December 12, 2011 - Final Exam

Final Exam

December 5, 2011 - Final Exam Review

Final Exam Review

December 2, 2011 - Court Observation Essay Due

Court observation essay due by 11:59 P.M., December 2, 2011, to e-mail.

Court time today.  

November 30, 2011 - Corporate Finance (Con't) [Chapter 29]

1. Provide the legal definition of a stock.

2. Provide the legal definition of a bond.

3. What is a bond indenture?

4. What is a mortgage bond?

5. What is a convertible bond?

6. What is a callable bond?

7. Describe common stock?  What are the three areas of proportionate interest?

8. What is a preferred stock?

9. Describe cumulative preferred stock.

10. What is private equity capital?

11. Describe a merger.

12. What is a consolidation in business law?

13. What is a share exchange?

14. What is an appraisal right?

15. What are the four areas of liability for purchase of assets?

16. What is a target corporation?

17. What is the crown jewel?

18. What is greenmail?

19. What is a white knight?

20. What is a poison pill (in business law!)?

* * *

November 28, 2011 - Final Exam Practice Answers

I am very pleased with our practice answers from last week.  If I do not contact you to conference individually, assume you are doing well on our practice exam questions. 

I hope everybody had a blessed Thanksgiving. 

November 28, 2011 - Corporate Formation, Merger, Termination (Chapter 29)

1. A corporation is a creature of ___________.

2. Describe a corporation.

3. A corporation is recognized as a __________.

4. Define dividend.

5. Define retained earnings.

6. Why are holding companies used in business?

7. What is a domestic corporation?

8. What is a foreign corporation?

9. What is an alien corporation?

10. What is a non-profit corporation?

11. What is a close corporation?

12. Why can management of close corporations be difficult?

13. Brief Williams v. Stanford.

14. What are the 6 most important requirements for S corp status?

15. What is the difference between an S corp and P (P.C.) corp?

16. What are the four incorporation procedures?

17. How do you secure a corporate name?

18. Why is selecting the state of incorporation important?

19. What four elements must articles of incorporation include?

20. What is a registered agent?

21. When do you file articles of incorporation with the state?

22. What are the six conflicts that may arise among documents involving corporations?

23. Describe ultra vires?

24. What is a de jure/de facto corporation?

25. Describe the legal theory of corporation by estoppel. 

26. Brief Brown v. W.P. Media.

27. What four factors lead a court to pierce the corporate veil?

* * * * Wednesday - Corporate Finance (page 738).

November 23, 25, 2011 - Thanksgiving Break

Thanksgiving Break

November 21, 2011 - Torts Model Exam Answer

Answer Torts Essay 1

1. Paul v. Dina

a. Assault
Paul has sued Dina alleging the intentional tort of assault. In order to recover, Paul must establish that Dina 1) intentionally 2) created in Paul a reasonable apprehension 3) of imminent harmful or offensive bodily contact. There are two acts of Dina that might give rise to liability for assault.
 

i. Dina's Verbal Threat
Intent. Dina intentionally made the statement, "I'm going to get you first." This was a voluntary act which threatened Paul with some kind of harm.

Reasonable Apprehension. However, Dina's statement should not have led to a reasonable apprehension of imminent harm. She was face to face with Paul and screaming at him and making threatening gestures. These actions may alone have created an apprehension in Paul. However, Dina said, "I'm going to get you first." Thus, Dina's words indicate that the threat is to be carried out in the future. There is no reasonable apprehension of imminent harm, and thus, this element of the tort of assault is not met. Thus, Dina is not liable to Paul for the verbal threat.
 
ii. Dina's Bicycle Attack
The second act of Dina which may give rise to the tort of assault is when Dina rode her bicycle at Paul.

Intent. Dina of her own volition rode her bike towards Paul as fast as possible. This satisfies the requirements of intent. However, is Dina's intent vitiated by the fact that she is possibly delusional and schizophrenic? The answer is no. All persons are capable of intentional torts.

There is no incapacity defense. So long as the act is voluntary and is substantially certain to bring about the intended result, the element of intent is met.

Reasonable Apprehension of Imminent Harm. Paul saw Dina riding towards him and was put in fear of harm as evidenced by his leaping to one side to avoid Dina. The test for apprehension is, however, an objective one. In this circumstance, having received a prior verbal threat from Dina and now with her act of bicycling toward him at high speed, Paul had a reasonable apprehension of imminent bodily harm. Dina had the apparent intent to carry out a threat and also the present ability to carry out her threat.

Dina is therefore liable to Paul for assault. She is liable for nominal damages and possibly punitive damages as well as damages caused by the assault. Paul dived away from Dina and struck his head and suffered a severe concussion and facial injuries. Dina will probably be liable to Paul for any medical expenses incurred as well as pain and suffering damages.

Dina may argue that the damages were not caused by her act, but rather were self-inflicted by Paul. However, this argument will fail. During the commission of the tort, it is foreseeable that the victim Paul would try to escape. The injury during the escape was caused by the assault and Dina is liable for these damages.

Dina may attempt to raise the defense of self-defense. A person is privileged to use appropriate force against another person when they reasonably believe that the other is about to cause them imminent harm. Here, Dina said, "I know you're out to get me." This indicates that she believed that Paul was a threat to her in some way. However, the defense of self-defense will fail.

First, the facts indicate no basis for Dina's fear of Paul. For self-defense to apply, Dina's fear would have to be objectively reasonable. It appears that Dina's fear is more likely to be the result of her delusions and not any real events. Thus, she had no reasonable fear of harm from Paul.

Further, self-defense can only be used to prevent or defend against imminent bodily harm. Here, no facts suggest Paul was about to harm Dina. Her fear that Paul might attack her in the future, even if true, would not give rise to self-defense. In fact, Paul was raking leaves and not threatening Dina.

Still further, Dina stated, "I will get you first." This indicates her intent to get Paul before he had the opportunity to hurt her. Even if her belief were true, self-defense does not allow one to take the law into your own hands and go on the offensive.

 
b. Battery
To recover for the intentional tort of battery, Paul must establish that Dina intentionally caused a harmful or offensive contact with Paul's person.

