Essay Writing Workshop Mixed Flashcards
What are the elements of a contract?
A contract requires offer, acceptance, and consideration
What are the elements of an offer?
An offer requires a promise, terms, and communication to the offeree.
What are the essential terms for an offer?
For CL: all essential terms must be provided (parties, subject matter, price, quantity)
For UCC: essential terms are parties, subject matter, and quantity
Which law governs a contract?
UCC governs all contracts involving sale of goods
CL is contracts involving services
If mixed between goods and services, whichever predominates will apply.
What is a unilateral offer?
A contract where the offeror makes a promise and the offeree must perform, it can only be accepted by complete performance.
What is a bilateral contract?
One in which parties exchange promises. It can be accepted by either a promise OR by the beginning of performance.
When is an offer irrevocable?
CL, Option Contract: An offer where the offeror promises to hold the offer open for a certain period of time, though the offeree must pay consideration to the offeror to hold the offer open.
UCC Firm Offer: An offer in writing where the offeror is a merchant and promises IN WRITING to hold the offer open for a certain period of time (no more than 90 days). No consideration required.
When is an offer revoked by the offeror?
When the revocation is received (a mailed revocation is not effective until received).
An offeror cannot revoke a unilateral contract if the offeree has started to perform.
What is a counter-offer?
If the offeree counters with different terms, the original offer is deemed terminated.
A “mere suggestion” of a different term or a “mere inquiry” about changing the terms is not a counter-offer, and will not terminate the original offer.
What are the five ways an offer can be terminated?
RV, RJ CO L D
Revocation by Offeror Rejection by Offeree Counter-Offer by Offeree Lapse of Time Death of the offeror
How does acceptance work for bilateral or unilateral offers?
Bilateral contracts can be accepted by a promise OR by the beginning of performance
Unilateral contracts can only be accepted by complete performance
How can an offer be accepted?
Any reasonable means of acceptance is allowed UNLESS the offer limits the means of acceptance
Silence is generally not an acceptance, unless the offeree has reason to believe silence will constitute an acceptance.
What is the Mirror Image Rule and when does it apply?
In Common Law, the Mirror Image Rule is that the acceptance must mirror the terms of the offer, any changes/additions to the terms constitutes a rejection of the original offer, and a counter-offer.
The UCC has no Mirror Image Rule. Instead:
- If any party is a non-merchant, then an acceptance from the offeree with changes or additions will be a valid acceptance, but the contract will not include the changes or additions unless the offeror agrees to them.
- If both parties are merchants, then an acceptance with changes or additions will be a valid acceptance, and the contract WILL include them unless (i) they materially alter the terms of the original offer; (ii) the original offer limits acceptance to the terms of the offer; or (iii) the offeror has previously objected, or objects to the changed or new terms.
What is the Mailbox Rule?
The mailbox rule states that an acceptance is valid when placed in the mail (before it is received).
EXCEPTION: If there is an option contract or firm offer, the acceptance is valid when received, and must be received before the offer expires.
SPECIAL ISSUE: If a party mails a rejection of an offer and then mails an acceptance to the offer, the first communication received is effective. The recipient of the communication does not have to read the communication for it to be effective.
What is a legal detriment?
A legal detriment is a promise to do or not do something, or performance / refraining from performance. It will generally qualify as consideration.
What is the preexisting duty rule?
A promise to perform a preexisting legal duty will not qualify as consideration because the promisor is already required to perform (no additional legal detriment is being incurred) by the promisor.
What is past consideration?
A legal detriment incurred in the past , which does not constitute consideration because it was not bargained for, and it was not in exchange for legal detriment in return
What is moral consideration?
Modern trend: A promise not supported by consideration which may be enforceable if it is made in recognition of a significant benefit previously received by the promisor from the promisee.
Does not apply if the promisee conferred the benefit as a gift
Court may also reduce the amount of money owed if it is disproportionate to the benefit conferred by the promisee.
What is Promissory Estoppel?
If a promise is made by a party but there is not consideration from both sides, the promise will still be enforceable if certain conditions are met.
The promise will be binding if:
•The promisor should reasonably expect the promise to induce action or forbearance;
• The promise actually induces action or forbearance; and
• Injustice can only be avoided by enforcement of the promise.
The damages awarded under promissory estoppel are usually limited to reliance damages (money spent on reliance of the promise).
What is the Mutual Mistake defense to contract formation?
If both parties are mistaken as to an essential element of the contract, the contract may be voidable by the adversely affected party.
What can a court do if there is mutual mistake?
Reformation: the parties can ask a court to reform the contract and rewrite it to reflect the correct element(s) of the contract. Only available if:
•There was a prior agreement (either oral or written) between the parties
•There was an agreement by the parties to put that agreement into writing, and
•As a result of a mistake, there is a difference between the prior agreement and the writing.
Rescission: If reformation is available to cure the mutual mistake, neither party can void (rescind) the contract. If reformation is not available, the contract may be voidable if:
• A mistake of fact existing at the time the contract was formed;
•The mistake relates to a basic assumption of the contract;
•The mistake has a material impact on the transaction; and
• The adversely affected party did not assume the risk of the mistake
What can the court do if there is a unilateral mistake?
Rescission: The mistaken party can void (rescind) the contract if:
•The mistake would make enforcement unconscionable; or
•Non-mistaken party failed to disclose the mistake, or caused the mistake
Also, there must not be serious prejudice to the non-mistaken party if the contract is voided
What are the defenses to contract formation?
MF DUI
Mistake (Mutual & Unilateral) Fraudulent Misrepresentation Undue Influence Duress Incapacity
What is fraudulent misrepresentation in a contract context?
An intentional misrepresentation that an innocent party justifiably relies on. Can be affirmative (lie) or through non-disclosure (omission).
If the fraud prevents a party from knowing the character or essential terms of the contract, no contract is formed and the apparent contract is void.
If the fraud is used to induce another to enter a contract, it is voidable if the adversely affected party justifiably relied on the misrepresentation in entering into the agreement.
When one party misrepresents the content or legal effect of a writing to another party, the other party may elect to avoid (rescind) the contract, or to reform it to express what had been represented.
What is undue influence?
Occurs when a party unfairly persuades the other party to assent to a contract
Occurs when a party is susceptible to persuasion
If a party is a victim of undue influence, it can void the contract
What is duress in a contract context?
When a party is improperly threatened and has no meaningful choice but to agree to the contract.
When the agreement is physically compelled by duress, the contract is void
Otherwise, voidable.
What is incapacity in a contract context?
When a party does not have capacity to enter into a contract. This is true for minors, mentally ill, and intoxicated people.
Minors are still liable for necessities that they contract for (housing or food)
What are the defenses to enforcement?
Statute of Frauds
Illegality
Unconscionability
What is the approach to Statute of Frauds for contracts?
- Determine whether SOF applies
- Determine whether the requirements (written, signed by party to be charged) are met
- If not met, discuss exceptions (part/full performance, estoppel)
Which contracts does the Statute of Frauds apply to?
Marriage Suretyship Contracts (usually services) that cannot be performed within one year of making Sale of goods (UCC) >= $500 Real Property
What are the requirements for the Statute of Frauds?
- Writing signed by the person to be charged that contains the essential terms of the deal. Does not have to be a formal contract, and multiple writings can be put together. For a UCC $500 sale of goods, the writing need not contain all the terms, but the contract is not enforceable against the party beyond the quantity of goods shown in writing.
- Signature. A document on company letterhead may be enough to constitute a signed writing as long as that was the intention
When will a court still enforce a contract even if the Statute of Frauds requirements are not met?
- For contracts that cannot be performed within one year of making: if full performance has occurred
- For UCC >= $500,
(a) if full performance has occurred (the goods have been delivered or paid for)
(b) if part performance (part of the purchase price), it will be enforceable to the extent that the money has been paid
(c) No writing required if the contract involves specially manufactured goods for the buyer
(d) Letter or Memorandum of Confirmation: If both parties are merchants and a party sends a confirmatory letter/memo that meets the SOF and the other party receives it and does not object in writing within 10 days, the contract is enforceable even though the receiving party did not sign - Sale of land: part performance. If the contract involves the sale of land, the contract will be enforced if at least two of the following three acts have occured:
(a) The purchaser pays part or all of the purchase price
(b) The purchaser takes possession of the land
(c) The purchaser substantially improves the property - Estoppel: If a party reasonably and detrimentally relies on a promise made by the party to be charged, a court may enforce the contract, despite the failure to meet the SOF requirement.
