MGMT-108 Guerin

Mediation

process by which a neutral 3rd party meets with the parties having the disagreement to help them find a mutually agreeable solution.

- mediator has no authority to impose a solution

-goal: 2 parties come to an agreement with the help of the mediator

Arbitration

more formal proceeding in which the disputing parties agree to submit problems to a neutral 3rd person and be bound by the arbitrator's decision.

- during arbitration, both sides give evidence and witnesses testify

advantages:

• Faster

• Cheaper

• Outside judge you hire

-Can be in an employee contract

Types of Jurisdiction

1. Subject Matter Jurisdiction

2. Personal Jurisdiction

*courts must have both types

Subject Matter Jurisdiction

A court's power to rule on the issues in the case

State vs Federal Jurisdiction

state courts include courts of general jurisdiction (ie. all cases that are not already assigned to other courts like family court, small claims, traffic, or criminal)

federal= these courts have restricted jurisdiction and are generally limited to cases that have :

1. the US is a party

2. the issue arises under federal law

3. cases involving diversity of citizenship

(Both parties are in different states at the time the case is filed and the amount in controversy exceeds $75,000)

Diversity of Citizenship

1. Amount in controversy exceeds $75,000

2a. The plaintiff and defendant are in different states at the time the case is filed or one is a citizen of a state and one isn't

- or when one is Citizen of a state and the other is an alien

2b. For Corporations- citizenship is both the state of incorporation and the state of its HQ

ex. if the company is incorporated in DE and HQ is CA. plaintiff is from CA. there is no diversity of citizenship unless the HQ was another state like NY.

Federal Question Jurisdiction

Federal courts have jurisdiction where the matter in controversy arises under the Consitution, federal law, or treaties

Federal Jurisdiction being Concurrent

In most cases where Federal Jurisdiction exists, it is concurrent with State Court Jurisdiction and may be brought in either court

FEDERAL QUESTION CAN GO TO STATE COURTS

*exception= bankruptcy, admiralty, maritime, tax, patents, copyright & trademarks

Removal Jurisdiction

If either Federal Question or Diversity of Jurisdiction exists and the plaintiff chose to sue in state court, the defendant may compel removal of the action to federal court

Personal Jurisdiction Criteria

1. The defendant is domiciled= resident of the state

2. The defendant consents either before or after the lawsuit is commenced

3. "minimum contacts" requirement= ex. transaction of business in that state, signing or performing contract in that state

Pleading Stage of Litigation

What are the 4 parts? What is its purpose?

1. The Summons and complaint

2. Challenges to complaint

3. The answer

4. Default judgment

purpose: to give notice of the general character of the controversy between the litigants

Pleading Stage of Litigation:

The summons and complaint

a civil action is commenced by the filing of plaintiff's complaint and properly notifying the defendant

Pleading Stage of Litigation:

challenges to the complaint

- demurrer/ motion to dismiss

demurrer = motion to dismiss

defendant contends that the complaint is defective for some reason

(e.g. the court lacks personal jurisdiction, statute of limitations problem (maybe it was 25 years ago)arbitration was on contract so the guy can't go to court

even if all your allegations are true the judge has to dismiss the complaint because of some LEGAL reason

Pleading Stage of Litigation

The Answer

For the defendant to either admit or deny each of the allegations in the Complaint, thus narrowing and defining the controversy.

May Include:

1. Affirmative Defense: Alleges new facts, that if proven, show that the defendant should not be held liable.

2. Counterclaims: Any claims the defendant has against the plaintiff. Such claims do not need to be related to the plaintiff's claim in the complaint.

Pleading Stage of Litigation:

default judgment

if the defendant fails to file an answer, a default judgment may be entered

1. Obtaining Judgment: after entry of default, the plaintiff must proceed to obtain a default judgment. Relief is limited to the amount sought in the complaint

2. Setting Aside The Default: Once the default is entered, the defendant's remedy is to move the court to set it aside. to set aside a default judgment, the defendant must show a valid excuse for defaulting such as "inadvertence, surprise, or excusable neglect"

Discovery Stage of Litigation:

1. purpose of discovery

2. scope of discovery

3. basic discovery devices

purpose: allows parties to go to trial with the best evidence for their contentions and knowledge of this adversary's case

scope: discovery may inquire into all nonprivileged info relevant to the subject matter of the action (whether or not admissible as proof at trial) or that it is reasonably calculated to lead to discoverable evidence

ex. insurance limit is not something the jury should know

privileged communications = spouse, doctors, clergy, attorney

basic discovery devices: interrogatories, depositions, , requests for admissions, Documents and Physical Inspection, and medical exams

request for admissions: a list of facts that the adversary must admit or deny, so that they don't have to be proven in trial

Discovery Stage of Litigation:

Basic Discovery Devices

1. interrogatories: written questions (addressable only to a party) requiring written responses

2. depositions: examination of a witness under oath in the presence of a court reporter. parties have the right to be represented by counsel who may examine and cross-examine the witnesses.

-Transcription: a deponent is entitled to review and correct the transcript of his/her testimony

-Use Of Deposition at trial: statements are usually inadmissible in trial except when used by one party against an adverse party as an admission or for impeachment purposes or where the deponent is unavailable

3. Documents/ Emails-you can ask to see like HR emails.. unless privileged communications

Documents and Physical Inspection

Medical Examination

Discovery Stage of Litigation:

Requests for Admission

a device that imposes a duty on the part served to acknowledge facts not in doubt which thus need not be proven at trial

list of facts that the adversary must admit or deny so that they don't have to prove it in trial

Terminating the Case Without a Trial:

summary judgment motion:

Terminating The Case Without Trial

1. Purpose: Either side may request that the court determine whether some or all of the contentions of the other side are so lacking in substance that the judgment can be rendered in their favor, without a trial.

