B-LAW Final Exam

What does "stare decisis" mean and why is it fundamental to the development of US and English legal tradition?

"To stand on decided cases."

Anne enters her email address, but does not click on "AGREEMENT" to read the terms. Has Anne entered into an enforceable contract to pay for E-Commerce Weekly?

Anne has entered into an enforceable contract to subscribe to E-Commerce Weekly.

Primesouth Bank issued a loan to Okefenokee Aircraft to buy a plane. When OAI defaulted, Primesouth repossessed the plane. OAI argued that Primesouth was not operating in a commercially reasonable manner.

Court ruled in Primesouth Bank's favor (collateral and judgment). State appellate court affirmed.

Kanahara is employed part-time by Cross-Bar Packing Corp. He is $2,000 in debt to the Holiday Department Store for goods purchased on credit. Most of this property is nonexempt and is in Kanahara's apartment. He is in default on his payments to Holiday, but Holiday learns that Kanahara has a girlfriend in another state and he plans on giving her most of his property for Christmas. What actions are available to and should be taken by Holiday to collect the debt owed by Kanahara?

Holiday's options include 1. Attachment 2. Writ of execution 3. Garnishment Since the property may be removed from the jurisdiction, prompt action is important

33-2

In this case, no express authority was given, and no implied authority exists for a purchasing agent of goods to acquire realty. Therefore, although Arden indicated in the contract that she was an agent, she acted out of the scope of her authority. Based on this the contract between Arden and Wilson is treated as an unaccepted offer. Wilson nor A&B is bound unless A&B accepts the contract before Wilson withdraws the offer.

"I, Juan Sanchez, promise to pay Kathy Martin or bearer $500 on demand." Negotiable?

Negotiable. Meets all of the requirements.

Edward borrowed from the bank to expand his sporting goods shop. The nearby ski slope collapsed and caused Edward to default on his loan to the bank. Edward believes that the bank is only entitled to half of his inventory.

No. The bank will prevail. The security interest is in Edward's entire inventory not specific items.

Sabrina Runyan writes the following note on a sheet of paper: "I, the undersigned do hereby acknowledge that I owe Lee Woo one thousand dollars. Why is this not a negotiable instrument?

Not signed by maker No definite promise to pay No definite time Not to order or to bearer

Roy Supply and R.M.R. Drywall has checking accounts at Wells Fargo Bank. Both account required all checks to carry 2 signatures. Several of Roy's checks were forged by Margo.

Roy and the two corps are only liable after 1 year after the forged checks were reported.

Yanuzzi has a checking account at Texas Bank. She only takes $50 out of her account at time. She sees extra charges. The banks tell her two weeks later that everything is accurate.

The bank violated the EFTA. It failed to report the results within 10 days and it failed to credit her account for the amount in dispute after taking more than 10 days to investigate.

Lee Dennegar and Mark Knutson lived in Dennegar's house. Dennegar paid the mortgage and other expenses. With Dennegar's consent, Knutson managed the household's financial affairs, including handling the mail. Knutson wrote checks for Dennegar to sign and sometimes signed Dennegar's name to the checks with Dennegar's consent. AT&T Universal issued a credit card in Dennegar's name - monthly statements were sent to the house and sometimes paid. Knutson later died. The unpaid charges were assinged to New Century Financial Services, who filed a suit against Dennegar to collect the unpaid amount. Dennegar claimed he never applied for the card and knew nothing about it. Under which theory could Dennegar be liable?

The court held Dennegar liable, and the intermediate appellate court affirmed this judgment. The principal is accountable for the conduct of the agent acting within the scope of his employment even if the conduct is unauthorized and the principal receives no benefit from it. Dennegar gave Knutson apparent authority. The court also cited periodic payments made on statements mailed to Dennegar's house.

In 2002, Hubbert and the others filed a suit in an Illinois state court against Dell, alleging that this marketing was false. Dell asked the court to compel arbitration.

The court held that the arbitration clause was not a part of the contract between Dell and the plaintiffs. Dell appealed and the appellate court reversed the lower court's holding and remanded the case.

Cathy Coleman took out loans to complete her college education. Coleman became irregularly employed as a teacher before filing under Chp. 13. (5 year plan)

The court might at least agree to a discharge of the student loan debt on the completion of the plan.

Frances Morelli agreed to sell Judith Bucklin a house for $77,000. Bucklin made a deposit. The contract stated that if proper title was not provided Bucklin could either (A) accept such title that is available or (B) recover the deposit. A proper title was not secured, so Bucklin gave Morelli some time to produce one. Morelli decided "the deal was over", and Bucklin refused and wanted to move forward with the bad title that was available. Bucklin filed suit in Rhode Island state court against Morelli. In whose favor should court rule? Should damages be awarded? What is appropriate remedy? Why?

The court ruled in Bucklin's favor, and the Rhode Island Supreme court upheld this ruling. Morelli's contention that the deal be cancelled because she offered to return the deposit was rejected.

33-10

The court ruled that the designation of Brandt as the beneficiary was valid, and the proceeds for the certificate of deposit were payable to her individually.

Reading Blue Mountain & Northern Railroad Co. and Norfolk Southern Railway Co. entered into a contract for the maintenance of a signaling system that serviced a stretch of track newar Jim Thorpe, Pennsylvania. In December 2002, a severe storm severed the wires and destroyed most of the poles. Norfolk installed an entirely new system and filed a suit in a federal district court against RBMN to recover half of the cost.

The court should issue a judgment in RBMN's favor. The storm largely destroyed the system and frustrated the purpose of the contract. This discharged RBMN's and Norfolk's obligations under their agreement.

Williams purchased a car from Stein for $1000 (wrote in pencil). Stein altered the check to read $10,000. Boz took the check from Stein as a HIDC. Can Williams use the real defense of material alteration to avoid payment on the check?

The defense of material alteration is not available to Williams. He contributed to the alteration by his negligence of writing in pencil. Williams is liable to Boz for $10,000.

Kathleen Lowden sued T-Mobile contending that its service agreements were not enforceable under Washington state law. T-mobile asked the court to dismiss the request for a class-action suit.

The federal appeals court held that the arbitration provision was invalid as unconscionable. Because it was invalid, the restriction on class action suits was also invalid. Eliminating the cause of action by the arbitration agreement violates public policy and is void and unenforceable.

Romanelli filed a suit in a New York state court against Chase and other banks, alleging the drawer is not liable on an unauthorized indorsement. Is this the rule? What are its exceptions?

The principals were fictitious payees, the accountants indorsements were effective and Chase was not liable. The court dismissed Romanelli's complaint and, based on the reasoning above, a state intermediate appellate court affirmed the dismissal.

One afternoon, McClesky goes into Miller's candy shop , looks at the candy, and picks up a $1 candy bar. Seeing that Miller is very busy, he waves the candy bar at Miller without saying a word and walks out. Is there a contract?

This is an implied-in-fact contract. The contract is also bilateral and is partially executory.

Robert Triffin bought dishonored checks from McCall's Liquor Corp. 17 had been dishonored based on counterfeit. Triffin met with the drawer, ADP. ADP refused to pay. Forms attached to McCall's checks had not been signed by their sellers but Triffin had scanned the signatures into his computer and pasted them on the agreements. Is Triffin a HIDC? Can he under Shelter principle? Which fraud would ADP be least likely to prove?

Tiffin does not qualify as HIDC. The court issued a judgment in ADP's favor. $5919.80 in compensatory damages. $17,759.40 in punitive damages. The court reversed the lower court's award of damanges and remanded the case for the possible imposition of sanctions on the plaintiff.

On May 1, by phone, Yu offers to hire Benson to perform 'personal favors'. On May 5, Benson returns Yu's call and accepts the offer. Discuss fully whether this contract falls under the Statute of Frauds in the following circumstances: (A) the contract calls for Benson to be employed for one year, with the right to begin performance immediately. (B) The contract calls for benson to be employed for nine months, with performance of services to being on September 1. (C) The contract calls for Benson to submit a written research report, with a deadline of two years for submission.

Under the Statute of Frauds, any contract that cannot be performed within one year from the date of entering into the contract needs a writing to be enforceable. 15-1

Huron Corp has 300,000 shares of common stock outstanding. The owners of the stock live in several different states. Huron has decided to split the stocks: two for one. Will Huron have to file a registration and prospectus statement on the new shares as a result of the split?

Under the federal securities law, a stock split is exempt from registration requirements.

After WWII, international tribunal convicted Nazis with "crimes against humanity." Assuming Nazis had obeyed German law and followed orders, what law had they violated?

Violated natural law by murder, extermination, enslavement, and other inhumane acts.

Sheila Bartell was arrested on various charges. "Rita E" had been one of her victims of forgery (3 checks - $590). The bank covered the checks, but Bartell was instructed to pay back the bank.

Wells Fargo paid $590 as a result of the forgeries. The bank was a direct victim of the defendant's crimes of forgery and is entitled to restitution. State intermediate court affirmed the lower court's order to the defendant to pay the bank.

Sierra and Shelby entered into a written "waste disposal agreement' under which Shelby allowed Sierra to deposit on Shelby's land waste products deleterious materials, and debris removed by Sierra in the construction of a highway. Later Shelby asked Sierra why it had not constructed a waterway and a building pad on the property as they had orally agreed. Sierra denied such agreement. Shelby filed suit. Sierra claimed oral agreement fell under Statute of Frauds and was unenforceable. Sierra claims that an agreement to remove minerals from land is considered a contract for the sale of an interest in the land.

shelby wins

Cohen contracts to sell his house to Windsor for $100,000. Terms call for Windsor to pay 10% as down payment. The terms state that if buyer breaches contract, Cohen will retain deposit. Windsor pays deposit, but her financing falls through and she breaches contract. Cohen sells house to Ballard then for $105,000. Windsor wants her $10,000 back, Cohen resfuses, claiming breach of contract entitles him to the deposit. Who is correct?

Windsor is correct Cohen's penalty to Windsor is excessive. Also, it covers no real damages, Cohen makes $10,000 for nothing. He actually sold the house for more to another buyer.

Michael Sabol, who does business in the recording industry, applied to Morton Community Bank for a $58,000 loan. In addition to the loan application, Sabol signed a promissory note that referred to the bank's rights in "any collateral" as well as a letter that said, "the undersigned does hereby authorize Morton to execute, file and record all financing statements, amendments....as to any security interest." Sabol didn't sign any other documents, including the financing statement, which did contain a description of the collateral. Three years later and having not repaid the loan, Sabol filed for bankruptcy. The bank claimed a security interest in Sabol's sound equipment. Does the bank have a valid security interest?

Without description of the collateral in a signed or authenticated document or in a separate document, no security interest can be recognized

Mallory promises a local hardware store that she will pay for a lawn mower that her brother is purchasing on credit if the brother fails to pay the debt. Must this promise be in writing to be enforceable? Why or Why not?

Yes Mallory becomes the guarantor; promises to pay the debt in the event that her brother fails to do so. This must be in writing to be enforceable.

Which law takes priority in: a) Federal statute conflicts with US Constitution, b) federal statute conflicts with state constitutional provision, c) state statute conflicts with common law of the state, d) state constitutional amendment conflicts with the US Constitution

a) US Constitution b) federal statute c)state statute d)US Constitution

Overseas Private Investment Corp vs. Kim

a.) Loan agreement stated that Sun Kim was liable for the full amount of the debt should the principal debtor default. b.) Guaranty must be in writing c.) Defendant liable (did not show evidence of duress) d.) Court concluded that Hee Sun Kim was fully liable

Carr has been diagnosed with schizophrenia and depression. She sells a piece of land to Campbell who says the land was worth $54,000. That was only the agricultural value of the land, though. Market value was $162,000. Carr signs the contract but holds onto the deed. Campbell files suit for specific performance. At the trial, an appraiser states the value to be $162,000. When will a court examine the adequacy of consideration. Are those circumstances present in this case? Should the court enforce the contract?

courts will examine consideration if it is ridiculously low, Carr wins the consideration was grossly inadequate. Campbell knew the value, but Carr did not. Plus Carr was insane, so that helped.

