MGMT 108 Guerin Midterm 1

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 hep 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 arbitrators decision.

- during arbitration both sides give evidence and witnesses testify

advantages:

• Faster

• Cheaper

• Outside judge you hire

-Can be in employee contract

Types of Jurisdicstion

1. Subject Matter

2. Personal

* courts must have both types

Subject Matter Jurisdiction, state vs federal

=a court's power to rule on the issues in the case

a. state courts= include courts of general jurisdiction (ie. all cases that aren't already assigned to other courts like family court, small claims, traffic, or criminal

b. federal= these courts have restricted jurisdiction and are generally limited to cases OR'S

1. the US is a party

2. the issue arises under federal law

3. cases involving diversity of citizenship

Diversity of Citizenship

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

2. 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 Jurisdiction being Concurrent

* in most cases where federal jursidiction exists, then states exists too

FEDERAL QUESTION CAN GO TO STATE COURTS

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

Removal Jursidiction

if either the federal question or diversity jurisdiction exists and the plaintiff chose to sue in the state court, the defendant may compel removal of the action to federal court

Personal Jurisdiction Criteria

1. defendant is domiciled= resident of the state

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

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

Pleading Stage of Ligitigation

What are the 4 parts?

What is its purpose?

1. summons and complaint

2. challenges to complaint

3. the answer

4. default judgement

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

Pleading Stage of Ligitigation: The summons and complaint

a civil action is commenced by the filing of plaintiffs complaint and properly notifying the defendant

Pleading Stage of Litigation: challenges to the complaint- demurrer/ motion to dismiss

demur= motion to dismiss

defendant contends that the complaint is defective for some reason

ex. court lacks personal jurisdiction, statue 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 Ligitigation: default judgement

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

1. obtaining judgement: after entry of default, plaintiff must proceed to obtain a default judgement. relief is limited to the amount sought in the complaint

2. setting aside the default: once the default is entered, the defenden'ts remedy is to move the court to set it aside. to set aside a default judgement, the defendant must show a valid excuse for defaulting such as "inadvertance, surprise, or excusable neglect"

Discovery Stage of Litigation:

1. purpose of discovery

2. scope of discovery

3. basic discovery devices

4. requests for admission

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

scope: discovery may inquire all nonprivliged info relevant to the subject mater of the action (whether or not admissible as proof at trial) or that it is reasonable 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, documents/emails, request for admissions, 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. interogtories: written questions (addressable only to a party) requiring a 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 corss examine the witnesses

a. a deponent is entitled to review and correct the transcript of his/ her testimony

b. 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

Discovery Stage of Litigation:

Requests for Admission

a 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 judgement motion:

GETTING THE JUDGEMENT WITHOUT GOING TO COURT.

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 judgement can be rendered in their favor, without a trial

Enforcing the judgement (Finding the money - 4 ways)

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

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

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

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

judgements are good for 10 years in CA

Louis Vs. Curry College

student in WA wants to go to curry college. he wants to sue curry college and get them to come to washington.

facts:

sales rep came to washington

sent info to washington via mail

opposing facts:

the sales rep wasnt an actual campus rep and was only responding to a question about curry college bc it was asked in the audience

-mailing was only sent to the one kid

VERDICT: no personal jursdiction

Brian Wilson Case

was sued in new hamshire for a book.. the plaintiff wanted him to come to NH.. since his book was activiely sold in NH, then yes thats enough personal jurisdiction

Personal Jurisdiction at the state level means you can decide which county to go in?

TRUE. can you request to change venue? yes

compulsory vs permissive couterclaims

compulsory: ex. get in car accident with back injury and damaged car.

- maybe defendent says the plaintiff pushed him afterward

-some fact related to the same transaction

permissive: get in the car accident with someone who never paid you back

Newman vs. Schiff Case

Newman-a professional accountant said he was offering a 100,000$ reward to anyone who could call in proving a code during the episode. the next day Schiff was watching a rerun and called into the station

-Newman said it was an offer only during the show filming

Schiff sued for breach of contract. who wins?

Newman wins...