What are the two types of unconscionability in a contract context?
A court will not enforce a contract that is so unfair, no reasonable person would agree to it. Court can refuse to enforce the entire contract, strike the unconscionable portion, or limit the unconscionable terms.
- Procedural unconscionability: when the bargaining process leading to the formation of the contract is unfair
- Substantive unconscionability: when the actual terms of the contract are unfair; there must be a significant showing of unfairness to find this.
How can a contract be modified?
Both parties must agree to any modification.
CL: Modifications must be supported by consideration
Watch out for exam facts where a party offers to pay more money to the other party to guarantee completion of the contract on time. This is a preexisting duty, and there is no consideration here, so the modification will not be enforceable.
If a party agrees to pay more money in exchange for earlier performance, there will be consideration.
SOF: If the modified contract falls within SOF, it must be in writing (unless an exception applies)
UCC: Modification does not require additional consideration, as long as it is entered into in good faith by both parties.
NOTE: A provision prohibiting oral modification to a sales contract even though the modification would not otherwise fall within the SOF is valid under the UCC
What is an accord?
An accord is a new agreement where a party agrees to accept a different performance than what was agreed upon
What is satisfaction of a contract?
Satisfaction occurs when the different performance (per the accord) is completed by the other party, which discharges the original contract duties and the accord agreement duties.
What is the parol evidence rule?
Extrinsic evidence of oral or written communications prior to the written contract are generally inadmissible for contradicting the terms of the contract.
If the contract is not the final agreement (not an integration) then PER does not apply.
If the contract has a “merger” clause, it is likely to be a total integration
If the writing contains some of the terms, it is a partial integration, and parol evidence is admissible and the writing may be supplemented by additional terms, as long as they are consistent with the writing (and do not contradict any of the terms).
What are exceptions to the Parol Evidence Rule?
@UCC
AT UCC
Timing: does not prohibit evidence of modification or statements made AFTER the written contract
Ambiguity and Interpretation: Evidence is admissible to interpret or clarify ambiguity in the contract.
Collateral Deal: Evidence of a separate deal is admissible, if it’s not part of the written contract.
UCC: Evidence of usual performance and dealing between parties is admissible.
Condition Precedent: Evidence of a condition precedent to the existence of the contract is admissible.
What is the standard of performance for a CL Promise Contract?
A party has a duty to substantially perform his part of the contract. If he substantially performs he may recover even though full performance was not rendered.
A party who has not substantially performed cannot recover damages on the contract, but he may be able to recover through restitution.
A party who fails to substantially perform is in material breach.
What is the standard of performance for a UCC contract?
There must be “perfect” tender of the goods.
The buyer has the right to inspect the goods, and once he accepts them, has an obligation to pay.
If a buyer rejects goods as nonconforming, and time still remains to perform under a contract, the seller has a right to cure and tender conforming goods.
If a party fails to meet the standard of performance, it will be in breach of contract.
How do installment contracts work under the UCC?
An installment contract is defined as one in which the goods are to be delivered in multiple shipments, and each shipment is to be separately accepted by the buyer.
Payment by the buyer is due upon each delivery, unless the price cannot be apporotioned.
What is a nonconforming shipment in an installment contract?
If the seller makes a nonconforming tender, or tenders nonconforming goods under one segment, the buyer can reject only if the nonconformity substantially impairs the value of that shipment to the buyer, and cannot be cured. If the seller makes adequate assurances that he can cure the nonconformity, the buyer must accept the shipment.
What happens to remaining segments in an installment contact?
When there is a nonconforming tender under one segment, the buyer may cancel the entire contract only if the nonconformity substantially impairs the value of the entire contract to the buyer.
What is the difference between an express condition, an implied condition, a condition precedent and a condition subsequent?
An express condition is expressed in the contract itself, “on condition that…”
AN implied condition is not written into the contract, or otherwise specifically agreed to by the parties, but it is one that a court may find exists.
A condition precedent is a condition that must occur before the other party has an obligation to perform
A condition subsequent is a one which, on occurrence, will excuse the duty to perform
When are conditions excused?
Waiver: A party can waive a condition as long as it is not material to the contract. The waiving party would then have a duty to perform
Wrongful interference: If a party hinders the other party’s performance, and interferes with the occurrence of the condition, the condition will be excused and the wrongful party will have a duty to perform.
Estoppel: If a party indicates it will not enforce a condition, and the other party reasonably relies on this, the party will be estopped from later enforcing the condition.
When is the duty to perform discharged?
Impracticability: when an unforeseeable event occurs (natural disaster), making performance extremely difficult. The nonoccurrence was a basic assumption at the time of the contract, and the party seeking discharge was not at fault.
Impossibility: An unforeseeable event occurs, making it objectively impossible for the party to perform.
Frustration of purpose: If an unexpected event arises that destroy the party’s purpose for entering the contract, the party will be entitled to rescind the contract
What are the types of third-party beneficiaries?
A third-party beneficiary results when parties to a contract intend that the performance by one of the parties is to benefit a third person not party to the contract. An intended beneficiary can enforce the contract, but an incidental beneficiary cannot.
What is assignment of rights?
Almost all contract rights can be assigned. Partial assignments are allowed, as is assignment of future or unearned rights.
Assignments are NOT allowed when they materially increase the duty or risk of the obligor or materially reduce the obligor’s chance of obtaining performance.
No formalities or consideration are required.
An assignee takes all of the rights at the time of assignment, but these are taken subject to any defenses that could be raised against the assignor.
What is delegation of duty?
Generally, obligations can be delegated.
Delegation is NOT permitted when the other party to the contract has a substantial interest in having the delegating individual perform (personal services contract involving taste or special skills), or the delegation is prohibited by the contract
The delegator is not released from liability, and recovery can be had if the delegatee does not perform, unless the other party to the contract agrees to substitute a new party (this is a novation). Consenting to delegation does not create a novation.
What is anticipatory breach?
Anticipatory breach occurs when a promisor party indicates that it will not perform prior to the date that performance is due.
CL: Clear and unequivocal indication through words or acts that it will not perform.
UCC: Unequivocal refusal to perform, or failure to provide adequate assurances within a reasonable time (must not exceed 30 days) of the other party demanding them.
Either party can demand assurances if they have reasonable grounds to be insecure about the other party’s ability to perform.
A failure to provide reasonable assurances can be treated as a repudiation.
Nonbreaching party can: (i) treat repudiation as breach and sue, (ii) suspend performance and demand performance; (iii) cancel contract, or (iv) wait for date of performance, and then sue
Retraction: promisor party can retract repudiation until/unless the other party acts in reliance, accepts repudiation, or has already filed an action for breach of contract.
What is minor breach?
When a party has substantially but not fully performed. Nonbreaching party is entitled to pursue remedies, but must still perform under the contract.
What are legal remedies to breach of contract?
Expectation Damages Consequential Damages Reliance Damages Incidental Damages Mitigating Damages
What are expectation damages
Damages directly resulting from the breach, intended to put the injured party in the same position as if the contract was performed. Must be foreseeable, and nonbreaching party must be able to prove with reasonable certainty.
If expectation damages would result in economic waste, courts may instead award damages equal to diminution in value UNLESS breach is willful.
What are consequential damages
Consequential damages are reasonably foreseeable damages other than expectation damages related to the breach.
Three elements must be met:
- Foreseeability: damages must be a natural and probable consequence of the breach, or contemplated by parties at the time the contract was formed
- Causation: plaintiff must show that the damages were caused by the defendant’s breach
- Certainty: Plaintiff must prove the dollar amount with reasonable certainty. If it is too speculative, a court will not award consequential damages.
What are reliance damages?
Damages that the nonbreaching party incurs in reasonable reliance upon the promise that the other party would perform.
MUST CHOOSE BETWEEN RELIANCE OR EXPECTATION DAMAGES
What are incidental damages?
