Business Law Exam #2 Part One

Class Discussion Problem #8

Simmons and Jenson go through with the deal. Instead of the stone being an actual diamond, it turns out to be a rare form of quartz known as a "Herkimer Diamond" that is found in the Herkimer Co. area in the vicinity of the Mohawk Valley Region of central New York state. It is called a Herkimer Diamond because it is an exceptionally lustrous variety of clear quartz. Jenson buys the stone for $10.00 and later learns that it is Herkimer Diamond Quartz and sells the stone for $2,500.

Class Discussion Problem #7

Simmons finds a stone in his pasture that he believes to be quartz. Jenson also believes that the stone is quartz. Jenson agrees to purchase it for $10.00. Just before delivery, the stone is discovered to be a diamond worth $1,000.00.

Are there any exceptions to this general rule relating to minors?

Some states terminate a person's status as a minor when their parent or guardian relinquished control over them. This usually occurs when the minors leave the parent's home and support themselves. Some states also terminate minority status upon marriage.

Generally, how do courts react to such clauses?

They are viewed with disfavor as being void as against public policy or unconscionable. Such clauses may be enforced if they are not unreasonable when the services involved are not essential (health clubs, parks, ski resorts) and the companies using them gain no relative advantage over their competitors by using such a clause.

Why was the arbitration provision in the finance agreement both procedurally and substantively unconscionable?

This agreement was procedurally unconscionable because an arbitrator could not provide injunctive relief to prevent future violations of the FDUTPA like a trial court judge could do. It was substantively unconscionable because although both parties could opt out, the buyer was limited to a claim in small claims court which would limit their recovery to $5,000 while the dealer had no such limit.

Is this a mistake of fact or a mistake of value?

This is a mistake in value. They both believed the stone was quartz, they did not know that it was a particular type of quartz.

What if Esprit said we think we can deliver the logs pre-cut and pre-drilled by June 1, 2014 if we can rent the equipment to do so. Would this satisfy the first element of a fraudulent misrepresentation?

This is a statement of opinion and generally is not actionable. Why would the Wilcox be willing to rely upon this statement? There is dumb And then there is stuuuuuuuuuuuuuuuuupid!

What must Sam show to establish this defense?

To establish duress, there must be proof of a threat to do something that the threatening party has no right to do. Generally the threatened act must be wrongful or illegal. He must show that the threat rendered him incapable of exercising free will. A threat to exercise a legal right does not constitute duress.

What are the elements of a fraudulent misrepresentation?

1. A misrepresentation of a material fact 2. There must be an intent to deceive 3. The innocent party must justifiably rely upon the misrepresentation 4. To collect damages, the innocent party must have been harmed as a result of the misrepresentation

You go into a bagel shop in New York City and you order a dozen bagels. What number of bagels will you most likely receive? What is this number of bagels called?

13 It is called a Baker's Dozen This is an example of trade usage If you see a term in the body of a contract with initial capital letters when the initial caps is not grammatically called for, this is an example of a defined term. That means that somewhere in the agreement the term is defined. Find it, be sure you agree with the definition.

What is an exculpatory clause?

A clause which releases a party from liability in the event of a monetary or physical injury no matter who is at fault.

What is the meaning of privity of contract?

A contract is a private agreement between the parties who have entered it. Traditionally these parties alone have the rights and liabilities under it.

Assume that Adams admits the existence of a contract. On what basis may this contract be subject to a statute of frauds? If it is, why is it? What is the rationale for this rule?

A contract that by its terms cannot be performed within a year. The contract was made of May 5, 2018. The counting period for compliance with a statute of frauds begins on the day after the contract is formed. The one-year period will expire on May 6, 2019. Benson did not begin to work until May 19, 2018. He expects to work until May 19, 2019. The reason for this rule is that the parties' memory of their contract terms is not likely to be reliable for longer than a year.

As a general rule, for contract purposes, what is the definition of a minor?

A person who has not yet reached the age of majority to be considered an adult. In all states this is age 18.

Class Discussion Problem #6

A couple who does not speak English goes to a South Florida car dealership to purchase a van. All the contracts they sign are in English - but the dealership employees explain the documents to them in Spanish. One of the contract documents they signed was an agreement to submit any disputes to arbitration. The couple claims this document was not explained to them. They also signed a financing agreement that contained a separate promise to submit any dispute to arbitration. The couple claims that the dealership required them to sign a contract in blank and that later the dealership filled in a lower amount for the value of their trade in other than what had been agreed upon. The dealer refused to correct the situation and the couple returned the car, with a total of seven miles on it, and demanded the return of their trade in. The dealer said their car had been sold. The couple brings a lawsuit under the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA") alleging that the practices used by the dealer were unfair trade practices under the statute. The dealer wants no part of a claim under the FDUPTA and sues to dismiss the buyer's complaint under the FDUPTA statute and to compel arbitration instead. Remember, in an arbitration proceeding the arbitrator has the authority to decide the dispute without many of the procedural protections a plaintiff enjoys in civil litigation. The trial court denied the dealer's motion to compel arbitration under both agreements because the agreements to arbitrate were unconscionable and cannot be enforced. The dealer is appealing the decision of the trial court.

Class Discussion Problem #5

A famous New York City hotel, Hotel Lux, is noted for its food as well as its luxury accommodations. Hotel Lux contracts with a famous chef, Chef Ramon, to become head chef at $10,000 per month. The contract states that should Ramon leave the employment of Hotel Lux for any reason, he will not work as a chef for any hotel or restaurant in New York, New Jersey or Pennsylvania for a period of one year. During the first 6 months of the contract, Hotel Lux heavily advertises Ramon as its head chef, and business at the hotel is excellent.Then a dispute arises between hotel management and Ramon, and Ramon terminates his employment. One month later, Ramon is hired by a famous New Jersey restaurant just across the New York state line. Hotel Lux learns of Ramon's new employment through a large advertisement in a New York City newspaper. Hotel Lux seeks to enjoin (prevent) Ramon from working in that restaurant in the restaurant for one year.

If the California law was followed, would the contract be a formal or informal contract?

A formal contract

What is the general rule regarding the ability of a minor to enter into a contract?

A minor can enter into any contract that an adult can, except those contracts prohibited by law to minors.

What is a negligent misrepresentation and how is it treated in the majority of states?

A misrepresentation made through carelessness when the party does not use reasonable care in making the statement. Most states treat a negligent misrepresentation as satisfying the requirement for scienter.

Under the parol evidence rule, what types of evidence may a party be prevented from introducing in a contract dispute?

A party normally cannot present any evidence of the following, if that evidence contradicts or varies the terms of the written contract. 1. Negotiations prior to the contract's formation 2. Agreements prior to the contract's formation 3. Oral agreements contemporaneous with (at the same time as) contract formation.