Consideration - 2 requirements

ill do something for you if you do something for me

1) 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

2) legal detriment - each side is either doing something they legally do not have to do OR refraining from doing something they have a legal right to do

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

*promissory estopel can substitute consideration

capacity

drugs, alc, no mental capacity, legal

1. age- 18+ yers old, VOIDABLE not 18 means one of 2 parties can get out of contract (only the minor can).. only until age of 18 or shortly thereafter

2. mental state-if there is lack of mental capacity from intoxication then the transaction is voidable

3. mental incompetency= a contract can be void if entered into by someone who is mentally incompetent

the offer: when is it terminated

1. Revocation of the offer by offeror. Exceptions:

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

b. promisorry 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 anotehr offer and there would be harm if they flaked

2. Rejection of offer by offeree

3. Counteroffer by offeree

4. Destruction of the subject matter

5. Death or incompetence of offeror or offeree

sources of contract law

a. common law

- services

-real estate

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

b. UCC article 2

-"goods"

-"movable tangile objects

genuinityy of consent

maybe there was a threat

types of contracts: expressed vs implied

expressed=

oral, wirrten

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 restaurant, drs. office,

landsberg case

scrabble scenario.. beach of an implied contract

-landsberg gave scrabble idea and they knew they had to pay. he sent it over and they used it

nondisclosure agreement

a contract by which one or more parties agree not to disclose confidential information that they have shared with each other as a necessary part of doing business together.

bilateral vs unilateral contracts

bilateral= promise for a promise

ex. 100 pens for 10$

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 game, realtor commission

unilateral conditions

once a person has begun the performance you cannot back out of the offer.

-when as performance began? when they start mowing the lawn

"if" "when"

requirements of an offer

1. person making offer has serious/ present intent to make deal right now. ex. i want to sell car right now, not thinking about it

2. terms are definite and clear

ex. "several" computers doesnt count. must say 3 or 4

3. clear who its offered to

best buy has an offer online for 52 inch tv for 9.99$. offer?

no not an offer because it is not realistic

pepsi says if you have enough pepsi poits then you get x,y,x. ex fighter jet.

harvard guy come in with enough points for the jet and sues them for breach of contract

is it offer?

nooo it was not reasonable for someone to believe that

advertisements

-offer 2010 lexus for 10k in newspaper with 100,000 miles. 5 people call about it and accept. is this offer?

not an offer bc it is going out to 1000 of people

-you know it is not reasonable that he can give it to everyone

-so the ad is just a solicitation for them to call me and make me an offer

"first come first served"first8 people come.

is this offer?

yes an offer, no negotiations

ex. uncle promises his nephew 5k cash if his 17 year old nephew doesn't smoke for 6 months

yes thats an offer

contract: legality

if subject matter is illegal or against public policy it can be void

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

ex. wager agreements, usury (legal rate of interest one can charge under various circumstances, exculpatory clauses

contract: reality of the consent (5)

consent of the parties must be freely given

1. misrepresentation:

-an innocent misstatement or omission of a material FACT

-reasonable relied upon

-which causes HARM to one of the parties in a contract ( only monetary harm"

2. fraud

-includes all 3 but they were intentional

3. duress: using physical or improper threats to force someone to enter into a contract

4. undue influence: personal relationship where b takes advantage of A because B knows how much A needs them

5. contracts of adhesion (you have no bargaining power) and unconscionability: absence of a meaningful choice on the part of one party and contact terms which are outrageously unfair.

ex. you cant negotiate at a hospital

or shocks the conscience of the courts.. extreme unfairness

contract enforceability: statute of frauds

i. definition= statute requires executory contracts to be in "Writing" to be enforceable

ii. what types of contracts does this apply to? if they aren't in writing then its not enforceable

1. LAND TRANSFER MUST ALWAYS BE IN WRITING

2. contracts that cannot by their terms be performed with in 1 year

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

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

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

3. promise to pay debt to another creditor

ex. guarantor= agree to be secondarily liable if debtor doesn't pay back creditor directly to credtitor

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. SOME WRITING PROVING EXISTENCE OR PARTY ADMITS CONTRACT EXISTS

Parol Evidence Rule

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

aka nothing before the contract matters

exception: contract subsequently made and void contracts

"MERGER CLAUSE"

Contract Remedies

A. Injunction: prohibits someone from performing certain acts

B. Rescission and Restitution: a party cancels, or rescinds the contract. He must then provide restitution by returning any property that he received from the other party

C. Specific Performance: you don't want damages or money. you want what the contract gave you. only able to if:

i. the item is unique such as a building; ii. the item does not involve a personal service

ex. land

personal service= lady gaga backing out of staples center, the cannot force her to bc of the 13th ammendment. they cant gaurantee a meaningful performance

