Page 8 - John Hundley 2012

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“Respondents in Discovery” Article Available…

An article by Sharp Thinking editor John Hundley exploring the intricacies of Illinois’
Respondents in Discovery Statute (735 ILCS 5/2-402) is being published by the SOUTHERN
ILLINOIS UNIVERSITY LAW JOURNAL.

Respondents in Discovery: A Beneficent Statute With Traps for the Unwary, 36 S.I.U.L.J.
335 (2012), follows a thorough history of the legislative development of the statute with a
comprehensive survey of case decisions in a variety of areas, including: the nature of the statute,
the procedures for invoking it, statute of limitations issues, issues that arise in attempting to
extend its six-month deadline for converting respondents to defendants, issues that arise in
actually attempting to convert respondents into defendants, issues that arise when attempting to
discard use of the statute after it has been invoked, the applicability of the statute in federal
cases, and matters of appellate review. Hundley

A limited number of copies of the article will be available to Sharp Thinking readers. If you would like a copy, email
Brenda@lotsharp.com.
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for breach of contract but not for fraud,” Posner noted (citations omitted). But “neither a breach of
contract nor an invocation of legal remedies in an effort to wiggle out of a disadvantageous
commercial relationship is fraud”, he said.

Moreover, “even if there were proof of fraud, BPI’s case would collapse for want of justifiable
reliance,” Posner wrote. Noting that some authorities have said the reliance must be
“reasonable”, he rejected the implication that the reliance requirement means freedom from
contributory negligence. “Reliance on a fraudulent representation need only be ‘justifiable,’” he
wrote, “by which is meant ‘not reckless,’ in other words not willfully
embracing a substantial risk” (citations omitted). The disclaimers in the
memorandum of understanding and letter of intent put BPI on notice that it
was assuming a risk in transferring its interests without a final agreement
having been reached, and if one gambles and loses “you have only
yourself to blame,” Posner said.

A couple of observations can be offered in response to the BPI opinion.

First, the opinion demonstrates the critical nature of expressly dealing with
whether a contract is being created when entering into “letters of intent” and
“memoranda of understanding”. Absent contractual disclaimers, such docu-
ments can be held to constitute a contract.

Second, Posner’s primer on promissory fraud ought to be required reading
for every lawyer who attempts to turn a contract case into a one involving fraud
– and for every lawyer who thinks a promise to perform a future act can never
constitute fraud. Posner’s rhetoric is a little strong in spots, but his explication on those issues is
the best we’ve seen – and long overdue.

John\Sharp Thinking\#59.doc
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