2. Procedure: A hearing on the motion is usually held.

3. Appeal: A summary judgment may be appealed. However, an order denying the motion is not a final decision and thus is generally not appealable.

Enforcing the judgment

(Finding the money - 4 ways)

a. judgment debtors exam- find out where the person has money. ex. a show dog

b. garnishment- go directly to the employer and get 1/3 of their salary

c. keeper- ex. a sheriff or security guard type person standing at the register and the end of the day handing it over to the creditor

d. writ of execution- order from the court to go into their house and grab the Picasso painting

judgments are good for 10 years in CA

Sources of Contract Law

1. Common law

2. Uniform Commercial Code (UCC), Article 2

a. common law

- services

-real estate

ex. if a salon messes up is it service or good?

service

b. UCC article 2

-"goods"

-"movable tangible objects

Susan, a Los Angeles resident, appears on a new NBC reality show. Susan is the first to be "kicked off the island" and leaves the show. On her way out, she throws a temper tantrum and destroys some of the furniture on the set. NBC is incorporated and headquartered in New York, where the show is filmed. NBC has offices and conduct business in Los Angeles and San Francisco. Humiliated by the loss, Susan plans to sue NBC for breach of contract, fraud and intentional infliction of emotional distress, seeking $200,000 in damages. Susan is considering filing her lawsuit in California state court, New York state court or the federal courts.

Explain whether the federal courts would or would not have subject matter jurisdiction.

Based on the information provided Federal Courts would have Subject Matter Jurisdiction over Susan's Lawsuit through the Diversity of Citizenship requirement.

Q2 Harvey is a resident of California. Harvey files an action in Los Angeles County Superior Court, California against Amazon alleging $100,000 in damages in a claim arising under the Civil Rights Act of 1964. Amazon is properly served a summons and complaint in California. Amazon requests that its attorney file a Demurrer for lack of subject matter jurisdiction. Will Amazon win the Motion? Please explain why or why not.

Harvey's filing contains a claim arising under the Civil Rights Act of 1964 which would fall under the Federal Question jurisdiction for Federal Courts. In most cases, where federal jurisdiction exists so does concurrent jurisdiction with State Courts as is the case with the Los Angeles County Superior Court giving the Los Angeles court Subject Matter Jurisdiction. Although Amazon will not win the motion to dismiss for lack of Subject Matter Jurisdiction, due to concurrent jurisdiction with federal and state courts, they have the right to compel removal of the action to Federal Court (Removal Jurisdiction).

3.

Q3 When Officer Krupke arrested Tony, a scuffle ensued. Tony believes that Krupke used excessive force in making the arrest. He wants to sue Krupke for violating his federal constitutional rights in a civil action. His injuries amount to about $25,000 of medical bills and a sore jaw. Both Tony and Krupke are citizens of New York. Can Tony file his case in Federal District court?

Tony would have to have Federal Question Jurisdiction or the Diversity of Citizenship Jurisdiction to file his case in Federal Court. Since Tony and Krupke are both citizens of New York and the amount in controversy does not exceed $75,000 he cannot file his case in federal District Court through the Diversity of Citizenship Jurisdiction. Tony, however, is suing Krupke for violating his Federal Constitutional rights which would fall under the Federal Question Jurisdiction as the matter in controversy falls under the Constitution. Tony can file his case in Federal District Court since his suit's matter in controversy falls under the Constitution fulfilling the Federal Question Jurisdiction requirement for Federal Courts.

Q4

Which of the following pretrial testimony is taken under oath, out of court, and may be used at trial:

a. Complaint b. Depositions c. Pleadings d. Demurrer e. All of the above

A demurrer is a motion to dismiss in the State of California which is not pretrial testimony.

The complaint is the filing that the plaintiff makes.

The Pleading gives notice of the general character of controversy between the litigants.

The Deposition is the correct answer as it is pretrial testimony is taken under oath, out of court, and may be used at trial.

Types of Contracts

1. Expressed vs Implied

expressed = oral, written

implied= (Landsberg case) someone gives you a service (implied that you will pay) you have the chance to reject it but you don't and you know they expect you to pay

ex. sitting at a restaurant, Dr. office,

2. Unilateral vs Bilateral

unilateral contract= promise for an act "if" "When"

ex.

promise for performance

a reward

I will give you 100$ if you find my watch.

or a Super Bowl bonus for winning the game, realtor commission

bilateral = promise for a promise

ex. 100 pens for 10$

Contract Formation

1. The Offer

2. Acceptance

3. Consideration

4. Capacity

5. Legality/Public Policy

6. Reality Of The Consent

Contract Formation:

The Offer Creation

1. CREATION:

a. Serious intent to make a deal now, using an objective standard; And

b. Terms are reasonably definite and clear

1. the person making an offer has serious/ present intent to make the deal right now.

ex. I want to sell the car right now, not thinking about it

2. terms are definite and clear

ex. "several" computers doesn't count. must say 3 or 4

3. clear who it's offered to

Contract Formation:

Acceptance

1. Under Common Law it must be a precise "mirror image" of the offer.

2. Acceptance is generally effective upon the moment of mailing (the "Mailbox Rule") even if the mail is in transit and hasn't reached the offeror's hands

Contract Formation: The Offer

When Is An Offer Terminated

A.Whenever the offeror says so!