Intent. Here, the same act of Dina, riding the bike at Paul, suffices as the intentional act. The act was voluntary despite Dina's illness as discussed above. Dina might argue that she only intended to scare Paul as evidenced by the fact she swerved away at the last minute. However, Dina intended the tort of assault. This intent will be transferred to the foreseeable tort of battery which occurred. It was foreseeable that Paul would attempt to escape, thus, the harm resulting from the escape will be presumed to have been the result of intent.
Infliction of Harmful or Offensive Contact. As a result of Paul's dive, he suffered facial injuries and a concussion when his head hit the curb. This is a harmful contact with Paul's person sufficient to satisfy this element of battery.

Damages. Dina will be liable for damages from this tort as described above for the tort of assault. Actual damages to cover medical expenses, pain and suffering and possibly punitive damages because this is an intentional tort.

Defenses. Dina's defense of self-defense will fail for the same reasons as above. The court may consider Dina's failure to take the medication as voluntary disablement akin to voluntary intoxication which would further discount any value that Dina's defense of incapacity would have.
 

2. Paul v. Mary

a. Was Mary Negligent as to Paul
Duty. Generally, the law imposes no duty to control the acts of another person. However, under certain circumstances, where a person has knowledge of the dangerous propensities of a person and also the means by which to control the person, then such a duty will arise. Here, Dina is Mary's minor daughter living at home. It is arguable whether Mary has control over Dina. This will be a jury question that could go either way; no facts are given. Mary did have knowledge of Dina's dangerous propensity. She knows of Dina's violent delusionary schizophrenic condition and Paul told her of his encounter with Dina. Thus, a duty of control will be imposed upon Mary. This duty will run to all foreseeable plaintiffs under the Cardozo rule for Palsgraf v. L.I.R.R. Co. Paul is a foreseeable plaintiff, particularly because he notified Mary of Dina's first threat.

Mary, then, has a duty to act as a reasonable person under the circumstances in her control of Dina and her actions towards Paul.

Breach. Did Mary breach her duty of care? Two acts of Mary possibly constitute breach of the duty of care. Mary assured Paul that Dina would not try to hurt him and assured him that the threat would not happen again. This statement turned out to be wrong. However, this is not a classic misrepresentation which must concern a present or past hurt. Mary's statement is a warranty that certain events will not occur in the future.
Her statement serves two purposes as well as possibly being a negligent statement. Mary, in making the statement, assumed a duty of care toward Paul. This augments the duty imposed by law. Mary in essence states that she has control of the situation and of Dina.

The second act that may constitute breach of the standard of care is Mary's acts toward Dina. Mary scolded Dina, but she took Dina's word that she was taking her medication. Under the circumstances, a reasonable person would have made certain that Dina was taking her medication. Mary's failure was breach.
Mary's Breach Caused Paul's Harm. Paul probably reasonably relied on Mary's statement that Dina would not threaten him again. Paul's failure to take self-protective action and rely on Mary was one cause of his injury.

Dina would probably not have attacked Paul if she had taken her medication. Therefore, Mary's failure to ensure Dina took her medication was another cause of the harm to Paul. But for Mary's breaches, the harm to Paul would not have occurred.

The harm to Paul was foreseeable because Mary knew of Dina's medical condition and violent propensity. She also knew that Dina had particularly threatened Paul. Thus, Mary's acts are the proximate cause of Paul's harm.

Finally, Paul suffered damages as discussed above. Mary will be liable in negligence for Paul's medical expenses and pain and suffering and lost wages. However, because Mary was merely negligent, she probably won't be liable to Paul for punitive damages.
 
b. Is Mary Vicariously Liable for Dina's Conduct ?

The general rule is that parents are not vicariously liable for the torts of their children. However, many states impose parental liability by statute for intertwined torts of minors. Thus, statutes usually have a limit of liability.
If the state where the events took place has such a statute, Mary may be liable for Dina's acts up to the dollar limit on liability. Otherwise, Mary will have no vicarious liability to Dina's acts.
Answer B Track

1. Paul v. Dina

A. Assault
Assault is the intentional causing of an apprehension of immediate harmful or offensive touching.
 

i. Dina's First Approach

 When Dina first yelled at Paul that she was "going to get" him, no assault occurred.

Although she may have caused fear or apprehension of future injury, and she made threatening gestures, her words seemingly take away the immediacy; her threat is to get Paul later; her intent is to get Paul later.

If, however, by her words and actions, she intended to cause an apprehension of present injury, Dina's actions in her first approach are sufficient to constitute assault. The facts do not make clear whether some outside event may have caused her to withdraw from an initial intent to threaten present injury.
 
ii. Dina's Second Approach
When Dina rode her bicycle at Paul, she committed assault. She clearly intended to cause Paul to be immediately afraid or apprehensive of a harmful touching. Paul's response of diving to the side shows that he was in fact afraid of being hit. The fact that Dina swerved away is not relevant to the assault which was already complete at that point.

 
B. Battery
Battery is the intentional causation of harmful or offensive contact to the plaintiff's person.

Intent. Dina may not have intended to hit Paul with her bike. Swerving to the side at the last minute may have been her plan all along, or she may have changed her mind as she approached Paul.
Even if her intent was not to hit Paul, Dina may nonetheless have intended a harmful or offensive touching. Paul's response of jumping to the side was foreseeable, as was the possibility that he would hit something or fall down when he did so. This is sufficient to constitute intent.

Causation. Dina's actions clearly caused Paul to hit the ground. But for her riding her bike at him, he would not have jumped, and her actions were the direct and proximate cause of his jumping and injury.
Harmful or Offensive Contact. Paul's response to Dina clearly was harmful, as evidenced by his injury: a severe concussion and facial injuries.
 
C. Defenses

• Consent
  Paul did not consent to Dina's contact. His warning by her ahead of time does not mean there was consent.
  
  
• Incapacity
  Both children and insane people may commit intentional torts. Incapacity is not a defense.
  
  
• Self-Defense
  An individual may respond with non-deadly force to a reasonable belief that she is under attack. She must respond with reasonable force under the circumstances.
  
  Here, Dina does not have the defense of self-defense available because there is no indication that she was under any attack at all.
  