What is the difference between a void and a voidable contract?

A void contract is one that has no force and effect. It is as if the contract was never made A voidable contract is a contract that otherwise may be enforceable but one or both parties may avoid the contract.

Class Discussion Problem #17

A-1 Fish Hatchery had an oral agreement with Clark's Fish Farm that A-1 would deliver minnows to Clark and Clark would store the minnows in its ponds until the fish reached "market size." At that point A-1 is to take back the fish and sell them to its customers. By their conduct, the parties had defined the term "market size" to mean one-pound net weight. A-1's customers began to demand larger fish and were no longer willing to take fish at one-pound net weight. As a result, A-1 refused to take the fish back from Clark until they weighed 1.5 pounds net weight, while continuing to deliver minnows to Clark for storage. Clark was running out of storage space and demanded that A-1 take the fish when they reached one-pound net weight. A-1 refused and Clark sues alleging breach of contract based upon A-1's refusal to accept the fish when they reached one-pound net weight.

What is the significance of whether the innocent third party can show an actual injury in the event of a fraudulent misrepresentation?

Actual injury is required to recover damages

Class Discussion Problem #3

After Sharon has had several drinks one night, she sold Charlotte a diamond necklace worth thousands of dollars for just $100. The next day Sharon offered the $100 to Charlotte and requested the return of her necklace. Charlotte refused to accept the $100 or return the necklace, claiming that there was a valid contract of sale.

What is the definition of duress?

Agreement to the terms of a contract is not voluntary if one of the parties is forced to enter into the contract. Duress is both a defense to the enforcement of a contract and a ground for rescission of a contract.

Class Discussion Problem #20

Alexander is a senior in high school. He lives in suburban Atlanta. He learns in early November of 2016 that he has been accepted as a member of the class of 2020 at the University of Tampa. Alexander's wealthy Uncle Michael decides to give him a car for Christmas so he will have transportation to and from Atlanta while he is in college. Uncle Michael makes a contract with Jackson Motors to purchase a new car for $18,000. Uncle Michael pays the full purchase price for the car. He instructs Jackson Motors to title the car in Alexander's name and to deliver the car to Alexander a few days before Christmas. He instructs Jackson Motors to allow Alexander to pick the color of the car and to allow Alexander to make any other decisions about the car that may be necessary. Uncle Michael tells Alexander's mother about the gift and shortly thereafter he leaves for a six-month vacation in Europe.

Assume that Jackson Motors refuses to deliver the car to Alexander in violation of Uncle Michael's instructions. What event must occur before an intended beneficiary may enforce a contract?

Alexander's rights under the contract must be said to have vested

Assume that in a subsequent lawsuit over the existence of the contract between Bob and Frank for the sale of the lot, Bob, during his deposition, admits that he made a promise to Frank to sell him the lot. What, if any, difference might this make in the outcome of the dispute?

An admission under oath of the existence of the contract may also serve as evidence of its existence and lead to the enforcement of the promise.

What is the rule in cases where the minor misrepresents their age to induce the other party to enter into a contract?

At common law the misrepresentation of age did not effect the minor's right to disaffirm a contract A growing number of states have enacted statutes to prohibit disaffirmance when the minor lied about his age. Some states have limited this exception to where the minor was engaged in business as an adult.

Is this a unilateral mistake or a bilateral mistake, and what is the difference?

Bilateral Mistake - a mistake made by both parties when both parties to the contract are mistaken about the same thing A unilateral mistake is a mistake that is made by only one party to the contract and generally is not a basis for relief from the contract

What are the three areas of the law where capacity issues are most likely to arise?

Contracts involving minors, contracts where a party may lack the degree of mental competence required by law, contracts where one of the parties claims voluntary intoxication

The textbook uses the phrase "contracts contrary to public policy." What is the meaning of this phrase and who decides what is or is not public policy?

Contracts that would have a negative impact on society Legislatures, courts and in some cases administrative agencies

Must the parties to a contract prove that they have the capacity to enter into a contract in each case?

Courts will generally presume the existence of contractual capacity, but the law has recognized three areas where the presumption of contractual capacity may be overcome.

Are there any other types of contracts where a minor cannot avoid the contract?

Depending on state law, sometimes a minor cannot avoid a contract for marriage or contracts to enlist in the armed services

Canopy wishes to submit the early drafts of the Temporary License Agreement into evidence to show that the parties originally agreed to allow Canopy to deduct its litigation expenses from the amount of any settlement or recovery prior to calculating the final amount due to Novell. In deciding whether to allow the introduction of the early drafts of the agreement under the parol evidence rule, what determination must a court make about the existing contract itself

Did the parties intend that the written contract is the complete and final statement of the terms of the agreement. If so, the contract is said to be fully integrated. If the contract is fully integrated, the extrinsic evidence is not admissible. Note: A well drafted commercial contract will include what is called an integration or zipper clause. The contract will include specific language to the effect that the parties agree that the language in the contract is the full and final statement of the agreement and that parties agree that neither party may introduce extrinsic or parol evidence to contradict or further explain the terms of the deal.

What is the test to determine if a mistake is sufficient to avoid a contract?

Does the mistake involve a material fact

What is economic duress?

Economic need generally is not enough to constitute duress.

Class Discussion Problem #15

Frank buys a new home in the Arlington Park subdivision. Bob, his next-door neighbor, owns a vacant lot in the subdivision that is located between their respective homes. Bob no longer wishes to keep the vacant lot because it is subject to the annual maintenance assessments levied by the subdivision's homeowner's association. Bob approached Frank to see if he would be interested in purchasing the lot. Frank states that he is interested in purchasing the lot, but he cannot obtain any additional financing for the purchase at this time because his credit is "maxed out" due to the purchase of the new home. Frank and Bob make an oral agreement wherein Frank agrees to purchase the lot from Bob for an agreed upon price. Frank has a period of five (5) years to pay the full purchase price to Bob. In the meantime, Frank agrees to pay the annual maintenance fee for the lot and assume the responsibility for maintaining the lot. A period of three years goes by. Frank has paid the annual maintenance fee as promised and he has mowed, edged and trimmed the grass on the lot and raked and removed the leaves that fell on the lot in the autumn. He also cleared the snow from the sidewalk that runs along the edge of the lot next to the street and placed salt on the sidewalk to prevent ice forming that might injure pedestrians using the sidewalk. He has also installed an maintained a small vegetable garden on the lot. At the end of the three-year period, Bob receives an offer from Sam for the purchase of his home and the lot that he accepts. Frank objects to the sale of the lot to Sam arguing that he has a contract to purchase the lot and that he has fully complied with the provisions of that contract. Sam points out that the country real estate records show the Bob is the owner of the lot and that no document exists that is signed by Bob to prove the terms of the deal.