Austin Keynes offered to sign a note to pay for an entertainment system. $150. Friedman Electronics sold the note to First National Bank. Special designation of each of the 3 parties.

Keynes- maker Friedman - payee; indorser First National Bank - holder; indorsee

James Johnson served as Bradley Union's personal caretaker and assistant, and was authorized by Union to handle his banking transactions. Union became incompetent and Douglas Maxwell was appointed as Union's guardian. Maxwell wanted Union reimbursed for checks that he believed were forged.

Summary judgment in favor of BB&T. Failure to report within 1 year after the bank makes accounts statements.

In which of these situation would specific performance be appropriate? (1) Thompson contract to sell house to Cousteau. Then, Thompson decides she wants to sell to another buyer who will pay more. (2) Amy contracts to sing and dance at Fred's nightclub, then refuses to perform. (3) Hoffman contracts to buy a rare coin owned by Erikson, at the last minute erikson decides to keep the coin (4) ABC Corp has three shareholders: Chang (48% owner), Panozzo (48%), and Ryan (4%). Ryan contracts to sell his 4% to Chang and then backs out.

(1) Specific performance is appropriate (2) Not appropriate (3) Specific performance is appropriate (4) Specific performance appropriate here

Tamara Cohen, showed property to Steven Galastinos, who represented Jerry Seinfeld and his wife Jessica. Cohen told Galastinos her commission would be 5 or 6 percent, and he agreed. Cohen also claims Jessica Seinfeld agreed to this commission. When the Seinfelds wanted to view the property, Cohen was unavailable due to religious reasons. The Seinfelds purchased the property and then refused to pay Cohen her Commision. There are two ethical questions here: (1) Cohen filed suit in New York State Court against the Seinfelds asserting breach of contract. Should the court order the Seinfelds to pay Cohen? Is she entitled to FULL commission? (2) What obligation do parties in business owe each other with respect to religious beliefs? How might this situation have been avoided?

(1) The court ordered the Seinfelds to pay Cohen (2) Parties are supposed to respect religious beliefs.

King County, Washington, hired Frank Coluccio Construction (FCCC) to be the general contractor for a public works project. FCCC hired Donald B. Murphy Contractors as a subcontractor. DBM was responsible for constructing an access shaft at eastern end of the tunnel. Problems arose during construction, a "blow-in" took place where water soil and debris filled the shaft. FCCC and DBM incurred expenses for repairs and delays. King County was supposed to buy an insurance policy to "insure against physical loss or damage". King county, which had general property damage insurance, did not take out the new policy. FCCC and DBM submitted damage claims that the county DENIED. FCCC filed in state court, alleging breach of contract. There are several ethics issues here. (1) King county's property damage policy excluded, at the county's request, coverage of tunnels. When FCCC and DBM filed claims, the county secretly colluded with property damage insurers to deny payment. What does this say about the counties ethics? (2) Could DBM, as a third, party, maintain action on the contract against King County? (3) All-risk insurance is a promise to pay on the "fortuitous" happening of a loss or damage from any cause except those specifically excluded. Payment is not made on a loss the claimant knows will occur. If a loss results from faulty workmanship, should the obligation under the all-risk policy be discharged?

(1)The court ruled in FCCC's favor. (2) The state court, and appellate court ruled against DBM being able to sue King County (3) The contract usually stands despite negligence on contractor's part

Which of these contracts are dischargable b/c events render them impossible to perform: (A) Jimenez, a famous singer, dies prior to a performance at a club. (B) Raglione contracts to sell you land, and before title transfers she dies. (C) Oppenheim contracts to sell you apples. B/c of frost, she can't deliver apples. (D) Maxwell contracts to lease service station. His source of income is the sale of gas. An oil embargo cuts sharply into his profits. He can't make lease payments.

(A) This is dischargable (B) Not dischargable (C) Dischargable (D) Not dischargable

William agreed to represent Shelborne in court who expected to receive $31 million. Shelborne agreed to pay William $1 million. Robert, the London contact, said that in order for Shelborne to get his money, he had to pay $110,010 in taxes. Shelborne asked a co-worker to loan him $50,000 and signed an agreement to pay him back within 72hrs an amount of $100,000. The money was wired to London. they never heard from Robert again. Shelborne never received his $31 million and then disappeared. William learned that Robert was not a London contact. Shelbornes co-worker wanted him money, and William promised him he'd get it. On the coworkers behalf, William filed a suit against Shelborne. The court ruled in Williams favor $200,000 but there were no assets from which to collect. (A) the co-worker, Parker, filed suit against William for breach of contract. He had evidence of tape recording with William promising Parker his money. Will they rule in Parker's favor? (B.) Williams filed counter suit, for unpaid attorney fee relating to lawsuit William filed on Parker behalf against Shelborne. The court ruled against William who appealed to Supreme Court but he failed to supply transcript of trial. Will they rule in his favor? (C) The sham deal is known as "419 scam" of all the parties involved, who behaved ethically?

(A) William Wins (B) Parker wins (A). William acted as the guarantee, and therefore had to be in writing. Williams wins (B). Parker wins because there was no evidence to consider. It was Williams job to supply the evidence, and he didnt. (C) everyone acted in self-interest fueled by greed. No one was ethical.

Cory Babcock and Honest Air Conditioning bought a new Corvette from Cox Chevrolet. Their retail installment sales contract (RISC) required monthly payments until the full amount was paid. It also imposed many other conditions on the buyers and seller with respect to the payment for, and handling of, the Corvette. Cox assigned the RISC to General Motors Acceptance Corp (GMAC). The buyers later sold the car to Florida Auto Brokers, which agreed to pay the remaining balance to RISC. The check was dishonored for insufficient funds after title had been forwards. GMAC filed suit against Honest Air and Babcock seeking breach of contract damages. Defendants argued RISC was a negotiable instrument.

(After appeal) State intermediate appellate court concluded that the RISC was not a negotiable instrument, but GMAC improperly released title before the Florida Auto Broker's check was honored. Ruled in favor of Babcock.

Grant owns a home valued at $45,000. He notices that the bathtubs and fixtures in the bathrooms need to be replaced, so he contracts with Jane's Plumbing to make the replacements. Jane replaces them, and she submits her $4,000 bill to Grant on June 1. Grant does not pay the bill because of financial difficulties. His only asset is his home, but his state's homestead exemption is $40,000. What are Jane's remedies in this situation?

1. Jane can file a mechanic's lien on the home of Grant (within 60 to 120 days). 2. Reduce the $4000 debt to judgment and then obtain a writ of execution on Grant's property.

Jeffrey Brown told Leal the number of workers needed and gave him the forms. Leal recruited Elias Moreno who lives in Texas. Moreno and others filed a suit in a federal district court against Poverty Point alleging in part violations of Texas state law relating to work. Can the court exercise personal jurisdiction?

A court can exercise personal jurisdiction over a non-resident defendant under the authority of a long arm statute. In this case, Texas's long arm statute applied. The court concluded that Poverty Point had sufficient minimum contacts with Texas based on the workers' recruitment in Texas.

Schmidt has a sole proprietorship and is trying to sell a piece of equipment. He offers to sell it to Barry for $10,000. What Happens if: A) S dies prior to B's acceptance. B is unaware of S's death. B) the night before B accepts, a fire destroys the equipment. C) B pays $100 for a 30 day option. During this 30 days S dies and later B accepts the offer, knowing S is dead. D) B pays $100 for a 30 day option. B dies during this period. B's estate accepts the offer within the 30 days

A) death of the offereor or offeree prior to acceptance automatically terminates a revocable offer. B) The offer is terminated if object is destroyed before acceptance. C) Death of offeror doesn't terminate option contract. The offeree can execute the option since performance isn't specific to S. D) Death of offeree also doesn't terminate the option. The estate can exercise the option.

Which case in uneforceable? A: Simon finds a stone and thinks its quartz. He agrees to sell it to Jenson for $10 who also believes its quartz. Just before delivery, they realize its a diamond worth $1,000. B: Jacoby's barn burns down and he accuses Goldman's son of arson and threatens to prosecute unless Goldman pays him $5000. Goldman agrees.

A: unenforceable B: unenforceable A: mistake of fact B: contract was made under duress due to threat of prosecution

Adam is a traveling salesman for Peter Petri Plumbling. Adam has express authority to offer a 5% discount if payment is made within 30 days. Petri did not say anything about extending credit. Adam finds a new customer - John - who agrees to place a large order if Adam gives him a 10% discount with payment due in equal installments in 30, 60 and 90 days. John calls Petri and asks if Adam is authorized to make contracts with discounts - Petri says yes. John then purchases $10,000 of goods which are delivered and being sold. Days later, John receives a bill for $9,500 due in 30 days. John insists he owes only $9,000 due in equal installments. Discuss the libaility of Petri and John.

Adam has express and apparent authority to give a discount. John is not bound to secret limitations imposed by the principal (Petri)(5%). Therefore, John is entitled to the 10 percent discount that he and Adam agreed upon.If it is customary for plumbing sales to be paid on a 30-60-90 day basis, then Petri will be bound. If not, John will owe a lump sum of $9000 in 30 days.

Su Ru Chen owned Lucky Duck Fortune Cookie Factory which made fortune cookies for restaurants. Chen listed the business for sale with Bob Sun, a real estate broker, for $35,000. Sun's daughter Frances and her fiance, Chan, decided that Chan would buy the business. Acting as a broker on Chen's (the seller's) behalf, Frances asked about the Lucky Duck's finances. Chen said that she sold about 1,000 boxes of cookies at $2,000 profit per month. When Chan took over, he found that the factory only produced 500 boxes and a profit loss each month. The factory closed two months later. Chan filed a suit against Chen alleging fraud. He included Frances's testimony as to what Chen had said to her. Chen objected to the admission of this testimony. What is the basis for this objection? Should the court admit it?

An intermediate state appellate court reversed the initial ruling. In this case, because Chen had neither known about nor consented to France's dual role, Frances was in conflict of interest, and "she could not be found to be authorized to act on matters about which she spoke."

Scott was an attorney that represented Andrew in a 2-day divorce trial. After day one, Scott asked Andrew to sign a promissory note for $26973, which was the amount Andrew owed the law firm. If Andrew refused, Scott would withdraw from the case and force Andrew to find a new lawyer. Andrew wanted another lawyer, Martin, to review the note. Scott urged Andrew to sign it and promised that a copy would be sent to Martin. Feeling he had no choice, Andrew hastily signed it. Andrew did not pay the money and claimed to be under duress. Scott's law firm filed suit.

Andrew wins the deal was made under duress. Scott's threat to withdraw in a time when Andrew was highly dependant on Scott created duress that left Andrew without many options; especially since Scott thwarted Andrews attempt to have another attorney review the note.

Ankir is a traveling salesperson of Jamison. Because of slowdown economics, Jamison decided to offer 20% discount on orders but Ankir only offered 15% discount and kept the extra 5%. Ankir has not lost any orders by this practice, rated as one of Jamison's top salespersons. Jamison learns of Ankir's actions. What are Jamison's rights?

Ankir breached his fiduciary duty by secretly retaining funds that belong to the principal (Peters). Funds retained by the agent are held in constructive trust on behalf of the principal. Peters can recover the funds from Ankir and terminate Ankir due to Ankir's breached duty of obedience.

Will an appellate court ever reverse a trial court's findings with respect to questions of fact?

Appellate courts nearly always defer to trial courts' findings of fact. An appellate court can reverse a lower court's findings of fact.