  Although one may be mistaken in her belief of a need for self-defense, this mistake must be reasonable. It's hard to say what a reasonable schizophrenic would believe, but objectively, the reasonable person would not believe Paul was attacking simply by raking leaves in the garden.
  
  Dina has no defense to her intentional torts of assault and battery, and she may further be liable for any emotional distress. Paul may recover for his injuries.

 

2. Paul v. Mary

A. Negligence

An individual is liable for the foreseeable results of her negligent conduct when she has (1) a duty (2) that duty is breached, (3) the breach of duty caused the plaintiffs injury and (4) the plaintiff suffers damages.
 
i. Duty

a. Foreseeable Plaintiff

Paul was clearly a foreseeable plaintiff as Mary knew Paul had been threatened by Dina. He was directly in danger

b. Standard of Care

The standard of care for individuals is objective. One must behave as would a reasonable person under the circumstances. Here, Mary knows that Dina has attacked people in the neighborhood.

c. Parent's Duty

When a parent has (1) special reason to know of the need to control a child and (2) the ability and opportunity to control that child, she may be negligent in failing to do so.
Mary knew Dina could attack people. Mary may have believed that the medication could control Dina, but simply asking Dina if she had taken it is not enough under the circum­stances.
She could have supervised Dina while taking the medication, and knowing that Dina had threatened Paul, she had notice that such supervision was necessary.
Mary was therefore subject to a special duty of care because of her knowledge and her opportunity and ability to control Dina.

 
ii. Breach

An individual breaches her duty when she fails to live up to the required standard of care.
Here, as discussed above, Mary was subject to a special parent's duty. She breached this duty by not controlling Dina, and by assuring Paul that he was in no danger.

iii. Causation

a. Actual Cause: But for Mary's failure to control Dina, and but for her inappropriate assurances of safety, Paul's injury would not have occurred. Thus, Mary's negligence is an actual cause of Paul's injury.
b. Proximate Cause: Proximate causation requires that defendant's role in plaintiff's injury was sufficiently connected to the injuring event that the injuring action can be said to be foreseeable.
Here, Mary's failure to control Dina clearly is closely connected to Paul's injuries. If she had assured that Dina took her medication, Dina would not have attacked Paul.
Mary's improper assurances of safety are also probably a proximate cause, because Paul may have been more on the alert had he been forewarned.
Mary's negligence, therefore, can be said to have caused Paul's injuries.

 
iv. Damages
Damages must be suffered in order for a tort recovery to be allowed. Here Paul's physical injuries are sufficient to satisfy this requirement.
 
v. Defenses

a. Intervening Intentional Tort: The intentional tort of another may sometimes break the chain of causation. Here, however, Dina's tort was clearly foreseeable, and was, in fact, the action Mary was responsible for preventing.
b. Assumption of the Risk: If an individual knows of a risk and voluntarily proceeds in the face of it, he may be said to have assumed the risk.
This is not a defense here, however, because Mary's assurances removed any knowledge of the danger from Paul's mind.
Mary should be liable in negligence to Paul for the injuries he suffered at Dina's hands.

 
B. Vicarious Liability
As a general rule, parents are not vicariously liable for the intentional torts of their children. They may be statutorily liable up to a limited dollar amount. This will vary by jurisdiction.
Parents may be liable in negligence for negligent supervision, as Mary is, discussed previously.
 
i. Assumption of a Duty
One may be liable for the torts of another if one assumes the duty to protect against these actions. Here, Mary assumed this duty when she assured Paul of his safety. Thus, she may be vicariously liable. However, under the general rule, Mary is not liable under a vicarious liability theory.

November 18, 2011 - Court

Court

November 16, 2011 - Torts Sample Exam Question

TORTS SAMPLE EXAM QUESTION

Dina, aged sixteen, lives at home with her mother, Mary, in a state where the age of majority is eighteen. Mary is aware that Dina has recently exhibited a sometimes violent and delusionary nature diagnosed as  schizophrenia and has attacked persons in the neighborhood. Medication that can control Dina's behavior has been prescribed, but without Mary's knowledge, Dina has stopped taking it.

A week after Dina stopped taking her medication, she approached a neighbor, Paul, as he walked along the sidewalk fronting Mary's home. When she has a face to face with Paul, Dina, without provocation, gestured threateningly and screamed, "I know you're out to get me and I'm going to get you first," and then strode away.

Paul, who had no knowledge of Dina's mental illness, phoned Mary about the incident. Mary told Paul that "Dina has sometimes made threats to others, but I do not think she will try to hurt you and I assure you that this will not happen again." Paul believed Mary's assurances and, for that reason, did not seek to avoid Dina.
Mary questioned Dina about the incident, scolded her, and asked if Dina was taking her medication. When Dina said she was, Mary did not pursue the matter.

Two days after Dina confronted Paul, Dina saw him raking leaves which had fallen into the street fronting their adjoining homes. Dina got on her bicycle and rode it as rapidly as she could directly at Paul. Although Dina swerved away from Paul at the last moment, Paul reacted by diving to one side. He struck his head on the curb and suffered a severe concussion and facial injuries

Paul has sued Dina and Mary, alleging tortious causes of action.

1. Is Paul entitled to recover against Dina for:
   
   a. Assault? Discuss.
   b. Battery ? Discuss.
   
   
2. Is Paul entitled to recover against Mary:
   
   a. On the ground that Mary was negligent as to Paul? Discuss.
   b. On the ground that Mary is vicariously liable for Dina's conduct? Discuss

November 16, 2011 - Sole Proprietorships & Private Franchises

1. What four factors does an entrepreneur need to consider?

2. Define sole proprietorship.

3. List four advantages of a sole proprietorship.

4. List three disadvantages of a sole proprietorship.

5. Brief Garden City Boxing Club v. Dominguez.

6. Define franchise.

7. What is the difference between a franchisor and franchisee?

8. Describe a distributorship.

9. Describe a chain style business.

10. Describe a manufacturing plant arrangement.

11. What federal law governs franchising?

12. What is the "franchise rule"?

13. Describe the franchise contract.

14. Brief LJL Transportation v. Pilot Air Freight Corp.

* * *

November 14, 2011 - Agency Relationships in Business (Chapter 23)