Class Discussion Problem #14

Frank is building a garage. He hires Sam to do the job. Sam goes to the Fred's building supply company to order the building materials he will need to do the job. Sam asks Fred to sell him the building materials on credit but Fred refuses to do so because Sam is a credit risk. When Sam tells Frank about his inability to obtain the necessary building materials, Frank goes to Fred and tells Fred he will pay Fred for any building materials he sells to Sam if Sam fails to pay the bill. There is no memorandum of the agreement between Frank and Fred. Fred sells the building materials to Sam on credit and Sam defaults on the payment. When Fred goes to Frank for payment, Frank refuses to pay.

What, if any, liability may a parent have to the other party to a contract entered into by a minor if the minor elects to avoid the contract?

Generally no liability, except for contracts for necessaries, which the parents are obligated to provide to their children.

What is the legal issue involved at this point? Is compliance with a statute of frauds an issue now?

Has a contract been formed? Compliance with a statute of frauds is not an issue yet.

If this exception should apply, what must Fred still prove?

He still must prove that the promise was made

Under what circumstances would Joanne's contract for the purchase of the piano be voidable?

If Joanne can present evidence to show that she was entering into a contract or lacked the mental capacity to comprehend the contract's nature or purpose.

Under what circumstances would Joanne's contract for the purchase of the piano be void?

If a court had previously determined she was not mentally competent and had appointed a guardian for her

What is a presumption of evidence?

If certain facts exist and are proven, the trier of fact can draw a legal conclusion based upon those facts. Example: My wife and I are married. She has a child. Even if I was on the other side of the world at the time of conception and gestation, the law will presume that I am the father of the child.

When both Simmons and Jenson thought the stone was quartz and it turns out to be a particular type of quartz with an enhanced value, the law says this is a mistake in value. When Jenson knows that it is Herkimer Diamond Quartz and Simmons did not know the true identity of the stone the law says this is a unilateral mistake of material fact. Why the difference in treatment?

If neither party knows the true value of the stone, they are still on equal footing. Jenson is not using a fact that is unknown to Simmons. At the time the deal is made both parties are in the dark about the true value of the stone. If Jenson knows the true value of the stone, that is a fact that is unknown to Simmons. Even though it is a unilateral mistake by Simmons, the law is not going to allow Jenson to profit from his knowledge of the true facts.

If the minor elects to avoid the contract, what happens to any consideration provided by the minor to the other party?

Normally the minor can recover any property (consideration)the minor has transferred to the other party.

Under what circumstances might the court allow the introduction of the prior drafts of the Temporary License Agreement into evidence?

If the court finds that the contract is not fully integrated Even if the contract is fully integrated, the exceptions to the parol evidence rule still apply The exceptions are listed in Section 16-5a on page 303. Note: Exceptions 1, 2, 4 and 5 deal with situations where the actual language or the terms of the current contract are not subject to attack.

What is the one exception to the economic duress rule?

If the party driving the hard bargain created the need, then economic duress will be found.

The textbook suggests that non-compete provisions in the sale of a business are treated differently than non-compete provisions in an employment context. Why do you think this might be the case?

In either case, the party seeking the non-compete provision wishes to protect the good will they have in the business or the good will the employee has established with the customer. In the case of the sale of the business, part of the purchase price, perhaps a significant part, is the good will the owner of the business has established with his customer base.In the case of a sale of a business the owner is being paid for that good will and he should not be able to turn around and trade on that good will in the same type of business at a different location.

How does the law determine when this event has occurred?

In one of three ways: I. When the conditions for vesting as stated in the agreement are satisfied. Example: Life insurance; on the death of the insured person II. When the third party demonstrates express consent to the agreement such as by sending a letter , a note, or an e-mail acknowledging awareness of, and consent to, the contract Example: The father of the bride purchases a house that he intends to give to the bride and her new husband upon their marriage. Since the ownership of the house entails several responsibilities (upkeep - taxes) the new couple's rights under the contract will not vest until such time as they acknowledge that they are willing to accept these responsibilities III. When the third party materially alters his or her position in detrimental reliance on the contract Example: instead of buying a house, Dad offers the new couple a sum of money for the construction of a new home. The new couple buy a lot for the new home. At this point their right to receive the money promised from Dad vests.

What does it mean when the rule provides that in order to satisfy a statute of frauds, it must be acknowledged by the party to be charged? Are both parties to the contract required to sign it?

In order for a party to be held responsible for the contract, they must acknowledge it. No, both parties are not required to sign or acknowledge the agreement, but why would you allow one party off the hook by not requiring them to sign the deal?

Assume the landlord is willing to consent to the Fred taking over the lease for the final three months of the term. Mary sends Fred a letter, with a copy to the landlord which states: "I hereby assign all my rights under the lease to Fred." In addition to the right to occupy the apartment, Mary has a duty under the lease to pay the monthly rent on the apartment. Under most circumstances, how will a court interpret this language regarding who has the duty to pay the rent?

In the fact of a blanket assignment, a court will assume that an assignment of all rights will also include a delegation of all duties.

What does it mean when the textbook states that one party must dominate the other party to the transaction?

In various types of relationships, one party may have the opportunity to dominate and unfairly influence another party so that said party does not exercise free will.

In order to have any rights under the contract between Uncle Michael and Jackson Motors, Alexander must claim he is an intended third-party beneficiary of the contract. In addition to an intended third-party beneficiary, what other types of beneficiaries to a contract may there be?

Incidental beneficiary: A person who may benefit from the contract but whose benefit was not the reason the contract was made Creditor Beneficiaries: the key to this type of beneficiary is that the party to the contract usually owes some type of debt to the third party and the contract is a means of extinguishing the debt or other obligation. Donee Beneficiaries: the contract is made for the express purpose of giving a gift A classic donee beneficiary is the person who is designated to receive the death benefit payable under a life insurance policy. Alexander is a donee beneficiary. The distinction was more important in the past because of the prejudice against enforcing the making of a gift. A creditor beneficiary would stand a better chance of being designated as an intended beneficiary under a third-party beneficiary contract Today the important distinction is between an intended and incidental beneficiary.

Is this contract subject to the Statute of Frauds? If not, why not?

Is this a contract for the sale of goods of $500 or more? Probably not. Clark is not selling the fish back to A-1. All Clark is doing is warehousing the fish for an indefinite period of time Is this a contract that cannot, by its terms be performed in one year? They can quit any time, there is no set time period in the agreement.