Damages that arise when the nonbreaching party is trying to remedy the breach (e.g., in a commercial contract, the cost of finding a replacement seller of goods)
What is mitigating damages?
The nonbreaching party has a duty to avoid or mitigate its damages to the extent possible, by seeking replacements/substitutes for goods/services.
A failure to mitigate damages will reduce the damages recovered by the nonbreaching party.
What are equitable remedies to breach of contract?
Restitution
Quasi-Contract
Specific Performance
What is restitution in a contract context?
Unjust enrichment (not based on the contract)
- Nonbreaching party has partially performed, and other party breaches. NB party will seek restitution damages for benefit conferred. Cannot seek restitution if it has performed all of its duties and the only performance due is payment – in this case, they must seek expectation.
Damages based on value of benefit conferred.
Reasonable value of what it would cost the breaching party to obtain the benefit from another source - Breaching party - if they haven’t substantially performed, they’re in breach and cannot recover under the contract. They CAN recover restitution if the NB party has benefited, in which case they can recover for benefit conferred minus damages
What is quasi-contract?
Implied-in-law contracts occur in certain situations where there is no enforceable contract, or a contract does not exist at all, where a court will award restitution damages anyway on the basis of quasi-contract.
- The plaintiff must confer a benefit on the defendant
- Plaintiff acted without gratuitous intend (intended to be paid)
- Would be unfair to let defendant retain the benefit, because they had an opportunity to decline and did not do so, or the plaintiff had a reasonable excuse for not giving the defendant such an opportunity (e.g. paying for an ambulance called in an emergency).
What is specific performance?
The NB party can ask a court to order the breaching party to perform.
- Must be a valid contract
- Terms must be clear enough to allow this
- NB party has satisfied any conditions precedent (or they have been excused) so performance is now due
- Money damages are inadequate (usually means item(s) involved are unique, like land, pieces of art, antique cars)
- Court can enforce and supervise performance (will not grant SP if required to supervise for a long period of time, or difficult to enforce)
- Courts will not require service contracts to be required b/c forcing a person to work can rise to the level of indentured servitude under 13A
- No defenses exist: court will not grant specific performance if breaching party can assert defense of laches (waited an unreasonably long time, and the delay prejudiced the breaching party), or unclean hands (NB engaged in unethical or immoral acts relating to the contract)
What are buyers’ remedies under the UCC if the seller fails to tender the goods?
Damages – market price minus contract price. Can also recover incidental and consequential damages.
Cover – buyer may purchase similar goods elsewhere and recover replacement minus contract price
Specific performance for unique goods
Under the UCC, if either the tender or the goods are nonconforming, the buyer can accept or reject all or part of the goods.
When does a UCC seller have a right to cure?
- If the time for performance under the contract has not yet elapsed, or
- the seller had reasonable grounds to believe the buyer would accept despite nonconformity
What are the seller’s remedies for wrongful rejection under the UCC?
If a buyer wrongfully rejects a tender of goods, in addition to being entitled to incidental damages a seller can:
- collect damages (contract price minus market price, together with incidental damages, less any expenses saved as a result of buyer’s breach)
- resell goods
- recover the price only if seller is unable to sell goods at a reasonable price after a reasonable effort, or circumstances indicate such effort will not yield a sale.
When is a trust revocable or irrevocable?
Under the traditional rule, a trust is presumed irrevocable unless expressly stated otherwise.
Under UTC, and majority rule, a trust is presumed revocable unless expressly stated to be irrevocable.
What is a mandatory vs. discretionary trust?
A mandatory trust requires the trustee to distribute all trust income.
A discretionary trust grants the trustee the power to distribute income at his discretion. The trustee does not abuse that discretion unless he acts dishonestly, or in a way not contemplated by the trust creator.
What is the rule against perpetuities, and what do some jurisdictions do about it?
A trust may fail if all interests thereunder may not vest within the applicable period of perpetuities (usually a life in being plus 21 years). Some jurisdictions take a “wait and see” approach, refraining from invalidating future interests until it is clear they will not vest within the perpetuities period.
What are the requirements for a private express trust?
Intent – the settlor must intend (orally, in writing, or by conduct) to make a gift in trust
Trust property – A trust must contain some property (anything is fine)
Valid trust purpose – trust can be created for any purpose, as long as it is not (i) illegal, (ii) restricted by rule of law or statute, or (iii) contrary to public policy (e.g. restraining first marriage)
Ascertainable beneficiaries – must be identifiable, may refer to outside writings or acts
What are the exceptions to the trust requirement of identifiable beneficiaries?
Indefinite class: A trustee can select a beneficiary from an indefinite class (“My friends”) unless they must distribute equally to all members of the indefinite class (not valid)
Unborn children: Valid, even though beneficiaries are not yet ascertainable when trust is created
Class gifts: Trusts for reasonably definite class (“my brothers”, “my grandchildren’) are valid
Charitable trusts – must not have individual ascertainable beneficiaries
What is a pour-over provision?
A provision in a will that directs the distribution of property to a trust upon the happening of an event, so that the property passes according to the terms of the trust without the necessity of the will reciting the entire trust.
The trust can be executed without the Statute of Wills formalities, and later amendments will apply to the assets.
What is a charitable trust?
- Charitable purpose (benefiting the community at large, or a particular segment of the comunity)
- Indefinite beneficiaries
- Not subject to RAP, may continue indefinitely
What is cy pres for a charitable trust?
A court may modify a charitable trust to seek an alternative charitable purpose if the original one becomes illegal, impracticable, or impossible to perform.
Specific intent to help one charity? court may not modify trust, and instead will terminate trust and become a resulting trust (an implied trust that is held for the settlor or his/her heirs).
General intent? substitute similar charity.
Modern approach is to presume general intent, and apply cy pres.
What is a resulting trust?
When a trust fails in some way, or when there is an incomplete disposition of trust property, a court can create a resulting trust requiring the holder of the property to return it to the settlor or the settlor’s estate.
What are the beneficiary and creditor rights to distribution?
Income beneficiaries receive income from the trust
Remainder beneficiaries are entitled to the trust principal upon termination of the trust
Creditors may reach trust principal or income only when such amounts become payable to the beneficiary, or are subject to his demand
Is a beneficiary’s equitable interest in trust property freely alienable?
Yes, it can be sold or used as collateral for a loan unless a statute or trust instrument limits the right.
What is a support trust?
A support trust directs the trustee to pay income or principal as necessary to support the trust beneficiary. Creditors cannot reach the assets of a support trust, except to the extent that a provider of a necessity to the beneficiary can be paid directly by the trustee.
What are the creditor’s rights under mandatory or discretionary trusts?
Under a mandatory trust, the trustee has no discretion, and the trust governs when the property is to be distributed.
Under a discretionary trust, the trustee is given complete discretion, and if exercised, then the creditors have the same rights as the beneficiary, unless a spendthrift restriction exists. The beneficiary of a fully discretionary trust lacks standing to challenge the actions or inactions of the trustee unless there is a clear abuse of discretion.
What is a spendthrift trust?
A trust that expressly restricts the beneficiary’s power to voluntarily or involuntarily transfer his or her equitable interest (this is a spendthrift clause).
Creditors usually cannot reach the trust interest, unless money is owed for child/spousal support, for basic necessities, or tax lien holders.
When may a settler revoke or amend a trust?
A settlor can modify or amend a revocable trust. For irrevocable trusts, modification, amendment, and termination can occur only with the consent of all beneficiaries, and only if the proposed change will not interfere with a primary purpose of the trust.
When may a beneficiary revoke or amend a trust?
A trust terminates automatically when the purpose has been accomplished.
A trust may also terminate if the settlor is deceased/has no remaining interest, and all the beneficiaries (income and remainder) consent. However, a trustee can block a premature trust termination by the beneficiaries if the trust is shown to have an unfulfilled material purpose.
The most common example of a trust that has an unfulfilled material purpose is one in which the settlor provided for successive interests, in which case the present and future beneficiaries must agree in order for the trust to be terminated prematurely.
When may a trustee modify or terminate a trust?
A trustee may not terminate a trust unless the trust contains express termination provisions.