D. 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 makret price minus contract price. the injured person must attempt to minimize or mitigate his damanges

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

scope of article 9 of the ucc (statute)

law that applies when a creditor takes an interest in the debtors personal property as collateral to secure payment of loan

"promisorry note"

contract that says borrowing $+ interest..

secured agreement

=if you dont pay then you owe you stuff

secured loan= collaterol +$+ interest

types of goods covered - personal property

1. goods: moveable tangile objects (consumer= household/family, inventory=resale, equipment=office).. depends on purpose

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

3. intangibles: trademarks, patents, and copyrights

4. chattel paper: any writing that evidence a monetary obligation & a security interest

5. accounts: a right to payment for goods or services not evidenced by a writing (eg. accounts receivable

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

secured transactions not covered by article 9

real estate & mechanic's liens

aircraft liens and IRS liens

PMSI

=purchase money security interest

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

ex. mortgage

AUTOMATIC PERFECTION in a consumer good

credit cards

=unsecured loans bc the credit card company owes the person

Attachment- creating a security interest under article 9

A. secured party gives value to the debtor (right to the money)

AND

B. the debtor has rights in the collateral

AND

C. Proof of the security agreement via

1. a written security agreement (promisory note)

OR

2. the secured party retains pocession of the collateral

Perfection= ways to notify the world about the security agreement

A. File a UCC-1 Financing statement

OR

B. take possession of the collateral (easy for stocks)

OR

C. Automatic Perfection (ex. PMSI)

*cannot be perfected until you are attached

the priority rule- who wins when there are competing claims in same collateral

A. between 2 unperfected creditors- first to attach wins

B. between 1 perfected and 1 unperfected creditor - the perfected creditor wins

C. between 2 perfected creditors - FIRST TO FILE OR FIRST TO PERFECT

Exceptions:

1. buyer in the ordinary course of business

2. consumer-consumer transaction

3. PMSI in inventory

4. PMSI in equipment

exception to "first to file or perfect wins"

1. 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

could also be wholeseller to reseller

2. Buyer of consumer good from another consumer: 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 statement was filed... GARAGE SALES

3. PSMI in Inventory: a person who has a PMSI in inventory has priority of a prior perfected secured party if he notifies the prior secured party and a financing statement filed before delivery of the new inventory

4. PMSI in Equipment: a person who has 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

floating lien

there is never a point for where this is not something for B of A to repossess

constant cycle:

inventory

proceeds (AR or Cash)

new inventory

Example: you're at a bar in Westwood and want to buy the painting on the wall. you buy it for 5k. B or A has a blanket lean on everything in the bar. do you get to keep the painting if Jane defaults?

No

- you are not a buyer in the ordinary case of business

-note that is equipment on wall, therefore not a c2c transaction

-first to file or perfect= bank perfected so they win

PSMI IN INVENTORY EXAMPLE: B of A has a blanket lean on Best Buy. Best Buy wants to buy more inventory using PMSI.

a. notify B of A

b. file ucc-1 BEFORE THE INVENTORY IS DELIVERED

then you are first just for the TVs and Best Buy is second

Termination of the Security Interest: the fail to pay - what can the creditor do?

1. repossess and sell collateral

- the right to "self help"= get collateral from the guy that owes it to you as long as you don't "breach the peace"

* lots of repossession happens in the middle of the night

- must sell in a "commerically reasonable" manner

or

2. repossess and keep the collateral as "strict forclosure"

-creditor can decide to keep the painting instead of selling it for 1 million, but they wave the right to sue the creditor for the missing money.. but creditor keeps profits if there are any

-both the creditor and debtor have to agree

"Commercially reasonable sale"

fair and square.. aka you cant sell it to someone for 1 million then have them sell it for 1.2 million and you split the profit with the new guy

"right of redemption"

debtor has right to get it back if they have $$, interest, and expenses up to the actual sale

Susan, a Los Angeles resident, appears on a new NBC reality show, My Big Fat Obnoxious Accountant. Susan is the first to be "kicked off the island" and leaves the show in shame. On her way out, she throws a temper tantrum and destroys some of the furniture on the set. NBC and the production company that made the show are incorporated and headquartered in New York, where the show is filmed. NBC and the producers have offices and conduct business in Los Angeles and San Francisco. Humiliated by the loss, Susan plans to sue NBC and the producers of the show 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.

(A) As to each of the state courts, indicate whether personal jurisdiction exists and why.