B. If no time is stated by the offeror, then after a reasonable time.

1. Revocation of the offer by the offeror.

EXCEPTIONS:

a. option contract: to lock in 6 months on the offer, ill pay you 5k.

b. Promissory Estopel= the deal is going to contribute to another deal ex. GAP needs 100k buttons from another company to make a deal and then the button company flakes. button company knew they were relying on the buttons for another offer and there would be harm if they flaked

2. Rejection/Counteroffer by the offeree, not inquires by the offeree

3. Termination by operation of law.

4. Destruction of the subject matter

5. Death or incompetence of the offeror or offeree

Contract Formation:

Consideration

1. A mutual bargained for exchange of benefits

- I'll do something for you if you do something for me

- bargain: each side has to do something they don't legally have to do or refrain from doing something they have a right to do

- ex: aunt offers niece 100$ to go to school. but the niece legally has to go to school. not an offer

2. The exchange does not have to be fair or equal

3. An exception to the requirement of consideration is Promissory Estoppel (the deal is going to contribute to another deal)

-ex. GAP needs 100k buttons from another company to make a deal and then the button company flakes. button company knew they were relying on the buttons for another offer and there would be harm if they flaked

*promissory estoppel can substitute consideration

Contract Formation

Capacity

1. AGE: A contract entered into by a minor is voidable as long as he/she disaffirms the contract shortly after reaching the age of majority.

2. INTOXICATION: If a person was sufficiently to lack mental capacity, the transaction is voidable at the option of the intoxicated person.

3. MENTAL INCOMPETENCY: A contract can be void or voidable if entered into by a person who is mentally incompetent.

Contract Formation

Legality/Public Policy

1. If the subject matter of the contract is illegal or against public policy, it is void

ex. interferes with public safety and welfare.... bungee jumping is okay but signing to say if wires from a leased apartment injure you is against public policy or covenant not to compete (not enforceable bc it conflicts with public policy in CA because they want free comp.)

2. Examples include wager agreements, usury(legal rate of interest one can charge under various circumstances and exculpatory clauses.

Contract Formation

Reality Of The Consent

- The Consent Of The Parties Must Be Freely Given

1. Misrepresentation: An innocent misstatement or omission of a material fact reasonably relied upon and which causes harm to one of the parties to the contract.

2. Fraud: An intentional misstatement or omission of a material fact. reasonable relied upon and which causes harm(Monetary) to one of the parties to the contract.

3. Duress: Using physical or improper threats to force someone to enter into a contract.

4. Undue Influence: Using your special position of trust to unduly influence someone to enter into a contract for your own economic advantage.

- ex: personal relationship where b takes advantage of A because B knows how much A needs them

5. Adhesion Contracts (you have no bargaining power) & Unconscionability: Absence of a meaningful choice on the part of one party and contract terms which are outrageously unfair.

-ex: you can't negotiate at a hospital or shocks the conscience of the courts.. extreme unfairness

contract law: Damages

2 different types

a form of contract remedy where the sum of money is payed back to the injured party

1. compensatory

ex. you need a 500$ part to make it to obligation on Monday. then you have to pay someone else 1000$ for the same part.. you need to be compensated 500$ bc that was a loss

2. consequential damages

ex. as a result of the breach.. aka they breached with the gap bc you didn't deliver the part and therefore lost profits..cannot be speculative you need to be able to calculate them

Contract Enforceability

1. Statute of Frauds

2. Parol Evidence Rule

Contract Enforceability

Statute of Frauds

Definition: Statute requires executory contracts to be in "Writing" to be enforceable

What types of contracts does this apply to?

1. LAND TRANSFER or SALE OF LAND MUST ALWAYS BE IN WRITING

2. Contracts that cannot by their terms be performed within 1 year from the date on which they were formed.

-ex. 5-year agreements you might not remember the oral details

-ex. within 2 years is fine because it can be done in 1

-ex. period starts from the date you enter into an agreement not when she starts teaching

3. Surety agreements guaranteeing repayment of another person's debt to their creditor

-ex. agrees to be secondarily liable if debtor doesn't pay back creditor directly to creditor

4. sale of goods over $500 or equal to $500. (ex. land can just have proof of oral agreement and not a full-blown contract)

IF IT APPLIES, HOW IS IT SATISFIED?

SOME WRITING PROVING EXISTENCE, Signed by the denying person

OR

PARTY ADMITS CONTRACT EXISTS

Contract Enforceability

Parol Evidence Rule

Definition: After the parties have entered into a clear, written agreement, evidence of statements made prior to at the time of signing the agreement may not be admitted into court to contradict the written agreement.

Exceptions To The Rule: Contract subsequently modified, or voidable, or void contracts.

if document has intended to be the final written expression of the deal then nothing that was said prior to the agreement can contradict the contract

aka nothing before the contract matters

exception: contract subsequently made and void contracts

"MERGER CLAUSE"

Contract Remedies

1. Injunction

2. Rescission & Restitution

3. Specific Performance

4. Damages

Contract Remedies

Injunction

Prohibits someone from performing certain acts.

Contract Remedies

Rescission & Restitution

A party cancels; or rescinds the contract. He must then provide restitution by returning any property that he received from the other party.

Contract remedies

Specific Performance

A party may obtain the specific property or item that the contract entitled him to receive. A court will compel specific performance only if:

1. The item is unique, such as a building,

2. The item does not involve a personal service.

ex. land

personal service = Lady Gaga backing out of Staples Center, they cannot force her to bc of the 13th Amendment. they can't guarantee a meaningful performance

Contract Remedies

Damages

The sum of money needed to replace an injured party in the same financial position as if the contract had been performed. -The basic measure is market price minus contract price.

-The injured person must attempt to minimize, or mitigate his damages.

ex. lease with the landlord for 12 months and 2 months in you breach. The landlord has to try to rent out the property.

Wally contracts in writing to buy 50,000 pounds of fertilizer from Theodore Garden Supplies for $25,000. Wally will be using the fertilizer to landscape a new hotel and will make a profit of $100,000 for the landscaping job. Two weeks before the landscaping job is set to start, Theodore notifies Wally, "I'm backing out of the deal...the price I gave you is too low because of "fluctuations in the market", (not related to Covid 19). Wally calls several other suppliers and is told the same quantity of fertilizer will cost $35,000. Wally buys the fertilizer for $35,000 and completes the project for the hotel on time and received payment. Wally wishes to file a lawsuit against Theodore. In that lawsuit, please indicate whether Wally will be able to recover any or none of the following and why.