1. Define fiduciary relationship.

2. Define employee.

3. Define independent contractor.

4. List four criteria used by the courts to determine if a worker is W-2 or 1099.

5. Brief Lopez v. El Palmer Taxi, Inc.

6. What is agency by agreement?

7. What is agency by ratification?

8. What is agency by estoppel?

9. What is agency by operation of law?

10. What are the agent's duties to a principal?

11. What are the principal's duties to an agent?

12. What is express authority?

13. What is a power of attorney?  Does it terminate on death?

14. What is implied authority?

15. Brief Ermoian v. Desert Hospital.

16. What is apparent authority?

17. What are the requirements for "ratification"?

18. Define disclosed principal.

19. Define partially disclosed principal.

20. Define an undisclosed principal.

21. What is the difference between an authorized act and an unauthorized act?

22. What is an e-agent?

23. Brief Warner v. Southwest Desert Images, LLC.

 24. Briefly describe the five ways in which agency relationships are terminated. (hint: page 599).

* * *

November 11, 2011 - Contracts Sample Answer

Contracts Sample Answer


WAS A VALID CONTRACT FORMED? 
 
Betty's (B's) rights against Art (A) depend on whether a valid contract was formed between them, and whether it was breached and by whom. A and B clearly agreed on the subject matter (drilling a well) and price ($10 a foot) and time for performance (June 1 completion). These terms suffice to form a contract.

The contract did not have to be in writing. A writing to evidence a contract is required by the statute of frauds when land is transferred, but not for services to be performed, as here.

Betty would not have rights against A if the contract called only for drilling for water, but the subject matter here is clearly a completed well, not the mere act of drilling: B's interest (known to A) was in the water, and she asked him about drilling "to supply drinking water," and further asked for a guaranteed completion date. Thus A may be liable, if his performance was not excused.

IMPOSSIBILITY

A's performance under the contract might be excused by impossibility. Under the doctrine of impossibility of performance, however, performance is excused only if performance would not be possible by anyone: an objective standard applies. While A's drilling accident was "unavoidable," other drillers with different or better equipment, or drilling another place, would still be able to perform (as shown by Carlos' performance). Art himself may have been able to perform in time after the accident, according to his statement that he couldn't promise performance by July 1. Thus A's performance cannot be excused by impossibility.
 
COMMERCIAL IMPRACTICABILITY 
 
The doctrine of commercial impracticability would similarly be of no avail to A to excuse performance. First, the doctrine is available in commercial settings: A had never drilled a well before, and B wanted the water for drinking (although also for her farm). The impracticability doctrine also requires that performance would be so economically burdensome that it would be wasteful for the obligations to be performed. Here Art was willing to continue performance without any "additional further payment," and water was eventually found at 300 feet on only a second drilling, so the doctrine would not excuse A's performance.
 
ANTICIPATORY REPUDIATION 

If A breached the contract by anticipatory repudiation, B could legitimately go to Carlos for completion. If A completely, unequivocally repudiated the contract, B's further obligations under the contract would be excused.

But A did not so repudiate: he merely said he could not promise the contract's completion by July 1. This expression of doubt could not alter his obligation to perform by July 1, and he was not insisting that B modify their contract, since Betty refused to let him start another well. B had to wait until July 1 to see if he breached. Because A was willing to continue his performance, B was still bound by the contract: her performance was not excused.

B'S REFUSAL 

A covenant "implied in fact" in all contracts is the cooperation of the obligee in receiving an obligor's performance. A's further performance was excused when this condition arose by B's refusal to let Art start another well: breach of this covenant sets up a condition, which, unsatisfied, excuses his further performance. But B's refusal constitutes breach of the contract on her part, so that B should be unable to collect damages from A if his anticipatory repudiation is not found.

BREACH 

IF ART BREACHED
If Art did breach the contract by anticipatory repudiation because he said he couldn't guarantee completion by July 1, B would be entitled to damages based on gaining the benefit of her bargain.

She bargained for a well drilled at $10 a foot, and 300 feet of drilling were required. Thus she paid a total of $8,000 to A and Carlos, and would have paid $3,000 if nothing had gone awry. If Art breached, her action in going to Carlos may be proved to be reasonable to gain her bargain and she could collect $5,000 from A.

B would only be able to collect the additional $15,000 from A if such loss to the apple crop was foreseen by Art at the time they entered into the contract, under the rule of Hadley v. Baxendale. Because A never dilled before and B was talking about drinking water rather than crops, such damages should probably be found not to have been within the reasonable expectations of A and B when they entered into the contract.

QUASI-CONTRACT 

Finally, if Art's conduct was not an anticipatory breach and B breached the contract, Art should have a good claim under the contract for his work at $10 a foot, or for restitution for the reasonable value of his services (in quasi-contract) at $12 a foot.


Professor's Notes:


RIGHTS 

It is fairly clear from the facts given that an effective contract has been formed so as to bind the parties. Betty asked Art to drill a well; Art laid out price and the maximum depth to which he could drill. Then Betty asked for a guaranteed completion date and Art agreed, asking for an advance. Betty paid the advance - thus manifesting her intent to be bound by all of the terms of the parties. Sufficient consideration is present since both parties incurred a legal detriment.

CONTRACT TERMS
The real issue in this case involves the terms of performance and attempt at performing by Art. By the terms of the agreement, upon receipt of his advance, Art was to commence drilling a well for Betty up to a depth of 600 feet. He was to complete performance by June

1. Any balance was payable on completion.

IMPOSSIBILITY
Art began performance and at 200 feet of depth he hit rock and his drill bit broke. The facts state that the accident was unavoidable. This raises the doctrine of impossibility. A performance under a contract is excused if the performance becomes objectively impossible, if no one in the world could complete the performance. From the facts given, it appears that drilling a well at this exact site is objectively impossible since the broken drill was unavoidable. Betty may claim that this does not render the performance impossible since Art could move and drill on a different site. The problem, though, is that Art cannot complete a new drill hole until July 1, a month after the deadline in the old contract.

Art will argue that the broken drill is a temporary impossibility and thus he should be allowed to continue his work. The modern trend among courts (and under the U.C.C., although that doesn't govern here) is to allow a reasonable time to "cure " performance if the time element in the contract is not crucial to the parties. Either under this doctrine or the doctrine of temporary impossibility, absent a showing of time being a crucial element of the contract, Art would be given an opportunity to reasonably complete his performance.