On behalf of BRJM, Nicolas offered Howard $210,000 for a parcel of land. Howard's company, Output Systems, Inc, owned the land. Howard had the land surveyed and appraised at $277,000 and found that it was 3.0 acres and therefore could not be subdivided because the law required 3.7 acres for subdivision of land. Howard counter offered Nicolas for $230,000 with Nicolas accepted. The parties signed a contract. When Howard refused to go through with the sale, BRJM filed a suit. Howard claimed it was a mutual mistake on 2 counts. (A) they agreed to allow the property to be split without the town's pre-approval. Later they found out this was not possible, leading Howard to rescind (B) After singing, they got a second appraisal that found the property to be 3.71 acres which meant it could be divided and that the value was $490,000.

BRJM wins the appellate court reversed the lower court's judgment and remanded the case for the new trial. (A) The court found that there was indeed a mutual mistake regarding the 'free split' but that this mistake was not 'material to the bargain' because the land COULD still be split, but papers had to be filed. (B) Necessary for a 'mutual mistake' is that both parties relied on the same mistaken information in entering the contract. In this case, the mistake about the size and value was unilateral on behalf of Howard. He was responsible for relying on HIS appraiser to be accurate in his calculations; which he wasn't.

'Negligence Per Se' - a North Carolina DOT regulation prohibits the placement of telephone booths within a right of way. GTE South placed a booth in the right of way near an intersection, where Laura Baldwin was using the phone when an accident occurred and a car smashed into the booth. Was Baldwin within the class of person's protected by the regulation? If so, did GTE's placement of the booth constitute negligence per se?

Baldwin, as a pedestrian, can be considered to be within the class protected by the regulation. GTE can be held to have been negligent per se.

Clarence Morgan Jr owned Easy Way Automotive, a car dealership in Mississippi. Easy Way sold a truck to Loyd barnard, who signed a note for the amount of the price payable to Trustmark National Bank in six months. Before the note came due, Barnard returned the truck to Easy Way, which sold it to another buyer. using some of the proceeds from the second sale, Easy Way sent a check to Trustmark to pay Barnard's note. meanwhile, barnard obtained another truck from Easy Way, financed through another 6 month note payable to Trustmark. After either of these deals, some of which involved more than one truck, an Easy Way check to Trustmark was dishonored. in a suit in a Mississippi court, Trustmark sought to recover the amounts of 2 notes from Barnard. trustmark had not secured titles to two of the trucks covered by the notes, hoewever, and this complicated Barnard's efforts to reclaim the vehicles from later buyers. A) On what basis might Barnard be liable on the Trustmark notes? Would he be primarily or secondarily liable?

Barnard is liable on the Trustmark notes as their maker. He is primarily liable.

Wesley Hall, an independent contractor managing property for Acree Investments, lost control on a fire he had set to clear ten acres of Acree land. Was Barrs' agency by ratification claim valid?

Barr's argument was not correct. The evidence was insufficient to establish an agency relationship between Mr. Acree and Wesley Hall. Barr's claim of agency creation by Hall saying that he was doing the burn "for Acree" was not sufficient to establish an agency. The forestry department that allowed the burn did not know or care about who Hall was acting for.

Adam's checks are imprinted with the words "Pay to the order of" followed by blank. Signs one check hands to Beth. Writes on other check "Carl or bearer." Which check is a bearer instrument?

Both are bearer instruments

Monay Jones signed a promissory note in favor of a mortgage company in the amount of $261,250, using the deed to her home as collateral. Fifth Third Bank became the holder of the note. She defaulted, and the bank agreed to raise the note's balance. She defaulted again. The bank received a check from a third party as payment on Jone's note. The bank's policy was to refuse personal checks in payoff of large debts. A bank rep noted the receipt of the check and forwarded the check to another department. The bank later discovered the check was lost and was never applied to Jones' account. Neither party could find proof the check existed. The bank tried to foreclose on Jones' house. She said her deceased aunt had paid the debt in full. What evidence supports the Jones gave the bank a check? Was it cashier or personal? Would it be fair for a court to find that the check had been paid in full? Or could the bank say it had not accepted the check, and thus was not responsible because it was pending approval?

Both courts ruled in Jones' favor. Both courts found evidence to support the existence of a cashier's check or other certified check.

Peaslee owns a greenhouse and nursery and is in debt. On Feb 1 he borrowed 5k from his father and paid it back on May 1, depleting all of his working capital. Cool Springs has extended credit to Peaslee on multiple occasions. ON July 1, he paid Cool half of what he owed. On Sept 1, Peaslee vouluntarily petitioned himself into bankruptcy. The trustee says that both his father and Cool must return the money. explain

Both payments can be declared preferences. Peaslee was probably insolvent at the time he paid both creditors.

Burke, rancher, has 8 creditors and a total indebtedness of $70,000. A drought has ruined all of Burke's crops and forced her to sell many of her cattle at a loss. She cannot pay off her creditors.

Burke can voluntarily petition herself into bankruptcy. She only has to be a debtor.

Verni was caught selling copies of a test in his dermatology class at CCC. Upon dismissal from CCC, he was informed of his right to appeal and to have an attorney, present witnesses, and other evidence...or to question any testimony against him. At the hearing, Verni did not bring attorney or present witnesses, etc. The court upehld his dismissal. Verni filed suit against CCC because he relied on CCC to provide the attorney.

CCC wins the court set aside the initial verdict Verni did nothing to prepare for trial. His own misunderstanding of his rights are not the responsibility of CCC. Verni must pay for his ignorance.

Sylvia takes her car to Caleb's Auto Repair Shop where there is a sign in the window that says all repairs must be paid for in case unless credit approved in advance. Sylvia and Caleb agree to repair her engine and put in a new transmission in her car. No mention of credit is made. Caleb does not give Sylvia an estimate, and he repairs the engine and puts in a new transmission. Sylvia learns the bill is $2,500 when she picks up her car. She refused to pay Caleb that amount and demands her car back, but Caleb insists on payment. Who is right in this matter?

Caleb has an artisan's lien on Sylvia's car. He can keep her car or foreclose on the lien if she doesn't pay

Marya Callais, a citizen of Florida, wants to sue a trucking firm whose headquarters are in Georgia (does business in Florida). In what court might Callais bring suit?

Callais can bring suit in a Florida State court (accident occurred there), Callais could also sue in Georgia (the firm is headquartered there), and Callais could sue in federal court (>$75,000 + diversity)

The Caplans own a lot, and they contract with Faithfuls to build on the lot. The contract states that "all plumbing fixtures" should be Crane brand. Faithful uses Kohler (which is considered an equivalent). The Caplans inspect and refuse to accept the house because of the substitution.

Caplans are forced to pay Faithful is liable for any difference proven between what was promised and what was provided.

Bertram writes a check for $200 payable to "cash". He loses the check. Jerrod finds it and delivers it to Amber, who he owes $200. Amber endorses the check "For deposit only, Amber Dowel" and deposits it. A) Is the check a bearer or order instrument? B) Did Jerrod's delivery constitute a valid negotiation? C) What type of endorsement did Amber make? D) Can bertram recover his $200?

Check was a bearer instrument. Does not designate a specific payee. The finder's delivery of the check to the creditor was a valid negotiation. Amber's indorsement is restrictive. No, the drawer cannot recover the proceeds from the person to whom the finder delivered the check. Drawer can recover from finder.

Gary leaves his checkbook in his shopping cart. Delores grabs it and starts forging checks. Gary claims that Citizens Bank must recredit his account for both checks, as his signature was forged.

Citizens Bank will not have to recredit Gary's account for the $1000 and probably will not have to re-credit his account for the first forged $100. 30 day rule. Bank no liability

RDP Royal Palm contracted with Clark construction to build a resort. The deadline for "substantial completion" was Feb. 28, 2000, but RDP could ask for changes and change the deadline. Clark encountered many unforeseen complications during construction and RDP issued hundreds of change orders. Extensions were requested and accepted, with no new finish date required. In March 2002, when the resort was substantially complete, RDP stopped paying. Clark stopped working, RDP hired another contractor and finished the resort. RDP filed suit in federal court alleging that Clark breached contract during 2-year delay. In whose favor should court rule?

Clark RDP waived right to enforce original completion date by accepting Clark's continued performance. Clark was entitled to payment for work. The appellate court confirmed this.

Susan Guinta is a real estate salesperson. Smythe Cramer Co. obtained a garnishment order to attach Guinta's personal earning. The order was served on Russell Realtors to attach sales commissions that Russell owed to Guinta. Russell objected arguing that commissions are not personal earnings and are therefore exempt from attachment under a garnishment of personal earnings. How should the court rule regarding Russell's objection?

Commissions are personal earnings subject to garnishment

Tyna Ek met Russell Peterson in Seattle and agreed to buy a boat from him that was located in Juno, Alaska. Ek paid $43,000 for the boat. In contract, Peterson agreed to make the boat seaworthy . He also agreed to renovate boat for free in exchange for portion of resale profits. Peterson acted shady, and Ek went to Alaska to take the boat from him. Peterson moved elsewhere and registered the boat under a false name, then the police seized the boat. Ek filed suit in Alaska state court, alleging breach of contract and seeking damages. What should damages include?

Compensatory damages to recover the purchase of the boat, etc. Consequential damages to cover Ek's troubles in dealing with Russell Peterson's antics.

Gene Shvartsshteyn had an affair with Melissa Winyard. A year after leaving Royal, Winyard filed under Chp. 7. Schroeder, Gene's wife, filed for divorce and filed a suit against Winyard alleging "Alienation of affection."

Court issued a judgment in Winyard's favor. Bankruptcy relief discharges the debtor from all debts that arose before the date of the order for relief. There was lack of intent.

John Sasson, a U.S. Army engineer, and Emily Springer, an attorney, met in January 2002. Six months later, John bought a townhouse and asked Emily to live with him. She agreed but kept her house. John paid the mortgage and other expenses on the townhouse, and he told Emily to quit her job and work from "our house." In May 2003, Emily quit her job and started her own law practice. In December, John made her the beneficiary of his IRA and said he would give her his BMW before the end of next year. He gave her an engagement ring in Sept 2004 and promised to take care of her for hte rest of her life. A month later, John was critically injured and died. Oh behalf of John's estate, his brover Steven filed a complaint to have Emily evicted from the townhouse.

Court ruled against Emily - they didn't live together long enough A) If the promise was made and consideration received, it is an enforceable contract against the promisor's estate. However, length of cohabitation played a role in this case. B) An ethical basis for enforcing a promise of support might arise if a broken promise caused the claimant to suffer but its terms were not other legally enforceable. Emily was not left destitute when John died (had her own law practice), so detrimental reliance can't be claimed here.

David Gain was the CEO of Forest Media Corp. To initiate negotiations, Gains met with RS's CEO, Gill Razz. Two days later Gains phoned his brother Mark who bought 3800 shares of RS stock.

David is liable for insider trading. Most likely source of that belief or knowledge was inside

Dennis mails a letter to Tanya offering to sell his car to her for $3,000. Over the weekend he sends a fax to her office revoking the offer. she didn't get the fax until Monday, after she had mailed a letter of acceptance to Dennis. Dennis wouldn't sell the car when Tanya demanded saying no contract was made since he revoked prior to acceptance. Is Dennis right?

Dennis is right Since the revocation was sent before the acceptance, there is no contract. It doesn't matter that Tanya didn't see the revocation.

The judge's role is not to make the law but to uphold and apply the law. Agree or disagree?

Disagree. In certain situations, judges make law.

Neal Peterson was on a race team, and one morning he practiced after a race. While in midair, Peterson collided with David Donahue, a 43 year old advanced skier who was crossing the slope. They both knew falls were possible with skiing and that injuries were possible. Donahue sought help for Peterson, who was lying motionless after the crash. Peterson filed a suit against Donahue for negligence. Which defense to a claim of negligence is Donahue most likely to assert? How is the court likely to apply that defense and rule on Peterson's claim?

Donahue's defense to the negligence charge was assumption of risk. Court ruled in defense and dismissed the case. The appellate court affirmed the dismissal of the suit.

