada, and Mexico, but it is expected that, with minimal adaptation, the Principles can be used around the world. Professor Ian Fletcher of University College London and Professor Bob Wessels of Vrije University, Amsterdam, will serve as Reporters. Canadian lawyer E. Bruce Leonard, the Chair and Reporter for Domestic Aspects of Canadian Insolvency Law for the prior project, will help direct the expansion of the Principles and act as Chair of the International Advisers to the project.