MATERIAL ALTERATION?

It must, of course, be determined whether or not time is truly of the essence to Betty. If time was of the essence so as to constitute a material alteration of the contractual agreement, then Betty may rescind the contract based on impossibility of performance, or she may attempt to rescind based on a mutual mistake of fact as to the ability to complete performance at the chosen site, and the court may try to unwind the transaction as far as possible, probably refunding to Betty $1500 as the difference in the agreed value of A's services and what Betty paid.

Betty may also try to show that Art had assumed the risk of not being able to complete performance at a given site. This would be especially helpful to Betty if she can show that Art picked the site to drill. (If Betty picked the site, she may have assumed the risk of impossibility ). If the court finds that Art assumed the risk, which is common in building contracts, then it must once again determine if this breach of the time element is a material one or not. This is based on a consideration of the time element and whether failure to meet this element will impair Art's ability to substantially perform.

The original agreement guarantees a June 1 completion, but the well is only for drinking (as per the January conversation, which is admissible here since there is no written agreement by which to trigger the parole evidence rule). There are no facts that support the need for a June 1 completion.

TIME OF THE ESSENCE

Courts have held "time is of the essence " clauses inoperative where the clause was not supported by the facts. It is likely that the courts would not stringently enforce this June 1 completion date.
If it is determined that there has been no material breach, either by the doctrine of temporary impossibility, or the finding of non-material breach due to non-importance of the date, then Art has a right to go and complete performance. It is an implied-in-fact condition, however, that he have access to the land on which he is to drill. Betty has refused to let Art begin performance again. Her prevention of satisfaction of the implied-in-fact condition will excuse Art from any further performance. It will effectively put Betty in breach.

EXCUSE

This is the likely outcome of a court's resolution of the dispute. Art's performance will be excused due to Betty's prevention of Art's performing - drilling the new well. This is a prevention of an implied-in-fact condition precedent to Art's performance, which excuses the performance.
 
DAMAGES

If Art is found to have breached the contract due to a failure to conform to a "material provision as to time," then Betty can sue for damages under this breach.
 
COVER DAMAGES

The starting point for Betty is the cost of "cover". The cost of obtaining substitute performance - here being the $4,500 paid to Carlos less the price she would have had to pay to Art for the job. This later figure would be $10 per foot times 300 feet which is where Art would have struck water. Betty would recover $4,500 less $3,000, or $1,500. Included in this is a refund of $500 from Art since he promised a refund. Betty will argue she should get more since Art said he wouldn't charge her for the useless hole, but Art would argue and the court would probably find that Art's statement was made as a condition of his continuing performance.
 
HADLEY v. BAXENDALE

Betty would probably claim her loss as a result of the crop failure. This is an incidental damage. Damages in contract must be caused by the breach, must be foreseeable as per Hadley v. Baxendale, certain and unavoidable. Although the damages here may be certain and unavoidable, there are serious problems with causation and foreseeability.
 
CAUSATION

The causation is extremely remote here, although Betty may claim that but for Art's non-performance she would have had water for her crops. The greater problem is foreseeability. Under Hadley, contract damages must be those that a reasonable person would foresee or those damages that would be foreseen by communication by the innocent party to the breaching party.
 
FORESEEABILITY

There is no way to have foreseen that the County dam would fail, leaving Betty with no irrigation water. More important, Betty told Art that the water was for drinking, so he was not on notice of any special facts: quite to the contrary since Betty specifically said the well was for drinking water.
Betty would fail on her claim for these special damages from crop loss.

If Art did not materially breach the contract and Betty prevented his performance, then the court would excuse Art and try to rescind the contract. Since the court can't rescind the contract to the starting point, they would likely give Art payment in the agreed-upon amount of his services, $2,000, and would ask him to refund the rest to Betty. This is the likely outcome.

The court may, if it finds Betty in breach, give Art the profit he would have made on the contract, "the benefit of his bargain," but this is not as likely as awarding him the value of services rendered with only the small refund to Betty.

November 9, 2011 - Example Contracts Question

CONTRACTS

Art and Betty own adjoining farms in County, an area, where all agriculture requires irrigation. Art bought a well-drilling rig and drilled a 400-foot well from which he drew drinking water. Betty needed no additional irrigation water, but in January 1985, she asked Art on what terms he would drill a well near her house to supply better tasting drinking water than the County water she has been using for years. Art said that because he had never before drilled a well for hire, he would charge Betty only $10 per foot, about $1 more than his expected cost. Art said that he would drill to a maximum depth of 600 feet, which is the deepest his rig could reach. Betty said, "OK, if you guarantee June 1 completion." Art agreed and asked for $3500 in advance, with any additional further payment or refund to be made on completion. Betty said, " OK," and paid Art $3500.

Art started to drill on May 1. He had reached a depth of 200 feet on May 10 when his drill struck rock and broke, plugging the hole. The accident was unavoidable. It had cost Art $12 per foot to drill this 200 feet. Art said he would not charge Betty for drilling the useless hole, but he would have to start a new well close by, and could not promise its completion before July 1.
Betty, annoyed by Art's failure, refused to let Art start another well and on June 1, she contracted with Carlos to drill a well. Carlos agreed to drill to a maximum depth of 350 feet for $4500, which Betty also paid in advance, but Carlos could not start drilling until October 1. He completed drilling and struck water at 300 feet on October 30.

In July, Betty sued Art seeking to recover her $3500, plus the $4500 paid to Carlos.
On August 1, County's dam failed, thus reducing the amount of water available for irrigation. Betty lost her apple crop worth $15,000. The loss could have been avoided by pumping from Betty's well if it had been operational by August 1. Betty amended her complaint to add the $15,000 loss.

In her suit against Art, what are Betty's rights and what damages, if any, will she recover? Discuss.

November 9, 2011 - Law Outline (Torts)

TORTS

1.     FOR EACH TORT IN THE QUESTION:

A.   STATE THE RULE AND ALL THE ELEMENTS AND ANALYZE THE FACTS.

B.    STATE DAMAGES ONLY IF IT IS AN ELEMENT, OR MENTIONED.

C.    STATE ANY APPARENT DEFENSES.

2.     AFTER DISCUSSING EACH AND EVERY TORT, CONSIDER ANY RELATED GENERAL TORT ISSUES. (Multiple defendants, respondent superior and etc.)