33-3

Dubycheck may be correct on its claim. If the campaign worker is someone who usually orders materials or has ordered from Dubycheck, Dubycheck can argue that employee had apparent authority. If either is applicable, ratification by Springer is not necessary, and Springer is liable.

Karen and Gerald Baldwin owned property and leased it to Wyoming Alaska Corp (WACO) for use as a gas station and convenience store. The lease obligated the Baldwins to make repairs but WACO was authorized to make necessary repairs. After 17 years, the property was run down: customers tripped over potholes in the parking lot and an underground gas tank was leaking. The store manager hired Duffield Construction to install a new tank and make other repairs. The Baldwins saw the new tank sitting on the property before the work began. WACO paid only a small portion of the cost, and Duffield filed a mechanic's lien and asked the court to foreclose on the property. The Baldwins disputed the lien arguing that they had not requested the work.

Duffield was entitled to foreclose on the mechanic's lien. The owners have to speak up with they see improvements being made.

Charles Edwards formed ETS Payphones to sell and lease pay phones. Eventually ETS defrauded thousands of investors of more than $300 million.

Edwards held liable. ETS at fault. The court granted the defendants' motion to dismiss. Higher court affirmed lower court's decision.

33-5

Even if Gaines' death was the result of BSP's negligence, Dean would not be liable because BSP was an independent contractor and an employer is not generally liable for the negligent acts of an independent contractor.

Southeast Bank issued five cashiers checks totaling $450,000. Sanchez gave two checks to Juan Diaz. Later, the bank failed. First Union National Bank agreed to assume Southeast's liability for outstanding cashier's checks and other times. A letter must be mailed to the bank's depositors, and the assistance agreement stipulated they were required to honor checks for 18 months. 60 months later, Diaz gave the checks to Acevedo, who tendered the checks to First Union. Do they have to pay?

First Union would most likely have to pay the amount of the cashier's checks to Acevedo. Liable when it entered into "Assistance Agreement."

Niles sold Kennedy a small motorboat for $1500. Kennedy gave Niles a check. Niles gave the check to Frazier. Kennedy stopped payment on her note due to problems with the boat. Niles has disappeared. Can Frazier recover from Kennedy as an HIDC?

Fraizer is an HIDC and can hold Kennedy liable

Frank was driving tractor-trailer down interstate when the trailer became lodged in concrete barrier. The police arrived and called tow truck to help Frank. the tow truck guy told Frank it would cost $275 for service; there was no mention of labor fee. After dropping off tractor-trailer only a few miles down the road, the tow truck guy said the total bill was $275 plus $4070 for labor fees. Frank paid the bill but the next day filed suit against tow truck guy.

Frank wins The $275 was a valid contract, but the additional $4070 was 'unconscionable' which means that no man in his right mind would pay 4 grand to have a tractor towed only a few miles down the road.

Junior owes creditors $1,000, it is due and payable on June 1. He has been in a car accident, and can't pay. His father, Fred, offers to pay $1,100 in 4 equal installments for the discharge of Junior's debt. Debtor accepts. Is this a novation or accord and satisfaction?

Fred's agreement to pay off Junior's debt is definitely a valid contracts. Fred becomes the debtor and Junior is discharged from further liability. Novation

Gary works for Bellsouth and signed a non-compete clause to not provide services or products similar to Bellsouth within Bellsouth's territory. Gary quit Bellsouth and immediately was hired by Sprint. Bellsouth sued Gary.

Gary Wins creates greater limitations on emloyee than is neccessary for the protection of the previous employer Bellsouth appealed and the appellate court affirmed the lower court's order

On Jan 1, Damon, for consideration, orally promised to pay Gary $300/month for as long as Gary lived, on the 1st day of every month. Damon made the payments for 9 months, but then stopped. Gary sued Damon for breach of contract. Daon said that under the Statute of Frauds, the contract was unenforceable because it could not be completed within 1 year.

Gary wins oral contracts that are IMPOSSIBLE to complete within 1 year fall under Statute of Frauds. Despite how unlikely it might be that Damon could die within a year, it IS still possible. Therefore, completion of the contract to "pay for as long as he lives" IS possible within a year, therefore the contract is enforceable.

Costello hired Sagan to race his car. For the car race, Gideon promised to pay Sagan $3000 if she won. Sagan won, but Gideon refused to pay on the basis that no consideration was received.

Gideon wins. Supported by the preexisiting duty rule. Sagan was already obligated to Costello to do her best to win the race. Sagan gave no consideration

Grano owns 40-room hotel. Tanner wants to buy hotel. Grano tells Tanner the hotel netted $30000 previous year and will net $45000 next year. The books, which Tanner read, showed the hotel only netted $15000 the previous year. Also, Grano fails to tell Tanner a new highway is being built that will redirect traffic away from hotel. Tanner purchases hotel. During Tanner's first year, the hotel nets only $18000. Eventually, Tanner realizes it was a mistake when he learns of the new highway. Tanner files suit.

Grano wins prediction of future earnings is an 'opinion' and there was no false representation because previous earnings were in 'the books', which Tanner had in his possession before purchase. Also, Grano had no duty to disclose to Tanner the plans for the highway. Overall, there was no justifiable reliance.

Milton agreed in writing to buy 15 acres of Henry's junkyard property for $15000 per acre with a ten-year option to buy the remaining 28.32 acres. Milton orally agreed to (1) begin operating a car skeleton processing plant within 6 to 15 months, (2) buy as many car skeletons generated by the yard as Henry wanted to sell him, and (3) allow all junk vehicles on the property to remain until they were processed at the new plant. Milton never operated such a plant, never bought any vehicles from the yard, and demanded that all vehciles be removed from the property. to obtain the remaining 28.32 acres Milton filed suit against Henry who responded with counter claim of breach of contract. Henry admitted to agreeing to sell as many as he wanted, while Milton admitted to agreeing to buy as many as Henry would sell him.

Henry wins Statute of Fraud applies to sale of goods, which in this case, is really about the sale of skeleton cars, not the land. Therefore, it must be in writing. However, in a trial where the party for whom action is sought, agrees orally, in court, that a verbal agreement did exist, then the agreement can be enforced without writing. This is the case here. So, the agreement to purchase as many cars as Henry was willing to sell, states the goods, and quantity which is sufficient to be enforced. Therefore, Milton breached the contract.

IBM hired Niels Jensen in 2000 as a sales rep. According to a brochure he was given on the incentive package, he should have received $2.6 million from a sale he made to the IRS. However, he was paid less than $500k. He filed suit saying the brochure was a unilateral offer that became binding when he closed the sale. Would it be fair to IBM to decide there was a contract if they hadn't intended this? Would it be fair to Jensen to say there was no contract?

IBM won Court said that Jensen failed to show that IBM had made an offer here.

Chef Perlee works for Hotel Lux and signed agreement not to compete in New York, New Jersey or Pennsylvania, if he leaves. 6 months later he quits and finds new job in New Jersey just across state line. Hotel Lux sues Chef Perlee for breach of contract.

If contract is considered reasonable, the court could decide in favor of Lux. If 'non-compete' is unreasonable, then court could allow Chef Parlee to compete directly, or could rewrite contract to grant Chef Parlee employment outside of Hotel Lux's competitive scope.

Robert Gutkowski sued the Yankees when he stopped working with the Yankees. He contended that he had been promised an ownership share in YES. There was no written contract for such a share.

In New York, a contract must be sufficiently "definite" to be enforceable. For Gutkowski to claim that he is due more compensation based on unjust enrichment or quantum meruit, he must have proof. The claims were dismissed.

Shoreline owns property in Gulf Shores and has RDI manage them. RDI takes out insurance. Hurricane hits and insurance estimates $334k in damage. Insurance pays the amount minus a $40k deductible, but RDI disputes. Insurance later gives $86k more if RDI signs a "release of all claims." They do. Later, Shoreline files a suit against insurance alleging that the deductible was incorrect and the contract was breached

Insurance wins The release was supported by valuable consideration (the $86k). Chp. 12-7

Jeremy took his mother on vacation to Mountain Air Resort where he is well known by the manager. The resort requires a large deposit to ensure payment for the room. Jeremy asked the manager to waive the deposit requirement and promised to pay for his mother's stay, in the event that she did not pay. The manager agreed to waive the deposit. After she returned home, Jeremy's mom refused to pay. Jeremy also refused to pay and said that his promise was not enforceable under the Statute of Frauds. Is Jeremy correct?

Jeremy wins Jeremy's oral promise was that he would act as the guarantor, which means it should have been in writing, BUT it wasnt. Therefore it does fall under the Statute of Frauds and is NOT enforceable.

Gil makes out a promissory note payable to Ben. By special endorsement, Ben transfers the note for value to Jess. By blank endorsement, Jess transfers the note for value to Pam. By special endorsement, Pam transfers the note for value to Adrien. In need of cash, Adrien transfers the instrument for value by blank endorsement back to Jess. When told that Ben has left the country, Jess strikes out Ben's endorsement. Later, she learns that Ben is a wealthy restaurant owner in Baltimore and that Gil is financially unable to pay. Jess contends that, as a HIDC, she can hold Ben, Pam, or Adrien liable on the note. Discuss Jess's contentions.

Jess cannot hold any of the parties liable on the instrument. When Jess reacquired the note, all intervening parties were discharged. Jess also crossed out Ben's indorsement.

A check drawn by Cullen for $500 is made payable to the order of Jordan. Jordan - for rent paid, signed Jordan Landlord - transfers to Deborah without indorsement Deborah - pay to BGN without recourse signed Deborah. Classify indorsements. Landlord - Deborah an indorsment?

Jordan - blank indorsment Deborah - special qualified indorsement Better-Garden Nursery - restrictive Because a bearer instrument can be negotiated by delivery only, without indorsement, Jordan's landlord did effectively negotiate the check to Deborah.

Juan is an elderly man who lives with his nephew, Samuel. Juan is totally dependent on Sam's support. Sam demands that Juan sell him some land for 35% below market value or else Same will no longer take care of Juan. Juan has no choice but to agree.

Juan can have the contract set aside excessive or undue inlfluence lacks genuine assent and is therefore voidable.

Waldo makes out a negotiable promissory note payable to the order of Grace. The note transfers several times. On the due date, Keith presents the note to Waldo for payment. Waldo has filed for bankruptcy and will have all debts discharged. Discuss whether Keith can hold Waldo, Grace or Adam liable.

Keith is an HIDC. Keith cannot hold Waldo liable. Grace cannot be held liable. Adam can be held liable on his unqualified special indorsement within 30 days.

Kira sold Charlotte a diamond ring for $100, while under the influence of alcohol. The next day Kira tried to return the $100, but Charlotte refused.

Kira got her ring back Since Kira was intoxicated, the contract was voidable at her option

Kobe Steel of Japan was interested in using the technology at its US subsidiary. PRM directed Kobe to talk to Primenergy about that. Primenergy then agreed to let Kobe use the technology in Japan without telling PRM. The district court ruled that PRM had to take all complaints about Primenergy to arbitration. PRM also had to take its complaint about Kobe to arbitration because the complaint involved a sublicense Kobe was granted by Primenergy. PRM appealed, contending that the fraud and theft of trade secrets went beyond the license agreement with Primenergy and that Kobe had no right to demand arbitration because it never had a right to use the technology under a license from PRM. Is PRM correct, or must all matters go to arbitration?

Kobe can compel arbitration. All claims PRM has against Primenergy go to arbitration because the arbitration clause covers "all disputes." The reviewing court affirmed the trial court's decision.

Maine Co promised to buy all of Merrick's blueberries but the price was never decided. Merrick delivered blueberries but a dispute arose over the price. Maine sent Herrick a check with a letter that said "this is the final payment." Merrick cashed the check, but filed a suit for breach of contract alleging that the buyer owed more. What will the court decide?