(B) Explain whether the federal courts would or would not

A. Personal jurisdiction exists in both the California and New York State Courts. Personal jurisdiction answers whether or not the plaintiff can require the defendant to attend trial in the state court. Although NBC is headquartered in New York, they have offices and conduct business in Los Angeles. Personal jurisdiction also exists in New York because NBC is headquartered there and Susan worked there.

B. Yes, the federal court would have subject matter jurisdiction because the case meets two criteria under the diversity requirement- the issue involves more than $75,000 and involves a diversity of citizenship. The case involves a diversity of citizenship because the company is headquartered in New York and Susan is a resident of Los Angeles.

Harvey is a resident of California. Harvey files an action in Orange County Superior Court, California against Microscoft alleging $100,000 in damages in a claim arising under the Federal Securities Act of 1933. Microscoft is properly served a summons and complaint in California. Microscoft requests that its attorney file a Demurrer for lack of subject matter jurisdiction.

Will Microsoft win the Motion? Please explain why or why not.

Microsoft will not win the motion. California Superior Court has subject matter jurisdiction, and therefore the Demurrer will be rejected. Harvey is filing regarding a federal question, which means both the federal ad state courts have subject matter jurisdiction.

The Double Diamond Dude Ranch is located in Montana and maintains a web site on the Internet. Before the Internet, the ranch had relied exclusively on word of mouth advertising. The website simply provides some general information and lists the ranch's phone number for reservations, but reservations cannot be made online. The ranch has no other connections or presence outside of Montana. Bob lives in Ohio and learned of the ranch through its website. Bob then spent a week as a paying guest at the ranch, but was injured when he fell off a horse.

Can Bob sue the dude ranch in an Ohio state court?

Bob absolutely cannot sue the dude ranch in an Ohio state court. This is because the Ohio state court does not have personal jurisdiction over the dude ranch. This is true for a couple of reasons. One, the dude ranch website does not have any directed advertising towards Ohio which would provide any intentional contact with that state. Their website is open for anyone in the country to see, but that doesn't give every state personal jurisdiction. Two, the dude ranch has no other connections or presence outside of Montana to establish any minimum contacts requirement for the Ohio state court. Since Bob went onto the website, dialed the number himself to make a reservation, then went over to the ranch for a week, he cannot claim that Double Diamond Dude Ranch has any sort of legitimate minimum contact with Ohio. Thus, Bob cannot sue the dude ranch in an Ohio state court.

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

B. Depositions

On July 1, Jane sent Harry a signed letter offering to sell Harry her condominium 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 condominium seems really high, I wish you would consider selling it for less money." On July 17, Jane receives a letter from D. Trumpp offering to purchase her condominium for $2,600,000. Jane immediately calls Harry and revokes her offer and then sends Trumpp an email accepting his offer. On July 27, Harry calls and insists he has the right to purchase the property and therefore officially accepts the offer under all the terms stated in the July 1 letter, including the $2,500,000 purchase price. Jane politely reminds him that she already revoked the offer and explains that it is too late because she has contracted to

Harry does not have a contract with Jane. 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.

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 emailed 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, why or why not?

There is not a contract. The offer Temp gave to Marie was for a 5-page photo layout for $135,000. Marie responding accepting the offer, but with different conditions. Because Marie made changes to the original offer, this is not an acceptance, but a counteroffer. Once a counter-offer is made the original offer no longer exists.

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 $2,000/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 $2,000/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 $ 2,000/week, who wins and why?

BUBA paying Larson $2,000 per week was not a contract even though it was announced at the banquet because it lacks consideration. BUBA was not getting anything in return from Larson by paying him, therefore it could be considered a gift. Even though some may argue that this is an oral contract, since the payments expected exceed one year, it should be in writing due to the Statute of Frauds. In the end, BUBA Corp. would win the case.

Samuel DaGrossa and others were planning to open a restaurant. At some point prior to August 2013, 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 2014, and a few weeks later, LaJaunie's employment was terminated. LaJaunie brought an action to enforce the stock-purchase agreement.

Is this oral agreement enforeceable under the Statute of Frauds?

Due to the statute of frauds, this contract is not enforceable. The Statute of Frauds indicates that the one year time frame to not require a written agreement starts at the time of performance. Even though the oral agreement was made in August 2013, the restaurant did not open until March 2014.

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.

What is Sister's best argument for enforcing his promise and making it a binding contract?