 

NOTE:                       Do not say “crime” or “guilty”.    (Say “tort” or “liable”).

                                    Look for multiple possible torts in the same scenario.

 

SPECIFIC TORTS

INTENTIONAL TORTS

General Considerations

·         Transferred Intent

·         All are liable for intentional torts (age does not matter).

TORTS AGAINST PERSONS

1.     Battery - Intentional, harmful or offensive, contact with the person.

·         Contact can be direct or indirect. (Something attached to plaintiff, like a purse.)

·         Inadvertent contact is not a battery. (but still analyze issue)

2.     Assault - Intentional, reasonable apprehension, of an imminent harmful contact.

·         Plaintiff must be aware of the assault.

·         Threat must be real, and in the immediate future.

·         Size does not matter.

3.     False Imprisonment - Intentional, restraint of a person, in a bound area. 

·         Restraint must be in all directions.

·         Physical threat is restraint.

·         There must be no reasonable means of escape.

·         Exception: Shoplifting: If suspicion is reasonable..

4.     Outrage - Intentional, extreme or outrageous conduct, causing the plaintiff to suffer emotional distress.

·         Words alone are not enough

·         Conduct must be outside bounds of reasonable behavior.

·         “Plaintiff will have to show emotional distress.”

·         Use this if assault and battery are not satisfied.

TORTS AGAINST PROPERTY

5.     Trespass to Land - Intentional, physical invasion of land, which is the plaintiff’s land.

·         Also consider nuisance tort.

·         Applies to a person intending to step on land, and also an intent to put something (like a thrown object) upon the land. [This may  couple with an assault issue.]

6.     Trespass to Chattels - Intentional, minor interference, with plaintiff’s personal property.

·         Applies when personal property is taken without subsequent disposition.

7.     Conversion - Intentional, major interference, with plaintiff’s personal property.

·         Applies when personal property is taken and subsequently sold, destroyed, etc. (Watch for use of item in battery.)

Only discuss Defenses if they are apparent from the fact pattern.

DEFENSES TO INTENTIONAL TORTS

1.     Consent - Valid consent, with the capacity to do so.

·         Validity is determined by not exceeding the scope of the consent.

·         Implied Consent is possible (Emergency situations, sports events, etc.)

2.     Self Defense - Reasonable force being used to prevent an apparent tort to ones self.

·         Reasonability depends on the force being used against the defender.

·         Applicable when tort is occurring or about to occur.

3.     Defense of Others - Reasonable force being used to prevent an apparent tort to another.

4.     Defense of Property - Reasonable force (except deadly force) being used to prevent an apparent tort to ones property.

5.     Recapture of Property - Reasonable force (except deadly force) being used to recapture property, while in “hot pursuit”.

6.     Necessity - Privilege to harm one’s property, for the public good, in an apparent emergency.

·         Shooting a rabid dog.

7.     Authority of the Law - Reasonable force to arrest someone committing a felony.

·         Note: shopkeepers privilege.

PRIVACY TORTS

Defamation A False and Defamatory Statement,  Published to a Third Party, Causing Damage to Plaintiff, at the Fault of  Def.

·         False statement: Of Fact, not opinion.

·         Must be about the plaintiff.

·         If not false, then look to another issue.

·         Must be Communicated (Written/Oral).

·         Defamatory statements are often damages per se.

·         TO Find Fault:

·         Public Person: Then malice must be shown. (The Knowing or reckless disregard for the truth.)

·         Private: Must be negligently made.

·         Republication: Same analysis. They too are liable.

Defenses to Defamation

1)     Truth

·         If its true, look to a different tort. 

(such as Invasion of Privacy).

2)     Consent - (In public forum.)

3)     Privileges - Confidential Communications

·         Spousal Communications

·         Court room testimony

·         Legislative hearings.

                                                            INVASION OF PRIVACY TORTS

1.     Publication in a False Light - Publication to a third party in a false light.

·         Public Person - Malice must also be proven.

·         Use this if defamation analysis does seem to good.

2.     Public Disclosure of Private Facts - Publication of private information of facts an ordinary person would not want to be made public.

·         Public Person - Malice must also be proven.

·         These are usually true statements, but tortuous.

3.     Intrusion into Plaintiff’s Affairs - An intrusion into the plaintiff’s private affairs which an average person would deem unreasonable.  (offensive to reasonable person) THIS IS THE CATCH ALL INVASION OF PRIVACY TORT.

4.     Appropriation of Plaintiff’s Picture/Name - Unauthorized appropriation or use, of plaintiff’s name or picture, for the commercial gain of the defendant.

Usually an advertising setting.

MISCELLANEOUS TORTS

1.     Misrepresentation - Intentional false representation of material fact, inducing plaintiff’s justifiable reliance, and plaintiff is ignorant of the falsehood, injured (damaged).

·         The fact must be material.

·         Silence is not enough (unless there is a statutory duty to speak;  ie. Real estate sale of home),

·         If in a commercial setting, consider negligent misrepresentation = consumer protection issue.

2.     Nuisance - Substantial and unreasonable interference with one’s rightful use and enjoyment of their property.

·         If a public nuisance, the interference is with a common public right.

·         Balancing Test: Balances rights of party to use their land and the interference it causes to others.

·         Defense: Activity is consistent with the zoning code of the area.   [Nuis. can be intentional or negligent]

3.     Interference with Business Relations - Intentional, interference with a business relationship, which causes a termination of business expectancy, causing damages.

·         THERE MUST BE THREE PARTIES INVOLVED.

·         Look for this coupled with a defamation tort.

·         Defenses: Privileged Interference- Where interferer is party’s attorney, accountant, spouse, business advisor.  These people can interfere. 

4.     Wrongful Institution of Legal Proceedings

NEGLIGENCE

RULE: To prove negligence, plaintiff must show defendant had a duty of care to plaintiff, and the breach of that duty proximately caused the plaintiff’s damages.