Maine wins. Accepting and cashing the check created accord and satisfaction. Also the letter was unambiguous, stating that Maine expected the ordeal to be over. If Merrick didn't like the amount, he shouldn't have cashed the check.

What is the difference between a concurring opinion and a majority opinion? Between concurring and dissenting opinion? Why do justices bother writing these if they do not affect the outcome of the case which has already been decided by the majority vote?

Majority opinion outlines the views of the majority of the justices. Concurring agrees with the conclusion, but for a different reason. Dissenting opinion disagrees with the conclusion reached by the majority. These opinions may be used by other courts to support their positions on a similar issue

Redford sells electric generators. He purchases generators from Mallon Corp by making a down payment and signing an agreement to make the balance of payments over a period of time. The agreement gives Mallon a security interest in the generators, and it properly files a financing statement on its security interest. Redford sells a generator to Garfield on an installment contract with payment to be made in equal installments. Garfield knows of Mallon's security interest when he buys the generator. Two months later, Redford defaults on his payments to Mallon. Discuss Mallon's rights against Garfield.

Mallon's perfection of its security interest is not effective against Garfield. Mallon has no rights to the generator possessed by Garfield. Mallon is entitled to proceeds however.

Contracts to manage a boxer must be in writing and the manager must have a license. Marco was a champion boxer, and Jose was an unlincesned manager who verbally agreed to help Marco. The agreement was 'no less than 10% of gross revenue' as payment for management services. Jose helped Marco get exclusive promotion deals, settle 3 lawsuits, and resolved unrelated tax problems. Jose did not train Marco, pick his opponents, or arrange his fights. One day, Marco stopped calling Jose. Jose filed suit.

Marco wins Despite Jose's services, state law requires license and written contract. Neither existed therefore verbal contract was unenforceable. Castillo appealed but the appellate court affirmed the summary judgment

Hartford Mutual Insurance issued a check payable to "Andrew Bogdan Jr, Crystal Bogdan, Oceanmark Bank, GGG Company" for a claim related to a commercial property. The payees included the mortgage holder (Ocean) and insurance company (GGG). The Bogdans cashed the check at Provident Bank. Meanwhile, Oceanmark sold the mortgage to Pelican National, which asked Oceanmark to pay it the amount of the check. Provident refused. Pelican filed suit against Provident, aruging the check had been improperly negotiated. Was this check payable jointly or in the alternative? Whose indorsements were required? In whose favor should the court rule?

Maryland Court of Appeals affirmed the lower court's judgment in favor of Provident. Check was neither clearly payable nor alternative, because the payees were not connect by or, etc. The indorsement of any one of the payees was sufficient

Warren wanted to buy a house from Merrill, a agent for the seller. Merrill said Warren's credit rating is poor and suggest her daughter would "go on title" until the loan if Warren agreed to pay $10,000. Also, Merrill could make 20% down payment. But Merrill secured the mortgage in her daughter's name alone. After Warren moved in and paid the commission, Merrill had Warren evicted. Warren filed a suit against Merrill and her daughter. Who was in an agency relationship? Was the duty breached here?

Merril (agent) and Warren were in an agency relationship. Merril's fiduciary duty was to Warren was to place his interests above her own in the real estate transaction. Merril breached her duties to Warren, committed fraud and misappropriated Warren's funds. A court should at least rule that the title be transferred to Warren.

Millennium Club is a bar. One day a group of underage kids got in using fake I.D's and even signed affidavits claiming they were 21 or older. When the state filed criminal charges against Millienium, the bar filed suit against the kids charging them $3000 each. (there were over 200 kids).

Millenium wins fraud and misrepresentation

Ford Moto Credit Co. , a subsidiary of Ford Motor Co.. Ford Motor is not a part of any agreements between Ford Credit and its customers. A number of plaintiffs filed a liability suit in Missouri state court against Ford Motor. But Ford Motor claimed that the court did not have venue. Plaintiffs asserted that Ford Credit have the transaction in Missouri State. Is Ford Credit an agent of Ford Motor?

Missouri State Court reversed original ruling and determined that Ford Credit did not operate as Ford Motor's agent. An agency relationship can only be established if the elements of an agency relationship exist. Ford Credit has no power to alter legal relations between Ford Motor Company and third parties. Therefore, Ford Credit does not act as an agent for Ford Motor.

NTRN hired Ameripay, a payroll company, to issue payroll checks. Ameripay setup an account that NTRN agreed to deposit funds in to cover its payroll obligations. At the end of the month 4 NTRN employees cashed their checks signed by Piacentini (Ameripay). The checks were returned dishonored. Which party is liable?

NTRN, as the principal, would be liable for their dishonor. Triffin could not enforce the dishonored payroll checks against Ameripay.

Alice Banks was injured when a chair she was sitting on at an Elks club collapsed. She had two surgeries and developed a staph infection. She sued Elks club and Boyce (the doctor) for negligence.

Negligent claims against each may stand alone. The alleged tortfeasors were not acting in concert with each other.

Peter hired Alice as an agent to sell property for at least $ 30,000. But Alice found the price is actually $45,000 and might be higher because a shopping mall will build there later. Alice forms a contract for Peter and Carl, her cousin for $32,000. Peter found the truth after he signed the contract. So he refused to deed the property to Carl. Carl sued Peter that the contract is binding and enforceable. Is Peter bound to this contract?

Neither Carl nor Alice can hold Peter to the contract, and Alice's breaches of fiduciary duties allows Peter to terminate his agency relationship.

When the check was not paid, A-1 sold it to Robert Triffin. When Triffin could not get the check honored, he sued AIG, contending that he had the right to collect on the check as a HIDC. The trial court rejected the claim. Triffin appealed.

Neither Triffin nor A-1 could claim HIDC status and therefore had no right to have the check cashed. The printing of the name on the check was not a proper signature Merriwether was the only one with a right to sign the check

Courts can overturn precedents and change common law. Should judges have the same authority to overrule statutory law?

No

Orphan Medical, pharmaceutical company. Before merger with Jazz, Orphan completed a phase of testing of Xyrem that indicated that the Food and Drug Administration would allow the drug to proceed to the next stage of testing. A shareholder sued saying that all shareholders should have known.

No duty to disclose early drug trial data No duty to give shareholders access to such data

Germanie Fequiere executed and delivered a promissory note in the principal amount of $240,000 to BNC Mortgage... Assuming that is true, does it mean that Chase, as as the holder cannot foreclose on the collateral property secured by mortgage?

No, even if the assignment of the mortgage was done properly, Chase, as the holder, has the right to foreclose on the mortgage.

Jabil Circuit is a publicly traded electronics and technology company. In 2008, shareholders who owned stock sued the company and its auditors, directors, and officers for insider trading. Jabil did not report that it backdated stock options for executives.

No, the claims were not sufficient to show a violation of rule 10b-5 because the complaint was too general.

Ball writes Sullivan asking how much he wants for a 40 acre piece of land. Sullivan wrote back and says he will not take less than $60,000. Ball sends a telegram saying I accept your offer for $60,000 for the land. Can Ball hold Sullivan to the contract?

No, there is no contract For an offer to exist, the offeror must show definite intention. Invitations to trade or negotiate only preliminaries. Any attempted acceptance wouldn't bind the parties. There is no offer to be accepted.

An elderly couple help Daniel by giving him food and shelter for a night. Daniel's father Fred appreciatively promises to pay them $500 for their help, but then backs out after he and Daniel have a fight. Can the elderly couple hold Fred liable for their services given to Daniel?

Past consideration is no consideration; therefore, a promise to pay for an event that has already taken place is not enforceable.

Planned Pethood Plus, Inc., is a veterinarian-owned clinic. It borrowed $389,000 from KeyBank at an interest rate of 9.3 percent per year for ten years. The loan had a "prepayment penalty" clause that clearly stated that if the loan was repaid early, a specific formula would be used to assess a lump-sum payment to extinguish the obligation. The sooner the loan was paid off, the higher the prepayment penalty. After a year, the veterinarians decided to pay off the loan. KeyBank invoked a prepayment penalty of $40,525.92, which was equal to 10.7 percent of the balance due. The veterinarians sued, contending that the prepayment requirement was unenforceable because it was a penalty. The bank countered that the amount was not a penalty but liquidated damages and that the sum was reasonable. The trial court agreed with the bank, and the veterinarians appealed. Was the loan's prepayment charge reasonable, and should it have been enforced? Why or why not?

Planned Pethood had the right to prepay the loan principal, but that triggered the prepayment penalty that was clearly stated in the contract. The alternative for Pethood was to pay the loan annually, year by year, for 10 years as the note called for. When it took advantage of the alternative, the prepayment penalty was not unreasonable.

Joanne, 75yr old woman with 'un-diagnosed' Alzheimer's disease purchases a piano with a 15-yr installment contract despite being financially unstable. The next day while piano is being delivered, she claims to have forgotten that she ever made the purchase. Can she avoid contractual obligation?

Probably Although it was not pre-determined as to whether she was incompetent; the fact that she made such an expensive purchase on a tight budget, and her behavior with delivery boy suggests her incompetence.

Berstein gets a contract for Shade to build a home for $153,000. As the project continues, Shade demands $13,000 more to continue and Berstein agrees to pay the addition, but then refuses to pay. Is Berstein required to pay the additional amount?

Probably not due to Shade's preexisting duty to build the house for the set amount.

Shannon's physician gives her pain medication and tells her not to drive after taking it. She decides to drive to the store and fails to stop at a traffic light and crashes into another car causing a passenger to be injured. Is she liable for the tort of negligence?

Shannon was negligent

William Larry Smith signed a lease for certain land owned by Sweet Smitherman. The lease stated that it was between Smitherman and WLS, Inc. (doing business as S&H Mobile Homes). The signature line identified the lessee as WLS, Inc. d/b/a S&H...By: William Larry Smith, President. Years later, Smitherman filed suit against William Larry Smith alleging he owed $26,000 in unpaid rent. Smith responded that WLS was the lessee and that he was not personally liable for the obligation.

Smith was the agent of WLS, and under those circumstances, WLS is liable to Smitherman for unpaid rent. An agent who signs a contract on behalf of his or her principal binds the principal only and incurs no personal liability.

Brian drafts a check for $3000 payable to his assistant Shanta. Brian is killed before he has a chance to go to the bank. Shanta presents the check to the bank and the bank honors it. Brian's widow demands that Southern Marine Bank recredit Brian's estate for the check paid to Shanta

Southern Marine Bank is not liable to Joyce or to Brian's estate for the $3000 paid to Shanta. Joyce would have had to issue a stop payment.

Somerset Valley Bank notified Alfred Hauser that the bank had begun to receive what appeared to be Hauser Co. payroll checks. None of the payees were Hauser employees, and Hauser had not written or authorized anyone to write checks, so he told the bank to not cash them. Robert Triffin bought some of these checks, and fulfilled all negotiable requirements. They were returned to him as "stolen", so Triffin sued.

State intermediate appellate court affirmed, holding that "the eighteen checks meet the definition of a negotiable instrument." Triffin- HIDC. Hauser Co was liable for payment of checks.

Robert Hildebrandt contracted with Harvey and Nancy Anderson to find a tenant for the Anderson' used-car lot. The Andersons agreed to pay Hildebrandt "a commission equal in amount to five percent up to first three years of lease". Paramount Automotive agreed to lease the premises. The Andersons signed a note to Hildebrandt saying they would pay an amount to Hildebrandt over an amount of time, representing the commission. Paramount stopped making payments, so the Andersons stopped paying Hildebrandt. Hildebrandt sued the Andersons.

State intermediate appellate court reversed the judgment and remanded the case for the entry of a judgment in Hildebrant's favor. "No condition appears on the face of the note."

How is statutory law created? What is the difference between statutory and common law? Which law governs in the event of a conflict?

Statutory law is enacted by state and federal legislatures. Common law is not in any particular form, usually consists of quotable statements of prior judges and statues, while statutory law is found in published laws and is relatively concise. Common law only governs in areas where the legislature has not "acted" or passed laws.