A court can remove a trustee if the purpose of the trust would be frustrated by the trustee’s continuance in office, or if the trustee violated a duty.
What is disclaimer of an interest?
Beneficiaries of trusts may disclaim their interest in trust property if it is reduced to writing within nine months after the future interest would become “indefeasibly vested”. The trust principal becomes immediately distributable (accelerates) to the remainder beneficiaries of the trust, if the remainder is vested. If the remainder is contingent upon a condition, it will not accelerate.
When the holder of a future interest effectively disclaims that interest, the disclaimant is deemed to have predeceased the life tenant.
What is lapse of a gift?
In most states anti-lapse statutes do not apply to nonprobate gifts, and if a gift to “issue” fails by reason of the non-survival of the issue, children and further descendants will not take under the trust.
UPC § 2-707 create a substitute gift in the descendants of the deceased issue. If such a statute governs, even words of survivorship (“to those of my issue who are living”) will not cut off this substitute gift.
What are a trustee’s powers?
Powers granted expressly in the trust
Powers necessary to act as a reasonably prudent person in managing the trust, including implied power to contract, sell, lease, or transfer the trust property
What is a trustee’s duty of loyalty?
A trustee must (i) administer the trust in good faith (subjective standard); (ii) act reasonably (objective standard) when investing property and otherwise managing the trust; (iii) solely in the best interests of the beneficiaries.
What is the ramification of a trustee involved in self-dealing?
Self-dealing creates an irrebuttable presumption that the trustee breached their duty of loyalty; no further inquiry into reasonableness or good faith is required because self-dealing is a per se breach.
Even when the self-dealing is authorized (by settlor, court order, or all beneficiaries), the transaction must still be reasonable and fair to avoid liability for breach.
Beneficiaries can set aside the transaction, or ratify the transaction and recover the profits from the transaction.
Describe a conflict of interest for a trustee.
When a trustee invests trust assets in a corporation in which the trustee has an interest, a conflict of interest occurs.
There is a presumption of a breach of the duty of loyalty, which can be rebutted by showing that the terms of the transaction were fair, or that the transaction would have been made by an independent party.
What is a trustee’s duty of prudence?
Duty to act as a reasonably prudent person, and treat the property as if it were his/her own. Duty to follow trust directions and carry them out in accordance with the trust.
What is the Prudent Investor Rule for a trustee?
Trustee must act as a prudent investor would (putting less emphasis on risk level); trustee must exercise reasonable care, caution and skill when investing and managing trust assets.
What is the duty to diversify for a trustee?
A trustee must adequately diversify the investments in order to spread the risk of loss under a total performance portfolio approach, but not if administrative costs would outweigh the benefits.
What is the duty to make property productive for a trustee?
Duty to pursue all possible claims, and derive the maximum amount of income from investments, to sell assets when appropriate, secure insurance, pay expenses, and act within a reasonable period of time in all matters.
What is the duty to be impartial for a trustee?
Balance interests of present beneficiaries (must not favor one of the present beneficiaries over the others, unless the trust provides for it).
Must also balance the interests of the present and future beneficiaries by investing property so that it produces a reasonable income for the income beneficiaries while preserving the principal for the remainder beneficiaries.
What are the duty to disclose and the duty to account for a trustee?
Disclose complete and accurate information about nature and extent of the trust property, including allowing access to trust records and accounts.
Periodically account for actions taken on behalf of the trust, so that trustee’s performance can be assessed against the terms of the trust.
What remedies are available for a breach of trustee’s duty?
Lost profits, interests, and other losses resulting from a breach of trust are the trustee’s responsibility; beneficiaries may sue the trustee and seek damages or removal of the trustee for breach of duties.
What is common-law marriage?
Although not recognized by most states, common-law marriage exists when the following four elements are met.
- Capacity: mental and legal
- Present agreement (both parties intend to be married)
- Cohabitation
- Holding out a marital relationship to the community
A marriage valid in one state will be valid in another unless it violates a strong public policy of the other state.
What is a no-fault divorce?
A unilateral no-fault divorce requires neither fault nor consent of the other spouse
The marriage must be irretrievably broken with no prospect of reconciliation (“irreconcilable differences”).
No attempt at reconciliation is required
What is the separation requirement for divorce?
Some states require a minimum period of separation before a divorce will be granted.
The separation does not have to be agreed to by both spouses.
A spouse can unilaterally move out and start the separation period.
What is mediation in a divorce context?
Mediation is sometimes used to facilitate the separation and divorce process
Mediator must follow a code of conduct, and meet the duties of:
•being impartial, disclosing any conflicts of interest
• clearly explaining and controlling the mediation process, ensuring that the parties have the information to make an informed decision
•not coerce or improperly influence a party to make a decision
Mediator misconduct may be grounds for not enforcing a separation agreement or a property settlement.
What is community property in the context of division of property at divorce?
Community property is only used in nine states, and it generally requires an equal division of the marital property.
What is the majority rule for division of property at divorce?
Equitable distribution, which requires an equitable, or fair distribution (not necessarily an equal 50/50 division), and takes into consideration all of the circumstances between the parties.
What is marital property vs. separate property?
Marital property is divided between spouses, but separate property generally remains the property of the owning spouse.
SP includes assets acquired during marriage by gift, descent, or devise. SP also includes anything acquired before marriage.
MP is all property/assets acquired during marriage by any means other than gift, descent, devise (e.g. wages earned byspouses)
SP can be transformed into MP if marital funds or efforts by owner-spouse enhance its value or build equity during marriage.
What are some specific types of marital property?
Future retirement/pension benefits earned by working during the marriage
Reimbursement for professional licenses or degrees
Personal injury claim proceeds have two approaches:
- if the cause accrues during marriage, even if the spouses are separated, all proceeds are MP
- Damages are divided between MP and SP by type
- Compensatory damages are SP of injured spouse
- Consortium loss damages are SP of non-injured spouse
- Lost wages, lost earning capacity and medical expenses are MP
How is a property division award modified?
Not modifiable after the fact because it is based on the assets at the time of the divorce. Changes in circumstances after divorce do not affect the award.
What factors are considered when determining spousal support awards?
- Financial resources of both parties
- Standard of living during marriage
- Time it will take for receiving spouse to find employment
- Length of marriage
- Contributions to marriage
- Age and health of both parties
- Marital misconduct (only in some states)
What are the four types of spousal support?
- Permanent alimony, for the remainder of the dependent spouse’s life (only appropriate after long marriages)
- Limited-duration alimony, awarded when marriage is of short duration
- Rehabilitative support, limited period of time (such as until the spouse receives education or employment)
- Reimbursement alimony, compensation for financial sacrifices made during the marriage which resulted in a reduced standard of living to secure an enhanced standard of living in the future.
How is spousal support modified?
Unlike property division, spousal support can be modified
The party seeking modification of spousal support has the burden of establishing a SIGNIFICANT CHANGE IN CIRCUMSTANCES that warrants the modification.
Voluntary reduction in income does not reduce support payments
A court may consider new obligations that arise for the spouse paying support (e.g. remarrying with new children)
In most jurisdictions, if the receiving spouse remarries, the spousal support may be terminated.
What is an ex parte divorce?
A court must have subject-matter and personal jurisdiction, but a state court may grant a divorce to one spouse, even if it does not have personal jurisdiction over the other spouse.
However, if there is no personal jurisdiction over the absent spouse, the state does not have jurisdiction to address property division, spousal support, or child support.
What is child support?
Both parents are legally required to support their minor children, and cannot bargain away child-support payments or agree to any release or compromise that would negatively affect the child’s welfare.
When does a state have personal jurisdiction over an out-of-state parent in an action to establish or enforce child support, or establish paternity?
If the out-of-state parent:
- is personally served within the state, or consents to jurisdiction
- resided with the child in the state in the past
- engaged in sexual intercourse in the state, and the child may have been conceived by that act of intercourse
What are the factors for determining child support amounts?
Primarily the income received by the obligor (paying) parent
Other factors may include:
- best interests of child
- age
- special needs
- assets of both parties
- standard of living during marriage
When are child-support payments modifiable?
When there is a SUBSTANTIAL CHANGE IN CIRCUMSTANCES regarding the child’s needs or the parents’ financial situation.