DUTY OF CARE

Generally:  -- Each person has a duty to act reasonably to everyone.

·         Mental ability is not relevant; the person still must act reasonable.

·         Physical disability (such as blindness) requires acting as reasonably as a person similarly situated.

·         Emergency Situation – What would the reasonable person do?

·         NO affirmative duty to act unless family member, and if the act puts the plaintiff at risk, then no duty.  Have a duty if you caused the harm.

Modifying the Duty - Special Relationships

1.     Good Samaritan - A person that renders service in an emergency has a duty to refrain from reckless and extreme gross negligence.  But no duty to stop in the first place unless it’s a relative!

2.     Children - Are held to a standard of a reasonable person their same age.

·         Children < 6 years old: Cannot be held negligent.

·         Children engaged in Adult Activity: Are held to an adult (reasonable person) standard of care.  (Like Hunting or driving tractor)

3.     Professionals - Health Care Professionals (HCP) are held to the standard of reasonable skill, care, and knowledge of a reasonably prudent practitioner in the state of Washington. (Regardless of experience.)

·         Holding Ones Self out as a Specialist - Imputes a higher standard of care.

·         Hospitals - Have a duty to supervise all medical practitioners.

·         Implied Consent - HCP’s must disclose to patients all material facts and risks relating to treatment.  If unconscious, or emergency and reasonable person in situation would have consented.

4.     Common Carriers / Innkeepers - Duty of Mere/Slight Negligence to their passengers and clients.  Higher Duty.

5.     Landowners / Occupiers of Land

a.      Duty to Adjacent Property Owners - No added duty for natural conditions occurring upon ones’ property that affects another’s property.  (Exception: If such condition is unreasonably dangerous, the owner has a duty to warn of the danger if may affect others.) Artificial conditions are subject to negligence or nuisance.

b.     Duties to Persons on Owner’s Property

1)     Duty to Adult Trespasser - No Duty Owed.

2)     Duty to Child Trespasser - Attractive Nuisance. If the condition would attract a child and the child would not appreciate the danger, then there is a duty to take precautions to protect children.  Must make attractive nuisance as safe as possible.  

3)     Duty to Licensees - Reasonable Care and to warn of known dangers. (Licensee - One who enters land with mere permission (express or implied) of the owners and for their own benefit.)   Social Guests are there for their benefit.

4)     Duty to Invitees - Reasonable Care & to warn of known dangers & dangers should have known to make reasonable inspection for dangers.  (Invitee - One who enters land in response to an express or implied invitation of the owner, and for the benefit of the landowner.)

·         EXCEPTIONS for Licensees and Invitees (where duty stops).

·         When person exceeds the scope of their invitation.

·         Claim arises from an obvious danger that recently occurred.

6.     Bailment Duties (Bailor = Owner of property; bailee = holder).

A.    If for Bailee Benefit: Bailor has a duty to warn of known defects/dangers; Bailee has a duty of great diligence.

B.    If for Bailor Benefit: Bailor has a duty of to warn of known and should have been known dangers; Bailee has a duty of slight diligence.

C.    If for Joint Benefit: Both parties must use reasonable care.   If have disclaimer of warranty, can limit liability but it cannot be in violation of public policy, but cannot exceed bailee’s own negligence.

                       

7.     Statutory Standards - Generally, the violation of any statutory standard will create a prima facie case of negligence (and the burden is shifted to the defendant to prove they were not negligent.)

·         Possible Defense: If conformity of the statute would have caused greater harm (if applicable from the facts).

·         Note:  Commercial Server of Alcohol – Negligent if a person is obviously drunk or a minor, the serving business will be liable for any acts of that person thereafter.  Not just a restaurant scenario, think 7-11.

·         Driving While Under Influence - Prima Facie Evidence of Negligence Per Se – so burden of proof shifts.  Exception: compliance with statutory standard would have created a greater harm.

8.     Affirmative Duty to Act - Generally there is no affirmative duty to act.  

·         Exceptions:              

a.      Family Member - One does have an affirmative duty to act on behalf of a family member.

b.     Party Action Creating Peril or Danger - If a party’s action is what actually caused a peril or danger, there is an affirmative duty to act.

c.      Gratuitous Act - If a Gratuitous act is offered, a duty to follow through may thereafter apply.

9.     Duty to Control Others - Generally, a person does not have a duty to control others, UNLESS they have actual ability and authority to control the third party, then they must use reasonable efforts to do so. (Ex. Child/Parent).

BREACH

1.     Generally - Look to the fact pattern to determine if the duty was breached.

2.     Violation of a Statute - Prima facie evidence of negligence.

3.     Res Ipsa Loquitor - An accident which would not likely happen in the absence of negligence, said negligence is attributable to the defendant, and the plaintiff is free from fault.

·         This is not a presumption of negligence, rather when proven it establishes a prima facie case of negligence, thereby shifting the burden to the defendant to disprove.

CAUSATION  

Two Part Analysis

1.     Cause in Fact - The injury would not have occurred but for the defendants act.

2.     Proximate Cause - A defendant is generally liable for all foreseeable harmful results.

·         A Foreseeable Intervening Cause does not break the chain of causation; and a prior tort is a proximate cause.

·         Rescuers and Medical Practitioners negligence is always a foreseeable intervening cause; therefore, a prior tort will be a proximate cause.

·         An Unforeseeable Intervening Cause, break the chain of causation; a prior tortfeasor is liable for damages up to the intervening cause, but not beyond.

·         Note:     If no intervening cause is presented by the facts, Simply state, “But for the defendant’s action the damage would not have occurred. Defendant action is a proximate cause.”

·         Two Defendants’ Simultaneous Actions - If both tended to cause the same damage, both will be held negligent and the burden shifts to them to determine the actual tortfeasor.

DAMAGES

1.     What Are the Damages - Only address damages if it is apparent from the fact pattern.

Otherwise, simply state “Defendant is / is not liable for damages”.

2.     Duty to Mitigate - If there is a time lapse between an injury and action, which could have been taken by the plaintiff, then plaintiff may have a duty to mitigate. Only discuss if in fact pattern.

3.     Collateral Source Rule - Damages are usually not reduced or mitigated by reason of plaintiff receiving benefits from other sources. (Ex. Insurance, sick pay, etc.)