Estrada Hermanos Inc (doing business in Florida) decides to sell $1 million worth of its common stock to the public. The stock will be sold only within the state of Florida. Do they need to register with the SEC?

Stock offerings that are restricted to residents of the state are exempt from registration requirements.

Cleveland Chiropractic College (CCC) promised prospective students that it would provide clinical training and experience by providing an ample variety of patients. CCC reported to the Council on Chiripractic Education that patient recruitment was the 'joint responsibility' of the college and student. After graduation, many students filed suit against CCC for telling them one thing, and reporting something else to its accreditation council.

Students win Appellate court affirmed the lower court's judgment CCC intentionally provided false information for the purpose of recruiting students, and those students relied on the falsity and thus incurred a loss in having to find and recruit patients on their own.

Just Homes, LLC (JH), hired Mike Building & Contracting, Inc., to do $1.35 million worth of renovation work on three homes. Community Preservation Corporation (CPC) supervised Mike's work on behalf of JH. The contract stated that in the event of a dispute, JH would have to obtain the project architect's certification to justify terminating Mike. As construction progressed, relations between Mike and CPC worsened. At a certain point in the project, Mike requested partial payment, and CPC recommended that JH not make it. Mike refused to continue work without further payment. JH evicted Mike from the project. Mike sued for breach of contract. JH contended that it had the right to terminate the contract due to CPC's negative reports and Mike's failure to agree with the project's engineer. Mike moved for summary judgment for the amounts owed for work performed, claiming that JH had not fulfilled the condition precedent—that is, JH never obtained the project architect's certification for Mike's termination. Which of the two parties involved breached the contract? Explain your answer.

Summary judgment for Mike. JH breached the contract because it failed to fulfill the condition precedent requiring it to obtain certification from the architect that sufficient cause existed to justify its termination.

Trelleborg loaded the pallets, and Camp drove to TNT's dock in Normal. When she opened the trailer door, the top pallet slipped. As Camp tried to close the door to prevent the pallet from falling, she injured her shoulder and arm. She filed a suit against TNT and Trelleborg, claiming negligence. What is their defense?

TNT and Trelleborg can argue that they did not owe Camp a duty. They might also argue that she assumed any risk and could have prevented the injury. The court issued a judgment in the defendants' favor. On Camp's appeal the US Court of Appeals affirmed this judgment.

ABC Clothiers has contract with Taylor & Sons to deliver some suits before May 1. On April 1, ABC tells Taylor they won't be able to deliver suits. Taylor wants to file suit against ABC immediately, but his son Tom says he has to wait until ABC actually fails to deliver. Is Taylor right or is Tom right?

Taylor senior is correct. He can file suit for breach of contract. He does not have to wait until May 1.

Hurricane Katrina - Evangel Temple Assembly

That was the situation, so Evangel had the right to terminate without payment. The court should not have accepted parol evidence, because it was not needed. In any event, that parol evidence did not change the outcome of the case because the contract could be resolved without it.

WTS required financing to develop a prototype of an unpatented fingerprint-verification system. Curbstone acquired WTS, and the resulting entity was named Electro-Optical Systems Corp. Over the next few months false press releases and made deceptive purchases of EOSC shares.

The SEC filed a civil action in a federal district court against Cavanagh and others, alleging they violated federal securities laws. The court ordered the defendants to pay civil fines and remit the remaining shares of their EOSC stock. U.S. Court of Appeals affirmed this judgment.

Jack and Maggie Turton filed a lawsuit against the county alleging violations of federal environmental laws pertaining to groundwater contamination and other pollution.

The Turtons would have a standing to bring their suit. The Turtons lived directly across from the landfill, and they were experiencing the specific types of harms.

At the trial, the court entered a judgment enjoining Coleman from marketing the software that was in competition with the software he had developed for Retina Consultants. (Clinex-RE)

The appellate court did not uphold the non-compete clause because it was invalid and unenforceable because it contained no time or territorial limits. It was reasonable that the court require Coleman to return funds.

Lauren Barton, a single mother with three children, lived in Portland, Oregon. Cynthia VanHorn also lived in Oregon until she moved to New York City to open and operate an art gallery. VanHorn asked Barton to manage the gallery under a one-year contract for an annual salary of $72,000. To begin work, Barton relocated to New York. As part of the move, Barton transferred custody of her children to her husband, who lived in London, England. In accepting the job, Barton also forfeited her husband's alimony and child-support payments, including unpaid amounts of nearly $30,000. Before Barton started work, VanHorn repudiated the contract. Unable to find employment for more than an annual salary of $25,000, Barton moved to London to be near her children. Barton filed a suit in an Oregon state court against VanHorn, seeking damages for breach of contract. Should the court hold, as VanHorn argued, that Barton did not take reasonable steps to mitigate her damages? Why or why not?

The appellate court reiterated the lower court's findings. The court should award Barton $72,000 for the one year's salary she would have been paid if VanHorn had not repudiated their contract and the costs to move to London.

Roberto Basulto and Raquel Gonzalez responded to an ad on Spanish-language television. Potamkin's staff explained the English-language contract, but did not explain an accompanying arbitration agreement. The buyers filed a suit against Potamkin. The dealer sought arbitration.

The arbitration agreement in this case was both procedurally and substantively unconscionable. The court refused to compel arbitration. On the dealer's approval, a state appellate court affirmed the ruling. 13-8

Thomas Baker and others who bought homes from Osborne Development Corp. sued for multiple defects in the houses they purchased. Were new homeowners bound by the arbitration agreement, or could they sue the builder, Osborne in court?

The arbitration agreement was not binding on the homeowners, so they could sue the builder, Osborne, in court. The appeals court held the arbitration agreement to be "oppression" against the homeowners. The agreements were one-sided and unconscionable.

Farrokh and Scheherezade Sharabianlou were looking for a location for a printing business. They signed a purchase agreement to buy a building owned by Berenstein Associates for $2 million. The Sharabianlous sought the return of their $115,000 deposit and rescission of the contract. The trial court awarded the Berensteins $428,660 in damages due to the reduced value of their property. The S's appealed.

The award of damages to the Berensteins was reversed and the Sharanbianlous were refunded their deposit.

Celine issues a 90 day promissory note payable to Hayden. The amount of the notes is left blank, pending a determiniation of the amount that Hayden will need to purchase a used car for Celine, though the amount may not exceed $2000. Hayden fills out the note for $5000 and sells the notes to First National Bank of Oklahoma for $4850. Hayden then leaves the states. First National Bank has no idea the instrument was incomplete when issued. Is the bank a HIDC? If Hayden sold the ntoes to a stranger in a bar for $500, would the stranger be a HIDC?

The bank does qualify as HIDC for the amount of $5,000. The stranger does not. The amount paid ($500) would raise a serious question of the stranger's good faith.

Spacemakers of American hired Jenny Triplett to maintain the company checkbook and reconcile it with the monthly statements from SunTrust Bank. She also handled invoices from vendors. Spacemakers' president, Dennis Rose, reviewed the invoices and signed the checks to pay them but no other employee checked Triplett's work. After a month of working there, Triplett had forged 6 checks totaling over $22,000 all payable to Triple M Entertainment (not a Spacemakers vendor). She forged 59 more checks totaling over $475,000. A SunTrust employee became suspicious of an item that required sight inspection under the bank's fraud detection standards. Spacemakers filed a suit against SunTrust, and the bank filed for summary judgment. On what basis could the bank avoid liability? In whose favor should the court rule and why?

The bank was not liable on two grounds. 1. Spacemakers failed to timely report the forgeries to the bank. 2. The bank did not fail to exercise ordinary care.

Danny and Marion Klein were injured when part of a fireworks display went astray and exploded near them. They sued Pyrodyne Corp (set up and discharged fireworks). Should Pyrodyne be liable for the damages caused?

The court agreed with the Kleins, applying the rule that "any party carrying on an 'abnormally dangerous activity' is strictly liable for ensuing damages.

Middleton Motors, Inc., a struggling Ford dealership in Madison, Wisconsin, sought managerial and financial assistance from Lindquist Ford, Inc., a successful Ford dealership in Bettendorf, Iowa. While the two dealerships negotiated the terms for the services and a cash infusion, Lindquist sent Craig Miller, its general manager, to assume control of Middleton. After about a year, the parties had not agreed on the terms, Lindquist had not invested any money, Middleton had not made a profit, and Miller was fired without being paid. Lindquist and Miller filed a suit in a federal district court against Middleton based on quasi contract, seeking to recover Miller's pay for his time. What are the requirements to recover on a theory of quasi-contract? Which of these requirements is most likely to be disputed in this case? Why?

The court awarded damages on a quasi- contractual basis, but the U.S. Court of Appeals for the Seventh Circuit reversed and remanded the case to determine what Lindquist's reasonable expectations were.

Ricky and Sherry Wilcox hired Espirit Log and Timber Frame Homes to build a log hourse , which the Wilcoxes intended to sell. Sold the home and sued Espirit due to construction delays.

The court awarded them $200,00 plus damages and attorney fees. The judgment of the lower court was affirmed.

Roger Bannister was the director of technical and product development for Bemis Co. He signed a covenant not to compete. Bannister accepted a position with Bancroft Bag, another competitor.

The court concluded that Bemis breached its agreement with Bannister, issued a summary judgment in his favor. Bemis appealed to the U.S. Court of Appeals which affirmed the judgment and award.

Kermit Johnson formed FB&I Building Products in Watertown, South Dakota to sell building materials. In March 2000 FB&I agreed to exclusively sell Component Manufacturing Co.'s building products in Colorado. Superior learned of the deal, terminated its contract, and did not honor a provision in the original deal.

The court concluded that FB&I materially breached its contract with Superior when it entered into an agreement with Component. Superior also breached its contract when it refused to let FB&I retain its Superior customers.

Peggy Williams helped Melvin Kaufman care for his wife and Williams' great aunt for several years before her death. Melvin asked Williams to take care of him and deeded the house to her. She eventually locked him out after a trip.

The court declared the deed void and canceled it. On Williams' appeal, the appellate court affirmed this judgment. Misrepresentation of a material fact.

Internet Archive removed the copies and filed a suit in a federal district court against Shell, who responded with a counterclaim for breach of contract. IA filed a motion to dismiss this claim. Did IA contract with Shell?

The court denied IA's motion to dismiss this claim. It is unlikely that IA will be held liable to Shell for her "fees."

Mark Denton cosigned a $101,250 loan that the First Interstate Bank (FIB) issued to Eric Anderson. Denton's mini-warehouse operation secured the loan. On his own, Anderson obtained a $260,000 SBA loan from FIB at the same time. The loans were to be used to buy logging equipment so Anderson could start a business. The business failed. FIB repossessed and sold the equipment and applied the proceeds to the SBA loan. FIB asked Denton to pay the other loan's outstanding balance plus interest. Denton refused, and FIB initiated proceedings to obtain his business assets. Denton filed a suit against FIB claiming that Anderson's equipment was the collateral for the loan that FIB was attempting to collect from Denton. A) Denton's assets served as the security for Anderson's loan. When the loan was obtain, FIB explained to Denton and Anderson that if Anderson defaulted, the proceeds from the sale of the logging equipment would be applied to the SBA loan first. Under these circumstances, is it fair to hold Denton liable for the unpaid balance? B) Is this a "contract of adhesion"?

The court found that Denton knew when he signed the note for Anderson's loans that Anderson defaulted and FIB repossessed the collateral. The sale proceeds would be applied first to the SBA loan. Court ruled in FIB's favor.

Xcentric of Arizona, runs a website, ripoffreport.com and mails books all over the country including Illinois where May International Co is located. Visitors posed on the website that May allegedly performed fraud and larceny and possessed child porn and drugs. May International filed suit against Xcentric for false representations. Xcentric said there was a lack of jurisdiction. What is the standard for exercising jurisdiction when the only connection is over the internet? How does it apply in this case?