The party seeking modification bears the burden of showing the change
Circumstances may include a parents’ change in occupation, remarriage, or an increase or involuntary decrease in income by either parent.
- A court will only modify child support amounts prospectively
- A court will not reduce the amount of child support retroactively.
When is child support terminated?
Usually when the child reaches the age of majority (typically 18)
Support can sometimes be ordered beyond the age of majority when the child is in college
Reasonable parental demands: an employable child’s right to support is contingent on compliance with reasonable parental demands; an employable child who fails to comply, even if attending college, risks loss of parental support.
When do courts have jurisdiction to modify existing child support obligations?
The state that issued the initial child support order has continuing exclusive jurisdiction to modify it, except:
•if both parents and the child no longer reside in the state, or
•the parties expressly agree to permit another state to exercise jurisdiction
When can a court enforce a child support obligation?
The receiving parent may register a child support order form one state in another non-issuing state
The non-issuing state can then enforce the support order.
What are the three types of child custody?
Legal custody: the right of a parent to make major decisions regarding the child
Physical custody: the right to have the child reside with a parent or guardian, and the obligation to provide for routine daily care and control
Joint custody: requires that both parents are willing and able to cooperate with respect to the wellbeing of the child, typically neither parent has a superior right to make major decisions.
When does a court have initial custody determination (home-state jurisdiction)?
A court has SMJ to preside over custody hearings and either enter or modify custody or visitation orders if the state is:
•the child’s home state, and has been the home state for a period of at least six months, or since birth if the child is under six months old
•Was the child’s home state in the past six months, and the child is absent from the state but one of the parents still lives there
What is significant-connection jurisdiction for custody purposes?
If no other state has or accepts home-state jurisdiction, then a court can enter or modify a custody order if:
- the child and at least one parent have a significant connection with the state
- there is substantial evidence in the state concerning the child’s care, protection, training, and personal relationships
What is custodial exclusive-continuing jurisdiction?
A court making the initial ruling in a custody case has exclusive jurisdiction over the matter until the court determines that:
•both parties no longer reside in the state, or
•the child no longer has a significant connection to the state, and any substantial evidence connected to the child’s condition is no longer available in the state.
What is the standard for determining child custody?
The best interest of the child.
Courts will consider an older child’s wishes if the child has sufficient maturity, and will look at the reasoning behind the preference.
Courts will generally not use race or religion in determining custody.
Legal parents are presumptively entitled to custody of their children in cases against third parties, including grandparents or stepparents.
If a custody statute does not have language providing for “special weight to the parent’s determination of her child’s best interest”, is it constitutional?
No, it is not constitutional unless language to that effect is present.
Where is the parental right to have contact with their children located?
It is in the constitution. The noncustodial parent is allowed reasonable visitation with a minor child.
Unwed biological fathers have substantive due process rights to have contact with their children, but only when the father demonstrates a commitment to the responsibilities of parenthood (e.g., participation in child rearing, or providing financial support).
How is a custody order modified?
The burden is on the parent seeking modification to establish modification is warranted. Most jurisdictions require a SUBSTANTIAL CHANGE IN CIRCUMSTANCES.
Relocation:
In most jurisdictions, the custodial parent seeking relocation bears the burden of demonstrating that relocation is for a legitimate and reasonable purpose, as opposed to restricting the noncustodial parent’s visitation.
Relocation considerations include:
• the best interests of the child
• the relationship of the non-relocating parent with the child
•age and needs of the child
•the child’s preference
•the quality of life of relocating parent and child
What is a premarital agreement?
A prenup is a contract made before the marriage, typically containing terms that relate to division of property or spousal support in the case of a divorce and at death.
Clauses relating to child custody and support are unenforceable.
When is a prenup enforceable?
If there has been
(1) full disclosure (financial status, income, assets & debts of all parties),
(2) the agreement is fair and reasonable (misconduct by a mediator, fairness of terms, mostly evaluated at time of contract execution but a minority evaluates at time of enforcement), and
(3) it is voluntary (consider factors such as time-pressure or the opportunity to be represented)
Additionally, the agreement must be (4) in writing, and (5) signed by the party to be charged.
To make an agreement unenforceable, a party must show at least one of the following:
- Involuntariness (fraud, duress, coercion), or
- Unfairness or unreasonableness together with lack of reasonable knowledge or disclosure.
What is a separation agreement?
Separation agreements are made between spouses who are planning for divorce to define property division, spousal support, child support, custody and visitation.
Can be invalidated in part or in whole if a party can show unconscionability or fraud.
What is a property-settlement agreement?
An agreement to settle the economic issues of the marital estate, entered into by the parties before a divorce decree is issued.
May be invalidated in part or in whole if a party can show unconscionability or fraud.
What is adoption?
A statutory legal action in which the previous parent-child relationship is terminated and a new parent-child relationship is established.
What family rights do unwed fathers have?
They have protections under 14A Due Process Clause if they have shown commitment to being a parent, including the right to object to the termination of parental rights by an adoption.
Some states maintain a putative father’s registry that allows unwed fathers to register themselves as the father of a child. If registered, the father will receive notice and a hearing before rights are terminated.
What are the legal effects of adoption?
Adoptive parents have all of the rights and responsibilities that biological parents would have had.
An adopted child has all the rights and responsibilities that a biological child would have had.
What are the limits on parental authority?
A parent has a right to make decisions about how to raise a child, including religion, but courts may intervene in the best interest of the child.
If medical treatment contradicts a parent’s religious beliefs, courts can intervene to protect a child when necessary medical care is needed to prevent serious harm to the child’s health.
What is a pre-incorporation promoter?
Someone who enters into contracts securing capital to bring the corporation into existence
Personally liable for a contract, even after the corporation comes into existence UNLESS:
- Novation – the corporation & third party agree to substitute the corporation for the promoter
- Adoption – the corporation takes the benefits of the contract
How is a corporation incorporated?
Must file articles of incorporation with the state
What is an Ultra Vires Act?
A corporation lists a purpose in its articles of incorporation, if it lists a narrow purpose and then acts outside of that scope, a shareholder can file suit to enjoin the action, or take action against the officer, director or employee who engaged in the act.
What is a de jure corporation, de facto corporation, or corporation by estoppel?
De Jure: exists when statutory requirements are met
De Facto: exists when a good faith attempt to incorporate is unsuccessful but they ran the business believing it to be incorporated
Corporation by Estoppel: a third-party entered into a contract with the corporation as though it was properly incorporated; the third party is estopped from asserting that the corporation was not formed appropriately.
How can stock be issued?
Issuance must be authorized by the board of directors
What is par value stock?
The corporation assigns a minimum value to its stock, and if the stock is sold for less than that the board is liable
What happens at an annual shareholders meeting?
The primary purpose of this required meeting is to elect directors.
Does each shareholder have the right to inspect corporate records?
Yes, but:
- Restricted to normal business hours
- Requires five days’ notice
- Must state a proper purpose
What is a shareholder’s right to vote?
Shareholders have a right to select the board of directors, and to approve of fundamental corporate changes (e.g., merger, sale of corporation).
Shareholders may also engage in proxy voting, wherein a written agreement allows a person to vote on behalf of the shareholder. This agreement is revocable unless otherwise stated (irrevocable proxy is allowed).
Can a shareholder amend corporate bylaws?
Yes, shareholders can amend or repeal bylaws, pass new bylaws, and limit the board of directors’ ability to change the bylaws.
Can shareholders enter into an agreement to vote their shares together?
Yes
What is the difference between a shareholder direct action vs. derivative action?
Direct: suing the corporation for the shareholder’s own benefit (i.e. to remedy a wrong personal to the shareholder). This usually arises when the shareholder is denied voting rights, the board failed to declare a dividend, or the board failed to approve or deny a merger.
Derivative: suing on behalf of the corporation, usually against a director or officer. Any recovery goes to the corporation.
Any person who is a shareholder at the time of the bad act or omission has standing, and the shareholder is required to first demand action by the board, giving them 90 days to act, unless the demand would be futile.
When are shareholders personally liable for corporate acts?