A. Specific performance

B. Compensatory damages

C. Consequential damages.

D. Compensatory & Consequential damages

Answer: B Compensatory DamagesWally will most likely be able to recover Compensatory Damages. Since Wally had an original Contract with Theodore for 25,000 and had to pay 35,000 when Theodore backed out and found a new supplier, the 10,000 increase could be recovered as Compensatory damages since Compensatory damages are meant to put the affected party back in a position before they had a breach of contract aka making them whole.

Secured Transactions

Scope of Article 9 of The UCC-Secured Credit Transactions

Scope of Article 9 of the UCC- laws that apply when a creditor takes an interest in the debtor's personal property as collateral to secure payment of a loan.

Secured Transactions

Types of Personal Property That is Covered by Article 9

Types of Personal Property That is Covered by Article 9

1. Goods: movable tangible objects (consumer, inventory, equipment, or farm products)

2. Instruments: a writing evidencing a right to payment of money & negotiable instruments (e.g. stock, promissory notes)

3. Intangibles: patents, trademarks, and copyrights

4. Chattel Paper: Any writing that evidences a monetary obligation & a security interest

5. Accounts: a right to payment for goods or services not evidenced by a writing (e.g. account receivable)

Secured Transactions

Types of Secured Transactions NOT Covered by Article 9

Types of Secured Transactions NOT Covered by Article 9

1. Real Estate and Mechanic's Liens

2. Aircraft Liens, IRS Liens

"Attachment"- Creating a Security Interest Under Article 9

A. Secured Party gives value to the debtor; and

B. The debtor has rights in the collateral; and

C. Proof of the security arrangement via

1. A written security agreement; or

2. The secured party retains possession of the collateral (e.g. Pawn Shop)

"Perfection" - Ways to Notify the World About the Security Interest

A. File a UCC-1 Financing Statement; or

B. Take possession of the collateral; or

C. Automatic Perfection: perfection occurs automatically at the time of attachment for a Purchase Money Security Interest in a consumer good. A purchase money security interest ("PMSI") occurs when the item purchased is used as the collateral for the loan.

D. Note: A party cannot be perfected until they are attached

Marie was a famous model. Temp magazine mailed her an offer to do a five-page photo layout for a new line of swimsuits for $135,000. Marie received the offer January 2. On January 3, Marie mailed Tempo the following note:

"I accept, but must have twelve pages devoted to me and accordingly, $150,000."

Tempo received this note on January 5. On January 6, Marie called them and told them she would do the modeling under the original terms, but Temp refused. Is there a contract, explain why or why not?

There is not a contract. The offer Temp Magazine gave to Marie was for a 5-page photo layout for 135,000. Marie responded by accepting the offer but with different conditions consisting of a 12-page photo layout for 150,000. Due to the fact that she changed conditions to the original offer, this is not an acceptance, but a counteroffer. Once a counter-offer is made the original offer no longer exists.

Patrick offered in writing to sell his house to Jarrod for $1,950,000. Jarrod was interested but did not wish to decide immediately so he asked Patrick if he would hold the offer open for thirty days in exchange for $5,000. Patrick agreed in writing and received the $5,000. Three days later Jarrod called Patrick and told him he was not sure he could purchase the property because of financing concerns, but he was still working on it. The next week, Patrick sold the house to Nick. If Jarrod accepts Patrick's offer within the 30 days period, explain whether there is or is not a contract.

Both parties, Patrick and Jarrod, entered into an "options contract" The offer to sell the house to Jarrod for $50,000 becomes irrevocable for 30 days in exchange for $5,000 in consideration. Jarrod statements to Patrick about his financing concerns were not a rejection of the offer so the offer is still irrevocable for the 30-day period so there is a contract and if Jarrod accepts Patrick's offer within those 30 days the contract is valid.

Sean, 17, a snowboarder, signs a long-term endorsement agreement for sportswear. He endorses the products and deposits his compensation for the endorsements for several years. At age 19, he decides he wants to void the agreement to take a better endorsement deal. He claims he lacked capacity when he signed the deal at 17. Can he get out of the contract?

Sean can not get out of the contract with claims that he lacked capacity when he was 17 since in order to void the contract under lack of capacity of age he had to have disaffirmed the contract Shortly after reaching the age of majority however he let a minimum of 1 year go by while depositing his compensation then wanted to disaffirm the contract which is too long so he can not get out of the contract.

Larson had worked for BUBA Corp. for 30 years and was retiring from his job. At the time of his decision to retire BUBA Corp. had no pension benefits for its employees. However, the Board of Directors of the corporation voted to give Larson $1,000/week "for as long as he lives" as a retirement benefit to honor the fact that Larson was the first employee to work for 30 years for BUBA Corp. The president of BUBA announced this decision about the pension at Larson's retirement banquet. BUBA paid Larson $1,000/week over a period of 2 years, until a new Board of Directors voted to cease any more payments to Larson because of financial difficulties. Based solely on the facts provided, if Larson sues BUBA to resume payment of the $ 1,000/week:

Answer: A Larson will lose because BUBA's promise was not supported by consideration

Larson will lose because BUBA Corp's promise was not supported by consideration.

Although some may argue this was an oral contract, since the payments expected exceed one year, it should be in writing due to the Statute of Frauds. So Larson would lose the case.