For the purposes of a statute of frauds, how would this contract be classified?

It is a collateral promise sometimes referred to as a secondary promise

What is the public policy involved in contracts that contain a covenant not to compete in an employment context?

It is a contract in restraint of trade because Chef Ramon is prevented from being employed in his field

What is the Federal Arbitration Act and why was it not applicable to this case.

It is a federal statute that states the policy of the United States is to support and promote arbitration as a means of alternative dispute resolution. If the parties enter into an arbitration agreement it should be enforced.

Is this a mistake of fact or is it a mistake of value and why is this distinction important?

It is a mistake in fact - they both thought the stone was quartz which caused both parties to be mistaken about the actual value of the stone. A mistake in value alone is not grounds for relief.

Assume that Jenson knew that the stone was Herkimer Diamond Quartz and he believed that Simmons did not know the true value of the stone. Is this a unilateral or a bilateral mistake?

It is a unilateral mistake, but now it is a mistake in fact since Jensen knew the true identity of the stone.

Based upon these facts, is the contract voidable? If not, why not?

It is not voidable. Contracts based upon mistakes of value are normally enforceable.The reason mistakes of value do not affect the enforceability of contracts is that value is variable.

Is this contract void or voidable and why does that make a difference?

It is voidable. This means that either party can rescind the contract, or they can elect to go through with the deal. If the contract was void that means the contract never had a legal existence and could not be enforced by either party.

What did Esprit do that might satisfy the first element of a fraudulent misrepresentation?

It made a promise that it could deliver the logs pre-cut and pre-drilled when it did not have the equipment to do so.

Florida law provides that in order to set aside an agreement to arbitrate, it must be both procedurally and substantively unconscionable. How was the stand-alone arbitration agreement both procedurally and substantively unconscionable?

It was procedurally unconscionable because when the dealer's representatives accepted the obligation to explain a contract written in English to Spanish speakers who did not speak English they must do so accurately and completely, and they failed to do so. It was substantively unconscionable because it deprived the plaintiffs of the remedies, they were seeking under their stated theory of liability

Regarding the contract with Jackson Motors, who is said to be in privity of contract?

Jackson Motors and Uncle Michael as the parties to the contract

Class Discussion Problem #13

Jeremy took his mother on a special holiday to Mountain Air Resort. Jeremy was a frequent patron of the resort and was well known by the manager. The resort required each of its patrons to make a large deposit to ensure payment of the room rental. Jeremy asked the manager to waive the requirement for his mother and told the manager that if his mother, for any reason, failed to pay the resort for her stay there, he would cover the bill. Mom stiffs the resort and Jeremy also refused to pay stating that his promise was not enforceable under the Statute of Frauds.

In order to satisfy a state statute of frauds, does a contract have to be written on paper? If not, why not?

No. The contract may be evidenced by a memorandum, an electronic record, an exchange of e-mails, text message or even tweets in order to satisfy a statute of frauds. The point that is some record of the terms and conditions agreed to by the parties must exist so that a court can figure out just what it is that the parties have agreed to do or not do.

Class Discussion Problem #2

Joanne is a 75-year-old widow who survives on her husband's small pension. Joanne has become increasingly forgetful, and her family worries that she may have Alzheimer's disease. No physician has diagnosed her, however, and no court has ruled on Joanne's legal capacity. One day while she was out shopping, Joanne stopped by a store that was having a sale on pianos. She signed a 15-year installment contract to buy a grand piano. When the piano arrived the next day, Joanne seemed confused and repeatedly asks the delivery person why a piano was being delivered. Joanne claims that she does not recall buying a piano.

Class Discussion Problem #18

Joe's Janitor Service has a contract with Hillsborough County Florida to clean the Fred Karl County Center. Under the terms of the contract, Hillsborough County has 60 days to pay Joe's invoices for cleaning services rendered under the contract. Invoices are to be submitted on a monthly basis after the end of the month in which the cleaning services are performed. The contract between Joes' and Hillsborough County specifically prohibits either party from being able to assign any rights or delegate any duties under the contract to a third party without the express written consent of the other party to the contract. Joe's has a cash flow problem which is exacerbated by the fact that Hillsborough County, its' biggest customer, does not have to pay for the cleaning services it performs until approximately two months after the services have actually been performed. To alleviate its' cash flow problem, Joe's makes an agreement with A-1 Factors to sell its' accounts receivable from Hillsborough County to A-1 for 90¢ on the dollar. This means that when Joe's submits its' invoice to Hillsborough County, will receive 90% of the amount of that invoice from A-1 Factors in return for an assignment by Joe's of the right to receive full payment of the invoice from Hillsborough County. A-1 sends a notice to Hillsborough County that it has been assigned the right to receive payment from Hillsborough County that is due under the contract with Joe's Janitor Service. The county ignores the notice and continues to issue payments directly to Joe's Janitor Service. A-1 sues Hillsborough County to collect the payments due to it under the assignment. Hillsborough County defends on the grounds that Joe's cannot make any assignments under the contract without their express written consent and that Hillsborough County did not consent to the assignment of the right of payment.

Once the assignment is made, what is the effect of the assignment as it relates to the right to receive further payments by Joe's from Hillsborough County?

Joe's right to receive payment for invoices submitted after the assignment is extinguished.

Class Discussion Problem #11

Juan is an elderly man who lives with his nephew Samuel. Juan is totally dependent on Samuel's support. Samuel tells Juan that unless he transfers a tract of land he owns to Samuel for a price 35% below its fair market value, Samuel will no longer support and take care of him. Juan enters into the contract.

If the contract is voidable, what are Joanne's options?

Just like a minor, she can either disaffirm the contract or ratify and enforce it.

What must an agreement contain in order to satisfy the requirements of a statute of frauds?

Just like any other contract, the "essential term of the deal" so a court can figure out what the parties agreed to do in order to be able to make a judgment as to enforceability.

Class Discussion Problem #1

Kobe Bryant was 17 years of age when he joined the National Basketball Association. Prior to his 18th birthday, he signed a contract with a trading card company giving it the right to use his likeness and other personal information on a trading card. Kobe also made personal appearances at events promoted by the trading card company for which he received additional compensation. After he became a star in the NBA, he was offered a new contract by a second trading card company for more money than he received under the first contract. He declined the offer from the second trading card company. The second trading card company asked how old he was at the time he signed the first contract. He replied that he was 17. The second trading card company advised him that he could disaffirm the existing trading card contract and sign a new contract with them. Kobe elected to do so. He was 18 years and three months old at the time he disaffirmed the first contract. He had accepted payments under the first contract and made one personal appearance under the first contract prior to attempting to cancel the agreement. The first trading card company sued for breach of contract.