The court may “pierce the corporate veil” and hold shareholders personally liable based on a totality of circumstances approach, looking at the following factors:
• Undercapitalization of the corporation at the time of formation
•Disregard of corporate formalities (annual meetings, votes)
• Use of corporate assets as shareholder’s own assets
• Self-dealing with corporation
• Siphoning corporate funds or stripping assets
What are a shareholders’ fiduciary duties?
“Controlling” shareholders have a duty to not abuse their power to disadvantage minority shareholders.
A controlling shareholder is someone who owns more than 50% of a corporation, or otherwise controls voting power.
What are the responsibilities of the board of directors?
Manage and direct the corporation’s business and affairs.
How are directors appointed and removed?
Selected by shareholders at the annual shareholder’s meeting, may be removed by shareholders for breach of fiduciary duty (common law) or without cause (modern trend)
What are the rules on director voting?
Must have a quorum of directors present to hold a vote (generally a majority), and “presence” can include a phone call so long as the director can hear and participate.
What is the procedure for scheduling a special meeting of the board of directors?
Requires notice at least 2 days before meeting
Notice must include date, time, and place (not subject)
A director who did not receive proper notice can object, but if they attend and fail to immediately object to lack of notice, objection is waived.
What are a director’s fiduciary duties?
Duty of care: PI
- must act as ordinarily prudent person
- duty to investigate and ask questions
- can rely on reports and outside experts
Duty of loyalty:
- must act in the best interest of the corporation
- violated if the director engages in self-dealing or usurping a corporate opportunity
What is the business judgment rule?
A rebuttable presumption that a director reasonably believed his actions were in the best interest of the corporation. To overcome this presumption, one of the following must be shown:
- Director did not act in good faith
- Director was not informed to the extent reasonably necessary
- Director did not show objectivity, and had material interest in the decision
- Director failed to timely investigate after being alerted to a significant matter
- Any other failure to act as a reasonable director
What is self-dealing in the context of a corporate director?
Engaging in a transaction with the corporation that benefits the director or a close family member; including transactions with another business entity that the director is associated with.
Safe harbor rules: transaction can be protected if:
- the director discloses all material facts to the board, and receives approval by a majority of disinterested board members
- the director discloses all material facts to shareholders and receives approval by a majority of disinterested shareholders
- the transaction is fair to the corporation substantively and procedurally.
The transaction can be enjoined or rescinded, and the corporation can seek damages from the interested director.
How can a director usurp a corporate opportunity, and how can they avoid doing so?
Usurping a corporate opportunity means taking an opportunity that the corporation might be interested in without first offering it to the corporation.
If the corporation declines, the director may take it without violating their duty of loyalty
What are corporate officers?
Elected by the board of directors to run day-to-day operations
President, Secretary, Treasurer, …
Act as agents of the corporation, and can act with actual express authority, actual implied authority, or apparent authority.
What are the steps involved in dissolution of a corporation?
A corporation may voluntarily terminate its status, at which point it starts winding up, and the corporation exists for the limited purpose of winding up its affairs and liquidating its business.
Order of distribution:
- Creditors of the corporation
- Shareholders of stock with preferences in liquidation
- Other remaining shareholders of stock
What is an LLC?
Limited Liability Company, which has the tax advantages of a partnership and the limited liability of a corporation.
It requires filing articles of organization, and members can be individuals or organizations.
It can be member-managed or manager-managed, and members of a member-managed LLC have authority to bind the LLC.
What is an LLC’s liability?
Members are generally not liable for LLC obligations but if the veil is pierced, they can be.
What are the duties of an LLC?
Members owe fiduciary duties to each other and to the LLC.
Duty of loyalty:
- Must account to LLC for any profit or benefit
- Must refrain from dealing with the LLC on behalf of an adverse interest
- Must refrain from competing with LLC
Duty of care:
- Must act reasonably
- Actions subject to business judgment rule
What actions may a member bring against an LLC?
Direct action: suit to enforce the member’s rights
Derivative action: suit on behalf of the LLC against other members (or even against themselves)
When can a member of an LLC withdraw?
At any time, and for any reason, though they must provide notice (not necessarily written)
What is the process for dissolving an LLC?
Dissolution can occur if all members agree, if there are not enough members remaining, or any other reason stated in the operating agreement.
A member can also ask for a court order to dissolve the LLC involuntarily. Must show that a controlling member has acted oppressively and harmed the member seeking dissolution.
Winding up: must pay off debts to creditors before distributing assets to members.
When does a principal have contractual liability for action an agent took?
If the agent acted with authority, the principal has liability.
What forms of authority can exist for an agent?
- Express actual authority: principal directly tells agent he has authority to perform certain actions (“do X”)
- Implied actual authority: based on reasonable understanding of principal’s instructions (“do whatever you need to in order to do X”)
- Apparent Authority: Based on principal’s manifestations to a third party. If the third party reasonably believes the agent has authority to act (based on principal’s conduct), then agent has power to bind the principal.
NOTE: If principal is undisclosed, there cannot be apparent authority.
What is estoppel in an agency context?
The principal is prevented from denying liability if he failed to take reasonable steps, and use ordinary care to inform a third party about a lack of authority.
How can a principal terminate authority?
Actual authority: principal can simply tell the agent that authority is revoked.
Apparent authority: principal must tell third party that authority is revoked.
What is ratification in an agency context?
A principal can ratify (affirm) an act performed by an agent, even if the agent did not have authority to act.
Ratification requires:
•the principal ratify the entire contract
• the principal and third party have legal capacity to contract
•the ratification occurs before the third party withdraws from the contract
•the principal knows the material facts of the transaction
How is a partnership formed?
Formation requires an association of two or more persons to carry on a for-profit business as co-owners.
It requires sharing of profits.
No intent requirement, and no formal agreement or writing is required.
What are the fiduciary duties of a partner?
A partner owes the partnership and other partners fiduciary duties of loyalty and care.
Loyalty:
- Must not compete with the partnership
- Must not advance an interest adverse to the partnership
- Must not usurp a partnership opportunity
Care:
- Required to act as reasonable partner
- Cannot engage in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law
Obligation of good faith and fair dealing
How are profits and losses split in a partnership?
Absent a partnership agreement, each partner will share profits and losses equally.
How can a partner’s financial interest be transferred?
Partners can transfer the right to receive distributions from the partnership to a third party
Partner is still a partner with remaining rights and obligations
Third party does not become a partner, but can seek judicial dissolution of the partnership
A creditor of a partner can enforce a judgment against the partner’s financial interest
How must property acquired by the partnership be used?
It must be used for the benefit of the partnership
What are management rights in a partnership?
Each partner has equal rights in the management and conduct of the partnership.
A majority of the partners can make a decision as to ordinary business matters.
All partners must consent to a matter outside the course of ordinary business.
What must a partnership provide its partners?
Access to records during business hours.
What is a partner’s contractual liability to the partnership?
A partner is an agent of the partnership.
- Express actual authority can come from the agreement, or authorization by partners
- Implied actual authority is based on a partner’s reasonable belief that an action is necessary to carry out his express authority
- Apparent authority exists when the partner acts in the ordinary course of partnership business and the third party reasonably believes the partner has authority to act.
What is a partnership’s tort liability for partner actions?
A partnership is liable for a partner’s tortious acts, including fraud, committed in the ordinary course of partnership business, or with partnership authority.
May a partner’s liability be imputed to the partnership?
A judgment creditor of an individual partner may not attach and execute upon partnership real estate.
What liability to third parties exists for a partnership?
A partnership is subject as a separate entity to a lawsuit for its obligations
Partners are also jointly and severally liable for all partnership obligations
Partnership creditor must exhaust the partnership’s assets before taking the partner’s individual assets
How can a partner withdraw from a partnership?
Any partner can choose to dissociate from the partnership by giving notice
Partnership may dissolve when the partner dissociates, but partner dissociation does not necessarily cause dissolution.
What does winding up look like for a partnership?
A partnership that is dissovled only continues to exist to “wind up” its business.
- Creditors have priority over partners to the partnership’s assets
- Partnership assets are first applied to pay off obligations to creditors (including partners who made loans to the partnership) before being distributed to the partners.
What is an LLP?