Sister's husband died of a heart attack. Sister, who lived in Buffalo, called her brother-in-law in San Antonio and told him she had no money and no place to live. Brother-in-law told Sister she could live in a spare room in his house. Sister traveled to San Antonio and upon her arrival, Brother-in-law informed her that he had rented the room to a college student. Sister's best chance of enforcing brother-in-law's promise is to argue:

a. The promise is supported by consideration and therefore a valid contract was formed.

b. The Doctrine of Promissory Estoppel

c. Implied Contract

d. Unilateral contract

e. None of the above

Answer: B The Doctrine of Promissory Estoppel

However, if Sister relied on that promise to her detriment by traveling to San Antonio, and the promise was clear and definite, the doctrine of promissory estoppel may apply. It prevents the brother-in-law from going back on his promise because his Sister relied on it to her detriment.

On July 1, Jane sent Harry a signed letter offering to sell Harry her home in Aspen for $2,500,000. The letter included all the essential terms of the sale. In the letter, Jane stated that she would keep the offer open for 30 days. On July 15, Harry called Jane and stated that "The price for your home seems really high, I wish you would contemplate selling it for $2,000,000." On July 17, Jane receives a letter from Juan offering to purchase her condominium for $2,550,000. Jane immediately calls Harry and revokes her offer and then sends Juan an email accepting his offer. On July 27, Harry calls and insists he has the right to purchase the property and therefore officially accepts. Jane politely reminds him that she already revoked the offer and explains that it is too late because she has contracted to sell the property to Juan. is an enforceable contract between Jane and Harry.

Based upon the foregoing there is no enforceable contract between Jane and Harry. At any point in time during the offer, the offerer has the right to terminate the offer. This is exactly what Jane did before Harry accepted it. The offer Harry accepted no longer existed once Jane revoked it.

1. Which of the following contract(s) do not have to be in writing under the Statute of Frauds?

a. The agreement of a father made to his son that if his son doesn't pay his fraternity bill, he would pay it.

b. A two year option contract to purchase a movie script.

c. A contract of employment for a term of nine months, performance to commence four months after the agreement was entered into.

d. Two of the above are correct.

Answer: D (A&B Do not have to be in writing under the Statue of Contracts)

The agreement a father made to his son that if he doesn't pay his fraternity bill, he will pay it does NOT need to be in writing to be a contract under the Statute of Frauds due to the fact that it is an agreement directly to his son(Debtor) and not his Creditor. Since the option contract to purchase a movie script is a two-year options contract it CAN be fulfilled within a year so it does not need to be in writing under the Statute of Frauds.

Jesus Rodriguez, owns a car dealership in East Los Angeles. His customers, including Graciela, are predominately Spanish-speaking. When purchasing one of his cars, Jesus makes his customer sign a contract which is entirely in English and contains excessive dealer charges. Graciela buys one of his cars and later refuses to pay the dealer charges on the contract. If Jesus sues her, what is Gracielas' best defense?

a. Unconscionability

b. Misrepresentation

c. Undue Influence

d. Fraud

Answer: A Unconscionability

If Jesus sues Graciela her best defense is Unconscionability. Since she could not speak the language or understand the contract she could claim she had an absence of a meaningful choice on her part and the contract contained terms, the excessive overcharges, that could be considered outrageously unfair however it is unlikely that she would win the case but this would be her best defense.

Samuel DaGrossa and others were planning to open a restaurant. At some point prior to August 2015, DaGrossa orally agreed with Philippe LaJaunie that LaJanunie, in exchange for his contribution in designing, renovating, and managing the restaurant, "could purchase a one-third interest in the restaurant's stock if the restaurant was profitable in its first year of operation". The restaurant opened in March 2016, and a few weeks later, LaJaunie's employment was terminated. LaJaunie brought an action to enforce the stock-purchase agreement. Explain fully whether this oral agreement is enforceable under the Statute of Frauds?

The Oral Agreement is not enforceable under the Statute of Frauds since the contract cannot be performed within one year from the date it was formed. In August 2015, the oral agreement was made the restaurant did not open until March 2016 so this could not be evaluated until March 2017, which is over one year from when the contract was initially formed in August 2015 so the contract would have to be in writing under the Statute of Frauds.

Sylvia, an elderly widow who is almost deaf, owns her own home. Her closest confidant for business transactions is her son-in-law, Ron. Ron offered to purchase her home for $100,000. The home had recently been appraised at $200,000, but Sylvia agreed, in writing, to sell when Ron persisted in making the offer. She never asked and he never volunteered information about the appraised value of the house. If Sylvia later desires to set aside that sale, what is her best argument against the validity of the contract?

Sylvia's best defense is likely undue influence because of her vulnerability and dependence on her sonin law, Ron, in business transactions who may have persuaded her to agree to a contract that did not reflect her best interests. Due to her relationship with Ron, she could argue that she was unduly Influenced.Indue Influence requires a person to be in a position of trust which her son-in-law was and requires him to unduly influence his grandma into entering a contract for his economic advantage

Priority Rules - Who Wins If There Are Competing Claims In The Same Collateral

A. As between two unperfected creditors: The first to attach wins.

B. As between a Perfected Creditor and an Unperfected creditor, the perfected creditor wins.

C. As between Two Perfected Creditors:

1. General Rule: The first secured party either to file or to perfect wins

2. Exceptions to the General Rule:

(i) Buyer in the Ordinary Course of Business: a person who buys "in the ordinary course of business" will take the goods free from any security interest created by the seller.

ex. could also be wholesaler to reseller

(ii) Buyer of a consumer good from another consumer: a consumer who purchases a consumer good from another consumer will take the goods free from a secured party's interest, provided that the buyer purchased the goods without knowledge of the prior security interest and no UCC-1 financing statement was filed.

ex. GARAGE SALES

Priority Rules - Who Wins If There Are Competing Claims In The Same Collateral

EXCEPTIONS to the General Rule Continued

2. Exceptions to the General Rule:

(iv) PMSI in Inventory: A person who has a PMSI in inventory has priority over a prior perfected secured party if he notifies the prior secured party and a financing statement is filed before delivery of the new inventory