The court found that the defendants' contacts with Illinois were sufficient to establish personal jurisdiction. The courts pointed out that defendants' Internet activities more than satisfy the minimum contacts standard. May be subject to suit in this state.

CA's Subdivision Map Act says that a map of a subdivision must be filed and approved before real property is sold. IN Now 2004 Black Hills Inv. Entered into 2 contracts with Albertsons to buy land in a developing shopping center. Government approvals relating to lot splits must be obtained before the sale, but the contract allowed Albertson's to waive this. Black Hills put a $133k deposit on the purchase. Albertson's decided to split the lots again and filed the map with the state. Black Hills objected, said they were terminating the deal, and asked for their deposit back. Alb refused. BH filed suit in CA saying that the contracts are void. Are they valid, voidable, unenforceable or void?

The court granted a summary judgment in favor of Black Hills. The appellate court affirmed the lower court's judgment. The appellate court concluded in part that "the contracts violated the prohibition codified in the SMA.

Kent Avery (on behalf of his law firm) contracted with Marlin Broadcasting to air commercials on a radio station featuring his voice and repeating his name and experience to make potential clients familiar with him. The radio station (WCCC) was not paid for the broadcasts, and Marlin sued Avery alleging an outstanding balance of $35,250. Pending the court's hearing, Marlin filed a request for a writ of attachment using the parties' contracts, ads' transcripts, and WCCC's invoices as evidence. Avery said he could not be held personally liable for the cost of the ads. Marlin argued that the ads unjustly enriched Avery.

The court granted the request for an attachment order. On Avery's appeal a state intermediate appellate court affirmed the lower court's judgment. The ads personally benefited Avery, and the Plaintiff was not paid.

Brian and Penny Grieme bought a house in North Dakota and took out a loan for the purchase through the North Dakota Housing Finance Agency (NDHFA). The Griemes obtained insurance through Center Mutual Insurance Co. A hailstorm damaged the house, and Center Mutual issued a check for $4,378 drawn on Bremer Bank. The check's payees were Brian Grieme and NDHFA. Grieme took the check to Wells Fargo. The back of the check had his signature and in hand-printed block letters the words "ND Housing Finance." The check was processed for collection and paid, and the canceled check was returned to Center Mutual. The Griemes canceled their policy, defaulted on their loan, and filed for bankruptcy by the time Center Mutual learned that NDHFA's indorsement had been forged. NDHFA filed a suit against Center Mutual for the amount of the check. Who is most likely to suffer a loss in this case?

The court held Center Mutual liable to the NDHFA. The forged endorsement of NDHFA did not operate as a signature of NDHFA an did not discharge Center Mutual's obligations as drawer.

Boehm, majority shareholder of AIH, wanted to sell AIH to Lincolinshire Management which create a AIH Acquisition to sign a SPA. Snow and Braley, on Boehm's behalf, work with Coyle, an agent of AHI Acquisition to "negotiate" the agreement. In February, 2002, Boehm delayed to sign the SPA and still refused to sign in April. AIH Acquisition filed a suit against AIH. Did Boehm violate any of the duties?

The court held that Boehm, as the principal, was bound to the SPA under the principles of agency law and that Boehm had violated the principal's duty of cooperation. He acted as if two agreements were good enough and then changed his mind. It is the duty of the agent and principal to cooperate. Boehm did not cooperate. The courts enforced the April contract even without Boehm's signature.

Emellie Anderson hired Kenneth Whitten to construct a two story addition to her home. Whitten did a poor job. Anderson filed a suit against Whitten alleging that his work was "substandard, not to code, unsafe and not done in a workmanlikemanner." Is this negligence?

The court imposed liability for the breach of a "duty of care the required Whitten to render performance in a good, substantial workmanlike manner" and awarded Anderson the cost to make the repairs. The state intermediate appellate court upheld the lower court's findings

Digimarc Corp., which provides secure personal identification documents, announced that it had improperly capitalized software development costs over at least the previous 18 months. Zucco claimed that it could show that there had been disagreements within Digimarc over its accounting.

The court in the case on which this problem is based dismissed Zucco's suit (not sufficient allegation of scienter). The US Court of Appeals affirmed.

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The court issued a judgment in the Crisses' favor. The contract was between the Crisses and the Pappases, not Kevin Pappas as an agent of Forever Green. A state intermediate appellate court affirmed.

Evelyn Kowalchuk and her son Peter, initiated an arbitration proceeding before the National Association of Securities and Dealers, asserting that Matthew Stroup fraudulently or negligently handled their accounts. Stroup offered to pay $285,000, and they e-mailed their acceptance. NASD issued an award in the Kowalchuks favor, and Stroup withdrew from his settlement "offer."

The court issued a judgment in the Kowalchuks' favor, and the appellate court affirmed the judgment. The document signed by Stroup established the existence of the parties' agreement and was enforceable to against him.

Instead, Montana, Lyttle and Knight deposited in high risk trades or spend on themselves. The SEC filed a civil suit in district court citing violation of the Securities Act of 1934 and SEC Rules 10b. What is need to establish such violations? Where investors be considered at least partly responsible for losses?

The court issued a summary judgment against the defendants (Lyttle, Montana & Knight)

Lisa and Darrell Miller divorced and entered into a joint custody implementation plan. After Landon's 18th birthday, Darrell filed a petition to reduce child support. Lisa responded by asking Darrell to pay the boy's college expenses but offered no evidence to support the request.

The court ordered Darrell to pay, but on appeal, an appellate court reversed the order. Ambiguity

'Question of Ethics' - The Bowden's hosted a cookout. Justin Parks, who was underage, drank at the party. One of the guests detained him to 'sober up.' Parks drove home and was killed in a one car accident. Linda Marcum, his mother, filed a suit in state court against the Bowdens alleging they were negligent.

The court recognized that "the public policy of this State treats these underage individuals as lacking full adult capacity to make informed decisions concerning the ingestion of alcoholic beverages.

Daigles sign an agreement with Trinity company's agent, Diez. Diez assured that Daigles do not need to pay the loan until they move into their new house and permanent financing had been secured. But Trinity declined to make the payment. Meanwhile, Diez left Trinity. Trinity fail to notify the Daigles. Three weeks later, Daigles were sued to pay on their loan.. Daigles paid the loan but filed a suit against Trinity to recover the cost. Who should have told the Daigles that Diez was no longer Trinity's agent? Could Trinity be liable to Daigles on this basis.

The court ruled in favor of the Daigles and awarded damages more than $26,000. The court ruled that many of Diez's false promises were made while he was an employee at Trinity. Trinity also did not notify that Daigle was no longer employed with Trinity when he left. Therefore Trinity (the principal) is bound to perform the obligations that the agent (Diez) has undertaken.

Terry Reigelsperger sought treatment for his back from chiropractor James Siller. He felt better and didn't intend on returning. He signed an "informed consent" saying "I intend this consent form to cover the entire course of treatment for my present condition or any future condition" He also signed something saying they would go to arbitration for any medical malpractice claims. 2 years later Reiglesperger sought treatment from Siller for his shoulder. R filed malpractice suit in regards to the 2nd treatment in CA state court against Siller. Siller wants it to be sent to arbitration. Did R's lack of intent to return to Siller affect the enforceability of the arbitration agreement and consent form?

The court said it must go through Arbitration whether or not R intended to return to Siller, the form he signed would apply to any future dispute.

Jason Knapp hired Barbara Meade as an independent contractor. The parties orally agreed to the terms of employment. No written agreement. Meade quit and later filed a lawsuit in a state court against Knapp, alleging breach of contract. Did the parties have an enforceable contract?

The court should conclude that the parties had a contract and order its enforcement.

James Stout, a professor of economics and business at Cornell, filed a petition in bankruptcy under Chp. 7 seeking discharge about $95,000 in credit-card debts.

The court should probably grant the trustee's motion. Stout would probably have to file Chp. 13. Homeschooling and ice skating are unnecessary.

Hueblein makes wine and gets Tarrant Dist. To handle distribution. Problems arise, and parties move to mediation. Under settlement agreement, Heublein agreed to pay Tarrant the amount of its "net loss" as determined by Coopers & Lybrand (accounting firm). Parties agreed the calculation would be "final and binding". Heublein disagrees with the calculation and refuses to pay. Heublein claims contract included implied provision that Coopers would properly apply the formula. With whom should court agree (Hueblein or Tarrant?)

The court should refuse to imply a condition precedent in the settlement agreement, and order Heublein to pay Tarrant.

Amez is a traveling salesperson for ABC Tires Corp. To cover the assigned geographic area, Amez is given a company car. One day, Amez decided to take his own car. After realizing he was late for an appointment. speeds and crashes his car into Thomas' tractor and severely injuring Thomas.Thomas claims he can hold ABC Tires liable for injuries.

The following factors caused ABC to be liable for Arnez's tort: his travel was within the scope of employment, and the TORT occurred while he was on his way to an appointment on behalf of ABC. If the TORT occurred on Arnez's own time, he would have been liable.

Caroline McAfee loaned $400,000 to Carter Oaks Crossing. Joseph Harman, President of COC, signed a promissory note that his company would repay the amount with interest in installments beginning in 1999 and ending in 2006. Harman filed for Bankruptcy

The guaranty was not discharged. Harman owes McAfee under the guaranty. The obligation was not discharged. McAfee was never informed of bankruptcy.

James Cavazod purchased a new Mercedes vehicle from a dealer and gave JP Morgan Chase a purchase-money security interest in the car. Cavazos forged a signature and received the title of the car and NXCESS bought the car.

The holder of the original valid PMSI dominates so Chase Bank gets the car. Wrongful intent is not an element of conversion. And thus innocent buyers of property may be liable.

Todd Leparski was authorized to recieve checks from Interior Crafts customers and deposit the checks into their account. Leparski stole check by indorsing the checks "Interior Crafts - for deposit only" but deposited some into his own account through an automated teller machine owned by Pan America. When alerted, Interior was able to recover some money, but to collect the rest, they filed suit against Leparski and Pan America. The court ruled in favor of Interior, so Pan America appealed. A)What type of indorsement was used? What is the obligation of a party that receive a check with this indorsement? Does the fact that Interior authorized Leparski to indorse its checks but not to deposit those checks into his own account absolve Pan America? B) How might a business discourage an employee's thievery such as Leparski's acts?

The indorsement on Interior's checks was a restrictive indorsement. The state intermediate appellate court affirmed the trial court's ruling in Interior's favor. A bank that receives checks with restrictive indorsements is liable. There is no requirement that the restrictive endorsement be made only by "the party whose account the payment is to be credited."

Troy Blackford went to collect his winnings at the casino and the employees refused to pay based on who he was. He sued for breach of contract. The trial court held in favor of the casino. The appellate reversed and ordered a new trial.

The jury found that the ban against Blackford had not been lifted, and, therefore, Prairie Meadows had not extended him an offer to wager. Trial court judgment affirmed.

Donald Goosic, a contractor, did business as "Homestead" bilders. To construct a house on "spec", Donald obtained materials from Sack Lumber on an open account. When Donald got behind on payments, his wife Frances cosigned a note payable to Sack. Donald later obtained a discharge of debt from a bankruptcy. Sack filed suit against Frances to collect on the note. She contended that was an accommodation party, and thus not liable. Under the UCC, a person receiving only an indirect benefit from a transaction can qualify as an accommodating party. What's the ruling?

The state intermediate appellate court affirmed the lower court's ruling that Frances was an accommodation party and ruled that she was not liable on the note.