Many times, a non-compete provision is a part of a larger employment contract. If the non-compete provisions are unenforceable, must the court void the entire contract?

No. A court may determine that the non-compete provisions are severable, and the court may leave the balance of the contract in effect.

Class Discussion Problem #4

Marco Antonio Barrera is a professional boxer and a 2-time world champion. In 2003, Jose Castillo orally agreed to become Barrera's manager. The understanding was that Castillo would be entitled to 10% of Barrera's gross revenue generated as a boxer and through endorsements. Apparently, Castillo did magnificent work as Barrera's manager, solving several problems for him. Barrera then stiffs Castillo and Castillo brings a lawsuit in a California state court alleging breach of contract.

What, if anything, can Mary do to avoid this result?

Mary must seek an agreement from the landlord to release her from the obligation to pay the rent.

Class Discussion Problem #19

Mary, a UT student, signs a one-year lease on an apartment. The term of the lease is from September 1, 2015 to August 31, 2016. The lease agreement specifies that the lease cannot be assigned without the landlord's consent. Mary decides that she does not want to attend summer school because she received a valuable intern position with a government agency in Tallahassee. She wants to assign the balance of the lease term, June, July and August of 2106 to her good friend Fred. The landlord objects to the assignment of the balance of the lease to Fred.

What is it about the character of the mistake that may satisfy this test?

Material is an accounting term It is used in the law on several occasions Is the fact such that if the true nature was known that it would make a difference to a party contemplating the deal?

Complete the following sentence: "When it comes to enforcing contracts, when in doubt ______________________."

Memorialize the deal, whether it is the type of contract that is covered by the Statute of Frauds or not. Compliance with the Statute of Frauds is simple. Take the issue off of the table!

If the minor elects to avoid a contract, what are the minor's obligations to the other party to the contract?

Most states require the minor to return the consideration if they still control it, even if the goods are damaged, the minor is often entitled to a full refund, however, a growing number of states hold the minor responsible for damage and wear and tear to the consideration, the minor must put the other party in the position they held before the contract was made.

What if Jeremy had said I will pay my mother's bill. Would this promise be covered by the Statute of Frauds?

No: it is no longer a collateral or secondary promise. Keep in mind the hotel still must prove that the promise was made

What is a contract for "necessaries" and what is the rule regarding avoidance by a minor for this type of contract?

Necessaries are basic needs such as food, clothing, shelter and medical services, Necessaries are determined on a case by case basis, The minor may disaffirm a contract for necessaries, but the minor must pay the reasonable value of the items received

May an adult who is a party to a contract with a minor avoid the contract because the other party is a minor?

No

In order for an assignment to be effective, must it have any type of specific form? If not, what would you want to include in such an agreement?

No Remember it's a contract. You want to be sure you cover the essential terms.

Is there anything in the facts of the problem to suggest that Juan wanted to sell the property? If he did not want to sell the property, what does this fact suggest?

No This suggests that Juan did not agree to the contract through the exercise of his free will

Sam is negotiating to sell his car to Bill. Sam tells Bill that the car has been driven 25K miles and has never been in an accident. Bill, being the cautious sort has the car inspected. His mechanic tells him that based upon the wear and tear that he sees on the car he believes it has been driven more than 25K miles. He also points out that certain repairs were made to the front end of the car that are only visible from the underside of the car. That suggests the car has been in an accident. Bill buys the car and it turns out to be the second CFH. Can Bill rescind (cancel) the contract? If not, why not?

No When he had the car inspected, he had ample reason to suspect that Sam's claim were false. He did not justifiably rely on Sam's statements. This is not in the textbook, but as a business person you need to know of the existence of these types of contract provisions. A well drafted commercial contract is going to contain representations and warranties. What this means is that Esprit will make a representation that all factual statements and promises made to the Wilcox in the contract are true and accurate. Further, Esprit will give a warranty (think guarantee) to the Wilcoxes that the representations are all true and correct. If the Wilcoxes can't sue for fraudulent misrepresentation, they will be able to sue for breach of the representations and warranties and the net result is going to be the same.

Assume that the agreement between Benson and Adams requires Benson to submit a written research report with a deadline of two years for the submission. Is this an agreement that must be reduced to writing because of the one-year rule? If not, why not?

No it is not. The legal test is performance possible with in one year because he could turn in the report before the expiration of the one-year period. The legal test is if performance possible within one year, it does not matter if performance is likely to be completed within one year.

Does the agreement between Frank and Bob satisfy the requirements of a statute of frauds?

No, there is no memorandum of the agreement that is signed by Bob.

Is Jeremy responsible for the payment of his mother's bill to the resort? If not, why not?

No. Since this is a collateral promise, there must be a writing signed by Jeremy to hold him responsible.

A-1 argues that the term "market size" was intended to allow for changes in what the market demanded. A-1 argued that its customers were no longer willing to accept fish at one-pound net weight A-1 because they needed fish that were larger than one pound. Therefore, A-1 argues the term "market size" gave them the ability to adjust to what the market demanded from time to time. Do you think that this evidence will be sufficient to counter Clark's evidence on the past practice of the parties under the agreement?

No. One of the contract interpretation rules a court will use is evidence of prior dealing or a course of performance Here the parties had a substantial history of defining "market size" to mean one-pound net weight. Prior dealing and course of performance are terms that have specific definitions under Article 2, UCC. These definitions are discussed in Chapter 20 of the textbook. For exam purposes, you are not required to go there and learn the precise definition. It is sufficient that you know that the parties, by their own conduct, can define an otherwise ambiguous term in an agreement.

Clark wishes to introduce evidence at trial to show the parties practice of returning the fish to A-1 when they reached one-pound net weight. Would the parol evidence rule prohibit the introduction of this evidence?

No. One of the exceptions to the Parol Evidence Rule is if the contract contains ambiguous terms. What is the meaning of "market size."

Assume that Joe's has failed to perform properly the required cleaning services under the contract, and Hillsborough County has served them with a formal notice of breach of contract. Would A-1 still be entitled to receive payment under the contract between Joe's and Hillsborough County?

No. The assignor takes the assignment subject to any defenses the party owing the payment may have to making it

Can Hillsborough County block the assignment of the right to receive payments by Joe's under the contract to A-1? If not, why not?

Normally a party to a contract can block an assignment of a right under a contract but assignments of the right to receive funds is an exception to this rule.

What is the doctrine of unconscionability of a contract or a contract provision?

Normally, a court does not look at the fairness or equity of a contract. People are presumed to be reasonably intelligent and the courts will not come to their aid just because they have made a bad deal. In certain circumstances, the bargains are so unfair or oppressive that the courts will choose to get involved to rectify the situation.