A limited liability partnership eliminates the partners’ personal liability for partnership obligations. Individual partners remain liable for their own torts.
Requires filing a statement of qualification with the state
Failure to form an LLP will typically result in a general partnership.
What is a limited partner?
Limited partners are agents of the LLP but are not personally liable for LLP obligations.
How does a partnership transition from GP to LLP?
If a general partnership incurs liability and then becomes an LLP, the LLP is liable for those obligations.
If an individual partner in a general partnership is liable, and then an LLP is formed, the partner is still liable for that obligation.
A new partner admitted to the LLP is not liable for pre-transition obligations.
What is an LP?
A Limited Partnership is formed by 2 or more people: at least one general partner, and one limited partner whose liability is limited to the amount contributed to the LP.
Must file certificate with the state.
Limited partners have a right to inspect and copy records upon reasonable demand.
Limited partners are not liable for partnership obligations, but can be liable if they participate in control of the partnership.
Removing a general partner does not amount to “control” of the partnership
Only liable to third parties who reasonably believe the limited partner is a general partner.
What is an accomplice, and what is their liability?
An accomplice is someone who aids or abets the principal prior to or during the crime. They must intend to help the principal commit the crime, and intend that the principal commit the crime. Mere knowledge that another person intends to commit a crime is not enough.
An accomplice is liable for any crimes that are the natural and probable consequence of the accomplice’s conduct.
How can an accomplice withdraw?
To legally withdraw (and avoid liability for the substantive crime), the accomplice must:
- Repudiate prior aid;
- Do all that is possible to countermand prior assistance;
- Do so before the chain of events is in motion and unstoppable.
What is an accessory after the fact?
A person who aids a felon to avoid apprehension after the felony is committed. To be guilty, the person must know the felony was committed.
What is the criminal insanity defense?
a. M’Naghten Rule: Not guilty if, because of mental disease or defect, the defendant did not know either (i) the nature and quality of the act, OR (ii) the wrongfulness of the act.
b. Irresistible Impulse Test: Not guilty if mental disease or defect prevented him from being able to conform his conduct to the law
c. Durham Rule: Not guilty if the crime would not have been committed but for the mental disease or defect
d. MPC Test: Not guilty if a mental disease or defect either prevents the defendant from knowing the wrongfulness of the conduct, or prevents the defendant from being able to conform his conduct to the law.
What is voluntary intoxication, and how does it affect liability?
Involves the voluntary ingestion of an intoxicating substance.
It is a defense to specific intent crimes, if the intoxication prevents the formation of the required intent.
Voluntary intoxication is not a defense to crimes involving malice, recklessness, or negligence, or for strict-liability crimes.
What is involuntary intoxication?
Unknowingly or forced to ingest an intoxicating substance. Defense to both general and specific crimes, as well as malice crimes when the intoxication serves to negate an element of the crime.
What is common-law murder?
The unlawful killing of a human being committed with malice aforethought. This includes the following mental states:
- Intent to kill
- Intent to inflict serious bodily injury
- Reckless indifference to an unjustifiably high risk to human life (depraved heart)
- Intent to commit certain felonies (felony murder)
What is the felony murder rule?
A defendant can be found guilty for the unintended but foreseeable killing that is proximately caused by or during the commission or attempted commission of an inherently dangerous felony. BARRK: burglary, arson, robbery, rape and kidnapping are considered inherently dangerous felonies.
What are exceptions and defenses to the felony murder rule?
Defenses:
- If the death was unforeseeable, FMR does not apply
- If the felony is complete and the defendant has reached a place of safety, FMR does not apply.
Death of bystander (Majority Rule):
- Defendant not liable for the death of a bystander caused by a police officer or as a result of resistance by the victim of the felony, because neither person is the felon’s agent.
Death of a co-felon:
- Defendant will not be held liable for the death of a co-felon if a victim or police officer kills the co-felon.
What is first-degree murder?
ONLY APPLICABLE IF JURISDICTION ISSUED STATUTE
Premeditated: defendant had enough time to plan and reflect on the idea of the killing. Amount of time needed may be brief, a mere second of reflection is sufficient.
Deliberate: Defendant made the decision to kill in a cool and dispassionate manner
What is second-degree murder?
Second-degree murder is the statutory version of common law murder.
Homicide committed with the necessary malicious intent:
- Intent to kill
- Intent to do great bodily injury, or
- Depraved-heart murder
What is voluntary manslaughter?
Murder committed in response to adequate provocation.
- Objective element: reasonable person would have been provoked by the victim’s actions.
Words are generally not enough provocation, sufficient provocations include discovery of adultery or serious battery
- Subjective element: defendant must have actually been provoked.
Time to cool off:
- Objective: there must not have been sufficient time for an ordinary (reasonable) person to cool off
- Subjective: The defendant also must not have actually cooled off.
What is involuntary manslaughter?
Unintentional homicide committed with criminal negligence or during an unlawful act.
Criminal negligence:
- Grossly negligent action (or inaction when there is a duty to act) that puts another person at significant risk of serious bodily injury or death
- MPC: In addition to grossly negligent action, defendant must have also been actually aware of the risk his conduct posed.
Unlawful Act:
- Defendant commits an unlawful act that does not rise to felony murder and a death occurs as a result.
What is criminal battery?
The intentional unlawful application of force to another person that causes bodily harm to that person, or constitutes an offensive touching.
What is criminal assault?
An attempt to commit a battery, or intentionally placing another in apprehension of imminent bodily harm.
What is kidnapping?
The unlawful confinement of a person against that person’s will coupled with either movement or concealment of that person.
What is False Imprisonment?
The unlawful confinement of a person without consent.
What is rape?
Unlawful sexual intercourse with a person against his/her will by force or threat of immediate force.
What is larceny?
Trespassory taking and carrying away of the personal property of another, without consent, with the specific intent to permanently deprive the owner of the property at the time of the taking.
- Taking and carrying away can be met by the slightest movement
- Intent to permanently deprive must be present at the time of the taking
What is embezzlement?
The fraudulent conversion of the property of another by a person who is in lawful possession of the property.
What is false pretenses?
Occurs when the defendant obtains title to the property of another person through reliance of that person on a false representation of material fact made by the defendant with the intent to defraud.
•False representation: The representation must be false and must be of a material past or present fact
An opinion, sales talk, or puffing, a prediction, or a false promise is not sufficient.
•Reliance: The victim must rely upon the false representation, and that reliance must cause the victim to pass title to the defendant.
•Intent to defraud: The defendant must know that the representation is false, and specifically intend to defraud.
What is robbery?
A larceny by force or intimidation when the taking of property is from the victim or in his presence.
What is burglary?
Burglary is the breaking and entering of the dwelling of another at nighttime with the specific intent to commit a felony therein.
- Breaking: the slightest push counts
- Entering: merely crossing a threshold suffices
- Specific intent to commit a felony: at the time of the breaking and entering, the defendant must have the intent to commit a felony (e.g., larceny, robbery, rape, murder) inside the dwelling.
- A defendant who fails to commit the underlying felony may nevertheless be guilty of burglary and attempt to commit the underlying felony.
What is conspiracy, in a criminal law context?
An agreement between two or more people to accomplish an unlawful purpose;
With specific intent to agree and commit the criminal objective; and
An overt act in furtherance of the conspiracy.
NOTE: A defendant can be convicted of conspiracy to commit a crime and the underlying crime itself (as well as any other crimes committed in furtherance of the conspiracy). There is no merger doctrine with regard to conspiracy.
What is the liability for co-conspirator crimes?
A conspirator is liable for the conspiracy and all the crimes of a co-conspirator committed in furtherance of the conspiracy.
How does one withdraw from conspiracy?
After there has been an agreement but before an overt act has been committed, a person may avoid criminal liability for conspiracy.
What is attempt in a criminal context?
Attempt requires a substantial step toward the commission of a crime, coupled with the specific intent to commit the crime. Mere preparation is not enough, and if a person succeeds in committing the crime he will not be liable for the attempt and the crime itself (the doctrine of merger applies).
How does one abandon an attempted crime?