Shearer and Couvion signed a note payable in monthly installments to Edgar House and Paul Cook, who later assigned the note to Southside Bank, who assigned the note to Midstates Resources, who assigned the note to Cadle Co. According to the payment history that Midstates gave to Cadle, the interest rate was 12, not the originally agreed upon 11. A Cadle employee noticed the discrepancy and recalculated the payments at 11 percent. When Shearer and Couvion refused to make further payments on the note, Cadle filed suit. Couvion and Shearer said they made timely payments on the note, that Cadle and the previous holders had failed to accurately apply the payments to the reduction of principal, and that the note "is either paid in full or very close to being paid in ful and satisfied". Is the maker's answer sufficient to support a verdict in their favor? On what grounds?

The state intermediate appellate court reversed and remanded the case for further proceedings. Appellate court ruled in Cadle's favor, and evidence showed that the note had not been paid in full.

East Mill Associates was building residential units which would be serviced by the East Brunswick Sewerage Authority. EMA agreed to pay 55% of the plumbing station upgrade to accommodate the new units. At the time, estimated cost to EMA was $150-200K. Costs increased and it was delayed almost 3 years. EBSA asked EMA for $340,022.12 (55% of the total cost). EMA wouldn't pay so EBSA filed for breach of contract. What rule should the court apply to interpret the contract?

The state intermediate appellate court reversed the lower court's order and directed an entry judgment in EBSA's favor for the full amount of its claim.

Robert and Percy were authorized signatories on the corporate checking account of Event Marketing Inc. The Helmers signed a check drawn on Event Marketing's account and issued to RTT. The check was signed on July 13, 1998 but dated August 14. When RTT presented the check for paymnet, it was dishonored due to insufficient funds. RTT filed suit against the Helmers, claiming that they were personally liable on Event Marketing's check. Can an authorized signatory on a corporate account be held liable for corporate checks returned for insufficient funds? Are the Helmers liable?

The state intermediate court reversed the ruling of the lower court. "An authorized representative is not personally liable when he or she signs a negotiable instrument on behalf of the represented entity.

Subcontractors produced parts for Autolign, which it then sold to automakers. Shortly afterward, Autolign ceased operations. The subcontractors sued Autolign for breach of contract and asserted a "molder's lien" on the molds in their possession.

The subcontractors have a superior lien on the molds. They can use them to offset sums they were not paid. The reviewing court reversed the trial court's decision and remanded.

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The subcontractors should have filed liens before the church made its final payment to NCS. Their liens were not timely. NCS was not an agent of the church. The church was not liable, because there was no evidence that the subcontractors believed that they were employed by the church.

Erica Bishop lived in public housing with her children. Her lease stated that only she and her children could live in the apartment. And she was responsible for all actions. Bishop's son Derek committed armed robbery. Bishop was given 30 days to vacate the apartment. Bishop appealed contending that the lease was unconscionable.

The terms of the lease are not unconscionable. It was also noted that Bishop failed to inform the landlord that Derek had vacated the apartment, which was also required by the terms of the lease.

Arnett Gertrude, a widow, added Jack Scriber as an authorized signatory to her checking account at Salyersville National Bank. Shorty before Gertrude died, Scriber wrote check on the account to withdraw nearly all of the $600,00 in the account and transferred the funds to his account.

The trial court was correct. The bank did not owe a fiduciary duty to Gertrude. The bank did not act in "bad faith." The bank was not obligated to look past power of attorney documents.

PP Door failed to make monthly payments, 73-75 Main Avenue filed a suit against PP Door and its owner. Li testified that she was the sole owner of PP Door but denied that Zhang was its manager

The triers were not convinced of LI's arguments. Reviewing court agreed with Li. There was no proof that she signed a guarantee agreement. Unenforceable under the statute of frauds.

Nellie Lumpkin, who suffered from various illnesses, including dementia, was admitted to the Picayune Convalescent Center, a nursing home. Because of her mental condition, her daughter, Beverly McDaniel, filled out the admissions paperwork and signed the admissions agreement. It included a clause requiring parties to submit to arbitration any disputes that arose. After Lumpkin left the center two years later, she sued, through her husband, for negligent treatment and malpractice during her stay. The center moved to force the matter to arbitration. The trial court held that the arbitration agreement was not enforceable. The center appealed. (a) Should a dispute involving medical malpractice be forced into arbitration? This is a claim of negligent care, not a breach of a commercial contract. Is it ethical for medical facilities to impose such a requirement? Is there really any bargaining over such terms? (b) Should a person with limited mental capacity be held to the arbitration clause agreed to by the nextof-kin who signed on behalf of that person?

There is a valid contract here. It is presumed in valid contracts that arbitration clauses will be upheld unless there is a violation of public policy. McDaniel had the legal capacity to sign on behalf of her mother. So Lumpkin should be held to the arbitration clause.

Wade is the friend of Paul Gett who is rich and interested in rare coin. Wade told Brown that he was the agent of Paul Gett to collect the rare coin. Brown trusted him and gave Wade a rare coin valued $25,000. Brown sought Gett and wanted to collect the payment from him. Gett denied the liability and claims that Wade was never his agent. Was this contract for rare coin made?

There was no agency agreement created by Gett and Wade. It is not reasonable to believe that someone is an agent solely because he or she is a friend of the principal. Brown cannot hold Gett liable unless Gett ratifies Wade's contract.

Richard Miller orally agreed to loan Jeff Miller $35,000 in exchange for a security interest in a 1999 Kodiak dump truck. Nothing concerning the loan, its repayment terms, or Richard's security interest or rights in the truck were put in writing. Jeff used the loan to buy the truck, which he kept in his possession. Later, Jeff filed a petition to obtain a discharge of his debts in bankruptcy. Richard claimed that he had a security interest in the truck and was entitled to any proceeds from its sale. What are a creditor's main concerns on a debtor's default? How does a creditor satisfy these concerns? What are the requirements for a creditor to have an enforceable security interest? Have these requirements been met?

There was no written agreement setting out Richard's rights in the truck and no agreement between them granting Richard a security interest. Richard had no greater priority than the claim of any unsecured creditor

Ruth parks her car on a steep hill and fails to put on the parking break. The car rolls downhill and knocks down a power line, the sparks cause a grass fire. Fire spreads to a barn one mile away which houses dynamite, which then explodes causing the roof to fail and injure Jim, a passing motorist. What element of negligence is of greatest concern? What legal doctrine resolves the issue? Will Jim be able to recover damages from Ruth?

This is a causation question. If Jim can prove cause in fact and proximate cause, then Jim will be able to recover damages from Ruth.

Tom is a salesman with Helikon. They sign a 1 year contract with Tom's commissions. After a year, they don't sign a contract, but Helikon says that the commissions will not change for at least a year. After 3 months, Helikon is bought out. New management contacts Tom with a new contract proposal. Tom continues to sell, but gets a letter 5 months later with significantly reduced commissions. New management says that there was no contract because there was no consideration.

Tom wins (appellate court reversed the lower court's decision and remanded the case for trial) Tom's substantial performance under the alleged agreement, and Helikon's acceptance of the benefits constitute consideration. Helikon knowingly accepted the benefits of Tom's services.

Novell, Inc., owned the source code for DR DOS, a computer operating system that Microsoft Corp. targeted with allegedly anticompetitive practices in the early 1990s. Novell worried that if it filed a suit, Microsoft would retaliate with further alleged unfair practices. Consequently, Novell sold DR DOS to Canopy Group, Inc., a Utah corporation. The purposes of the sale were to obligate Canopy to bring an action against Microsoft and to allow Novell to share in the recovery without revealing its role. Novell and Canopy signed two documents—a contract of sale, obligating Canopy to pay $400,000 for rights to the source code, and a temporary license, obligating Canopy to pay at least $600,000 in royalties, which included a percentage of any recovery from the suit. Canopy settled the dispute with Microsoft, deducted its expenses, and paid Novell the remainder of what was due. Novell filed a suit in a Utah state court against Canopy, alleging breach of contract for Canopy's deduction of expenses. Canopy responded that it could show that the parties had an oral agreement on this point. On what basis might the court refuse to consider this evidence? Is that the appropriate course in this case? Explain.

Under the parol evidence rule, a court could refuse to consider Canopy's evidence of an oral agreement between Canopy and Novell with respect to the payment of Canopy's expenses in its suit with Microsoft. Thus, it would be appropriate to exclude Canopy's evidence if the two documents Canopy and Novell signed constituted an integrated contract. Here, the parties entered into a written contract with respect to royalties. The writing obligated Canopy to pay Novell a percentage of its recovery from Microsoft. The writing did not mention a reduction of this amount, however, which would contradict the terms of the parties' contract and, for that reason, under the parol evidence rule, would not be a part of their agreement.

Tabor has a contract to buy filing cabinets from Martin for $40/cabinet. Martin then raises the price to $50/cabinet. Tabor signs a new contract to pay the new price. Can Martin legally collect the additional money?

Yes Typically, there is no consideration because Martin is already legally bound to sell the cabinets at a certain price, however, there is an exception under UCC for the sale of goods.

Emilio received from dishonest payees 2 checks. A) The drawer issued a check to the payee for $9. The payee cleverly altered the numeral on the check from 9 to 90 and the written word from NINE to NINETY. B) The drawer issued a check to the payee without filling in the amount, The drawer authorized the payee to fill in the amount for no more than $90. The payee filled in the amount of $900. Is Emilio an HIDC?

Yes, Emilio acted in good faith, the instrument is of value, and Emilio was not given a notice Emilio - HIDC

Marsh has a prize horse (Arabian Knight). Marsh needs working capital, so she borrows $50,000 from Mendez who takes possession of Arabian Knight as security for the loan. No written agreement is signed. Discuss whether, in the absence of a written agreement, Mendez has a security interest in Arabian Knight. If Mendez does have a security interest, is it a perfected security interest?

Yes, Mendez has a security interest. The security interest was created and perfected at the time the debtor transferred the collateral to the creditor as security for the loan.

Between 1988 and 1992, Lorna Nys took out 13 student loans totaling about $30,000. What is the standard for discharge of student loans under Chp. 7? Does Nys meet the standard?

You must prove "undue hardship" The court ruled in Nys' favor. Undue hardship does not require an exceptional circumstance beyond the inability to pay now. The court remanded the case.

Emergency One makes fire and rescue vehicles. Western Fire Truck contacted with EO to be its exclusive dealer in Colorado... In April 2002, EO terminated its contract with Western, which after reviewing Costello's email, fired Costello. Western filed a suit in a Colorado state court against Costello and EO, alleging, among other things, that Costello breached his duty as an agent and that EO aided and abetted the breach.

a.) A jury ruled in favor of Western on all its claims and awarded damages against EO ($280,00) and Costello ($70,000). Appellate court affirmed the lower court's ruling. Court discerned that Western and Costello intended for Costello to act as an agent. b.) According to the State Intermediate Appellate Court, sufficient evidence supports the jury's conclusion that Costello owed Western a fiduciary duty. c.) The court concluded that EO's conduct was wanton and reckless. The court determined that EO knew its "purposeful" interactions with Costello could have harmed, and did harm Western. EO's interactions with Costello ultimately resulted in his termination from Western.

Janine is in the intensive care unit. The doctor ordered around the clock care from Nursing Services Unlimited for 2 weeks in the hospital and 2 weeks when she went home. Janine was fully aware she was receiving the services. NSU billed Janine for $4000, but she refused to pay - saying she hadn't signed a contract for the services. No express contract was formed - under what legal theory can NS recover the money?

implied-in-fact/quasi contract if Janine didn't have to pay - she would have been unjustly enriched.

Burger Baby had Air Advertising fly a sign over the beach that said "Swim across the sound and Burger Baby pays $1000" Davidson sees the sign and jumps in. 4 hours later, when he was about halfway, Air Advertising flew another sign that said "Burger Baby Revokes." Davidson finished the swim. Was there a contract? Can he recover anything?

most courts would hold that there was a contract Burger Baby cannot revoke once Davidson started to perform. Unilateral contract (cannot be accepted by merely a promise to swim - must have performance). Express contract since terms were clearly stated. Executory contract - future performance. He should recover the $1000