May Mary assign the last three months of the lease to Fred?

Not without the permission of the landlord

A-1 provided Hillsborough County with a written notice of the assignment of the right to payment under its contract with Joe's. What are some of the other reasons why notice of an assignment may be important to the assignee?

Notice is not necessary to make the assignment effective Priority Issues: it is possible that the assignor may have assigned the right to someone else Discharge issues: if the obligor makes the payment before they know of the assignment, they may be discharged from their obligation under the contract to make the payment

Class Discussion Problem #16

Novell, Inc. owned the source code for DOS operating system. Novell believes that Microsoft targeted DOS with anti-competitive practices in the early 1990's. Novell wanted to sue Microsoft for violations of the US anti-trust laws, but Novell was hesitant to do so fearing further economic retaliation from Microsoft. Novell devised a plan whereby they would sell the rights to DOS to Canopy, Inc. Canopy would then bring an anti-trust suit against Microsoft, and if the litigation was successful, a portion of the damage award would be paid by Canopy to Novell. The parties worked out two contracts to consummate the plan. The first was a contract for sale of the DOS operating system to Canopy and the second was a temporary license agreement that obligated Canopy to pay a portion of the settlement or a recovery from Microsoft to Novell. The parties created multiple drafts of each contract prior to settling upon the final form of each contract. Early drafts of the Temporary License Agreement contained a provision allowing Canopy to deduct its litigation expenses from the amount of any settlement or recovery prior to determining the percentage of the balance to be paid to Novell. The final form of the Temporary License Agreement omitted this language. Canopy sued Microsoft and won a substantial recovery. Canopy deducted its litigation expenses from the amount of the settlement before calculating the percentage of the settlement to be paid to Novell. Novell objected to the deduction of the litigation expenses, and Canopy refused to pay any additional monies to Novell from the settlement.

Class Discussion Problem #12

On May 1st, by telephone, Adams offers to hire Benson to perform personal services for a period of one year. On May 5th, Benson returns Adams' telephone call and accepts the offer. Benson is to report on May 19th to begin work. Benson reports to Adams' office and May 19th stating that he is ready to begin work. Adams says why do you think you are here to work? Benson says because we have a contract and I am to be employed for one year. Adams says I never made a contract with you.

Is there a recognized exception to the requirements of a statute of frauds that may exist in this instance?

Partial performance If the purchaser has paid part of the purchase price, taken possession of the property, maintained it and made valuable improvements on the property may constitute enough evidence to prove the existence of the contract.

Why is Alexander an intended beneficiary under the contract?

Performance is rendered directly to him

The textbook states that there are two types of unconscionability. What are the two types and give a brief explanation of each.

Procedural unconscionability - is the how the unfairness is achieved. How it is done. Inconspicuous print, unintelligible language, or an inability to read the contract and to question what it means. The net effect is to leave the party without a remedy.Substantive unconscionability - the provisions are oppressive or overly harsh - in other words the proponent should not be allowed to do this. A landlord accepts funding from the state government to provide subsidized housing to low income families. He includes a provision in the lease whereby the tenant promises not to sue the owner for any damages suffered by the tenant due to the landlord's negligence.

What are the remaining two types of contracts that may be subject to a statute of frauds?

Promises made in consideration of marriage Contracts for the sale of goods priced at $500 or more.

What is the status of the Statute of Frauds in the United States today?

Remember, contract law is state law. Every state in the union has adopted some form of a statute of frauds. The statutes may vary slightly from state to state.

Class Discussion Problem #9

Ricky and Sherry Wilcox hired Esprit Log and Timber Frame Homes to build a log house, which they intended to sell to a third party. They had paid Esprit $125,260 for the materials and services. The log house was to be built on land the couple owned situated on a high elevation in a remote area in Georgia. The contract was entered into on April 1, 2014. Esprit was to deliver the logs to the construction site not later than June 1, 2014. A key element of the contract was a provision that required Esprit was to supply the logs to build the walls of the home that were to be pre-cut and pre-drilled. This was necessary so that the logs could be taken off a truck and be immediately used to build the walls of the home.This feature would eliminate the necessity for the equipment to perform these tasks to be brought to the remote and difficult to reach construction site. Esprit delivered the logs to the construction site on May 31, 2014. When Esprit delivered the logs to the construction site, they were not pre-cut and pre-drilled as required by the contract. The reason the logs were not pre-cut and pre-drilled is that Esprit did not own the equipment to perform this operation at the time Esprit entered into the contract. As a result, it took five extra months to build the house while the logs were cut and drilled one by one at the construction site after the Wilcoxes rented the equipment necessary to cut and drill the logs.

Class Discussion Problem #10

Sam owns a tract of land that he inherited from his mother's estate. The land has a fair market value of $50,000. Sam's mother-in-law is diagnosed with a rare form of blood cancer. She has no medical insurance and Medicaid will not cover the treatment for her condition because it deems the treatment to be experimental. Sam is trying to find a buyer for the property, but he is having difficulty doing so since the property is landlocked and is unsuitable for commercial or residential development. David learns of Sam's desire to sell the property and he offers to purchase the property for $35,000. Sam searches in vain for another buyer and attempts to persuade David to increase his offer. However, David remains steadfast and Sam eventually agrees to sell the land to David for $35,000. Prior to the completion of the sale to David, Sam's mother-in-law has a brain aneurism and unfortunately dies unexpectedly. Sam no longer has a need to sell the property and refuses to complete the sale of the property to David.

What is the legal term used to describe when evidence is available to satisfy this requirement?

Scienter or guilty knowledge

Assume that the lease was silent on the ability of Mary to make an assignment of the remaining three months of the term to Fred. The landlord runs a routine credit check on Fred and he learns that Fred has a very low credit score, his automobile has recently been repossessed by the bank that loaned money to Fred to purchase the car and he is the defendant in two cases in small claims court for the collection of debts he allegedly has not paid when due. May Mary assign the last three months of the lease to Fred?

She can try, but the landlord can object because the assignment significantly changes his risk since Fred has credit problems

What steps must she take to avoid the contract for the sale of the necklace?

She must affirmatively disaffirm the contract and return the consideration she received for the sale of the necklace. In the chapter on consideration, we learned that a party to a contract cannot argue that the contract does not satisfy the consideration element when there is a disparity in the value of the consideration received by each party. This problem could be an example of when a court might be willing to take a closer look at the facts to determine, in light of the disparity in value, that some other reason may exist for avoiding the contract.A contract must have a legal purpose in order for it to be enforced. Contracts that are contrary to a statute such as contracts to commit a crime, contracts that violate a usury statute (interest charged in excess of the maximum allowed by law) and gambling contracts where gambling is illegal are void. Licensing statutes are a separate category.