DEFENSES TO NEGLIGENCE

1.     Comparative Fault - Pure comparative fault applies. Plaintiff damages will be reduced by his % of liability.

2.     Assumption of the Risk - A voluntary undertaking of an activity knowing there is risk.

·         This may be implied or express.

3.     Intoxication - Defendant must show plaintiff was intoxicated and also more than 50% at fault.

4.     Commission of A Felony - Defendant must show plaintiff was in the commission of a felony at the time of the injury and the felony was a proximate cause of the injury.

STRICT LIABILITY

RULE: A person is strictly liable because he is engaged in a dangerous activity. (Based on the nature of the activity.)

LIABILITY FOR ANIMALS

1.     Trespassing Animals - Owners are strictly liable for damages caused.

2.     Wild Animals - Owners are strictly liable for damages caused.

3.     Domestic Animals - Owners are generally not strictly liable unless owner knows the animal has a propensity for danger.

LIABILITY FOR ABNORMALLY DANGEROUS ACTIVITIES

Rule: Persons engaged in Activities Involving Serious Risk of Harm, and Risk is Present Regardless of Precautions taken, will be held strictly liable for damages.

DEFENSES (see above)

1.     Comparative Fault

2.     Intoxication

3.     Commission of a Felony

STATUTORY TORTS

PRODUCTS LIABILITY

Generally:

·         Product: Anything made or manufactured is a product. (Blood is excepted).

·         Manufacturer: One who designs, produces and/or fabricates product. (not minor assembly).

·         Product Seller: Everyone in the commercial chain is a Product Seller . (Wholesaler/Distributor/Retailer).

·         Exception: Does not apply to used goods.

Manufacturer Liability

·         When Strictly Liable: A manufacturer is strictly liable for dangerous products that result from: Construction Defects (deviation from standards); or Breach of Warranty (express or implied).

·         Express warranties - look to the facts for specific warranties given.

·         Implied Warranties - Merchantability and Fitness for a Particular Purpose.

·         When Negligence Standard Applies: A manufacturer is held to a negligence standard for Design Defects; or  Inadequate Warnings at the time of manufacture.

·         Market Share Liability: If there are multiple mfgs., damage is caused, and actual mfg. is not determinable, liability is apportioned by market share. (Drug cases.)

Product Seller Liability

·         When Strictly Liable: A product seller strictly liable for dangerous products ONLY IF:

1)     Product is sold under seller’s name;

2)     Seller is a controlled subsidiary of manufacturer;

3)     Seller provides specifications for product

4)     No solvent manufacturer under WA JX.

·         When Negligence Standard Applies: A product seller will be held to a negligence standard in all cases except those specified above where strict liability applies.

Defenses

1.     Evidence of Industry Custom and Regulatory Standards -Compliance with Government Contract Specifications is an Absolute Defense.

2.     Useful Safe Life has Expired -If the facts do not specify a useful life, the Presumption is 12 years for manufactured products.

3.     Statute of Limitations - 3 years from the time plaintiff discovered or reasonably should have discovered problem.

CONSUMER PROTECTION   (Applicable to Contracts (fraud) outline)

The Consumer Protection Act prohibits unfair deceptive acts or practices occurring in trade or business that affects the public interest and injures the plaintiff.

1.     Unfair or Deceptive Act/Practice- Includes Per Se Unfair Acts, and an act which has the capacity to deceive the general public (no intent necessary).

2.     Occurring in Trade or Practice - Any type of Commerce.

3.     Which Affects the Public Interest - Acts Committed in Course of Defendants Business, that are Part of a Pattern, and there is a Potential for Repetition

4.     Injury to Plaintiff

Defenses         

Statute of Limitation = 4 years.

(Tolled by Action brought by State Attorney)

GENERAL CONSIDERATIONS

VICARIOUS LIABILITY   (Get material from Agency outline - tort liability)

When someone else will be held responsible for the acts of the actor.

Respondeat Superior 

·         When Master is Vicariously Liable - Employer is vicariously liable for tortuous acts of an employee when committed in the Scope of Employment.

1.     Frolic or Detour - A defense for the employer.

2.     Independent Contractor - Who has control of the manner/method/means.

Partnership Liability    (Get material from Partnership outline - tort liability)

 All partners are liable for the negligent acts of other partners, except for intentional torts.

Automobile Owner Liability

Generally, an automobile owner is not liable for another’s use of his car, unless covered in Family Car Doctrine.

·         Family Car Doctrine - Owner is liable if he furnishes a vehicle for the benefit of family members, which is driven with acquiescence of the owner,  within an area of permissible use.

·         Watch for facts that seem to indicate FCD, but not satisfying elements.

Parent for Child        

·         Negligence of Child: A parent is generally not liable for the negligent acts of their children.

·         IF parent has knowledge of a propensity for negligent behavior on the part of the child, they may be liable for negligent supervision.

·         Intentional Tort By Child: Parents ARE liable for intentional torts inflicted by their children.

MULTIPLE DEFENDANTS

Rule: All joint tortfeasors are jointly and severally liable for the plaintiff’s injuries.

·         But look for intervening causes that may limit damages by respective tortfeasor.

SURVIVAL ACTIONS

When Plaintiff Dies Before Bringing an Action: The action survives death and the personal representative may bring the action on behalf of the estate.

COMMUNITY PROPERTY    

Tort Liability to Third Party - A tort committed during marriage is presumed to be an activity for the benefit of the community and is a community property liability.

Enforcement of Liability Upon Termination of Marriage- Enforcement of a CP tort liability occurring during the marriage is enforceable against either spouses former CP.

Character of Damages in Personal Injury Action

·         General Damages, including pain and Suffering, are separate property of the injured spouse.

·         Special Damages, including lost wages and medical bills, remain community property.

Interspousal Torts - Wages and Medical Bills will remain community property losses, but pain and suffering will remain separate property.

STATUTE OF LIMITATIONS

2 YEARS -  Personal Intentional Torts /  Nuisance

3 YEARS -  Property Torts / Negligence / Fraud

Medical Malpractice

·         3 years from Date of Act, or

·         1 year from Discovery, whichever is later, but not to exceed 8 years total.