Sister's best argument would be promissory estoppel. The only reason Sister agreed to move to San Antonio was because she was told she could stay with Brother. Had he not agreed, she would not have spent the money to travel there.

ABC Co., a California corporation sells musical instruments. 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, 2000. 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, 2001 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. She stated that the sole purpose of the purchase wa

A)

No, a buyer in the ordinary course of business is exempt from the repossession of the goods they bought. This is one of the exceptions to the general rule because it would be bad for the economy if people were afraid of items they buy as consumers to be retaken when a debtor defaults on their debt.

B)

Black Walnut would have a superior interest in the ABC inventory of pianos because the pianos bought by ABC from Black Walnut would be classified as purchase money security interest, or PMSI, because the item purchased is used as the collateral for the loan. Black Walnut followed the law for this to be the case by filing a UCC-1 before delivery of the inventory, as long as they notify the prior secured party prior to the delivery as well. If they did not notify the prior party (Local Bank), then they would not have a superior interest.

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 collateral. Because SAFE BANK was the first of the two banks to file or to perfect, which they achieved by filing the UCC-1 on May 4, they would have the right to repossess and sell Tyler's equipment.

B) No; even though ONE TIME CREDIT has possession of the collateral, they would still be able to see that the equipment had a UCC-1 Financing Statement that gave priority interest to SAFE BANK. Thus, SAFE BANK would still have the superior claim on possession of the collateral.

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.

undue influence example:

son gets dying fathers land for 23,500 but it was worth 140,000

- you can argue undue influence, but not capacity bc he only had physical ailments...

-cant use inadequate consideration bc who cares if he made a bad deal

ONLY ARGUE UNDUE INFLUENCE and the price can be used as support

ex.

landlord put in the contract of lease agreement that if tenant ever sold his business the landlord got to make 1/3 of profits

uncosciounability

jesus owns car dealership in LA. his customer speaks only spanish. the contract is in english and has over charges. the customer signs it and then refuses to pay. what is his best way to win?

Unconscionability is his best case

- you cannot get out of a contract bc u dont speak the language

ex.

if you cant pay for your student loan, then ill pay it for you if you grade for me. does this need to be in writing under statute of frauds?

no because the credit is being made directly to student and not the creditor

ex. tell doctor to send me the bill for my mother. does this need to be in writing under statute of frauds?

no becuase she is being primarily liable, not secondarily

crabtree- pg 47

example of statute of frauds.. crabtree had an agreement to increase his salary after 2 years and miss arden denied this existence. they were able to piece together previous memos and therefore crabtree won bc there was written evidence

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 didnt deliver the part and therefore lost profits..cannot be speculative you need to be able to calculate them

Stages of Litigation

1. Pleading (summons and complain, demurrer/motion to dismiss)

2. Discovery (basic discovery devices)

3. Terminating Case without Trial (summary judgment)

4. Trial

5. Appeal

6. Enforcing the Judgment

Basic Discovery Devices

1. interrogatories: written questions requiring written responses

2. depositions: examination of a witness under oath

2a. transcription: transcript of what happened during the deposition

2b. statements in depositions are usually inadmissible at trial, except for impeachment or where the witness is unavailable (preserves the evidence)

3. documents/emails

4. medical examinations

5. request for admissions

Pleading Stage of Ligitigation : the answer, affirmative defenses, counterclaims

function is for the defendant to either admit or deny each of the allegations in the complaint

1. affirmative defenses: answer may allege new facts, that if proven, show that the defendant should not be held liable.. basically saying if you take me to court this is why i will win.. ex. self defence, breach on contract bc of duress, fraud

2. counterclaims: answer may include any claims the defendant has against the plaintiff. claims can be related to the original claim (compulsory), but they do not need to be (permissive)

requirements of misrepresentation/fraud

1. material misstatement of face

2. plaintiff reasonably relied on the misstatement

3. detriment/harm to the plaintiff

4. scienter (fraud only): an intent to deceive

Promissory Estoppel

1. offeror knew that offeree would take certain steps bc of offer

2. offeree relied on offer and took those steps

3. detriment/harm if offeror did not follow through with offer

types of collateral

A. Real Estate Property - governed by real estate law

B. Personal Property - governed by Article 9 of UCC

1. Goods - consumer, inventory, equipment, farm products

2. instruments - stocks and bonds

3. intangibles - patents, trademarks, copyrights

4. accounts receivable