(v) PMSI in Equipment: A person who has a PMSI in equipment has priority over a prior perfected secured party if that person files a UCC-1 Financing Statement within 20 days after the debtor receives possession of the equipment

ex. Best Buy getting new shelves

Termination of Security Interest

A. If the Debtor satisfies the Debt- The creditor must file a Termination Statement.

B. If the Debtor does not satisfy the debt:

1. The Secured Creditor may repossess and keep the collateral as full payment- "Strict Foreclosure"; or

2. The Secured Creditor may repossess and sell the collateral

C. Strict Foreclosure

1. Notice and approval required from the debtor and all other secured parties

D. Repossessing and selling the Collateral

1. Secured party may repossess the collateral as long as it does not "breach of the peace"

2. Secured party may lease or sell the collateral at a public or private sale as long as it is done in a "commercially reasonable" manner

3. Debtor has the right of redemption by paying the full amount of the debt plus all the secured parties expenses prior to sale by the secured creditor

PMSI

-ex. getting loan to buy computers and using collateral as computers

ex. mortgage

Blanket Lien

A security interest in all assets of your customer on a non-priority basis, eliminating potential conflict with your customer's primary lender

floating lien

there is never a point where this is not something for B of A to repossess constant cycle:inventory proceeds (AR or Cash)new inventory

Robert executed a valid promissory note and security agreement with First Time Bank covering Robert's new purchase of machinery and equipment for his new factory. However, First Time Bank failed to perfect its security interest in the equipment and machinery. Six months later, Robert defaults on the loan with First Time Bank. Robert did not sell the machinery & equipment or use it as collateral for another loan.

Without taking any additional actions (i.e. filing a UCC-1 Financing Statement), can First Time Bank repossess Robert's new machinery and equipment?

Without taking any additional actions First Time Bank can repossess Robert's new machinery and equipment since there is a valid security interest and there are no competing claims to the collateral.

On May 2, 1990 SAFE BANK discussed the possibility of loaning Tyler Corp. $500,000. Tyler signed a security agreement and UCC-1 Financing Statement covering its existing equipment. On May 4th, SAFE BANK properly filed the UCC-1 Financing Statement. On May 7, Tyler approached ONE TIME CREDIT about borrowing $600,000 secured by the same equipment. On that same day, ONE TIME CREDIT obtained a signed security agreement, promissory note, and UCC-1 Financing Statement from Tyler Corp, gave Tyler the money and properly filed the UCC-1 Financing Statement. On May 10, Tyler signed a promissory note and received the $500,000 from SAFE BANK.

A) If Tyler defaults on both loans, who has a superior interest in the equipment?

B) Would your answer change if ONE TIME CREDIT took possession of the collateral instead of filing a UCC-1 Financing Statement?

A) If Tyler defaulted on both loans Safe Bank would have the superior interest in the equipment since Safe Bank was the first of the two banks to file or to perfect which they did by filing the UCC-1 Financing Statement on May 4 so they would have the right to repossess and sell Tyler's equipment.

ABC Co. borrowed $1,000,000 from Local Bank for working capital and gave its inventory, proceeds and after-acquired inventory as security for the loan. Local Bank took a security agreement and filed a UCC-1 Financing Statement in the proper place on April 1, 2015. On January 3d of the next year, ABC Co. contracted to buy 50 fancy black walnut pianos for its store from Black Walnut Piano Company. Black Walnut agreed to sell them to ABC Co. on credit, reserving, pursuant to an agreement, a security interest in the pianos to secure their purchase price. Black Walnut filed a UCC-1 Financing Statement in the appropriate place on Jan. 8, 2016 and delivered the pianos on Jan. 9. On March 3d of that year, Cathy brought a black walnut piano from ABC Co. on credit, signing a promissory note and a security agreement. . ABC Co. did not file a UCC-1 Financing Statement. Several months later,

A) No according to one of the exceptions to the General Rule "Buyer in the Ordinary Course of Business" a buyer in the ordinary course of business will take the goods free from any security interest created by the seller. This is one of the exceptions to the general rule because it would be bad for the economy if people were afraid that items that they buy as consumers would be repossessed when a debtor defaults on their debt.

B) Black Walnut would not have a superior interest in the ABC inventory of pianos because the pianos bought by ABC from Black Walnut would be classified as PMSI because the item purchased is used as collateral for the loan. Black Walnut would have priority over the prior perfected secured party as long as they notified the prior secured party before the delivery which they did'nt so LOCAL BANK HAS SUPERIOR INTEREST INSTEAD

A) Can Black Walnut or Local Bank repossess the piano sold to Cathy Consumer?

B) Which creditor, Local bank or Black Walnut, has the superior interest in the Black Walnut pianos in ABC's inventory?

Marina Inc. sells and services sailboats. On April 1, Marina financed the purchase of its entire inventory with ACE Finance Company. ACE required Marina to execute a security agreement and a UCC-1 financing statement covering the inventory and proceeds. On April 4, ACE properly filed the UCC-1 Financing Statement covering the inventory, proceeds and after-acquired inventory. On April 27, Marina sold one of the sailboats to Wally for use in his charter business for $100,000 ($50,000 cash and $50,000 on credit). Wally, who had once worked for Marina, knew that Marina regularly financed its inventory with ACE. Marina defaults on its obligations to ACE. Can ACE repossess the sailboat purchased by Wally?

Under the "Buyer in the Ordinary Course of Business" clause as an exception to the general rule, Wally is the Buyer in the Ordinary Course of Business which means that he can take the goods free from any security interest created by the seller. Even though Wally knew about Marina Inc.'s previous financing agreement, it cannot be repossessed by ACE.