What did Castillo try to argue?

That he was not a boxing manager, but a business manager and therefore not subject to the requirements of the statue.

If Sharon wishes to force Charlotte to return the necklace, what must she argue?

That she did not have the capacity to enter into the contract for the sale of the necklace due to her intoxication

If Joanne wishes to avoid the contract, what must she argue?

That she was not mentally competent at the time she entered into the agreement.

What is the origin of the Statute of Frauds, and what did it require?

The Statute of Frauds originated in England by an act of Parliament in 1677. In early common law, parties to a contract were not allowed to testify about the terms of the agreement. This led to the practice of hiring 3rd party witnesses to testify about the terms of the agreement. The Statute of Frauds was designed to deal with creditability and honestly issues. The traditional rule stated that the contract must be in writing and signed by the party to be charged.

What is the result likely to be in cases of economic duress?

The aggrieved party will not receive relief from the contract

If an agreement does not comply with a statute of frauds, is it void or voidable? If the agreement is voidable, what does this mean?

The agreement is voidable. This means one of the parties to the agreement must disaffirm it, otherwise they are free to perform.

In chapter 17 we will study two exceptions to the privity doctrine. What are these exceptions?

The assignment of rights and the delegation of duties under a contract Third party beneficiary contracts

Who is an assignor and who is an assignee?

The assignor is the party who makes an assignment The assignee is the party who receives the assignment

Based upon these facts, is the contract voidable? If not, why not?

The contract is voidable. One of the exceptions to the rules on a unilateral mistake is if one party knows or should have known that the other party is making a mistake of fact. Here Jensen knew the true value of the stone and had reason to suspect that Simmons did not know its true value.

When a minor is a party to a contract, is the contract valid, void or voidable?

The contract is voidable. This means the minor can enforce the contract (assuming it is otherwise valid) unless the minor choses to withdraw from the contract.

How does the law distinguish between an intended and incidental beneficiary?

The contract was made for the benefit of the intended beneficiary versus someone who might enjoy a benefit under the agreement, but such a benefit was not intended by the parties.

Based upon the facts as given, what do you believe the result will be when Sam attempts to avoid the contract for the sale of the land to David?

The contract will be enforced. David has no duty to buy the property and he is free to set a price as he sees fit.

What benefit would Juan enjoy if he can show the existence of the elements of this possible presumption?

The court could draw a legal conclusion that undue influence exists without the necessity of establishing evidence that he did not act out of his own free will. This finding would give him a basis to rescind (cancel) the contract and the property will be returned to him.

Most controversies involving licensing statutes are not like the California statute that not only required the manager to be licensed but also dictated the form of the contract. In most cases, one of the parties may be required to have a license from a state, city or county and the other party is attempting to use the first party's lack of a license to avoid contractual liability. In those cases, the argument is it is illegal for the person to be offering certain services when they do not have the required license. Therefore, the person who does not have the license should not be rewarded for performing work or providing a service without said license. In these types of cases, courts have recognized two types of licensing situations. What are the two types of licensing situations and which one will prevent a party who does not have a license from enforcing a contract?

The courts make a distinction between licenses that are necessary to protect the public from unauthorized practitioners and licenses that are designed to raise revenue for the governmental entity that requires the license. In the first case, the lack of the license voids the contract In the second case, the lack of the license has no effect on the enforceability of the contract.

Who is a delagator and who is a delagatee?

The delagator is the party who delegates a duty The delagatee is the party who now must perform the delegated duty

What is the second thing that Samuel must prove to take advantage of this possible presumption of evidence?

The dominant party is enriched by the transaction.

When is a contract personal in nature? Why can't rights under a contract that is personal in nature be assigned? What is the one exception to this rule?

The duty to be performed is dependent upon the unique talents and abilities of the individual who has promised performance. If performance has occurred, and the only duty that remains is to make the payment for the performance.

When a fraudulent misrepresentation occurs, what options are available to the innocent party?

The innocent party may cancel the contract. This action is called a recession or stated another way the innocent party chooses to rescind the contract. What this means if the contract is cancelled and the parties are returned to the positions they held at the time the contract was entered into.

Since he was 18 years and three months old at the time, he served notice to cancel the first contract, what must he argue in order to be able to avoid the first contract?

The law allows a minor who has reached the age of majority to disaffirm a contract entered into as a minor for a reasonable period of time after his 18th birthday. A reasonable period of time is determined on a case by case basis

What is contractual capacity?

The legal ability to enter a contractual relationship

In order for a contract to manage a professional boxer to be valid under California law, what requirements must be satisfied?

The manager must be licensed by the State of California and the parties must enter into a form of contract required by the state

When a minor is a party to a contract, what additional right does the minor have that is not extended to adults who are parties to a contract?

The minor has the right to avoid the contract, subject to certain exceptions, at the option of the minor.

If a minor wishes to avoid a contract, what steps must the minor take to do so. What is the legal term used to describe this process?

The minor must disaffirm the contract, this can be accomplished through a written or verbal expression of the minor's intent to be free of the contract, the minor may also disaffirm the contract through conduct, the minor must disaffirm the entire contract, this process is called a disaffirmance.

. In general terms, how can conduct that satisfies the first element of a fraudulent misrepresentation occur?

The misrepresentation may be made by words or conduct

Who is an obligor and who is an obligee?

The obligor is the person who owes a duty under a contract The obligee is the person who is entitled to receive performance under the agreement Note: in a bilateral contract both parties may be obligated to perform a duty and at the same time be owed a duty. The actual identity of an obligor and an obligee will depend upon the right that is being assigned

What is a fraudulent misrepresentation?

The offeror makes a representation to the offeree that is consciously false and is intended to mislead the offeree and induce the offeree to enter into a contract.

In states that allow covenants not to compete in an employment context, what are the standards that such a contract must satisfy to be enforceable?

The period of the restraint and the geographic boundaries of the restraint must be reasonable. Generally this is a fact determination that is made on a case by case basis. However, some states refuse to enforce non-compete agreements in an employment context. Other states, like Florida, have statutes that are very favorable to non-compete agreements in an employment context.

Assume that prior to the dispute in question that after six years of doing business together, A-1 and Clark enter into a written contract for their business arrangement. Assume further that the written contract included the term market size and did not define it. After the dispute arises, Clark attempts to introduce evidence of the parties' practice of returning the fish when they reached one-pound net weight? Would this evidence be excluded under the parole evidence rule?

The result will be the same. It does not matter if you included the ambiguous term in a written contract

Under what circumstances may the contract with Joanne be valid?