CL: Once defendant has taken a substantial step toward the commission of the offense, the defendant may not legally abandon the attempt to commit the crime. Some states do recognize voluntary abandonment as a defense to attempt, though abandonment is not voluntary if it is motivated by a desire to avoid detection.
What are two affirmative defenses to criminal charges?
Self-defense: reasonable force to protect oneself at reasonable time; deadly force can only be used to protect against deadly force.
- Unreasonable use of force can be used as imperfect self-defense. Too much force for the circumstances may mitigate a murder charge down to voluntary manslaughter.
Duress: Third party unlawful threat causing a defendant to reasonably believe that the only way to avoid death or serious bodily injury to himself or another is to violate the law, and that causes the defendant to do so.
- Under majority rule, duress is not a defense to intentional homicide but it is available for criminally negligent homicide.
What is the concept of domicile in a conflict of laws context?
If a person is domiciled in a particular state, then the person will be subject to personal jurisdiction in that state’s courts, whether or not the person can be found and personally served process. Domicile is a question of fact.
How is domicile of individuals determined?
Domicile will be where the person is present with the intent to remain for an unlimited time. Courts look to physical presence, and intent (absence of intent to go elsewhere qualifies)
Presence under compulsion, such as prison, will not establish domicile by choice.
How is domicile of corporations determined?
A corporation’s domicile is always the state where it is incorporated.
What is choice of law?
When a cause of action involves contacts with more than one state, the forum court must determine which state’s law is to be applied to decide the issues in the case.
What are the constitutional limitations governing choice of law?
Due Process:
- A forum state may apply its own law to a particular case only if it has a significant contact or significant aggregation of contacts with the state such that a choice of its law is NEITHER ARBITRARY NOR FUNDAMENTALLY UNFAIR
Full Faith and Credit:
- A forum state must apply the law of another state when the forum state has no contacts with or interest in the controversy, but it does not prevent the forum state from applying its own law when the forum HAS such contacts or interest in the controversy. However, it does not require a state to apply another state’s law in violation of its own legitimate public policy.
When is a contractual choice-of-law provision valid?
- Valid agreement with an effective choice-of-law clause
- Applicable to the lawsuit under the terms of the contract
- REASONABLY RELATED TO THE LAWSUIT (the law to be applied is from a state with connections to the parties or contract)
- Not in violation of the public policy of the forum state or another interested state
What are the three approaches to choice of law?
- Vested-Rights (First Restatement)
- Most-significant relationship (Second Restatement)
- Governmental interest
What is the vested-rights approach in choice of law?
This approach looks to the jurisdiction where the parties’ rights are vested, meaning where the act or relationship that gives rise to the cause of action occurred or was created. Generally this approach looks for the location where the LAST LIABLE EVENT TOOK PLACE.
If the issue is procedural, the the forum court will apply its own procedural rules.
If the issue is substantive, the court must identify the substantive area of law involved.
The forum court will then determine what the forum state’s choice-of-law rules require with regard to the characterized issue. For example, if the issue is characterized as a substantive tort issue, then the law of the forum state may require that the law of the place of the injury apply.
What is the most-significant relationship approach to conflict of interest?
Applies the law of the STATE WITH THE MOST SIGNIFICANT RELATIONSHIP TO THE ISSUE IN QUESTION.
Forum court generally considers the contacts that link each jurisdiction to the case, as well as the seven policy principles set forth in the Second Restatement.
What is the governmental-interest approach to conflict of laws?
Presumed that the forum state will apply its own law, but the parties may request that another state’s law be applied. If so, that party must identify the policies of competing laws.
If there is a false conflict (the forum has no interest in litigation), the court applies the law of the state that does have an interest. If there is a true conflict, the forum state will review its own policies to determine which law should apply. If the conflict cannot be resolved, the forum state law is applied.
What is the conflict of laws rule in federal diversity cases?
The federal district court is generally required to apply the conflict-of-laws rules of the state in which it sits.
However, if a diversity case was transferred under federal venue law from a federal court in one state to another federal court in a different state, the first state’s choice-of-law rules will be applied.
What is the conflict of laws rule for torts?
Vested-Rights: governed by the law of the place where the wrong was committed – where the last event necessary to make the actor liable for the tort took place (where the person or thing that is injured is situated)
Most-significant-relationship: Four important contacts weighed (i) place of injury, (ii) place where conduct causing injury occurred, (iii) domicile, residence, place of incorporation, or place of business of parties, (iv) place where relationship is centered
Governmental-interest: Forum state looks to its own law so long as the state has a legitimate interest in applying its own law
What is the conflict of laws approach for torts?
- Express choice of law: If this exists in the contract, it will govern unless (i) it is contrary to public policy, (ii) there is no reasonable basis for the parties’ choice, or (iii) there was fraud/mistake and true consent was not given
- Vested rights: certain contractual issues are deemed to vest in the location where the contract was executed, while others are deemed to vest in the location where the contract was to be performed.
Where the contract was executed: (i) validity of contract, (ii) defenses to formation of contract, (iii) interpretation of contract
Where the contract was to be performed: (i) details of performance such as time, manner of performance; (ii) person who is obligated to perform and the person to whom performance is to be made; (iii) sufficiency of performance; and (iv) excuses for nonperformance. - Most-significant-relationship: consider (i) location of contracting, negotiation, and performance; (ii) place where contract’s subject matter is located; (iii) location of the parties’ domiciles
- Default rules: land contracts controlled by law of the state of situs; personalty (personal property) contracts controlled by the law of the state where the place of delivery is located
What is the conflict of laws approach to issues involving tangible personal property?
UCC governs most of these issues, and parties may stipulate governing applicable law. For secured transactions, law governing perfection, nonperfection, and priority of security interests in tangible and intangible collateral is the law of the state in which the debtor is locatd.
What is the conflict of laws approach to issues involving transactions not covered by the UCC?
- Vested rights: state in which the property was located at the time of the transaction at issue (even when the property may have been taken to another state without the owner’s permission)
- Most-significant-relationship: Law of the situs of the tangible personal property at the time that the relevant transaction took place, unless another state has a more significant relationship to the transaction.
What is the conflict of laws approach to issues involving real property?
Vested Rights: law of the situs of real property governs legal issues concerning title, disposition of real property, and whether any interest can be gained or lost.
MSR: law of situs is presumed to be most significant.
What is the conflict of laws approach to handling inherited personal property?
Questions regarding the validity of a decedent’s will regarding personal property and the transfer of personal property from someone who dies intestate or who has a will are governed by the law of the deceased’s domicile at the time of death.
What is the conflict of laws approach to inherited real property?
Questions regarding the validity of a decedent’s will regarding real property and the transfer of real property from someone who dies intestate or who has a will are governed by the law of the situs.
What is the general family law conflict of law approach?
Marriages are valid where they took place, and are recognized in all other states. If a marriage violates a particularly strong public policy of the domicile of either party, however, it will be invalid. (these policies include bigamy or incest).
What is the conflict of laws approach for grounds for divorce?
Questions of law relating to the grounds for divorce are controlled by the plaintiff’s domicile in a divorce matter.
What is the conflict of laws approach for grounds for premarital agrements?
To determine the enforceability of a premarital agreement, most states apply the law of the state with the most significant relationship to the matter at hand. Some states apply the law of the state in which the premarital agreement was executed.
What are the three arguments against the application of foreign law?
- The law is procedural, rather than substantive
- The law is against public policy
- The law is a penal law.
When is a procedural foreign law applied?
If the foreign law sought to be applied is procedural, the forum state’s law will always govern. The forum state’s law is applied to determine whether a law is substantive or procedural.
Which matters are considered procedural for conflict of law purposes?
- The proper court in which to bring an action
- The sufficiency of the pleadings
- The proper or necessary parties to an action
- Venue
- The rules of discovery
- Service of process
What does the Erie doctrine state?
In diversity jurisdiction cases, federal district courts must apply the substantive law of the state in which the court sits.
How does a court determine when a law is substantive or procedural under Erie?
The court considers whether the failure to apply state law would lead to different outcomes in state and federal courts. If the answer is yes, then the court will generally apply state law.
A state’s choice of law rules are considered to be substantive law. Therefore, a federal court with diversity jurisdiction must use the choice of law rules of the state that it is located in.