Donald purchased a diamond bracelet form Mayor Jewelry as a present for Lorraine. Donald signed a written contract agreeing to pay for the bracelet in forty-eight monthly installment and granted Mayor a security interest in the bracelet. Donald took possession of the bracelet. The owner of Mayor Jewelry advised the store manager to be certain that she perfect the security interest immediately. The store manager did not file a financing statement.

I. Two weeks later, Mayor's owner asks the store manager if she had perfected the security interest and she replies "of course, there is nothing to worry about." ls she correct?

ANSWER-Yes, she is correct that they are perfected, as it was automatically perfectedat the time of attachment because it was a Purchase Money Security Interest in aConsumer good.However, there is something to worry about because if a Consumer1 sells a consumeritem to another consumer 2, there is an exception to the general rule.... Consumer 2 willbe able to keep the item even if there is a prior perfected secured party (Mayor), butonly if Consumer 2 did not know about the prior perfected interest and Mayor did not filea financing statement.

2. Instead of giving the bracelet to Lorraine, Donald sells the bracelet for $10,000 to his friend Ronald, who retains it for his own use. Prior to purchasing the bracelet, Ronald asks Donald if the bracelet is free and clear of all liens and Donald replies "yes". Shortly thereafter, Donald declares bankruptcy still owing $7,500 to Mayor Jewelry. After Ronald refuses to give the bracelet to Mayor, Mayor sues Ronald . To whom should the court award possession?

Answer-The above exception applies.... Consumer 2 will be able to keep the item even ifthere is a prior perfected secured party (Mayor) because Consumer 2 purchased it anddid not know about the prior perfected interest and a financing statement was not filed

On May 2, 1990 SAFE BANK discussed the possibility of loaning Tyler Corp. $500,000. Tyler signed a security agreement and UCC-1 Financing Statement covering its existing equipment. On May 4th, SAFE BANK properly filed the UCC-1 Financing Statement. On May 7, Tyler approached ONE TIME CREDIT about borrowing $600,000 secured by the same equipment. On that same day, ONE TIME CREDIT obtained a signed security agreement, promissory note, and UCC-1 Financing Statement from Tyler Corp, gave Tyler the money and properly filed the UCC-1 Financing Statement. On May 10, Tyler signed a promissory note and received the $500,000 from SAFE BANK.

A) If Tyler defaults on both loans, who has a superior interest in the equipment?

B) Would your answer change if ONE TIME CREDIT took possession of the collateral instead of filing a UCC-1 Financing Statement?

B) No, even if One Time Credit took possession of the collateral instead of filing a UCC-1 Financing Statement they would still be able to see that the equipment had a UCC-1 Financing Statement that gave priority interest to Safe Bank so Safe Bank would still have the superior claim on possession of the collateral.

3. Instead of selling the bracelet, Donald gives it to Lorraine as he intended. Donald declares bankruptcy still owing Mayor $7,500. Mayor sues Lorraine. To whom should the court award possession of the bracelet?

Answer-The above exception DOES NOT apply.... Consumer 2 will NOT be able to keepthe item even if there is a prior perfected secured party (Mayor) because Consumer 2 didnot PURCHASE the bracelet.

4. Instead of selling the bracelet or giving it to Lorraine, Donald uses the bracelet as collateral to borrow $10,000 from First National Bank. He signs a security agreement giving the bank a security interest in the bracelet. For safekeeping the bank stores the bracelet in its vault. Donald declares bankruptcy. To whom should the court award the bracelet? Would your answer be different if Mayor or First National had filed a financing statement?

ANSWER- The general rule applies, first to file or first to perfect. Here Mayor wasperfected before FNB perfected by possession. Same answer if FNB filed, as Mayor wasfirst!

Louis v Curry College: young student from Washington going to college from a different state. Leaves college and sues them for breach of contract for not properly representing school while back home in the state of WA. Does he have personal jurisdiction to sue college from the state of Washington?

NOT "minimum contact" because school did not send representative or have mass mailing to Washington (VERY SPECIFIC TO CASE)

Would have to go to Court in home state of Curry College that has subject matter and personal jurisdiction

Instead of answering a complaint, a defendant might elect to file a:

MOTION TO DISMISS

A Motion for Summary Judgment differs from a Motion to Dismiss because the Motion for Summary Judgement:.

Requires the court to consider factual issues

Mrs. Jones says to Todd, the son of her neighbor: "Todd, if you wash my car today, I will give you $25.00." Later that same day, while Mrs. Jones is out shopping with her husband, Todd sees Mrs. Jones's car in the driveway and washes it. This situation is an example of:

A typical unilateral contract. (like a reward)

Not a tool available tool a winning party to enforce judgment of trial court:

demurrer

ARE THESE LEGAL "OFFERS"?

Donald Trump filed a lawsuit against Bill Maher for failing to live up to an "unconditional offer" to donate $5 million to charity if Trump provided a copy of his birth certificate proving that he's not "spawn of his mother having sex with an orangutan."

No

EXAMPLE:

Richards wrote Flowers on Jan 15, "We would be interested in buying your Lot on Gravel Drive, Oakland California, if we can deal with you directly and not throughA realtor. If You're Interested, please advise us by return mail of the price you would expect to receive. "

On Jan 19, Flowers responded, "Thank you for your inquiry regarding my Lot on Gravel Drive. As long as your offer would be in cash, I see no reason why we could not deal directly on this matter. Considering what I paid for the lot and the taxes that I have paid, I expect to receive $500,000 for this property. Let Me Know What You Decide."

On Jan. 25, Richards emailed Flowers, "Have agreed to buy your Lot on your terms. " When Flowers later refused to convey the property to Richards, Richards sued Flowers for breach of contract.

Did the parties enter into a contract?

What could Flowers have done to avoid this problem?