The seller would have to present evidence to show that Joanne was lucid at time she made the contract

What are the other exceptions to the rule that a contract can prohibit assignments under the contract?

The textbook points out that there are four exceptions to this rule. The remaining three exceptions are: 1. Restraints against alienation 2. Negotiable instruments 3. In a contract for the sale of goods, the right to receive damages for a breach of contract or the payment of an amount owed.

The first trading card company will argue that Kobe had ratified the agreement and therefore had lost the right to avoid the contract. The textbook says there are two types of ratification. What are the two types of ratification and which type may be involved here?

The two types of ratification are express and implied. Express ratification occurs when minor, upon reaching the age of majority, states orally or in writing that he intends to be bound by the contract. Implied ratification occurs when the minor through conduct indicates an intent to be bound by the contract This would be an example of implied ratification

What is the parol evidence rule?

There may be a dispute over the meaning and application of a party's agreement. As in the problem, one of the parties may wish to introduce evidence outside of the actual contract language to explain the party's agreement. This outside evidence is called extrinsic evidence. The rule on the admissibility of the extrinsic evidence is called the parol evidence rule.

What is the second element of a fraudulent misrepresentation?

There must be an intent to deceive on the part of the person making the fraudulent misrepresentation

Why is it so difficult to prove the existence of undue influence?

There must be clear and convincing evidence that the person did not act out of his or her free will.

What is the doctrine of reformation and how may it apply to non-compete agreements in an employment context?

Under the doctrine of reformation a court may rewrite the contract provision to make it enforceable. When a non-compete provision is part of a larger contract, many times both parties are willing to ask the court to reform the non-compete provisions to make them enforceable. This is sometimes referred to as the "blue pencil doctrine." It is not uncommon that a non-compete provision in an employment context will include a provision that requires the court to reform the agreement to make it enforceable.

What is undue influence?

Undue influence arises from relationships in which one party can greatly influence another party thus overcoming that party's free will.

What is the legal test for determining whether her level of intoxication was sufficient to impair her ability to make a contract?

Was she sufficiently intoxicated so as not to understand the nature of the transaction

As a practical matter, when will the minor elect to avoid the contract?

When the contract turns out to be a bad deal for the minor.

What is an innocent misrepresentation and how does it impact the option available to the innocent party?

When the party makes a statement that he/she believes to be true, but it actually misrepresents the material facts. The example used in the textbook is a seller tells the buyer that a tract of land contains 250 acres when it in fact contains 215 acres. The buyer then agrees to purchase the land and only later finds out the true facts. I suggest that this example is farfetched. Any contract for the sale of real estate is going to be subject to conditions (we will learn about conditions when we review Chaptr18 on Performance and Discharge). One of these conditions will be a survey to establish the exact boundaries and the amount of land involved. This contract will be discharged for failure to satisfy a condition. In this case, the remedy is recession not damages.

When does this element exist?

When the party making the statement or engaging in the conduct knows it is false.

In the Introduction to Chapter 15, the textbook states that lack of voluntary consent can be a basis for avoiding a contract. The introduction then gives some examples of when voluntary consent may be missing. What is the concept of voluntary consent attempting to promote in contracting?

When we studied consideration, we were introduced to the concept of the "bargained for exchange." The basis of the bargained for exchange is the offeror's promise is what should induce the offeree's acceptance of that promise by making a return promise (or performance). Any other reason for accepting a new duty or responsibility defeats the rationale behind the concept of consideration.

Is this type of contract subject to a statute of frauds?

Yes A collateral promise is one made to a third party to assume the debt or obligation of a primary party to a contract.

On these facts, has a mistake been made? If so, who was mistaken? What label does the law place on this type of mistake?

Yes Both parties were mistaken. This is still a bilateral mistake, but it is not a mistake of a material fact. The stone is quartz.

Is the agreement to purchase the lot between Frank and Bob subject to a statute of frauds? If not why not?

Yes It is a contract for a transfer of an interest in real estate.

Has Jeremy's mother made a contract with the resort? If so, what kind?

Yes It is an implied in fact contract

Is there a possible presumption of evidence available in this case that would assist Juan to avoid this contract? If so, what must Juan show about his relationship with Samuel to take advantage of this presumption of evidence?

Yes The presumption is called undue influence. The parties must be in a fiduciary relationship A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. . Typically a fiduciary takes care of money or other assets owned by another person. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some manner. A fiduciary duty is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom he owes the duty such that there is no conflict of duty between the fiduciary and the principal and the fiduciary must not profit from his position as a fiduciary.

Is Hillsborough County liable to pay A-1 after it has made the payment to Joe's?

Yes, Joe's no longer has the right to receive the payment.

Is Hillsborough County able to recover the payments it made to Joe's?

Yes, but let's hope he is not judgment proof

Could Frank raise the doctrine of promissory estoppel to preclude the sale of the lot by Bob to Sam? If so, what would Frank have to prove to take advantage of this doctrine?

Yes, depending upon the law of the state. That Bob made a clear and definite promise That Bob should have expected that Frank would rely upon the promise That Frank reasonably relied upon the promise by acting or refraining from some act. Frank's reliance was definite and resulted in a substantial detriment Enforcement of the promise is necessary to avoid an injustice

As an employer in the State of Florida, Joe's must provide worker's compensation coverage for its' employees. (Worker's Compensation is an insurance fund that is administered by the State of Florida and is financed by mandatory employer contributions. The fund provides monetary benefits to employees of Florida employers who are injured on the job.) The Florida Workers Compensation Statute specifically prohibits the assignment of the right to receive payments by beneficiaries of the plan. Is such a restriction enforceable? If it is enforceable, what do you think is the basis for this restriction?

Yes, the legislature is free to create the exception Think how many people receive WC benefits. Think how difficult it would be to keep track of all of this

Assume that Fred fails to pay the rent; may Mary be liable for the rent payments?

Yes. This is a major difference between an assignment and a delegation. The delagator remains liable for the breach of performance by the delagatee.

Prior to the discovery that the stone is a diamond, is there a valid contract between Simmons and Jenson?

Yes. There was an offer, acceptance, consideration, legal purpose, and the parties had the capacity to enter into a contract

Is Frank's promise covered by the Statute of Frauds? Why or why not?

Yes: is it a collateral or secondary promise that must be evidenced by a memorandum acknowledged by Frank to be enforceable

Is there an exception to the Statute of Frauds rule that might apply to this situation making Frank responsible for his promise?

Yes: it is an example of the "main purpose rule." Here, Frank's promise is made to secure a benefit to Frank - to get his garage built

If you are A-1, how do you solve this problem?

You must go to Clark and negotiate a change to the terms of the deal. You can't just shove it down their throats.