Did the parties enter into a contract?

NOT AN OFFER because "as long as your offer is in cash" implies Flowers is not making an offer but asking Richard to make an offer

What could Flowers have done to avoid this problem?

Flowers should have clearly said at ending that this is NOT an offer in the second paragraph.

Ralphs advertises ground beef at $2.49/lb.- an offer?

Advertisements are NOT LEGAL OFFERS because does not have intended recipient- more of an invite for other person to make an offer

EXAMPLE: Thompson's Dry Goods store published the following advertisement in the Silver city Morning News on Monday March 12, 1996.

"8 Brand New Stetson Cowboy Hats Beaver Felt, Selling for $72.50..... out they go..... Sat. March 17th Each .... $5.00.

1 Navajo Turquoise Necklace..... worth $125.000 now selling for 40.00... "FIRST COME, FIRST SERVED"

On the following Saturday, Roy was the first person to arrive at the store and demanded the necklace. The Store clerk refused to sell it to him because it was a "house rule" that the sale was intended for women only. If Roy brings a lawsuit against Thompson's dry Goods for their refusal to sell him the necklace, alleging a contract existed, who should win and why?

Contract SHOULD exist - advertisement makes very clear offer

"I noticed your ad in the Sunday paper for all-wool shag carpet, color dove gray, at $50.00/yd installed. Please install 2,000 yards in my building at (address specified)." The Carpet Co. does not have sufficient inventory to fill Harry's order, so it immediately purchases more carpet from the factory, incurring extra expense. The next day (before EZ Carpet Co. has responded to Harry's letter and begun installation) Harry sends an email : "Have made other arrangements for carpet, order canceled." Isthere an enforceable contract?

OFFER FOR UNILATERAL CONTRACT (offer accepted when carpet installed).

NOT an enforceable contract- offer revoked before carpet began to be installed

ADs generally not considered offers- merely offers to negotiate (unilateral)

Carpet company should have turned it into bilateral contract

Told harry he would install carpet but needs to get more inventory and had harry sign binding contract

Lund offered to sell Steck his car and told him the car had only been driven 25,000 miles and never been in an accident. Steck hires a mechanic and the mechanic says the car probably has at least 50,000 miles and probably has gotten in an accident. Steck still purchases car. Later, it developed multiple mechanical problems and Steck sought to rescind the contract on the basis of Lund's fraudulent misrepresentation of the auto's condition. WILL STECK BE ABLE TO RESCIND (CANCEL) HIS CONTRACT?

Yes material misstatement of fact, 2. not reasonable to rely on seller when mechanic gave better info- THEREFORE cannot rescind contract

Example: Grano owns a 42 room motel and Tanner is interested in purchasing it. During negotiations, Grano tells Tanner the motel netted $300,000 last year and will net at least $450,000 next year. The motel books, which Grano turns over to Tanner before the purchase, clearly show the motel only netted $150,000 last year. Tanner purchased the motel. During the first year under Tanner, the motel netted only $180,000. It is at this time Tanner learns of the motel's low profitability and he wants his money back. Tanner's legal arguments for his money back due to: Grano's false statements about the (A) past and (B) future

NEITHER A OR B constitute misrepresentation or fraud-

Tanner could not reasonable rely on false statements by seller as he had the books and statements about FUTURE income are not actionable as they are predictions

Berstein owns a lot and wants to build a house to a specific set of plans and specifications. She solicits bids from building contractors and receives three bids: One from Carlton for $560,000, one from Freind for $558,000 and one from Shade for $553,000. She accepts Shade's bid. One month after construction of the house has begun, Shade contacts Berstein and informs her that because of inflation and a recent price hike in materials, he will not finish the house unless Berstein agrees to pay an extra $30,000. Berstein reluctantly agrees to pay the additional sum. After the house is finished, however, Berstein refuses to pay the additional $30,000. Discuss whether Berstein is legally required to pay this additional amount. Does the contract need to be in writing under the Statute of Frauds?

He does not have to pay him because no consideration- no bargain

No preexisting duty rule

Exception: unforeseen circumstances (inflation does not count)

EXAMPLE: Is this an example of Duress?

The Visa of the then pregnant Ukrainian wife-to-be { in the US) was about to expire and her American husband-to-be demanded that she sign a prenuptial agreement if she wanted to get married before her Visa expired, and it was 6 days before the wedding.

At their divorce, she argued the prenuptial agreement was unenforceable because it was signed under duress.

YES DURESS: "Improper threat" - to be deported, could also argue unconscionable

Avoid duress by having own council and doing it months before wedding

Consider whether and under what circumstances, a fraud action could be maintained by bob in the following circumstances:

Sam, in order to induce Bob to buy his 100 shares of XYZ corporation stock state to Bob, "This stock will pay dividends within five years that will equal or exceed the purchase price I'm asking". Partly on reliance upon Sam's Statement, Bob Purchases the stock. XYZ subsequently goes bankrupt without paying dividends.

NOT fraud or misrepresentation- not a statement of fact (a prediction)

Fraud?

2. Sam is negotiating the sale of his commercial building to Bob. Tom is a tenant in the building under a long term lease. Sam, in order to induce Bob to buy states, in his opinion, Tom is a "good" tenant. In fact, as Sam Knew, Tom had been consistently delinquent in rent payment and had damaged the premises in the past. Partially in reliance upon Sam's Statement, Bob purchased the building. Tom moved out shortly thereafter, leaving the premises in shambles and a substantial amount of rent unpaid

YES

Secured Transactions

DEBTOR: borrower

Creditor: lender

Debtor wants loan to be UNSECURED

Creditor wants loan to be SECURE (backed by collateral)

Better to be overcollateralized

Getting a guarantor helps make creditor feel more confident ("if he does not pay I will")

VISA/Mastercard unsecured